Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Policy Changes and Fiscal Year 2018 Rates; Quality Reporting Requirements for Specific Providers; Medicare and Medicaid Electronic Health Record (EHR) Incentive Program Requirements for Eligible Hospitals, Critical Access Hospitals, and Eligible Professionals; Provider-Based Status of Indian Health Service and Tribal Facilities and Organizations; Costs Reporting and Provider Requirements; Agreement Termination Notices, 37990-38589 [2017-16434]
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37990
Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
42 CFR Parts 405, 412, 413, 414, 416,
486, 488, 489, and 495
[CMS–1677–F]
RIN 0938–AS98
Medicare Program; Hospital Inpatient
Prospective Payment Systems for
Acute Care Hospitals and the LongTerm Care Hospital Prospective
Payment System and Policy Changes
and Fiscal Year 2018 Rates; Quality
Reporting Requirements for Specific
Providers; Medicare and Medicaid
Electronic Health Record (EHR)
Incentive Program Requirements for
Eligible Hospitals, Critical Access
Hospitals, and Eligible Professionals;
Provider-Based Status of Indian Health
Service and Tribal Facilities and
Organizations; Costs Reporting and
Provider Requirements; Agreement
Termination Notices
Centers for Medicare and
Medicaid Services (CMS), HHS.
ACTION: Final rule.
AGENCY:
We are revising the Medicare
hospital inpatient prospective payment
systems (IPPS) for operating and capitalrelated costs of acute care hospitals to
implement changes arising from our
continuing experience with these
systems for FY 2018. Some of these
changes implement certain statutory
provisions contained in the Pathway for
Sustainable Growth Rate (SGR) Reform
Act of 2013, the Improving Medicare
Post-Acute Care Transformation Act of
2014, the Medicare Access and CHIP
Reauthorization Act of 2015, the 21st
Century Cures Act, and other
legislation. We also are making changes
relating to the provider-based status of
Indian Health Service (IHS) and Tribal
facilities and organizations and to the
low-volume hospital payment
adjustment for hospitals operated by the
IHS or a Tribe. In addition, we are
providing the market basket update that
will apply to the rate-of-increase limits
for certain hospitals excluded from the
IPPS that are paid on a reasonable cost
basis subject to these limits for FY 2018.
We are updating the payment policies
and the annual payment rates for the
Medicare prospective payment system
(PPS) for inpatient hospital services
provided by long-term care hospitals
(LTCHs) for FY 2018.
In addition, we are establishing new
requirements or revising existing
sradovich on DSK3GMQ082PROD with RULES2
SUMMARY:
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requirements for quality reporting by
specific Medicare providers (acute care
hospitals, PPS-exempt cancer hospitals,
LTCHs, and inpatient psychiatric
facilities). We also are establishing new
requirements or revising existing
requirements for eligible professionals
(EPs), eligible hospitals, and critical
access hospitals (CAHs) participating in
the Medicare and Medicaid Electronic
Health Record (EHR) Incentive
Programs. We are updating policies
relating to the Hospital Value-Based
Purchasing (VBP) Program, the Hospital
Readmissions Reduction Program, and
the Hospital-Acquired Condition (HAC)
Reduction Program.
We also are making changes relating
to transparency of accrediting
organization survey reports and plans of
correction of providers and suppliers;
electronic signature and electronic
submission of the Certification and
Settlement Summary page of the
Medicare cost reports; and clarification
of provider disposal of assets.
DATES: This final rule is effective on
October 1, 2017.
FOR FURTHER INFORMATION CONTACT:
Donald Thompson, (410) 786–4487,
and Michele Hudson, (410) 786–4487,
Operating Prospective Payment, MS–
DRGs, Wage Index, New Medical
Service and Technology Add-On
Payments, Hospital Geographic
Reclassifications, Graduate Medical
Education, Capital Prospective Payment,
Excluded Hospitals, Sole Community
Hospitals, Medicare Disproportionate
Share Hospital (DSH) Payment
Adjustment, Medicare-Dependent Small
Rural Hospital (MDH) Program, and
Low-Volume Hospital Payment
Adjustment Issues.
Michele Hudson, (410) 786–4487,
Mark Luxton, (410) 786–4530, and
Emily Lipkin, (410) 786–3633, LongTerm Care Hospital Prospective
Payment System and MS–LTC–DRG
Relative Weights Issues.
Mollie Knight, (410) 786–7948, and
Bridget Dickensheets, (410) 786–8670,
Rebasing and Revising the Hospital
Market Basket Issues.
Siddhartha Mazumdar, (410) 786–
6673, Rural Community Hospital
Demonstration Program Issues.
Jeris Smith, (410) 786–0110, Frontier
Community Health Integration Project
Demonstration Issues.
Lein Han, (617) 879–0129, Hospital
Readmissions Reduction Program—
Readmission Measures for Hospitals
Issues.
James Poyer, (410) 786–2261, Hospital
Readmissions Reduction Program—
Administration Issues.
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Elizabeth Bainger, (410) 786–0529,
Hospital-Acquired Condition Reduction
Program Issues.
Joseph Clift, (410) 786–4165,
Hospital-Acquired Condition Reduction
Program—Measures Issues.
Grace Im, (410) 786–0700, and James
Poyer, (410) 786–2261, Hospital
Inpatient Quality Reporting and
Hospital Value-Based Purchasing—
Program Administration, Validation,
and Reconsideration Issues.
Reena Duseja, (410) 786–1999, and
Cindy Tourison, (410) 786–1093,
Hospital Inpatient Quality Reporting—
Measures Issues Except Hospital
Consumer Assessment of Healthcare
Providers and Systems Issues; and
Readmission Measures for Hospitals
Issues.
Kim Spaulding Bush, (410) 786–3232,
Hospital Value-Based Purchasing
Efficiency Measures Issues.
Elizabeth Goldstein, (410) 786–6665,
Hospital Inpatient Quality Reporting—
Hospital Consumer Assessment of
Healthcare Providers and Systems
Measures Issues.
James Poyer, (410) 786–2261, PPSExempt Cancer Hospital Quality
Reporting Issues.
Mary Pratt, (410) 786–6867, LongTerm Care Hospital Quality Data
Reporting Issues.
Jeffrey Buck, (410) 786–0407, and
Cindy, Tourison (410) 786–1093,
Inpatient Psychiatric Facilities Quality
Data Reporting Issues.
Lisa Marie Gomez, (410) 786–1175,
EHR Incentive Program Clinical Quality
Measure Related Issues.
Kathleen Johnson, (410) 786–3295,
and Steven Johnson (410) 786–3332,
EHR Incentive Program Nonclinical
Quality Measure Related Issues.
Caecilia Blondiaux, (410), 786–2190,
and Ariadne Saklas, (410) 786–3322,
Changes in Notice of Termination of
Medicare Providers and Suppliers
Issues.
Monda Shaver, (410) 786–3410, and
Patricia Chmielewski, (410) 786–6899,
Accrediting Organizations Survey
Reporting Transparency Issues.
Kellie Shannon, (410) 786–0416,
Medicare Cost Reporting and Valuation
of Assets Issues.
SUPPLEMENTARY INFORMATION:
Electronic Access
This Federal Register document is
available from the Federal Register
online database through Federal Digital
System (FDsys), a service of the U.S.
Government Printing Office. This
database can be accessed via the
Internet at: https://www.gpo.gov/fdsys.
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Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
Tables Available Only Through the
Internet on the CMS Web Site
In the past, a majority of the tables
referred to throughout this preamble
and in the Addendum to the proposed
rule and the final rule were published
in the Federal Register as part of the
annual proposed and final rules.
However, beginning in FY 2012, some of
the IPPS tables and LTCH PPS tables are
no longer published in the Federal
Register. Instead, these tables generally
will be available only through the
Internet. The IPPS tables for this final
rule are available through the Internet
on the CMS Web site at: https://
www.cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/AcuteInpatient
PPS/. Click on the link on the
left side of the screen titled, ‘‘FY 2018
IPPS Final Rule Home Page’’ or ‘‘Acute
Inpatient—Files for Download’’. The
LTCH PPS tables for this FY 2018 final
rule are available through the Internet
on the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/LongTerm
CareHospitalPPS/ under the
list item for Regulation Number CMS–
1677–F. For further details on the
contents of the tables referenced in this
final rule, we refer readers to section VI.
of the Addendum to this final rule.
Readers who experience any problems
accessing any of the tables that are
posted on the CMS Web sites identified
above should contact Michael Treitel at
(410) 786–4552.
sradovich on DSK3GMQ082PROD with RULES2
Acronyms
3M 3M Health Information System
AAMC Association of American Medical
Colleges
ACGME Accreditation Council for Graduate
Medical Education
ACoS American College of Surgeons
AHA American Hospital Association
AHIC American Health Information
Community
AHIMA American Health Information
Management Association
AHRQ Agency for Healthcare Research and
Quality
AJCC American Joint Committee on Cancer
ALOS Average length of stay
ALTHA Acute Long-Term Hospital
Association
AMA American Medical Association
AMGA American Medical Group
Association
AMI Acute myocardial infarction
AO Accrediting Organizations
AOA American Osteopathic Association
APR DRG All Patient Refined Diagnosis
Related Group System
APRN Advanced practice registered nurse
ARRA American Recovery and
Reinvestment Act of 2009, Public Law
111–5
ASCA Administrative Simplification
Compliance Act of 2002, Public Law 107–
105
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ASITN American Society of Interventional
and Therapeutic Neuroradiology
ASPE Assistant Secretary for Planning and
Evaluation (DHHS)
ATRA American Taxpayer Relief Act of
2012, Public Law 112–240
BBA Balanced Budget Act of 1997, Public
Law 105–33
BBRA Medicare, Medicaid, and SCHIP
[State Children’s Health Insurance
Program] Balanced Budget Refinement Act
of 1999, Public Law 106–113
BIPA Medicare, Medicaid, and SCHIP [State
Children’s Health Insurance Program]
Benefits Improvement and Protection Act
of 2000, Public Law 106–554
BLS Bureau of Labor Statistics
CABG Coronary artery bypass graft
[surgery]
CAH Critical access hospital
CARE [Medicare] Continuity Assessment
Record & Evaluation [Instrument]
CART CMS Abstraction & Reporting Tool
CAUTI Catheter-associated urinary tract
infection
CBSAs Core-based statistical areas
CC Complication or comorbidity
CCN CMS Certification Number
CCR Cost-to-charge ratio
CDAC [Medicare] Clinical Data Abstraction
Center
CDAD Clostridium difficile-associated
disease
CDC Centers for Disease Control and
Prevention
CEHRT Certified electronic health record
technology
CERT Comprehensive error rate testing
CDI Clostridium difficile [C. difficile]
infection
CFR Code of Federal Regulations
CLABSI Central line-associated
bloodstream infection
CIPI Capital input price index
CMI Case-mix index
CMS Centers for Medicare & Medicaid
Services
CMSA Consolidated Metropolitan
Statistical Area
COBRA Consolidated Omnibus
Reconciliation Act of 1985, Public Law 99–
272
COLA Cost-of-living adjustment
CoP [Hospital] condition of participation
COPD Chronic obstructive pulmonary
disease
CPI Consumer price index
CQL Clinical quality language
CQM Clinical quality measure
CY Calendar year
DACA Data Accuracy and Completeness
Acknowledgement
DPP Disproportionate patient percentage
DRA Deficit Reduction Act of 2005, Public
Law 109–171
DRG Diagnosis-related group
DSH Disproportionate share hospital
EBRT External beam radiotherapy
ECE Extraordinary circumstances
exemption
ECI Employment cost index
eCQM Electronic clinical quality measure
EDB [Medicare] Enrollment Database
EHR Electronic health record
EMR Electronic medical record
EMTALA Emergency Medical Treatment
and Labor Act of 1986, Public Law 99–272
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37991
EP Eligible professional
FAH Federation of American Hospitals
FDA Food and Drug Administration
FFY Federal fiscal year
FPL Federal poverty line
FQHC Federally qualified health center
FR Federal Register
FTE Full-time equivalent
FY Fiscal year
GAF Geographic Adjustment Factor
GME Graduate medical education
HAC Hospital-acquired condition
HAI Healthcare-associated infection
HCAHPS Hospital Consumer Assessment of
Healthcare Providers and Systems
HCFA Health Care Financing
Administration
HCO High-cost outlier
HCP Healthcare personnel
HCRIS Hospital Cost Report Information
System
HF Heart failure
HHA Home health agency
HHS Department of Health and Human
Services
HICAN Health Insurance Claims Account
Number
HIPAA Health Insurance Portability and
Accountability Act of 1996, Public Law
104–191
HIPC Health Information Policy Council
HIS Health information system
HIT Health information technology
HMO Health maintenance organization
HPMP Hospital Payment Monitoring
Program
HSA Health savings account
HSCRC [Maryland] Health Services Cost
Review Commission
HSRV Hospital-specific relative value
HSRVcc Hospital-specific relative value
cost center
HQA Hospital Quality Alliance
HQI Hospital Quality Initiative
HwH Hospital-within-hospital
HWR Hospital-wide readmission
ICD–9–CM International Classification of
Diseases, Ninth Revision, Clinical
Modification
ICD–10–CM International Classification of
Diseases, Tenth Revision, Clinical
Modification
ICD–10–PCS International Classification of
Diseases, Tenth Revision, Procedure
Coding System
ICR Information collection requirement
ICU Intensive care unit
IGI IHS Global, Inc.
IHS Indian Health Service
IME Indirect medical education
IMPACT Act Improving Medicare PostAcute Care Transformation Act of 2014,
Public Law 113–185
I–O Input-Output
IOM Institute of Medicine
IPF Inpatient psychiatric facility
IPFQR Inpatient Psychiatric Facility
Quality Reporting [Program]
IPPS [Acute care hospital] inpatient
prospective payment system
IRF Inpatient rehabilitation facility
IQR [Hospital] Inpatient Quality Reporting
LAMCs Large area metropolitan counties
LDS Limited Data Set
LOS Length of stay
LTC–DRG Long-term care diagnosis-related
group
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Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
LTCH Long-term care hospital
LTCH QRP Long-Term Care Hospital
Quality Reporting Program
MA Medicare Advantage
MAC Medicare Administrative Contractor
MACRA Medicare Access and CHIP
Reauthorization Act of 2015, Public Law
114–10
MAP Measure Application Partnership
MCC Major complication or comorbidity
MCE Medicare Code Editor
MCO Managed care organization
MDC Major diagnostic category
MDH Medicare-dependent, small rural
hospital
MedPAC Medicare Payment Advisory
Commission
MedPAR Medicare Provider Analysis and
Review File
MEI Medicare Economic Index
MGCRB Medicare Geographic Classification
Review Board
MIEA–TRHCA Medicare Improvements and
Extension Act, Division B of the Tax Relief
and Health Care Act of 2006, Public Law
109–432
MIPPA Medicare Improvements for Patients
and Providers Act of 2008, Public Law
110–275
MMA Medicare Prescription Drug,
Improvement, and Modernization Act of
2003, Public Law 108–173
MMEA Medicare and Medicaid Extenders
Act of 2010, Public Law 111–309
MMSEA Medicare, Medicaid, and SCHIP
Extension Act of 2007, Public Law 110–173
MOON Medicare Outpatient Observation
Notice
MRHFP Medicare Rural Hospital Flexibility
Program
MRSA Methicillin-resistant Staphylococcus
aureus
MSA Metropolitan Statistical Area
MS–DRG Medicare severity diagnosisrelated group
MS–LTC–DRG Medicare severity long-term
care diagnosis-related group
MU Meaningful Use [EHR Incentive
Program]
MUC Measure under consideration
NAICS North American Industrial
Classification System
NALTH National Association of Long Term
Hospitals
NCD National coverage determination
NCHS National Center for Health Statistics
NCQA National Committee for Quality
Assurance
NCVHS National Committee on Vital and
Health Statistics
NECMA New England County Metropolitan
Areas
NHSN National Healthcare Safety Network
NOP Notice of Participation
NOTICE Act Notice of Observation
Treatment and Implication for Care
Eligibility Act, Public Law 114–42
NQF National Quality Forum
NQS National Quality Strategy
NTIS National Technical Information
Service
NTTAA National Technology Transfer and
Advancement Act of 1991, Public Law
104–113
NUBC National Uniform Billing Code
NVHRI National Voluntary Hospital
Reporting Initiative
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OACT [CMS’] Office of the Actuary
OBRA 86 Omnibus Budget Reconciliation
Act of 1986, Public Law 99–509
OES Occupational employment statistics
OIG Office of the Inspector General
OMB [Executive] Office of Management and
Budget
ONC Office of the National Coordinator for
Health Information Technology
OPM [U.S.] Office of Personnel
Management
OQR [Hospital] Outpatient Quality
Reporting
O.R. Operating room
OSCAR Online Survey Certification and
Reporting [System]
PAC Post-acute care
PAMA Protecting Access to Medicare Act of
2014, Public Law 113–93
PCH PPS-exempt cancer hospital
PCHQR PPS-exempt cancer hospital quality
reporting
PMSAs Primary metropolitan statistical
areas
POA Present on admission
PPI Producer price index
PPR Potentially Preventable Readmissions
PPS Prospective payment system
PRA Paperwork Reduction Act
PRM Provider Reimbursement Manual
ProPAC Prospective Payment Assessment
Commission
PRRB Provider Reimbursement Review
Board
PRTFs Psychiatric residential treatment
facilities
PSF Provider-Specific File
PSI Patient safety indicator
PS&R Provider Statistical and
Reimbursement [System]
PQRS Physician Quality Reporting System
PUF Public use file
QDM Quality data model
QIES ASAP Quality Improvement
Evaluation System Assessment Submission
and Processing
QIG Quality Improvement Group [CMS]
QIO Quality Improvement Organization
QM Quality measure
QPP Quality Payment Program
QRDA Quality Reporting Document
Architecture
RFA Regulatory Flexibility Act, Public Law
96–354
RHC Rural health clinic
RHQDAPU Reporting hospital quality data
for annual payment update
RIM Reference information model
RNHCI Religious nonmedical health care
institution
RPL Rehabilitation psychiatric long-term
care (hospital)
RRC Rural referral center
RSMR Risk-standard mortality rate
RSP Risk-standardized payment
RSSR Risk-standard readmission rate
RTI Research Triangle Institute,
International
RUCAs Rural-urban commuting area codes
RY Rate year
SAF Standard Analytic File
SCH Sole community hospital
SCHIP State Child Health Insurance
Program
SCIP Surgical Care Improvement Project
SFY State fiscal year
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SGR Sustainable Growth Rate
SIC Standard Industrial Classification
SIR Standardized infection ratio
SNF Skilled nursing facility
SNF QRP Skilled Nursing Facility Quality
Reporting Program
SNF VBP Skilled Nursing Facility ValueBased Purchasing
SOCs Standard occupational classifications
SOM State Operations Manual
SRR Standardized risk ratio
SSI Surgical site infection
SSI Supplemental Security Income
SSO Short-stay outlier
SUD Substance use disorder
TEFRA Tax Equity and Fiscal
Responsibility Act of 1982, Public Law 97–
248
TEP Technical expert panel
THA/TKA Total hip arthroplasty/total knee
arthroplasty
TMA TMA [Transitional Medical
Assistance], Abstinence Education, and QI
[Qualifying Individuals] Programs
Extension Act of 2007, Public Law 110–90
TPS Total Performance Score
UHDDS Uniform hospital discharge data set
UR Utilization review
VBP [Hospital] Value Based Purchasing
[Program]
VTE Venous thromboembolism
Table of Contents
I. Executive Summary and Background
A. Executive Summary
1. Purpose and Legal Authority
2. Summary of the Major Provisions
3. Summary of Costs and Benefits
B. Summary
1. Acute Care Hospital Inpatient
Prospective Payment System (IPPS)
2. Hospitals and Hospital Units Excluded
from the IPPS
3. Long-Term Care Hospital Prospective
Payment System (LTCH PPS)
4. Critical Access Hospitals (CAHs)
5. Payments for Graduate Medical
Education (GME)
C. Summary of Provisions of Recent
Legislation Implemented in This Final
Rule
1. The American Taxpayer Relief Act of
2012 (ATRA) (Pub. L. 112–240), the
Medicare Access and CHIP
Reauthorization Act of 2015 (MACRA)
(Pub. L. 114–10), and the 21st Century
Cures Act (Pub. L. 114–255)
2. Pathway for SGR Reform Act of 2013
(Pub. L. 113–67)
3. Improving Medicare Post-Acute Care
Transformation Act of 2014 (IMPACT
Act) (Pub. L. 113–185)
4. The Medicare Access and CHIP
Reauthorization Act of 2015 (MACRA)
(Pub. L. 114–10)
5. The 21st Century Cures Act (Pub. L.
114–255)
D. Issuance of Notice of Proposed
Rulemaking
II. Changes to Medicare Severity DiagnosisRelated Group (MS–DRG) Classifications
and Relative Weights
A. Background
B. MS–DRG Reclassifications
C. Adoption of the MS–DRGs in FY 2008
D. FY 2018 MS–DRG Documentation and
Coding Adjustment
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Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
1. Background on the Prospective MS–DRG
Documentation and Coding Adjustments
for FY 2008 and FY 2009 Authorized by
Public Law 110–90
2. Recoupment or Repayment Adjustment
Authorized by Section 631 of the
American Taxpayer Relief Act of 2012
(ATRA)
3. Adjustment for FY 2018 Required Under
Section 414 of Public Law 114–10
(MACRA) and Section 15005 of Public
Law 114–255
E. Refinement of the MS–DRG Relative
Weight Calculation
1. Background
2. Discussion of Policy for FY 2018
F. Changes to Specific MS–DRG
Classifications
1. Discussion of Changes to Coding System
and Basis for FY 2018 MS–DRG Updates
a. Conversion of MS–DRGs to the
International Classification of Diseases,
10th Revision (ICD–10)
b. Basis for FY 2018 MS–DRG Updates
2. MDC 1 (Diseases and Disorders of the
Nervous System)
a. Functional Quadriplegia
b. Responsive Neurostimulator (RNS©)
System
c. Precerebral Occlusion or Transient
Ischemic Attack With Thrombolytic
3. MDC 2 (Diseases and Disorders of the
Eye: Swallowing Eye Drops
(Tetrahydrozoline))
4. MDC 5 (Diseases and Disorders of the
Circulatory System)
a. Percutaneous Cardiovascular Procedures
and Insertion of a Radioactive Element
b. Modification of the Titles for MS–DRG
246 (Percutaneous Cardiovascular
Procedures With Drug-Eluting Stent
With MCC or 4+ Vessels or Stents) and
MS–DRG 248 (Percutaneous
Cardiovascular Procedures With NonDrug-Eluting Stent With MCC or 4+
Vessels or Stents)
c. Transcatheter Aortic Valve Replacement
(TAVR) and Left Atrial Appendage
Closure (LAAC)
d. Percutaneous Mitral Valve Replacement
Procedures
e. Percutaneous Tricuspid Valve Repair
5. MDC 8 (Diseases and Disorders of the
Musculoskeletal System and Connective
Tissue)
a. Total Ankle Replacement (TAR)
Procedures
b. Revision of Total Ankle Replacement
(TAR) Procedures
c. Magnetic Controlled Growth Rods
(MAGEC® System)
d. Combined Anterior/Posterior Spinal
Fusion
6. MDC 14 (Pregnancy, Childbirth and the
Puerperium)
a. Vaginal Delivery and Complicating
Diagnoses
b. MS–DRG 998 (Principal Diagnosis
Invalid as Discharge Diagnosis)
c. MS–DRG 782 (Other Antepartum
Diagnoses Without Medical
Complications)
d. Shock During or Following Labor and
Delivery
7. MDC 15 (Newborns and Other Neonates
with Conditions Originating in Perinatal
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Period): Observation and Evaluation of
Newborn
8. MDC 21 (Injuries, Poisonings and Toxic
Effects of Drugs): Complication Codes
9. MDC 23 (Factors Influencing Health
Status and Other Contacts With Health
Services): Updates to MS–DRGs 945 and
946 (Rehabilitation With CC/MCC and
Without CC/MCC, Respectively)
10. Changes to the Medicare Code Editor
(MCE)
a. Age Conflict Edit
b. Sex Conflict Edit
c. Non-Covered Procedure Edit
d. Unacceptable Principal Diagnosis Edit
e. Future Enhancement
11. Changes to Surgical Hierarchies
12. Changes to the MS–DRG Diagnosis
Codes for FY 2018
a. Background of the CC List and the CC
Exclusions List
b. Additions and Deletions to the Diagnosis
Code Severity Levels for FY 2018
c. Principal Diagnosis Is Its Own CC or
MCC
d. CC Exclusions List for FY 2018
13. Comprehensive Review of CC List for
FY 2019
14. Review of Procedure Codes in MS
DRGs 981 Through 983; 984 Through
986; and 987 Through 989
a. Moving Procedure Codes From MS–
DRGs 981 Through 983 or MS–DRGs 987
Through 989 Into MDCs
b. Reassignment of Procedures Among MS–
DRGs 981 Through 983, 984 Through
986, and 987 Through 989
15. Changes to the ICD–10–CM and ICD–
10–PCS Coding Systems
16. Replaced Devices Offered Without Cost
or With a Credit
a. Background
b. Changes for FY 2018
17. Other Policy Changes: Other Operating
Room (O.R.) and Non-O.R. Issues
a. O.R. Procedures to Non-O.R. Procedures
b. Revision of Neurostimulator Generator
c. External Repair of Hymen
d. Non-O.R. Procedures in MDC 17
(Myeloproliferative Diseases and
Disorders Poorly Differentiated
Neoplasms)
G. Recalibration of the FY 2018 MS–DRG
Relative Weights
1. Data Sources for Developing the Relative
Weights
2. Methodology for Calculation of the
Relative Weights
3. Development of National Average CCRs
H. Add-On Payments for New Services and
Technologies for FY 2018
1. Background
2. Public Input Before Publication of a
Notice of Proposed Rulemaking on AddOn Payments
3. ICD–10–PCS Section ‘‘X’’ Codes for
Certain New Medical Services and
Technologies
4. Revision of Reference to an ICD–9–CM
Code in § 412.87(b)(2) of the Regulations
5. FY 2018 Status of Technologies
Approved for FY 2017 Add-On Payments
a. CardioMEMSTM HF (Heart Failure)
Monitoring System
b. Defitelio® (Defibrotide)
c. GORE® EXCLUDER® Iliac Branch
Endoprosthesis (IBE)
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37993
d. Idarucizumab
e. Lutonix® Drug Coated Balloon PTA
Catheter and In.PACTTM AdmiralTM
Paclitaxel Coated Percutaneous
Transluminal Angioplasty (PTA) Balloon
Catheter
f. MAGEC® Spinal Bracing and Distraction
System (MAGEC® Spine)
g. VistogardTM (Uridine Triacetate)
h. Blinatumomab (BLINCYTOTM Trade
Brand)
6. FY 2018 Applications for New
Technology Add-On Payments
a. Bezlotoxumab (ZINPLAVATM)
b. EDWARDS INTUITY EliteTM Valve
System (INTUITY) and Liva Nova
Perceval Valve (Perceval)
c. Ustekinumab (Stelara®)
III. Changes to the Hospital Wage Index for
Acute Care Hospitals
A. Background
1. Legislative Authority
2. Core-Based Statistical Areas (CBSAs) for
the FY 2018 Hospital Wage Index
3. Codes for Constituent Counties in
CBSAs
B. Worksheet S–3 Wage Data for the FY
2018 Wage Index
1. Included Categories of Costs
2. Excluded Categories of Costs
3. Use of Wage Index Data by Suppliers
and Providers Other Than Acute Care
Hospitals Under the IPPS
C. Verification of Worksheet S–3 Wage
Data
D. Method for Computing the FY 2018
Unadjusted Wage Index
1. Methodology for FY 2018
2. Clarification of Other Wage Related
Costs in the Wage Index
E. Occupational Mix Adjustment to the FY
2018 Wage Index
1. Use of 2013 Occupational Mix Survey
for the FY 2018 Wage Index
2. Use of the 2016 Medicare Wage Index
Occupational Mix Survey for the FY
2019 Wage Index
3. Calculation of the Occupational Mix
Adjustment for FY 2018
F. Analysis and Implementation of the
Occupational Mix Adjustment and the
FY 2018 Occupational Mix Adjusted
Wage Index
G. Application of the Rural, Imputed, and
Frontier Floors
1. Rural Floor
2. Expiration of the Imputed Floor Policy
3. State Frontier Floor for FY 2018
H. FY 2018 Wage Index Tables
I. Revisions to the Wage Index Based on
Hospital Redesignations and
Reclassifications
1. General Policies and Effects of
Reclassification and Redesignation
2. MGCRB Reclassification and
Redesignation Issues for FY 2018
a. FY 2018 Reclassification Requirements
and Approvals
b. Extension of PRA Information Collection
Requirement Approval for MGCRB
Applications
c. Deadline for Submittal of Documentation
of Sole Community Hospital (SCH) and
Rural Referral Center (RRC)
Classification Status to the MGCRB
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d. Clarification of Special Rules for SCHs
and RRCs Reclassifying to Geographic
Home Area
3. Redesignations Under Section
1886(d)(8)(B) of the Act
4. Changes to the 45-Day Notification Rules
J. Out-Migration Adjustment Based on
Commuting Patterns of Hospital
Employees
K. Reclassification From Urban to Rural
Under Section 1886(d)(8)(E) of the Act
Implemented at 42 CFR 412.103
L. Clarification of Application Deadline for
Rural Referral Center (RRC)
Classification
M. Process for Requests for Wage Index
Data Corrections
1. Process for Hospitals to Accept Wage
Index Data Corrections
2. Process for Wage Index Data Corrections
by CMS After the January Public Use File
(PUF)
N. Labor Market Share for the FY 2018
Wage Index
IV. Rebasing and Revising of the Hospital
Market Baskets for Acute Care Hospitals
A. Background
B. Rebasing and Revising the IPPS Market
Basket
1. Development of Cost Categories and
Weights
a. Use of Medicare Cost Report Data
b. Final Major Cost Category Computation
c. Derivation of the Detailed Cost Weights
2. Selection of Price Proxies
3. Labor-Related Share
C. Market Basket for Certain Hospitals
Presently Excluded From the IPPS
D. Rebasing and Revising the Capital Input
Price Index (CIPI)
V. Other Decisions and Changes to the IPPS
for Operating Costs
A. Changes to MS–DRGs Subject to
Postacute Care Transfer and MS–DRG
Special Payment Policies
B. Changes in the Inpatient Hospital
Updates for FY 2018 (§ 412.64(d))
1. FY 2018 Inpatient Hospital Update
2. FY 2018 Puerto Rico Hospital Update
C. Change to Volume Decrease Adjustment
for Sole Community Hospitals (SCHs)
and Medicare-Dependent, Small Rural
Hospitals (MDHs) (§ 412.92)
1. Background
2. Changes to the Volume Decrease
Adjustment Calculation Methodology for
SCHs
D. Rural Referral Centers (RRCs): Annual
Updates to Case-Mix Index (CMI) and
Discharge Criteria (§ 412.96)
1. Case-Mix Index (CMI)
2. Discharges
E. Payment Adjustment for Low-Volume
Hospitals (§ 412.101)
1. Expiration of Temporary Changes to
Low-Volume Hospital Payment Policy
2. Background
3. Payment Adjustment for FY 2018 and
Subsequent Fiscal Years
4. Parallel Low-Volume Hospital Payment
Adjustment Regarding Hospitals
Operated by the Indian Health Service
(IHS) or a Tribe
F. Indirect Medical Education (IME)
Payment Adjustment (§ 412.105)
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G. Payment Adjustment for Medicare
Disproportionate Share Hospitals (DSHs)
for FY 2018 (§ 412.106)
1. General Discussion
2. Eligibility for Empirically Justified
Medicare DSH Payments and
Uncompensated Care Payments
3. Empirically Justified Medicare DSH
Payments
4. Uncompensated Care Payments
a. Calculation of Factor 1 for FY 2018
b. Calculation of Factor 2 for FY 2018
(1) Background
(2) Methodology for Calculation of Factor
2 for FY 2018
c. Calculation of Factor 3 for FY 2018
(1) Background
(2) Data Source for FY 2018
(3) Time Period for Calculating Factor 3 for
FY 2018, Including Methodology for
Incorporating Worksheet S–10 Data
(4) Methodological Considerations for
Calculating Factor 3
(5) Methodological Considerations for
Incorporating Worksheet S–10 Data
H. Medicare-Dependent, Small Rural
Hospital (MDH) Program (§ 412.108)
1. Background for the MDH Program
a. Expiration of the MDH Program
I. Hospital Readmissions Reduction
Program: Updates and Changes
(§§ 412.150 Through 412.154)
1. Statutory Basis for the Hospital
Readmissions Reduction Program
2. Regulatory Background
3. Maintenance of Technical Specifications
for Quality Measures
4. Policies for the Hospital Readmissions
Reduction Program
5. Applicable Period for FY 2018
6. Calculation of Aggregate Payments for
Excess Readmissions for FY 2018
7. Background and Current Payment
Adjustment Methodology
a. Background
b. Current Payment Adjustment
Methodology
8. Provisions for the Payment Adjustment
Methodology for FY 2019: Methodology
for Calculating the Proportion of DualEligible Patients
a. Background
b. Data Sources Used To Determine Dual
Eligibility
c. Data Period Used To Define Dual
Eligibility
9. Provisions for the Payment Adjustment
Methodology for FY 2019: Methodology
for Assigning Hospitals to Peer Groups
10. Provisions for the Payment Adjustment
Methodology for FY 2019: Payment
Adjustment Formula Calculation
Methodology
a. Background
b. Proposals
c. Analysis
11. Accounting for Social Risk Factors in
the Hospital Readmissions Reduction
Program
12. Extraordinary Circumstances
Exceptions (ECE) Policy
13. Timeline for Public Reporting of Excess
Readmission Ratios on Hospital
Compare for the FY 2018 Payment
Determination
J. Hospital Value-Based Purchasing (VBP)
Program: Policy Changes
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1. Background
a. Statutory Background and Overview of
Past Program Years
b. FY 2018 Program Year Payment Details
2. Accounting for Social Risk Factors in the
Hospital VBP Program
3. Retention and Removal of Quality
Measures for the FY 2019 Program Year
a. Retention of Previously Adopted
Hospital VBP Program Measures
b. Removal of the PSI 90 Measure
c. Summary of Previously Adopted
Measures and Measure for Removal for
the FY 2019 and FY 2020 Program Years
4. New Measures for the FY 2022 Program
Year, FY 2023 Program Year, and
Subsequent Years
a. New Measure for the FY 2022 Program
Year and Subsequent Years: HospitalLevel, Risk-Standardized Payment
Associated with a 30-Day Episode-ofCare for Pneumonia (PN Payment)
b. New Measure for the FY 2023 Program
Year and Subsequent Years: Patient
Safety and Adverse Events (Composite)
(NQF #0531)
5. Previously Adopted and Baseline and
Performance Periods
a. Background
b. Person and Community Engagement
Domain
c. Efficiency and Cost Reduction Domain
d. Safety Domain
e. Clinical Care Domain
f. Summary of Previously Adopted and
Newly Finalized Baseline and
Performance Periods for the FY 2019
Through FY 2023 Program Years
6. Performance Standards for the Hospital
VBP Program
a. Background
b. Previously Adopted and Newly
Finalized Performance Standards for the
FY 2020 Program Year
c. Previously Adopted Performance
Standards for Certain Measures for the
FY 2021 Program Year
d. Previously Adopted and Newly
Finalized Performance Standards for
Certain Measures for the FY 2022
Program Year
e. Performance Standards for Certain
Measures for the FY 2023 Program Year
7. Scoring Methodology and Data
Requirements for the FY 2019 Program
Year and Subsequent Years
a. Domain Weighting for the FY 2020
Program Year and Subsequent Years for
Hospitals That Receive a Score on All
Domains
b. Domain Weighting for the FY 2019
Program Year and Subsequent Years for
Hospitals Receiving Scores on Fewer
than Four Domains
c. Minimum Numbers of Cases for Hospital
VBP Program Measures for the FY 2019
Program Year and Subsequent Years
d. Weighting Measures Within the
Efficiency and Cost Reduction Domain
K. Changes to the Hospital-Acquired
Condition (HAC) Reduction Program
1. Background
2. Implementation of the HAC Reduction
Program for FY 2018
3. Data Collection Time Periods for the FY
2020 HAC Reduction Program
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4. Request for Comments on Additional
Measures for Potential Future Adoption
5. Accounting for Social Risk Factors in the
HAC Reduction Program
6. Request for Comments on Inclusion on
Disability and Medical Complexity for
CDC NHSN Measures
7. Extraordinary Circumstances Exceptions
(ECE) Policy for the HAC Reduction
Program
8. Maintenance of Technical Specifications
for Quality Measures
L. Rural Community Hospital
Demonstration Program
1. Introduction
2. Background
3. Provisions of the 21st Century Cures Act
(Pub. L. 114–255) and Finalized Policies
for Implementation
a. Statutory Provisions
b. Terms of Continuation for Previously
Participating Hospitals
c. Solicitation for Additional Participants
4. Budget Neutrality
a. Statutory Budget Neutrality Requirement
b. Methodology Used in Previous Final
Rules
c. Budget Neutrality Methodology for
Extension Period Authorized by the 21st
Century Cures Act (Pub. L. 114–255)
d. Finalized Budget Neutrality Approach
e. Reconciling Actual and Estimated Costs
of the Demonstration for Previous Years
(2011, 2012, and 2013)
M. Adjustment to IPPS Rates Resulting
From the 2-Midnight Policy for FY 2018
N. Provider-Based Status of Indian Health
Service and Tribal Facilities and
Organizations
VI. Changes to the IPPS for Capital-Related
Costs
A. Overview
B. Additional Provisions
1. Exception Payments
2. New Hospitals
3. Payments for Hospitals Located in
Puerto Rico
C. Annual Update for FY 2018
VII. Changes for Hospitals Excluded From the
IPPS
A. Rate-of-Increase in Payments to
Excluded Hospitals for FY 2018
B. Revisions to Hospital-Within-Hospital
Regulations
C. Report of Adjustment (Exceptions)
Payments
D. Critical Access Hospitals (CAHs)
1. Background
2. Frontier Community Health Integration
Project (FCHIP) Demonstration
3. Physician Certification Requirement for
Payment of Inpatient CAH Services
Under Medicare Part A
a. Background
b. Notice Regarding Changes to
Instructions for the Review of the CAH
96-Hour Certification Requirement
VIII. Changes to the Long-Term Care Hospital
Prospective Payment System (LTCH PPS)
for FY 2018
A. Background of the LTCH PPS
1. Legislative and Regulatory Authority
2. Criteria for Classification as an LTCH
a. Classification as an LTCH
b. Hospitals Excluded From the LTCH PPS
3. Limitation on Charges to Beneficiaries
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4. Administrative Simplification
Compliance Act (ASCA) and Health
Insurance Portability and Accountability
Act (HIPAA) Compliance
B. Medicare Severity Long-Term Care
Diagnosis-Related Group (MS–LTC–
DRG) Classifications and Relative
Weights for FY 2018
1. Background
2. Patient Classifications Into MS–LTC–
DRGs
a. Background
b. Changes to the MS–LTC–DRGs for FY
2018
3. Development of the FY 2018 MS–LTC–
DRG Relative Weights
a. General Overview of the Development of
the MS–LTC–DRG Relative Weights
b. Development of the MS–LTC–DRG
Relative Weights for FY 2018
c. Data
d. Hospital-Specific Relative Value (HSRV)
Methodology
e. Treatment of Severity Levels in
Developing the MS–LTC–DRG Relative
Weights
f. Low-Volume MS–LTC–DRGs
g. Steps for Determining the FY 2018 MS–
LTC–DRG Relative Weights
C. Changes to the LTCH PPS Payment
Rates and Other Changes to the LTCH
PPS for FY 2018
1. Overview of Development of the LTCH
PPS Standard Federal Payment Rates
2. FY 2018 LTCH PPS Standard Federal
Payment Rate Annual Market Basket
Update
a. Overview
b. Annual Update to the LTCH PPS
Standard Federal Payment Rate for FY
2018
c. Adjustment to the LTCH PPS Standard
Federal Payment Rate under the LongTerm Care Hospital Quality Reporting
Program (LTCH QRP)
d. Annual Update under the LTCH PPS for
FY 2018
D. Changes to the Short-Stay Outlier
Adjustment Policy (§ 412.529)
E. Temporary Exception to the Site Neutral
Payment Rate for Certain Spinal Cord
Specialty Hospitals
F. Temporary Exception to the Site Neutral
Payment Rate for Certain Discharges
With Severe Wounds From Certain
LTCHs
G. Moratorium and Regulatory Delay of the
Full Implementation of the ‘‘25-Percent’’
Threshold Policy’’ Adjustment
(§ 412.538)
H. Revision to Moratorium on Increasing
Beds in Existing LTCH or LTCH Satellite
Locations Under the 21st Century Cures
Act (Pub. L. 114–255) (§ 412.23)
I. Changes to the Average Length of Stay
Criterion Under the 21st Century Cures
Act (Pub. L. 114–255)
J. Change in Medicare Classification for
Certain Hospitals (§ 412.23)
IX. Quality Data Reporting Requirements for
Specific Providers and Suppliers
A. Hospital Inpatient Quality Reporting
(IQR) Program
1. Background
a. History of the Hospital IQR Program
b. Maintenance of Technical Specifications
for Quality Measures
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c. Public Display of Quality Measures
d. Accounting for Social Risk Factors in the
Hospital IQR Program
2. Retention of Previously Adopted
Hospital IQR Program Measures for
Subsequent Payment Determinations
3. Removal and Suspension of Previously
Adopted Hospital IQR Program Measures
4. Previously Adopted Hospital IQR
Program Measures for the FY 2019
Payment Determination and Subsequent
Years
5. Considerations in Expanding and
Updating of Quality Measures
6. Refinements to Existing Measures in the
Hospital IQR Program for the FY 2020
Payment Determination and Subsequent
Years
a. Refining Hospital Consumer Assessment
of Healthcare Providers and Systems
(HCAHPS) Survey (NQF #0166) for the
FY 2020 Payment Determination and
Subsequent Years
b. Refinement of the Hospital 30-Day, AllCause, Risk-Standardized Mortality Rate
(RSMR) following Acute Ischemic Stroke
Hospitalization Measure for the FY 2023
Payment Determination and Subsequent
Years
c. Summary of Previously Adopted
Hospital IQR Program Measures for the
FY 2020 Payment Determination and
Subsequent Years
7. Voluntary Hybrid Hospital-Wide
Readmission Measure With Claims and
Electronic Health Record Data (NQF
#2879)
a. Background
b. Voluntary Reporting of Electronic Health
Record Data for the Hybrid HWR
Measure (NQF #2879)
c. Data Sources
d. Outcome
e. Cohort
f. Inclusion and Exclusion Criteria
g. Risk-Adjustment
h. Calculating the Risk-Standardized
Readmission Rate (RSRR)
i. Data Submission and Reporting
Requirements
j. Confidential Hospital-Specific Reports
8. Changes to Policies on Reporting of
eCQMs
a. Background
b. Modifications to the eCQM Reporting
Requirements for the Hospital IQR
Program for the CY 2017 Reporting
Period/FY 2019 Payment Determination
c. Modifications to the eCQM Reporting
Requirements for the Hospital IQR
Program for the CY 2018 Reporting
Period/FY 2020 Payment Determination
9. Possible New Quality Measures and
Measure Topics for Future Years
a. Potential Inclusion of the Quality of
Informed Consent Documents for
Hospital-Performed, Elective Procedures
Measure
b. Potential Inclusion of Four End-of-Life
(EOL) Measures for Cancer Patients
c. Potential Inclusion of Two Nurse
Staffing Measures
d. Potential Inclusion of Additional
Electronic Clinical Quality Measures
(eCQMs) in the Hospital IQR and
Medicare and Medicaid EHR Incentive
Programs
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10. Form, Manner, and Timing of Quality
Data Submission
a. Background
b. Procedural Requirements for the FY
2020 Payment Determination and
Subsequent Years
c. Data Submission Requirements for
Chart-Abstracted Measures
d. Changes to the Reporting and
Submission Requirements for eCQMs
e. Submission Form and Method for the
Voluntary Hybrid Hospital-Wide
Readmission Measure with Claims and
Electronic Health Record Data (NQF
#2879)
f. Sampling and Case Thresholds for the FY
2020 Payment Determination and
Subsequent Years
g. HCAHPS Administration and
Submission Requirements for the FY
2020 Payment Determination and
Subsequent Years
h. Data Submission Requirements for
Structural Measures for the FY 2020
Payment Determination and Subsequent
Years
i. Data Submission and Reporting
Requirements for HAI Measures
Reported via NHSN
11. Modifications to the Validation of
Hospital IQR Program Data
a. Background
b. Changes to the Existing Processes for
Validation of Hospital IQR Program
eCQM Data for the FY 2020 Payment
Determination and Subsequent Years
c. Modifications to the Educational Review
Process for Chart-Abstracted Measures
Validation
12. Data Accuracy and Completeness
Acknowledgement (DACA)
Requirements for the FY 2020 Payment
Determination and Subsequent Years
13. Public Display Requirements for the FY
2020 Payment Determination and
Subsequent Years
a. Background
b. Potential Options for Confidential and
Public Reporting of Hospital IQR
Measures Stratified by Patient DualEligibility Status
14. Reconsideration and Appeal
Procedures for the FY 2020 Payment
Determination and Subsequent Years
15. Change to the Hospital IQR Program
Extraordinary Circumstances Exceptions
(ECE) Policy
a. Background
b. Alignment of the Hospital IQR Program
ECE Policy With Other CMS Quality
Programs
B. PPS-Exempt Cancer Hospital Quality
Reporting (PCHQR) Program
1. Background
2. Criteria for Removal and Retention of
PCHQR Program Measures
3. Retention and Removal of Previously
Finalized Quality Measures for PCHs
Beginning With the FY 2020 Program
Year
a. Background
b. Removal of Measures from the PCHQR
Program Beginning With the FY 2020
Program Year
4. New Quality Measures Beginning With
the FY 2020 Program Year
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a. Considerations in the Selection of
Quality Measures
b. New Quality Measures Beginning With
the FY 2020 Program Year
c. Summary of Previously Finalized and
Newly Finalized PCHQR Program
Measures for the FY 2020 Program Year
and Subsequent Years
5. Accounting for Social Risk Factors in the
PCHQR Program
6. Possible New Quality Measure Topics
for Future Years
a. Background
b. Localized Prostate Cancer: Vitality;
Localized Prostate Cancer: Urinary
Incontinence; Localized Prostate Cancer:
Urinary Frequency, Obstruction, and/or
Irritation; Localized Prostate Cancer:
Sexual Function; and Localized Prostate
Cancer: Bowel Function
c. 30-Day Unplanned Readmission for
Cancer Patients
7. Maintenance of Technical Specifications
for Quality Measures
8. Public Display Requirements
a. Background
b. Deferment of Public Display of Two
Measures
9. Form, Manner, and Timing of Data
Submission
a. Background
b. Reporting Requirements for New
Measures
10. Extraordinary Circumstances
Exceptions (ECE) Policy Under the
PCHQR Program
a. Background
b. Modifications to the ECE Policy
C. Long-Term Care Hospital Quality
Reporting Program (LTCH QRP)
1. Background and Statutory Authority
2. General Considerations Used for
Selection of Quality Measures for the
LTCH QRP
a. Background
b. Accounting for Social Risk Factors in the
LTCH QRP
3. Collection of Standardized Patient
Assessment Data Under the LTCH QRP
a. Definition of Standardized Patient
Assessment Data
b. General Considerations Used for the
Selection of Standardized Patient
Assessment Data
4. Policy for Retaining LTCH QRP
Measures and Policy To Apply That
Retention Policy to Standardized Patient
Assessment Data
5. Policy for Adopting Changes to LTCH
QRP Measures and Policy To Apply That
Policy for Adopting Changes to
Standardized Patient Assessment Data
6. Quality Measures Currently Adopted for
the LTCH QRP
7. LTCH QRP Quality Measures Beginning
With the FY 2020 LTCH QRP
a. Finalized Proposal To Replace the
Current Pressure Ulcer Quality Measure,
Percent of Residents or Patients With
Pressure Ulcers That Are New or
Worsened (Short Stay) (NQF #0678),
With a Modified Pressure Ulcer Measure,
Changes in Skin Integrity Post-Acute
Care: Pressure Ulcer/Injury
b. Mechanical Ventilation Process Quality
Measure: Compliance With Spontaneous
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Breathing Trial (SBT) by Day 2 of the
LTCH Stay
c. Mechanical Ventilation Outcome Quality
Measure: Ventilator Liberation Rate
8. Removal of the All-Cause Unplanned
Readmission Measure for 30 Days PostDischarge From LTCHS From the LTCH
QRP
9. LTCH QRP Quality Measures Under
Consideration for Future Years
a. LTCH QRP Quality Measures Under
Consideration for Future Years
b. IMPACT Act Measure—Possible Future
Update to Measure Specifications
c. IMPACT Act Implementation Update
10. Standardized Patient Assessment Data
Reporting for the LTCH QRP
a. Standardized Patient Assessment Data
Reporting for the FY 2019 LTCH QRP
b. Standardized Patient Assessment Data
Reporting Beginning With the FY 2020
LTCH QRP
11. Form, Manner, and Timing of Data
Submission Under the LTCH QRP
a. Start Date for Standardized Patient
Assessment Data Reporting by New
LTCHs
b. Mechanism for Reporting Standardized
Patient Assessment Data Beginning With
the FY 2019 LTCH QRP
c. Schedule for Reporting Standardized
Patient Assessment Data Beginning With
the FY 2019 LTCH QRP
d. Schedule for Reporting the Newly
Finalized Quality Measures Beginning
With the FY 2020 LTCH QRP
e. Removal of Interrupted Stay Items From
the LTCH CARE Data Set
12. Changes to Previously Codified
Participation Requirements Under the
LTCH QRP
13. Changes to Previously Codified Data
Submission Requirements Under the
LTCH QRP
14. Changes to Previously Codified
Exception and Extension Requirements
Under the LTCH QRP
15. Changes to Previously Codified
Reconsiderations Requirements Under
the LTCH QRP
16. Application of the LTCH QRP Data
Completion Thresholds to the
Submission of Standardized Patient
Assessment Data Beginning With the FY
2019 LTCH QRP
17. Policies Regarding Public Display of
Measure Data for the LTCH QRP
18. Mechanism for Providing Feedback
Reports to LTCHs
D. Inpatient Psychiatric Facility Quality
Reporting (IPFQR) Program
1. Background
a. Statutory Authority
b. Covered Entities
c. Considerations in Selecting Quality
Measures
2. Factors for Removal or Retention of
IPFQR Program Measures
a. Background
b. Considerations in Removing or Retaining
Measures
3. Proposal for New Quality Measure for
the FY 2020 Payment Determination and
Subsequent Years—Medication
Continuation following Inpatient
Psychiatric Discharge
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a. Background
b. Appropriateness for the IPFQR Program
c. Measure Calculation
d. Data Sources
e. Public Comment
4. Summary of Previously Finalized
Measures for the FY 2020 Payment
Determinations and Subsequent Years
5. Possible IPFQR Program Measures and
Topics for Future Consideration
6. Public Display and Review
Requirements
7. Form, Manner, and Timing of Quality
Data Submission for the FY 2019
Payment Determination and Subsequent
Years
a. Procedural Requirements for FY 2019
Payment Determination and Subsequent
Years
b. Data Submission Requirements for the
FY 2019 Payment Determination and
Subsequent Years
c. Reporting Requirements for the FY 2019
Payment Determination and Subsequent
Years
d. Population and Sampling
e. Data Accuracy and Completeness
Acknowledgement (DACA)
Requirements
8. Reconsideration and Appeals Procedures
9. Extraordinary Circumstances Exceptions
(ECE) for the IPFQR Program
a. Background
b. ECE Policy Modifications
E. Clinical Quality Measurement for
Eligible Hospitals and Critical Access
Hospitals (CAHs) Participating in the
EHR Incentive Programs
1. Background
2. Modifications to the CQM Reporting
Requirements for the Medicare and
Medicaid EHR Incentive Programs for CY
2017
a. Background
b. Changes to Policies Regarding Electronic
Reporting of CQMs for CY 2017
3. CQM Reporting for the Medicare and
Medicaid EHR Incentive Programs in
2018
a. Background
b. CQM Reporting Period for the Medicare
and Medicaid EHR Incentive Programs in
CY 2018
c. CQM Reporting Form and Method for
the Medicare EHR Incentive Program in
2018
F. Clinical Quality Measurement for
Eligible Professionals (EPs) Participating
in the Medicaid EHR Incentive Program
in 2017
1. Modifications to the CQM Reporting
Period for EPs in 2017
2. Modifications to CQM Reporting
Requirements for Medicaid EPs Under
the Medicaid EHR Incentive Program
G. Changes to the Medicare and Medicaid
EHR Incentive Programs
1. Revisions to the EHR Reporting Period
in 2018
2. Significant Hardship Exception for
Decertified Certified EHR Technology
(CEHRT) for EPs, Eligible Hospitals, and
CAHs Seeking To Avoid the Medicare
Payment Adjustment
3. Ambulatory Surgical Center (ASC)-Based
Eligible Professionals (EPs)
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4. Certification Requirements for 2018
X. Revisions of Medicare Cost Reporting and
Provider Requirements
A. Electronic Signature and Submission of
the Certification and Settlement
Summary Page of the Medicare Cost
Report
1. Background
2. Changes Relating to Electronic Signature
on the Certification and Settlement
Summary Page of the Medicare Cost
Report
3. Changes Relating to Electronic
Submission of the Certification and
Settlement Summary Page of the
Medicare Cost Report
4. Clarifications Relating to the Items
Required to be Submitted by Providers
with the Medicare Cost Report
a. Settlement Summary and Certification
Statement
b. Removal of the Transition Period
Language
5. Revisions to 42 CFR 413.24(f)(4)(iv)
B. Clarification of Limitations on the
Valuation of Depreciable Assets
Disposed of on or after December 1, 1997
XI. Changes Relating to Survey and
Certification Requirements
A. Revisions to the Application and ReApplication Procedures for National
Accrediting Organizations (AOs),
Provider and Supplier Conditions, and
Posting of Survey Reports and
Acceptable Plans of Corrections (PoCs)
B. Changes to Termination Public Notice
Requirements for Certain Providers and
Suppliers
1. Background
2. Basis for Changes
3. Changes to Regulations
XII. MedPAC Recommendations
XIII. Other Required Information
A. Publicly Available Data
B. Collection of Information Requirements
1. Statutory Requirement for Solicitation of
Comments
2. ICRs for Temporary Exception to the
LTCH PPS Site Neutral Payment Rate for
Certain Spinal Cord Specialty Hospitals
3. ICRs for the Hospital Inpatient Quality
Reporting (IQR) Program
4. ICRs for PPS-Exempt Cancer Hospital
Quality Reporting (PCHQR) Program
5. ICRs for Hospital Value-Based
Purchasing (VBP) Program
6. ICRs for the Long-Term Care Hospital
Quality Reporting Program (LTCH QRP)
7. ICRs for the Inpatient Psychiatric
Facility Quality Reporting (IPFQR)
Program
8. ICRs for the Electronic Health Record
(EHR) Incentive Programs and
Meaningful Use
9. ICRs Relating to Electronic Signature
and Electronic Submission of the
Certification and Settlement Summary
Page of Medicare Cost Reports
10. ICRs Relating to Changes in Public
Notices of Terminations
Regulation Text
Addendum—Schedule of Standardized
Amounts, Update Factors, and Rate-ofIncrease Percentages Effective with Cost
Reporting Periods Beginning on or after
October 1, 2017 and Payment Rates for
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LTCHs Effective with Discharges
Occurring on or after October 1, 2017
I. Summary and Background
II. Changes to the Prospective Payment Rates
for Hospital Inpatient Operating Costs for
Acute Care Hospitals for FY 2018
A. Calculation of the Adjusted
Standardized Amount
B. Adjustments for Area Wage Levels and
Cost-of-Living
C. Calculation of the Prospective Payment
Rates
III. Changes to Payment Rates for Acute Care
Hospital Inpatient Capital-Related Costs
for FY 2018
A. Determination of Federal Hospital
Inpatient Capital-Related Prospective
Payment Rate Update
B. Calculation of the Inpatient CapitalRelated Prospective Payments for FY
2018
C. Capital Input Price Index
IV. Changes to Payment Rates for Excluded
Hospitals: Rate-of-Increase Percentages
for FY 2018
V. Updates to the Payment Rates for the
LTCH PPS for FY 2018
A. LTCH PPS Standard Federal Payment
Rate for FY 2018
B. Adjustment for Area Wage Levels Under
the LTCH PPS for FY 2018
1. Background
2. Geographic Classifications (Labor Market
Areas) for the LTCH PPS Standard
Federal Payment Rate
3. Labor-Related Share for the LTCH PPS
Standard Federal Payment Rate
4. Wage Index for FY 2018 for the LTCH
PPS Standard Federal Payment Rate
5. Budget Neutrality Adjustment for
Changes to the LTCH PPS Standard
Federal Payment Rate Area Wage Level
Adjustment
C. LTCH PPS Cost-of-Living Adjustment
(COLA) for LTCHs Located in Alaska and
Hawaii
D. Adjustment for LTCH PPS High-Cost
Outlier (HCO) Cases
E. Update to the IPPS Comparable/
Equivalent Amounts to Reflect the
Statutory Changes to the IPPS DSH
Payment Adjustment Methodology
F. Computing the Adjusted LTCH PPS
Federal Prospective Payments for FY
2018
VI. Tables Referenced in this Final Rule and
Available through the Internet on the
CMS Web site
Appendix A—Economic Analyses
I. Regulatory Impact Analysis
A. Introduction
B. Need
C. Objectives of the IPPS
D. Limitations of Our Analysis
E. Hospitals Included in and Excluded
From the IPPS
F. Effects on Hospitals and Hospital Units
Excluded From the IPPS
G. Quantitative Effects of the Policy
Changes Under the IPPS for Operating
Costs
1. Basis and Methodology of Estimates
2. Analysis of Table I
3. Impact Analysis of Table II
H. Effects of Other Policy Changes
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1. Effects of Policy Relating to New
Medical Service and Technology AddOn Payments
2. Effects of Changes to MS–DRGs Subject
to the Postacute Care Transfer Policy and
the MS–DRG Special Payment Policy
3. Effects of the Changes to the Volume
Decrease Adjustment for Sole
Community Hospitals (SCHs)
4. Effects of Changes to Low-Volume
Hospital Payment Adjustment Policy
5. Effects of the Changes to Medicare DSH
and Uncompensated Care Payments for
FY 2018
6. Effects of Reduction Under the Hospital
Readmissions Reduction Program
7. Effects of Changes Under the FY 2018
Hospital Value-Based Purchasing (VBP)
Program
8. Effects of Changes to the HAC Reduction
Program for FY 2018
9. Effects of Implementation of the
Additional 5-Year Expansion of the
Rural Community Hospital
Demonstration Program
10. Effects of the Changes Relating to
Provider-Based Status of Indian Health
Service and Tribal Facilities and
Organizations
11. Effects of the Changes Relating to
Hospital-Within-Hospital Policy
12. Effects of Continued Implementation of
the Frontier Community Health
Integration Project (FCHIP)
Demonstration
I. Effects of Changes in the Capital IPPS
1. General Considerations
2. Results
J. Effects of Payment Rate Changes and
Policy Changes Under the LTCH PPS
1. Introduction and General Considerations
2. Impact on Rural Hospitals
3. Anticipated Effects of LTCH PPS
Payment Rate Changes and Policy
Changes
4. Effect on the Medicare Program
5. Effect on Medicare Beneficiaries
K. Effects of Requirements for Hospital
Inpatient Quality Reporting (IQR)
Program
L. Effects of Requirements for the PPSExempt Cancer Hospital Quality
Reporting (PCHQR) Program
M. Effects of Requirements for the LongTerm Care Hospital Quality Reporting
Program (LTCH QRP)
N. Effects of Updates to the Inpatient
Psychiatric Facility Quality Reporting
(IPFQR) Program
O. Effects of Requirements Regarding the
Electronic Health Record (EHR)
Incentive Programs and Meaningful Use
P. Effects of Electronic Signature and
Electronic Submission of the
Certification and Settlement Summary
Page of Medicare Cost Reports
Q. Effects of Changes Relating to Survey
and Certification Requirements
R. Effects of Clarification of Limitations on
the Valuation of Depreciable Assets
Disposed of on or after December 1, 1997
S. Alternatives Considered
T. Reducing Regulation and Controlling
Regulatory Costs
U. Overall Conclusion
1. Acute Care Hospitals
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2. LTCHs
V. Regulatory Review Costs
II. Accounting Statements and Tables
A. Acute Care Hospitals
B. LTCHs
III. Regulatory Flexibility Act (RFA) Analysis
IV. Impact on Small Rural Hospitals
V. Unfunded Mandate Reform Act (UMRA)
Analysis
VI. Executive Order 13175
VII. Executive Order 12866
Appendix B: Recommendation of Update
Factors for Operating Cost Rates of
Payment for Inpatient Hospital Services
I. Background
II. Inpatient Hospital Update for FY 2018
A. FY 2018 Inpatient Hospital Update
B. Update for SCHs for FY 2018
C. FY 2018 Puerto Rico Hospital Update
D. Update for Hospitals Excluded from the
IPPS
E. Update for LTCHs for FY 2018
III. Secretary’s Recommendation
IV. MedPAC Recommendation for Assessing
Payment Adequacy and Updating
Payments in Traditional Medicare
I. Executive Summary and Background
A. Executive Summary
1. Purpose and Legal Authority
This final rule makes payment and
policy changes under the Medicare
inpatient prospective payment systems
(IPPS) for operating and capital-related
costs of acute care hospitals as well as
for certain hospitals and hospital units
excluded from the IPPS. We also are
making changes relating to the providerbased status of Indian Health Service
(IHS) and Tribal facilities and
organizations and to the IPPS lowvolume hospital payment adjustment for
hospitals operated by the IHS or a Tribe.
In addition, it makes payment and
policy changes for inpatient hospital
services provided by long-term care
hospitals (LTCHs) under the long-term
care hospital prospective payment
system (LTCH PPS). It also makes policy
changes to programs associated with
Medicare IPPS hospitals, IPPS-excluded
hospitals, and LTCHs.
We are establishing new requirements
or revising requirements for quality
reporting by specific providers (acute
care hospitals, PPS-exempt hospitals,
LTCHs, and inpatient psychiatric
facilities) that are participating in
Medicare. We also are establishing new
requirements or revising existing
requirements for eligible professionals
(EPs), eligible hospitals, and CAHs
participating in the Medicare and
Medicaid EHR Incentive Programs. We
are updating policies relating to the
Hospital Value-Based Purchasing (VBP)
Program, the Hospital Readmissions
Reduction Program, and the HospitalAcquired Condition (HAC) Reduction
Program. We also are making changes
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related to the transparency of
accrediting organization survey reports
and plans of correction; to allow
electronic signature and electronic
submission of the Certification and
Settlement Summary page of the
Medicare cost reports; and to clarify
provider reimbursement regulations
relative to the sale or scrapping of
depreciable assets on or after December
1, 1997.
Under various statutory authorities,
we are making changes to the Medicare
IPPS, to the LTCH PPS, and to other
related payment methodologies and
programs for FY 2018 and subsequent
fiscal years. These statutory authorities
include, but are not limited to, the
following:
• Section 1886(d) of the Social
Security Act (the Act), which sets forth
a system of payment for the operating
costs of acute care hospital inpatient
stays under Medicare Part A (Hospital
Insurance) based on prospectively set
rates. Section 1886(g) of the Act requires
that, instead of paying for capital-related
costs of inpatient hospital services on a
reasonable cost basis, the Secretary use
a prospective payment system (PPS).
• Section 1886(d)(1)(B) of the Act,
which specifies that certain hospitals
and hospital units are excluded from the
IPPS. These hospitals and units are:
Rehabilitation hospitals and units;
LTCHs; psychiatric hospitals and units;
children’s hospitals; cancer hospitals;
extended neoplastic disease care
hospitals (previously referred to as
‘‘long-term care neoplastic disease
hospitals’’ and renamed in this final
rule), and hospitals located outside the
50 States, the District of Columbia, and
Puerto Rico (that is, hospitals located in
the U.S. Virgin Islands, Guam, the
Northern Mariana Islands, and
American Samoa). Religious
nonmedical health care institutions
(RNHCIs) are also excluded from the
IPPS.
• Sections 123(a) and (c) of the BBRA
(Pub. L. 106–113) and section 307(b)(1)
of the BIPA (Pub. L. 106–554) (as
codified under section 1886(m)(1) of the
Act), which provide for the
development and implementation of a
prospective payment system for
payment for inpatient hospital services
of LTCHs described in section
1886(d)(1)(B)(iv) of the Act.
• Sections 1814(l), 1820, and 1834(g)
of the Act, which specify that payments
are made to critical access hospitals
(CAHs) (that is, rural hospitals or
facilities that meet certain statutory
requirements) for inpatient and
outpatient services and that these
payments are generally based on 101
percent of reasonable cost.
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• Section 1866(k) of the Act, as added
by section 3005 of the Affordable Care
Act, which establishes a quality
reporting program for hospitals
described in section 1886(d)(1)(B)(v) of
the Act, referred to as ‘‘PPS-exempt
cancer hospitals.’’
• Section 1886(a)(4) of the Act, which
specifies that costs of approved
educational activities are excluded from
the operating costs of inpatient hospital
services. Hospitals with approved
graduate medical education (GME)
programs are paid for the direct costs of
GME in accordance with section 1886(h)
of the Act.
• Section 1886(b)(3)(B)(viii) of the
Act, which requires the Secretary to
reduce the applicable percentage
increase that would otherwise apply to
the standardized amount applicable to a
subsection (d) hospital for discharges
occurring in a fiscal year if the hospital
does not submit data on measures in a
form and manner, and at a time,
specified by the Secretary.
• Section 1886(o) of the Act, which
requires the Secretary to establish a
Hospital Value-Based Purchasing (VBP)
Program under which value-based
incentive payments are made in a fiscal
year to hospitals meeting performance
standards established for a performance
period for such fiscal year.
• Section 1886(p) of the Act, as added
by section 3008 of the Affordable Care
Act, which establishes a HospitalAcquired Condition (HAC) Reduction
Program, under which payments to
applicable hospitals are adjusted to
provide an incentive to reduce hospitalacquired conditions.
• Section 1886(q) of the Act, as added
by section 3025 of the Affordable Care
Act and amended by section 10309 of
the Affordable Care Act and section
15002 of the 21st Century Cures Act,
which establishes the ‘‘Hospital
Readmissions Reduction Program.’’
Under the program, payments for
discharges from an ‘‘applicable
hospital’’ under section 1886(d) of the
Act will be reduced to account for
certain excess readmissions. Section
15002 of the 21st Century Cures Act
requires the Secretary to compare
cohorts of hospitals to each other in
determining the extent of excess
readmissions.
• Section 1886(r) of the Act, as added
by section 3133 of the Affordable Care
Act, which provides for a reduction to
disproportionate share hospital (DSH)
payments under section 1886(d)(5)(F) of
the Act and for a new uncompensated
care payment to eligible hospitals.
Specifically, section 1886(r) of the Act
requires that, for fiscal year 2014 and
each subsequent fiscal year, subsection
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(d) hospitals that would otherwise
receive a DSH payment made under
section 1886(d)(5)(F) of the Act will
receive two separate payments: (1) 25
percent of the amount they previously
would have received under section
1886(d)(5)(F) of the Act for DSH (‘‘the
empirically justified amount’’), and (2)
an additional payment for the DSH
hospital’s proportion of uncompensated
care, determined as the product of three
factors. These three factors are: (1) 75
percent of the payments that would
otherwise be made under section
1886(d)(5)(F) of the Act; (2) 1 minus the
percent change in the percent of
individuals who are uninsured (minus
0.2 percentage point for FY 2018
through FY 2019); and (3) a hospital’s
uncompensated care amount relative to
the uncompensated care amount of all
DSH hospitals expressed as a
percentage.
• Section 1886(m)(6) of the Act, as
added by section 1206(c) of the Pathway
for Sustainable Growth Rate (SGR)
Reform Act of 2013 (Pub. L. 113–67),
which provided for the establishment of
site neutral payment rate criteria under
the LTCH PPS with implementation
beginning in FY 2016.
• Section 1886(m)(6) of the Act, as
amended by section 15009 of the 21st
Century Cures Act (Pub. L. 114–255),
which provides for a temporary
exception to the application of the site
neutral payment rate under the LTCH
PPS for certain spinal cord specialty
hospitals for discharges in cost reporting
periods beginning during FYs 2018 and
2019.
• Section 1886(m)(6) of the Act, as
amended by section 15010 of the 21st
Century Cures Act (Pub. L. 114–255),
which provides for a temporary
exception to the application of the site
neutral payment rate under the LTCH
PPS for certain LTCHs with certain
discharges with severe wounds
occurring in cost reporting periods
beginning during FY 2018.
• Section 1886(m)(5)(D)(iv) of the
Act, as added by section 1206(c) of the
Pathway for Sustainable Growth Rate
(SGR) Reform Act of 2013 (Pub. L. 113–
67), which provides for the
establishment of a functional status
quality measure under the LTCH QRP
for change in mobility among inpatients
requiring ventilator support.
• Section 1899B of the Act, as added
by section 2(a) of the Improving
Medicare Post-Acute Care
Transformation Act of 2014 (the
IMPACT Act, Pub. L. 113–185), which
provides for the establishment of data
reporting for certain post-acute care
providers, including LTCHs.
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2. Summary of the Major Provisions
a. MS–DRG Documentation and Coding
Adjustment
Section 631 of the American Taxpayer
Relief Act of 2012 (ATRA, Pub. L. 112–
240) amended section 7(b)(1)(B) of
Public Law 110–90 to require the
Secretary to make a recoupment
adjustment to the standardized amount
of Medicare payments to acute care
hospitals to account for changes in MS–
DRG documentation and coding that do
not reflect real changes in case-mix,
totaling $11 billion over a 4-year period
of FYs 2014, 2015, 2016, and 2017. The
FY 2014 through FY 2017 adjustments
represented the amount of the increase
in aggregate payments as a result of not
completing the prospective adjustment
authorized under section 7(b)(1)(A) of
Public Law 110–90 until FY 2013. Prior
to the ATRA, this amount could not
have been recovered under Public Law
110–90. Section 414 of the Medicare
Access and CHIP Reauthorization Act of
2015 (MACRA) (Pub. L. 114–10)
replaced the single positive adjustment
we intended to make in FY 2018 with
a 0.5 percent positive adjustment to the
standardized amount of Medicare
payments to acute care hospitals for FYs
2018 through 2023. The FY 2018
adjustment was subsequently adjusted
to 0.4588 percent by section 15005 of
the 21st Century Cures Act.
For FY 2018, we are making the
0.4588 percent positive adjustment to
the standardized amount as required by
section 414 of Public Law 114–10, as
amended by section 15005 of the 21st
Century Cures Act.
b. Adjustment to IPPS Rates Resulting
From 2-Midnight Policy
In FY 2017, we made a permanent
adjustment to the standardized amount,
the hospital-specific payment rates, and
the national capital Federal rate to
prospectively remove the 0.2 percent
reduction to the rates put in place in FY
2014 to offset the estimated increase in
IPPS expenditures as a result of the 2midnight policy. In addition, we made
a temporary one-time prospective
increase to the FY 2017 standardized
amount, the hospital-specific payment
rates, and the national capital Federal
rate of 0.6 percent by including a
temporary one-time factor of 1.006 in
the calculation of the standardized
amount, the hospital-specific payment
rates, and the national capital Federal
rate to address the effects of the 0.2
percent reduction to the rate for the 2midnight policy in effect for FYs 2014,
2015, and 2016.
For FY 2018, we are including a factor
of (1/1.006) in the calculation of the FY
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2018 standardized amount, the hospitalspecific payment rates, and the national
capital Federal rate to remove the
temporary one-time factor of 1.006, as
established in the FY 2017 IPPS/LTCH
PPS final rule.
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c. Reduction of Hospital Payments for
Excess Readmissions
We are making changes to policies for
the Hospital Readmissions Reduction
Program, which is established under
section 1886(q) of the Act, as added by
section 3025 of the Affordable Care Act,
as amended by section 10309 of the
Affordable Care Act. The Hospital
Readmissions Reduction Program
requires a reduction to a hospital’s base
operating DRG payment to account for
excess readmissions of selected
applicable conditions. For FY 2018 and
subsequent years, the reduction is based
on a hospital’s risk-adjusted
readmission rate during a 3-year period
for acute myocardial infarction (AMI),
heart failure (HF), pneumonia, chronic
obstructive pulmonary disease (COPD),
total hip arthroplasty/total knee
arthroplasty (THA/TKA), and coronary
artery bypass graft (CABG). In this final
rule, we are establishing the following
policies: (1) Specify applicable time
period for FY 2018; (2) specifying the
calculation of aggregate payments for
excess readmissions for FY 2018; (3)
making changes to the payment
adjustment factor in accordance with
the 21st Century Cures Act for FY 2019;
and (4) updating the Extraordinary
Circumstances Exceptions policy.
d. Hospital Value-Based Purchasing
(VBP) Program
Section 1886(o) of the Act requires the
Secretary to establish a Hospital VBP
Program under which value-based
incentive payments are made in a fiscal
year to hospitals based on their
performance on measures established
for a performance period for such fiscal
year. In this final rule, we are removing
one previously adopted measure, the
PSI 90: Patient Safety for Selected
Indicators measure, from the Hospital
VBP Program beginning with the FY
2019 program year. We also are
adopting one new measure, HospitalLevel, Risk-Standardized Payment
Associated with a 30-Day Episode of
Care for Pneumonia, beginning with the
FY 2022 program year, and adopting a
modified version of a previously
adopted measure, Patient Safety and
Adverse Events Composite (NQF
#0531), beginning with the FY 2023
program year. In addition, we are
making two modifications to our
domain scoring policies beginning with
the FY 2019 program year, and further
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establishing a new weighting
methodology for the measures within
the Efficiency and Cost Reduction
domain. We also are addressing public
comment submitted in response to our
comment solicitation on whether and
how to account for social risk factors in
the Hospital VBP Program.
e. Hospital-Acquired Condition (HAC)
Reduction Program
Section 1886(p) of the Act, as added
under section 3008(a) of the Affordable
Care Act, establishes an incentive to
hospitals to reduce the incidence of
hospital-acquired conditions by
requiring the Secretary to make an
adjustment to payments to applicable
hospitals effective for discharges
beginning on October 1, 2014. This 1percent payment reduction applies to a
hospital whose ranking is in the top
quartile (25 percent) of all applicable
hospitals, relative to the national
average, of conditions acquired during
the applicable period and on all of the
hospital’s discharges for the specified
fiscal year. In this final rule, we are
establishing the following policies: (1)
Specifying the data collection time
periods for the FY 2020 HAC Reduction
Program; and (2) updating the
Extraordinary Circumstances Exception
policy for the HAC Reduction Program.
In this final rule, we also are responding
to comments received regarding: (1)
Additional measures and potential
future adoption; (2) accounting for
social risk factors; and (3) the inclusion
of disability and medical complexity for
the CDC NHSN measures.
f. DSH Payment Adjustment and
Additional Payment for Uncompensated
Care
Section 3133 of the Affordable Care
Act modified the Medicare
disproportionate share hospital (DSH)
payment methodology beginning in FY
2014. Under section 1886(r) of the Act,
which was added by section 3133 of the
Affordable Care Act, starting in FY
2014, DSHs receive 25 percent of the
amount they previously would have
received under the statutory formula for
Medicare DSH payments in section
1886(d)(5)(F) of the Act. The remaining
amount, equal to 75 percent of the
amount that otherwise would have been
paid as Medicare DSH payments, is paid
as additional payments after the amount
is reduced for changes in the percentage
of individuals that are uninsured. Each
Medicare DSH will receive an
additional payment based on its share of
the total amount of uncompensated care
for all Medicare DSHs for a given time
period.
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In this final rule, we are updating our
estimates of the three factors used to
determine uncompensated care
payments for FY 2018. The statute
permits the use of a data source other
than the CBO estimates to determine the
percent change in the rate of
uninsurance as part of the calculation of
Factor 2 beginning in FY 2018. We are
using uninsured estimates produced by
CMS’ Office of the Actuary (OACT) as
part of the development of the National
Health Expenditure Accounts (NHEA)
in the calculation of Factor 2. We also
are beginning to incorporate data from
Worksheet S–10 in the calculation of
hospitals’ share of uncompensated care
by combining data on uncompensated
care costs from the Worksheet S–10 for
FY 2014 with proxy data regarding a
hospital’s share of low-income insured
days for FYs 2012 and 2013 to
determine Factor 3 for FY 2018. We will
continue to use data from three cost
reporting periods to calculate Factor 3,
which will gradually incorporate
uncompensated care data from
Worksheet S–10 into the calculation of
Factor 3. As part of this policy, we are
including a definition of
uncompensated care costs consisting of
the sum of charity care and bad debt
and a trim methodology to address
aberrant cost-to-charge ratios (CCRs) as
well as potentially aberrant
uncompensated care costs that exceed a
threshold of 50 percent of total
operating costs. We also are providing
that, for Puerto Rico hospitals, Indian
Health Service and Tribal hospitals, and
all-inclusive rate providers, we will
substitute data regarding low-income
insured days for FY 2013 for the
Worksheet S–10 data from FY 2014 cost
reports.
We are continuing the policies that
were finalized in FY 2015 to address
several specific issues concerning the
process and data to be employed in
determining hospitals’ share of
uncompensated care in the case of
hospital mergers. We also are
continuing the policies finalized in FY
2017 concerning the methodology for
calculating each hospital’s relative share
of uncompensated care, such as
combining data from multiple cost
reports beginning in the same fiscal year
and averaging the sum of three
individual Factor 3s by the number of
cost reporting periods with data. In
addition, we are annualizing hospital
cost reports that do not span 12 months.
We also are applying a scaling factor to
each hospital’s uncompensated care
amount so that total uncompensated
care payments will be consistent with
the estimated amount available to make
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uncompensated care payments for FY
2018.
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g. Changes to the LTCH PPS
In this final rule, we set forth changes
to the LTCH PPS Federal payment rates,
factors, and other payment rate policies
under the LTCH PPS for FY 2018;
changes to the payment methodology
under the short-stay outlier (SSO)
policy; implementation of several
provisions of the 21st Century Cures
Act; and the adoption of a 1-year
regulatory delay on the full
implementation of the 25-percent
threshold policy for discharges
occurring in FY 2018 (that is, for the
fiscal year after expiration of the current
statutory moratoria under the 21st
Century Cures Act, which is set to
expire September 30, 2017).
h. Hospital Inpatient Quality Reporting
(IQR) Program
Under section 1886(b)(3)(B)(viii) of
the Act, subsection (d) hospitals are
required to report data on measures
selected by the Secretary for a fiscal year
in order to receive the full annual
percentage increase that would
otherwise apply to the standardized
amount applicable to discharges
occurring in that fiscal year. In past
years, we have established measures on
which hospitals must report data and
the process for submittal and validation
of the data.
In this final rule, we are finalizing
several changes. First, we are refining
two previously adopted measures.
Specifically, we are finalizing an update
to the Hospital Consumer Assessment of
Healthcare Providers and Systems
(HCAHPS) survey measure by replacing
the three existing questions about Pain
Management with three new questions
that address Communication About Pain
During the Hospital Stay, beginning
with the FY 2020 payment
determination with modification that
public reporting would be delayed. In
addition, we are finalizing an update to
the stroke mortality measure to include
the use of NIH Stroke Scale claims data
for risk adjustment, beginning with the
FY 2023 payment determination. We
also are adopting the Hospital-Wide AllCause Unplanned Readmission Hybrid
Measure as a voluntary measure for the
CY 2018 reporting period.
In addition, we are finalizing a
modified, reduced policy for eCQM
reporting as compared to our proposals.
For both the CY 2017 reporting period/
FY 2019 payment determination and CY
2018 reporting period/FY 2020 payment
determination, we are finalizing that
hospitals will be required to select and
submit four of the available eCQMs
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included in the Hospital IQR Program
measure set and provide one selfselected, calendar year quarter of data.
We are also modifying our eCQM
certification requirements such that for
the CY 2018 reporting period hospitals
will be able to use: (1) The 2014 Edition
of CERHT, (2) the 2015 Edition of
CEHRT, or (3) a combination of both the
2014 and 2015 Editions of CEHRT. In
addition, we are finalizing the following
policies: (1) For the CY 2017 reporting
period/FY 2019 payment determination
and the CY 2018 reporting period/FY
2020 payment determination, a hospital
using EHR technology certified to the
2014 or 2015 Edition, but for which
such EHR technology is not certified to
all 15 available eCQMs available to
report, will be required to have its EHR
technology certified to all 15 eCQMs
that are available to report in the
Hospital IQR Program; (2) for the CY
2017 reporting period/FY 2019 payment
determination, hospitals will be
required to use the most recent version
of the eCQM electronic specifications
(namely, the Spring 2016 version of the
eCQM specifications and any applicable
addenda); (3) for the CY 2018 reporting
period/FY 2020 payment determination,
hospitals will be required to use the
most recent version of the eCQM
electronic specifications (namely, the
Spring 2017 version of the eCQM
specifications and any applicable
addenda); and (5) hospitals’ EHR
technology certified to all 15 eCQMs
would not need to be recertified each
time it is updated to a more recent
version of the eCQMs. These policies
are being made in alignment with the
CQM electronic reporting policies for
the Medicare and Medicaid EHR
Incentive Programs, and will decrease
the required number of eCQMs and
quarters of reporting as compared with
the previously finalized requirements in
the FY 2017 IPPS/LTCH PPS final rule.
Furthermore, we are finalizing our
policies for the eCQM data validation
process, whereby we will select eight
cases per quarter (the number of
quarters required will vary by specific
FY payment determination) to complete
eCQM validation for the FY 2020
payment determination and subsequent
years. In addition, for the FY 2020
payment determination and subsequent
years, we are establishing policies
related to the exclusion criteria for
hospital and case selection, and the data
submission requirements for
participating hospitals. For the FY 2021
payment determination and subsequent
years, we are finalizing our proposal to
extend our previously finalized medical
record submission policy for eCQM
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validation requiring submission of at
least 75 percent of sampled eCQM
measure medical records in a timely and
complete manner. Also, we are: (1)
Formalizing our educational review
process for chart-abstracted measures
for the FY 2020 payment determination
and subsequent years, and (2) finalizing
that we will use this process to correct
quarterly scores for any of the first 3
quarters of validation in order to
compute the final confidence interval.
Moreover, we are establishing policies
related to our Hospital IQR Program
Extraordinary Circumstances Extension
or Exemptions policy, including a
change to the name of the policy to
Extraordinary Circumstances Exceptions
(ECE) policy and updates to 42 CFR
412.140(c)(2) to reflect our ECE policy.
Finally, we responded to our
solicitation of public comment on
accounting for social risk factors in the
Hospital IQR Program, the confidential
and potential future public reporting of
clinical quality measure data stratified
by patients’ dual-eligible status, and the
following clinical quality measures that
we are considering for future inclusion
in the Hospital IQR Program: (1) Quality
of Informed Consent Documents for
Hospital-Performed, Elective Procedures
measure; (2) four End-of-Life process
and outcome measures for cancer
patients; (3) two nurse staffing
measures; and (4) 11 newly specified
electronic clinical quality measures
(eCQMs).
i. Long-Term Care Hospital Quality
Reporting Program (LTCH QRP)
Section 1886(m)(5) of the Act requires
LTCHs to report certain quality data to
CMS in order to receive their full annual
update under the LTCH PPS. In this
final rule, we are adopting one new
outcome measure related to pressure
ulcers and two new measures (one
process and one outcome) related to
ventilator weaning. We also are defining
the certain standardized patient
assessment data that LTCHs must report
to comply with section 1886(m)(5)(F)(ii)
of the Act, as well as the requirements
for the reporting of these data. Finally,
we will publicly report data on four
assessment-based measures and three
claims-based measures.
j. Inpatient Psychiatric Facility Quality
Reporting (IPFQR) Program
For the Inpatient Psychiatric Facility
Quality Reporting (IPFQR) Program, we
are making several policy changes. First,
beginning with the FY 2019 payment
determination (that is, for extraordinary
circumstances occurring during CY
2018), we are updating the IPFQR
Program’s extraordinary circumstances
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exceptions (ECE) policy by: (1) Allowing
designated personnel to provide their
contact information and sign the ECE
request in lieu of the requesting IPF’s
Chief Executive Officer (CEO); (2)
allowing up to 90 days after the
extraordinary circumstance to submit
the request; and (3) stating that we will
strive to respond to ECE requests within
90 days of receiving them. Second, we
are changing the annual data
submission period from a specific date
range to a 45-day period that begins at
least 30 days following the end of the
collection period. Third, we are aligning
our deadlines for submission of a Notice
of Participation (NOP) or program
withdrawal with this data submission
timeframe. Finally, we are establishing
factors by which we will evaluate
measures for removal from or retention
under the IPFQR Program. These factors
align with those in use in other quality
reporting programs.
We are not finalizing our proposal to
adopt the Medication Continuation
following Inpatient Psychiatric
Discharge measure for FY 2020 payment
determination and subsequent years.
3. Summary of Costs and Benefits
• Adjustment for MS–DRG
Documentation and Coding Changes.
Section 414 of the MACRA replaced the
single positive adjustment we intended
to make in FY 2018 once the
recoupment required by section 631 of
the ATRA was complete with a 0.5
percent positive adjustment to the
standardized amount of Medicare
payments to acute care hospitals for FYs
2018 through 2023. The FY 2018
adjustment was subsequently adjusted
to 0.4588 percent by section 15005 of
the 21st Century Cures Act (Pub. L. 114–
255). For FY 2018, we are making the
0.4588 percent positive adjustment to
the standardized amount as required by
these provisions.
• Adjustment to IPPS Payment Rates
as a Result of the 2-Midnight Policy. The
removal of the adjustment to IPPS rates
resulting from the 2-midnight policy
will decrease IPPS payment rates by (1/
1.006) for FY 2018. The (1/1.006) is a
one-time factor that will be applied to
the standardized amount, the hospitalspecific rates, and the national capital
Federal rate for FY 2018 only.
• Medicare DSH Payment Adjustment
and Additional Payment for
Uncompensated Care. Under section
1886(r) of the Act (as added by section
3133 of the Affordable Care Act), DSH
payments to hospitals under section
1886(d)(5)(F) of the Act are reduced and
an additional payment for
uncompensated care is made to eligible
hospitals beginning in FY 2014.
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Hospitals that receive Medicare DSH
payments receive 25 percent of the
amount they previously would have
received under the statutory formula for
Medicare DSH payments in section
1886(d)(5)(F) of the Act. The remainder,
equal to an estimate of 75 percent of
what otherwise would have been paid
as Medicare DSH payments, is the basis
for determining the additional payments
for uncompensated care after the
amount is reduced for changes in the
percentage of individuals that are
uninsured and additional statutory
adjustments. Each hospital that receives
Medicare DSH payments will receive an
additional payment for uncompensated
care based on its share of the total
uncompensated care amount reported
by Medicare DSHs. The reduction to
Medicare DSH payments is not budget
neutral.
For FY 2018, we are providing that
the 75 percent of what otherwise would
have been paid for Medicare DSH will
be adjusted to approximately 58.01
percent of the amount to reflect changes
in the percentage of individuals that are
uninsured and additional statutory
adjustments. In other words,
approximately 43.51 percent (the
product of 75 percent and 58.01
percent) of our estimate of Medicare
DSH payments, prior to the application
of section 3133 of the Affordable Care
Act, will be available to make additional
payments to hospitals for their relative
share of the total amount of
uncompensated care.
We project that estimated Medicare
DSH payments, and additional
payments for uncompensated care made
for FY 2018, will increase payments
overall by approximately 0.6 percent as
compared to the estimate of overall
payments, including Medicare DSH
payments and uncompensated care
payments that will be distributed in FY
2017. The additional payments have
redistributive effects based on a
hospital’s uncompensated care amount
relative to the uncompensated care
amount for all hospitals that are
estimated to receive Medicare DSH
payments, and the calculated payment
amount is not directly tied to a
hospital’s number of discharges.
• Changes to the Hospital
Readmissions Reduction Program. For
FY 2018 and subsequent years, the
reduction is based on a hospital’s riskadjusted readmission rate during a 3year period for acute myocardial
infarction (AMI), heart failure (HF),
pneumonia, chronic obstructive
pulmonary disease (COPD), total hip
arthroplasty/total knee arthroplasty
(THA/TKA), and coronary artery bypass
graft (CABG). Overall, in this final rule,
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we estimate that 2,591 hospitals will
have their base operating DRG payments
reduced by their determined proxy FY
2018 hospital-specific readmission
adjustment. As a result, we estimate that
the Hospital Readmissions Reduction
Program will save approximately $564
million in FY 2018, an increase of
approximately $27 million over the
estimated FY 2017 savings.
• Value-Based Incentive Payments
Under the Hospital VBP Program. We
estimate that there will be no net
financial impact to the Hospital VBP
Program for the FY 2018 program year
in the aggregate because, by law, the
amount available for value-based
incentive payments under the program
in a given year must be equal to the total
amount of base operating MS–DRG
payment amount reductions for that
year, as estimated by the Secretary. The
estimated amount of base operating MS–
DRG payment amount reductions for the
FY 2018 program year and, therefore,
the estimated amount available for
value-based incentive payments for FY
2018 discharges is approximately $1.9
billion.
• Changes to the HAC Reduction
Program. A hospital’s Total HAC score
and its ranking in comparison to other
hospitals in any given year depends on
several different factors. Any significant
impact due to the HAC Reduction
Program changes for FY 2018, including
which hospitals will receive the
adjustment, will depend on actual
experience.
• Update to the LTCH PPS Payment
Rates and Other Payment Factors. Based
on the best available data for the 415
LTCHs in our database, we estimate that
the changes to the payment rates and
factors that we are presenting in the
preamble and Addendum of this final
rule, which reflects the rolling end to
the transition of the statutory
application of the site neutral payment
rate required by section 1886(m)(6)(A)
of the Act, the update to the LTCH PPS
standard Federal payment rate for FY
2018, and estimated changes to the site
neutral payment rate and high-cost
outlier (HCO) payments will result in an
estimated decrease in payments from FY
2017 of approximately $195 million.
• Changes to the 25-Percent
Threshold Policy. In this final rule, we
estimate our adoption of a 1-year
regulatory delay of the full
implementation of the 25-percent
threshold policy for discharges
occurring in FY 2018 will increase
payments to LTCHs in FY 2018 by $70
million.
• Changes to the Hospital Inpatient
Quality Reporting (IQR) Program.
Across 3,300 IPPS hospitals, we
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estimate that our finalized requirements
for the Hospital IQR Program will result
in the following changes to costs and
benefits in this program compared to
previously finalized requirements: (1) A
cost reduction of $613,864 for the FY
2019 payment determination due to the
updates to the eCQM reporting
requirements; (2) a total net cost
reduction of $866,277 for the FY 2020
payment determination due to the
updates to the eCQM reporting
requirements, the updates to the eCQM
validation procedures, and the
voluntary reporting of the new Hybrid
Hospital-Wide Readmission measure;
and (3) a total cost reduction of
$255,104 for the FY 2021 payment
determination due to the updates to the
eCQM validation procedures.
• Changes Related to the LTCH QRP.
In this final rule, we are adopting one
outcome measure related to pressure
ulcers and two new measures (one
process and one outcome) related to
ventilator weaning. We also are
specifying the use of certain
standardized patient assessment data as
required under section 1899B(b)(1)(B) of
the Act and policies regarding public
display of measure data. Overall, the
cost associated with the changes to the
LTCH QRP is estimated at a reduction
of $893.14 per LTCH annually or
$380,480 for all LTCHs.
• Changes to the IPFQR Program. In
this final rule, we are not adopting the
one claims-based measure we proposed.
However, we are updating our ECE
process; changing the specification of
the data submission period; aligning the
timeframe for submission of the NOP or
program withdrawal with the data
submission period; and establishing
factors to evaluate measures for
retention or removal. We do not believe
that these policies will have any impact
on the IPFQR program burden.
B. Summary
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1. Acute Care Hospital Inpatient
Prospective Payment System (IPPS)
Section 1886(d) of the Social Security
Act (the Act) sets forth a system of
payment for the operating costs of acute
care hospital inpatient stays under
Medicare Part A (Hospital Insurance)
based on prospectively set rates. Section
1886(g) of the Act requires the Secretary
to use a prospective payment system
(PPS) to pay for the capital-related costs
of inpatient hospital services for these
‘‘subsection (d) hospitals.’’ Under these
PPSs, Medicare payment for hospital
inpatient operating and capital-related
costs is made at predetermined, specific
rates for each hospital discharge.
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Discharges are classified according to a
list of diagnosis-related groups (DRGs).
The base payment rate is comprised of
a standardized amount that is divided
into a labor-related share and a
nonlabor-related share. The laborrelated share is adjusted by the wage
index applicable to the area where the
hospital is located. If the hospital is
located in Alaska or Hawaii, the
nonlabor-related share is adjusted by a
cost-of-living adjustment factor. This
base payment rate is multiplied by the
DRG relative weight.
If the hospital treats a high percentage
of certain low-income patients, it
receives a percentage add-on payment
applied to the DRG-adjusted base
payment rate. This add-on payment,
known as the disproportionate share
hospital (DSH) adjustment, provides for
a percentage increase in Medicare
payments to hospitals that qualify under
either of two statutory formulas
designed to identify hospitals that serve
a disproportionate share of low-income
patients. For qualifying hospitals, the
amount of this adjustment varies based
on the outcome of the statutory
calculations. The Affordable Care Act
revised the Medicare DSH payment
methodology and provides for a new
additional Medicare payment that
considers the amount of uncompensated
care beginning on October 1, 2013.
If the hospital is training residents in
an approved residency program(s), it
receives a percentage add-on payment
for each case paid under the IPPS,
known as the indirect medical
education (IME) adjustment. This
percentage varies, depending on the
ratio of residents to beds.
Additional payments may be made for
cases that involve new technologies or
medical services that have been
approved for special add-on payments.
To qualify, a new technology or medical
service must demonstrate that it is a
substantial clinical improvement over
technologies or services otherwise
available, and that, absent an add-on
payment, it would be inadequately paid
under the regular DRG payment.
The costs incurred by the hospital for
a case are evaluated to determine
whether the hospital is eligible for an
additional payment as an outlier case.
This additional payment is designed to
protect the hospital from large financial
losses due to unusually expensive cases.
Any eligible outlier payment is added to
the DRG-adjusted base payment rate,
plus any DSH, IME, and new technology
or medical service add-on adjustments.
Although payments to most hospitals
under the IPPS are made on the basis of
the standardized amounts, some
categories of hospitals are paid in whole
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or in part based on their hospitalspecific rate, which is determined from
their costs in a base year. For example,
sole community hospitals (SCHs)
receive the higher of a hospital-specific
rate based on their costs in a base year
(the highest of FY 1982, FY 1987, FY
1996, or FY 2006) or the IPPS Federal
rate based on the standardized amount.
SCHs are the sole source of care in their
areas. Specifically, section
1886(d)(5)(D)(iii) of the Act defines an
SCH as a hospital that is located more
than 35 road miles from another
hospital or that, by reason of factors
such as isolated location, weather
conditions, travel conditions, or absence
of other like hospitals (as determined by
the Secretary), is the sole source of
hospital inpatient services reasonably
available to Medicare beneficiaries. In
addition, certain rural hospitals
previously designated by the Secretary
as essential access community hospitals
are considered SCHs.
Under current law, the Medicaredependent, small rural hospital (MDH)
program is effective through FY 2017.
Through and including FY 2006, an
MDH received the higher of the Federal
rate or the Federal rate plus 50 percent
of the amount by which the Federal rate
was exceeded by the higher of its FY
1982 or FY 1987 hospital-specific rate.
For discharges occurring on or after
October 1, 2007, but before October 1,
2017, an MDH receives the higher of the
Federal rate or the Federal rate plus 75
percent of the amount by which the
Federal rate is exceeded by the highest
of its FY 1982, FY 1987, or FY 2002
hospital-specific rate. MDHs are a major
source of care for Medicare beneficiaries
in their areas. Section 1886(d)(5)(G)(iv)
of the Act defines an MDH as a hospital
that is located in a rural area, has not
more than 100 beds, is not an SCH, and
has a high percentage of Medicare
discharges (not less than 60 percent of
its inpatient days or discharges in its
cost reporting year beginning in FY
1987 or in two of its three most recently
settled Medicare cost reporting years).
Section 1886(g) of the Act requires the
Secretary to pay for the capital-related
costs of inpatient hospital services in
accordance with a prospective payment
system established by the Secretary. The
basic methodology for determining
capital prospective payments is set forth
in our regulations at 42 CFR 412.308
and 412.312. Under the capital IPPS,
payments are adjusted by the same DRG
for the case as they are under the
operating IPPS. Capital IPPS payments
are also adjusted for IME and DSH,
similar to the adjustments made under
the operating IPPS. In addition,
hospitals may receive outlier payments
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for those cases that have unusually high
costs.
The existing regulations governing
payments to hospitals under the IPPS
are located in 42 CFR part 412, subparts
A through M.
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2. Hospitals and Hospital Units
Excluded From the IPPS
Under section 1886(d)(1)(B) of the
Act, as amended, certain hospitals and
hospital units are excluded from the
IPPS. These hospitals and units are:
Inpatient rehabilitation facility (IRF)
hospitals and units; long-term care
hospitals (LTCHs); psychiatric hospitals
and units; children’s hospitals; cancer
hospitals; extended neoplastic disease
care hospitals (referred to as ‘‘long-term
care neoplastic disease hospitals’’ in the
proposed rule and renamed for this final
rule, which were formerly LTCHs
classified under section
1886(d)(1)(B)(iv)(II) of the Act and
redesignated by section 15008 of Pub. L
114–255) and hospitals located outside
the 50 States, the District of Columbia,
and Puerto Rico (that is, hospitals
located in the U.S. Virgin Islands,
Guam, the Northern Mariana Islands,
and American Samoa). Religious
nonmedical health care institutions
(RNHCIs) are also excluded from the
IPPS. Various sections of the Balanced
Budget Act of 1997 (BBA, Pub. L. 105–
33), the Medicare, Medicaid and SCHIP
[State Children’s Health Insurance
Program] Balanced Budget Refinement
Act of 1999 (BBRA, Pub. L. 106–113),
and the Medicare, Medicaid, and SCHIP
Benefits Improvement and Protection
Act of 2000 (BIPA, Pub. L. 106–554)
provide for the implementation of PPSs
for IRF hospitals and units, LTCHs, and
psychiatric hospitals and units (referred
to as inpatient psychiatric facilities
(IPFs)). (We note that the annual
updates to the LTCH PPS are included
along with the IPPS annual update in
this document. Updates to the IRF PPS
and IPF PPS are issued as separate
documents.) Children’s hospitals,
cancer hospitals, hospitals located
outside the 50 States, the District of
Columbia, and Puerto Rico (that is,
hospitals located in the U.S. Virgin
Islands, Guam, the Northern Mariana
Islands, and American Samoa), and
RNHCIs continue to be paid solely
under a reasonable cost-based system
subject to a rate-of-increase ceiling on
inpatient operating costs.
The existing regulations governing
payments to excluded hospitals and
hospital units are located in 42 CFR
parts 412 and 413.
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3. Long-Term Care Hospital Prospective
Payment System (LTCH PPS)
The Medicare prospective payment
system (PPS) for LTCHs applies to
hospitals described in section
1886(d)(1)(B)(iv) of the Act effective for
cost reporting periods beginning on or
after October 1, 2002. The LTCH PPS
was established under the authority of
sections 123 of the BBRA and section
307(b) of the BIPA (as codified under
section 1886(m)(1) of the Act). During
the 5-year (optional) transition period, a
LTCH’s payment under the PPS was
based on an increasing proportion of the
LTCH Federal rate with a corresponding
decreasing proportion based on
reasonable cost principles. Effective for
cost reporting periods beginning on or
after October 1, 2006, all LTCHs are
paid 100 percent of the Federal rate.
Section 1206(a) of the Pathway for SGR
Reform Act of 2013 (Pub. L. 113–67)
established the site neutral payment rate
under the LTCH PPS, which made the
LTCH PPS a dual rate payment system
beginning in FY 2016. Under this
statute, based on a rolling effective date
that is linked to the date on which a
given LTCH’s Federal FY 2016 cost
reporting period begins, LTCHs are paid
for discharges at the site neutral
payment rate unless the discharge meets
the patient criteria for payment at the
LTCH PPS standard Federal payment
rate. The existing regulations governing
payment under the LTCH PPS are
located in 42 CFR part 412, subpart O.
Beginning October 1, 2009, we issue the
annual updates to the LTCH PPS in the
same documents that update the IPPS
(73 FR 26797 through 26798).
4. Critical Access Hospitals (CAHs)
Under sections 1814(l), 1820, and
1834(g) of the Act, payments made to
critical access hospitals (CAHs) (that is,
rural hospitals or facilities that meet
certain statutory requirements) for
inpatient and outpatient services are
generally based on 101 percent of
reasonable cost. Reasonable cost is
determined under the provisions of
section 1861(v) of the Act and existing
regulations under 42 CFR part 413.
5. Payments for Graduate Medical
Education (GME)
Under section 1886(a)(4) of the Act,
costs of approved educational activities
are excluded from the operating costs of
inpatient hospital services. Hospitals
with approved graduate medical
education (GME) programs are paid for
the direct costs of GME in accordance
with section 1886(h) of the Act. The
amount of payment for direct GME costs
for a cost reporting period is based on
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the hospital’s number of residents in
that period and the hospital’s costs per
resident in a base year. The existing
regulations governing payments to the
various types of hospitals are located in
42 CFR part 413.
C. Summary of Provisions of Recent
Legislation Implemented in This Final
Rule
1. The American Taxpayer Relief Act of
2012 (ATRA) (Pub. L. 112–240), the
Medicare Access and CHIP
Reauthorization Act of 2015 (MACRA)
(Pub. L. 114–10), and the 21st Century
Cures Act (Pub. L. 114–255)
Section 631 of the American Taxpayer
Relief Act of 2012 (ATRA) (Pub. L. 112–
240) amended section 7(b)(1)(B) of
Public Law 110–90 to require CMS to
make a recoupment adjustment to the
standardized amounts under section
1886(d) of the Act based upon the
Secretary’s estimates for discharges
occurring from FYs 2014 through FY
2017 to fully offset $11 billion. Once the
recoupment required under section 631
of the ATRA was completed, CMS had
anticipated making a single positive
adjustment in FY 2018 to offset the
reductions required to recoup the $11
billion under section 631 of the ATRA.
However, section 414 of the MACRA
replaced the single positive adjustment
CMS intended to make in FY 2018 with
a 0.5 percent positive adjustment for
each of FYs 2018 through 2023. Section
15005 of the 21st Century Cures Act
(Pub. L. 114–255, enacted December 13,
2016) further amended Public Law 110–
90 to reduce the adjustment for FY 2018
from 0.5 percent point to 0.4588
percentage point.
2. Pathway for SGR Reform Act of 2013
(Pub. L. 113–67)
The Pathway for SGR Reform Act of
2013 (Pub. L. 113–67) introduced new
payment rules in the LTCH PPS. Under
section 1206 of this law, discharges in
cost reporting periods beginning on or
after October 1, 2015 under the LTCH
PPS will receive payment under a site
neutral rate unless the discharge meets
certain patient-specific criteria. In this
final rule, we are continuing to update
certain policies that implemented
provisions under section 1206 of the
Pathway for SGR Reform Act.
3. Improving Medicare Post-Acute Care
Transformation Act of 2014 (IMPACT
Act) (Pub. L. 113–185)
The Improving Medicare Post-Acute
Care Transformation Act of 2014
(IMPACT Act (Pub. L. 113–185), enacted
on October 6, 2014, made a number of
changes that affect the Long-Term Care
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Quality Reporting Program (LTCH QRP).
In this final rule, we are continuing to
implement portions of section 1899B of
the Act, as added by section 2(a) of the
IMPACT Act, which, in part, requires
LTCHs, among other postacute care
providers, to report standardized patient
assessment data, data on quality
measures, and data on resource use and
other measures.
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4. The Medicare Access and CHIP
Reauthorization Act of 2015 (Pub. L.
114–10)
Section 411(g) of the Medicare Access
and CHIP Reauthorization Act of 2015
(MACRA, Pub. L. 114–10) sets the
annual update under the LTCH PPS to
1.0 percent for FY 2018. In this final
rule, consistent with this requirement,
we are updating the LTCH standard
Federal payment rate by 1.0 percent for
FY 2018.
The MACRA also extended the MDH
program and temporary changes to the
payment adjustment for low-volume
hospitals through FY 2017. In this final
rule, we discuss the expiration of the
MDH program and the expiration of the
temporary changes to the low-volume
hospital payment adjustment under
current law.
5. The 21st Century Cures Act (Pub. L.
114–255)
The 21st Century Cures Act (Pub. L.
114–255), enacted on December 13,
2016, contains a number of provisions
affecting payments under the LTCH
PPS, the Hospital Readmissions
Reduction Program and the Medicare
EHR Incentive Program, which we are
implementing in this final rule:
• Section 4002(b)(1)(A) amended
section 1848(a)(7)(B) of the Act to
provide that the Secretary shall exempt
an eligible professional from the
application of the payment adjustment
under section 1848(a)(7)(A) of the Act
with respect to a year, subject to annual
renewal, if the Secretary determines that
compliance with the requirement for
being a meaningful EHR user is not
possible because the certified EHR
technology used by such eligible
professional has been decertified under
the Office of the National Coordinator
for Health Information Technology’s
(ONC) Health IT Certification Program.
• Section 4002(b)(2) amended section
1886(b)(3)(B)(ix)(II) of the Act to provide
that the Secretary shall exempt a
hospital from the application of the
payment adjustment under section
1886(b)(3)(B)(ix)(I) with respect to a
fiscal year, subject to annual renewal, if
the Secretary determines that
compliance with the requirement for
being a meaningful EHR user is not
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possible because the certified EHR
technology used by the hospital is
decertified under ONC’s Health IT
Certification Program.
• Section 15002, which amended
section 1886(q)(3) of the Act by adding
subparagraphs (D) and (E), which
requires the Secretary to develop a
methodology for the calculating the
excess readmissions adjustment factor
for the Hospital Readmissions
Reduction Program based on cohorts
defined by the percentage of dual
eligible patients (that is, patients who
are eligible for both Medicare and fullbenefit Medicaid coverage) cared for by
a hospital. In this final rule, we are
implementing changes to the payment
adjustment factor to assess penalties
based on a hospital’s performance
relative to other hospitals treating a
similar proportion of dual-eligible
patients.
• Section 15004(a), which further
amended section 114(d)(7) of the
MMSEA (as amended) by striking ‘‘The
moratorium under paragraph (1)(A)’’
and inserting ‘‘[a]ny moratorium under
paragraph (1)’’ and specified that such
amendment shall take effect as if
included in the enactment of section
112 of the PAMA. We are implementing
the exceptions to the current statutory
moratorium, which is in effect through
September 30, 2017, on increasing beds
in an existing LTCH or an existing
LTCH satellite as provided by Section
15004(a).
• Section 15004(b), which modifies
high cost outlier payments to LTCH
standard Federal rate cases beginning in
FY 2018.
• Section 15006, which further
amended section 114(c)(1)(A) of the
MMSEA (as amended) by extending the
moratorium on the full implementation
of the 25-percent threshold policy
through June 30, 2016, and for
discharges occurring on or after October
1, 2016 and before October 1, 2017. In
this final rule, we are implementing the
moratorium on the full implementation
of the 25-percent threshold policy for
discharges occurring on or after October
1, 2016, through September 30, 2017, as
provided by section 15006.
• Section 15007, which amended
section 1206(a)(3) of the Pathway for
SGR Reform Act by extending the
exclusion for of Medicare Advantage
plans’ and site neutral payment rate
discharges from the calculation of the
average length-of-stay to all LTCHs, for
discharges occurring in cost reporting
periods beginning on or after October 1,
2015.
• Section 15008, which provided for
a change in Medicare classification for
‘‘subclause (II)’’ LTCHs by redesignating
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38005
such hospitals from section
1886(d)(1)(B)(iv)(II) to section
1886(d)(1)(B)(vi) of the Act. In this final
rule, we are implementing the
reclassification of hospitals which had
previously been classified as ‘‘subclause
(II)’’ LTCHs as their own category of
IPPS-excluded hospitals as provided by
the provisions of section 15008.
• Section 15009 of Public Law 114–
255, which added new subparagraph (F)
to section 1886(m)(6) of the Act,
providing for a temporary exception to
the site neutral payment rate for certain
spinal cord specialty hospitals for all
discharges occurring during such
LTCH’s cost reporting periods that begin
during FYs 2018 and 2019.
• Section 15010, which added a new
subparagraph (G) to section 1886(m)(6)
of the Act, to create a temporary
exception to the site neutral payment
rate for certain severe wound discharges
from certain LTCHs during such LTCH’s
cost reporting period beginning during
FY 2018.
• Section 16003 amended section
1848(a)(7)(D) of the Act to provide that
no payment adjustment may be made
under section 1848(a)(7)(A) of the Act
for 2017 and 2018 in the case of an
eligible professional who furnishes
substantially all of his or her covered
professional services in an ambulatory
surgical center (ASC). Section
1848(a)(7)(D)(iii) of the Act provides
that determinations of whether an
eligible professional is ASC-based may
be made based on the site of service as
defined by the Secretary or an
attestation, but shall be made without
regard to any employment or billing
arrangement between the eligible
professional and any other supplier or
provider of services. Section
1848(a)(7)(D)(iv) of the Act provides that
the ASC-based exception shall no longer
apply as of the first year that begins
more than 3 years after the date on
which the Secretary determines,
through notice-and-comment
rulemaking, that certified EHR
technology applicable to the ASC setting
is available.
D. Issuance of a Notice of Proposed
Rulemaking
In the proposed rule that appeared in
the Federal Register on April 28, 2017
(82 FR 19796), we set forth proposed
payment and policy changes to the
Medicare IPPS for FY 2018 operating
costs and for capital-related costs of
acute care hospitals and certain
hospitals and hospital units that are
excluded from IPPS. In addition, we set
forth proposed changes to the payment
rates, factors, and other payment and
policy-related changes to programs
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associated with payment rate policies
under the LTCH PPS for FY 2018.
Below is a summary of the major
changes that we proposed to make.
1. Proposed Changes to MS–DRG
Classifications and Recalibrations of
Relative Weights
In section II. of the preamble of the
proposed rule, we included—
• Proposed changes to MS–DRG
classifications based on our yearly
review for FY 2018.
• Proposed adjustment to the
standardized amounts under section
1886(d) of the Act for FY 2018 in
accordance with the amendments made
to section 7(b)(1)(B) of Public Law 110–
90 by section 414 of the MACRA and
section 15005 of the 21st Century Cures
Act.
• Proposed recalibration of the MS–
DRG relative weights.
• A discussion of the FY 2018 status
of new technologies approved for addon payments for FY 2017 and a
presentation of our evaluation and
analysis of the FY 2018 applicants for
add-on payments for high-cost new
medical services and technologies
(including public input, as directed by
Pub. L. 108–173, obtained in a town hall
meeting).
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2. Proposed Changes to the Hospital
Wage Index for Acute Care Hospitals
In section III. of the preamble to the
proposed rule, we proposed to make
revisions to the wage index for acute
care hospitals and the annual update of
the wage data. Specific issues addressed
include, but are not limited to, the
following:
• The proposed FY 2018 wage index
update using wage data from cost
reporting periods beginning in FY 2014.
• Clarification of other wage-related
costs in the wage index.
• Calculation of the proposed
occupational mix adjustment for FY
2018 based on the 2013 Occupational
Mix Survey.
• Analysis and implementation of the
proposed FY 2018 occupational mix
adjustment to the wage index for acute
care hospitals.
• Proposed application of the rural
floor and the frontier State floor and the
proposed expiration of the imputed
floor.
• Proposed revisions to the wage
index for acute care hospitals based on
hospital redesignations and
reclassifications under sections
1886(d)(8)(B), (d)(8)(E), and (d)(10) of
the Act.
• Proposal to require documentation
of SCH and RRC classification status
approvals to be submitted to the
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MGCRB by the first business day after
January 1.
• Clarification of special rules for
SCHs and RRCs reclassifying to
geographic home areas.
• Proposed changes to the 45-day
notification rule.
• The proposed adjustment to the
wage index for acute care hospitals for
FY 2018 based on commuting patterns
of hospital employees who reside in a
county and work in a different area with
a higher wage index.
• Determination of the labor-related
share for the proposed FY 2018 wage
index.
3. Proposed Rebasing and Revising of
Hospital Market Basket
In section IV. of the proposed rule, we
proposed to revise and rebase the
hospital market baskets for acute care
hospitals and update the labor-related
share.
4. Other Decisions and Proposed
Changes to the IPPS for Operating Costs
In section V. of the preamble of the
proposed rule, we discussed proposed
changes or clarifications of a number of
the provisions of the regulations in 42
CFR parts 412 and 413, including the
following:
• Proposed changes to MS–DRGs
subject to the postacute care transfer
policy.
• Proposed changes to the inpatient
hospital update for FY 2018.
• Proposed changes to the volume
decrease adjustment for SCHs.
• Proposed updated national and
regional case-mix values and discharges
for purposes of determining RRC status.
• Expiration of the temporary changes
to the payment adjustment for lowvolume hospitals at the end of FY 2017.
• Proposed parallel low-volume
hospital payment adjustment
concerning hospitals operated by the
Indian Health Service (IHS) or a Tribe.
• The statutorily required IME
adjustment factor for FY 2018.
• Proposed changes to the
methodologies for determining
Medicare DSH payments and the
additional payments for uncompensated
care.
• Discussion of expiration of the
MDH program at the end of FY 2017 and
our policy to allow MDHs to apply for
SCH status in advance of the expiration
of the MDH program and be paid as
such under certain conditions.
• Proposed changes to the rules for
payment adjustments under the
Hospital Readmissions Reduction
Program based on hospital readmission
measures and the process for hospital
review and correction of those rates for
FY 2018.
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• Proposed changes to the
requirements and provision of valuebased incentive payments under the
Hospital Value-Based Purchasing
Program.
• Proposed requirements for payment
adjustments to hospitals under the HAC
Reduction Program for FY 2018.
• Discussion of and proposals relating
to the additional 5-year extension of the
Rural Community Hospital
Demonstration Program.
• Proposals related to the providerbased status of IHS and Tribal facilities
and organizations that would remove
the regulatory date limitation that
restricted the grandfathering provision
to IHS or Tribal facilities and
organizations furnishing services on or
before April 7, 2000. We also proposed
to make a technical change to make the
regulation text more consistent with our
current rules that require these facilities
to comply with all applicable Medicare
conditions of participation that apply to
the main provider.
5. Proposed FY 2018 Policy Governing
the IPPS for Capital-Related Costs
In section VI. of the preamble to the
proposed rule, we discussed the
proposed payment policy requirements
for capital-related costs and capital
payments to hospitals for FY 2018.
6. Proposed Changes to the Payment
Rates for Certain Excluded Hospitals:
Rate-of-Increase Percentages
In section VII. of the preamble of the
proposed rule, we discussed—
• Proposed changes to payments to
certain excluded hospitals for FY 2018.
• Proposed policy changes relating to
payments to hospitals-within-hospitals.
• Proposed continued
implementation of the Frontier
Community Health Integration Project
(FCHIP) Demonstration.
7. Proposed Changes to the LTCH PPS
In section VIII. of the preamble of the
proposed rule, we set forth—
• Proposed changes to the LTCH PPS
Federal payment rates, factors, and
other payment rate policies under the
LTCH PPS for FY 2018.
• Proposed changes to the short-stay
outlier (SSO) policy.
• Proposed 1-year regulatory delay of
the full implementation of the 25percent threshold policy for discharges
occurring in FY 2018.
• Proposed changes to implement the
temporary exception to the site neutral
payment rate for certain spinal cord
specialty hospitals and for certain
discharges with severe wounds from
certain LTCHs, as provided under
sections 15009 and 15010 of Public Law
114–255, respectively.
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• Proposed change to the average
length of stay criterion to implement
section 15007 of Public Law 114–255.
• Proposed change in Medicare
classification for certain hospitals to
implement section 15008 of Public Law
114–255.
care hospitals. We proposed to establish
the threshold amounts for outlier cases.
In addition, we addressed the update
factors for determining the rate-ofincrease limits for cost reporting periods
beginning in FY 2018 for certain
hospitals excluded from the IPPS.
8. Proposed Changes Relating to Quality
Data Reporting for Specific Providers
and Suppliers
12. Determining Prospective Payment
Rates for LTCHs
In the Addendum to the proposed
rule, we set forth proposed changes to
the amounts and factors for determining
the proposed FY 2018 LTCH PPS
standard Federal payment rate and other
factors used to determine LTCH PPS
payments under both the LTCH PPS
standard Federal payment rate and the
site neutral payment rate in FY 2018.
We proposed to establish the
adjustments for wage levels, the laborrelated share, the cost-of-living
adjustment, and high-cost outliers,
including the applicable fixed-loss
amounts and the LTCH cost-to-charge
ratios (CCRs) for both payment rates.
In section IX. of the preamble of the
proposed rule, we addressed—
• Proposed requirements for the
Hospital Inpatient Quality Reporting
(IQR) Program.
• Proposed changes to the
requirements for the quality reporting
program for PPS-exempt cancer
hospitals (PCHQR Program).
• Proposed changes to the
requirements under the LTCH Quality
Reporting Program (LTCH QRP).
• Proposed changes to the
requirements under the Inpatient
Psychiatric Facility Quality Reporting
(IPFQR) Program.
• Proposed changes to requirements
pertaining to the clinical quality
measurement of eligible hospitals and
CAHs as well as EPs participating in the
Medicare and Medicaid Electronic
Health Record (EHR) Incentive
Programs.
9. Proposed Changes Relating to
Medicare Cost Reporting and Provider
Requirements
In section X. of the preamble of the
proposed rule, we presented our
proposals to revise the regulations to
allow providers to use an electronic
signature to sign the Certification and
Settlement Summary page of the
Medicare cost report and submit this
page electronically, and clarify the rules
relating to the sale or scrapping of
depreciable assets disposed of on or
after December 1, 1997.
10. Proposed Changes Relating to
Survey and Certification Requirements
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In section XI. of the preamble of the
proposed rule, we present our proposals
for allowing transparency in accrediting
organization survey reports and plans of
correction and for changing the
requirement for providers to publish
self-termination notices in newspapers.
11. Determining Prospective Payment
Operating and Capital Rates and Rate-ofIncrease Limits for Acute Care Hospitals
In section V. of the Addendum to the
proposed rule, we set forth proposed
changes to the amounts and factors for
determining the proposed FY 2018
prospective payment rates for operating
costs and capital-related costs for acute
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13. Impact Analysis
In Appendix A of the proposed rule,
we set forth an analysis of the impact
that the proposed changes would have
on affected acute care hospitals, CAHs,
LTCHs, PCHs, and IPFs.
14. Recommendation of Update Factors
for Operating Cost Rates of Payment for
Hospital Inpatient Services
In Appendix B of the proposed rule,
as required by sections 1886(e)(4) and
(e)(5) of the Act, we provided our
recommendations of the appropriate
percentage changes for FY 2018 for the
following:
• A single average standardized
amount for all areas for hospital
inpatient services paid under the IPPS
for operating costs of acute care
hospitals (and hospital-specific rates
applicable to SCHs).
• Target rate-of-increase limits to the
allowable operating costs of hospital
inpatient services furnished by certain
hospitals excluded from the IPPS.
• The LTCH PPS standard Federal
payment rate and the site neutral
payment rate for hospital inpatient
services provided for LTCH PPS
discharges.
15. Discussion of Medicare Payment
Advisory Commission
Recommendations
Under section 1805(b) of the Act,
MedPAC is required to submit a report
to Congress, no later than March 15 of
each year, in which MedPAC reviews
and makes recommendations on
Medicare payment policies. MedPAC’s
March 2017 recommendations
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38007
concerning hospital inpatient payment
policies address the update factor for
hospital inpatient operating costs and
capital-related costs for hospitals under
the IPPS. We addressed these
recommendations in Appendix B of the
proposed rule. For further information
relating specifically to the MedPAC
March 2017 report or to obtain a copy
of the report, contact MedPAC at (202)
220–3700 or visit MedPAC’s Web site at:
https://www.medpac.gov.
II. Changes to Medicare Severity
Diagnosis-Related Group (MS–DRG)
Classifications and Relative Weights
A. Background
Section 1886(d) of the Act specifies
that the Secretary shall establish a
classification system (referred to as
diagnosis-related groups (DRGs)) for
inpatient discharges and adjust
payments under the IPPS based on
appropriate weighting factors assigned
to each DRG. Therefore, under the IPPS,
Medicare pays for inpatient hospital
services on a rate per discharge basis
that varies according to the DRG to
which a beneficiary’s stay is assigned.
The formula used to calculate payment
for a specific case multiplies an
individual hospital’s payment rate per
case by the weight of the DRG to which
the case is assigned. Each DRG weight
represents the average resources
required to care for cases in that
particular DRG, relative to the average
resources used to treat cases in all
DRGs. Section 1886(d)(4)(C) of the Act
requires that the Secretary adjust the
DRG classifications and relative weights
at least annually to account for changes
in resource consumption. These
adjustments are made to reflect changes
in treatment patterns, technology, and
any other factors that may change the
relative use of hospital resources.
B. MS–DRG Reclassifications
For general information about the
MS–DRG system, including yearly
reviews and changes to the MS–DRGs,
we refer readers to the previous
discussions in the FY 2010 IPPS/RY
2010 LTCH PPS final rule (74 FR 43764
through 43766) and the FYs 2011
through 2017 IPPS/LTCH PPS final
rules (75 FR 50053 through 50055; 76
FR 51485 through 51487; 77 FR 53273;
78 FR 50512; 79 FR 49871; 80 FR 49342;
and 81 FR 56787 through 56872,
respectively).
C. Adoption of the MS–DRGs in FY 2008
For information on the adoption of
the MS–DRGs in FY 2008, we refer
readers to the FY 2008 IPPS final rule
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with comment period (72 FR 47140
through 47189).
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D. FY 2018 MS–DRG Documentation
and Coding Adjustment
1. Background on the Prospective MS–
DRG Documentation and Coding
Adjustments for FY 2008 and FY 2009
Authorized by Public Law 110–90
In the FY 2008 IPPS final rule with
comment period (72 FR 47140 through
47189), we adopted the MS–DRG
patient classification system for the
IPPS, effective October 1, 2007, to better
recognize severity of illness in Medicare
payment rates for acute care hospitals.
The adoption of the MS–DRG system
resulted in the expansion of the number
of DRGs from 538 in FY 2007 to 745 in
FY 2008. By increasing the number of
MS–DRGs and more fully taking into
account patient severity of illness in
Medicare payment rates for acute care
hospitals, MS–DRGs encourage
hospitals to improve their
documentation and coding of patient
diagnoses.
In the FY 2008 IPPS final rule with
comment period (72 FR 47175 through
47186), we indicated that the adoption
of the MS–DRGs had the potential to
lead to increases in aggregate payments
without a corresponding increase in
actual patient severity of illness due to
the incentives for additional
documentation and coding. In that final
rule with comment period, we exercised
our authority under section
1886(d)(3)(A)(vi) of the Act, which
authorizes us to maintain budget
neutrality by adjusting the national
standardized amount, to eliminate the
estimated effect of changes in coding or
classification that do not reflect real
changes in case-mix. Our actuaries
estimated that maintaining budget
neutrality required an adjustment of
¥4.8 percentage points to the national
standardized amount. We provided for
phasing in this ¥4.8 percentage point
adjustment over 3 years. Specifically,
we established prospective
documentation and coding adjustments
of ¥1.2 percentage points for FY 2008,
¥1.8 percentage points for FY 2009,
and ¥1.8 percentage points for FY
2010.
On September 29, 2007, Congress
enacted the TMA [Transitional Medical
Assistance], Abstinence Education, and
QI [Qualifying Individuals] Programs
Extension Act of 2007 (Public Law 110–
90). Section 7(a) of Public Law 110–90
reduced the documentation and coding
adjustment made as a result of the MS–
DRG system that we adopted in the FY
2008 IPPS final rule with comment
period to ¥0.6 percentage point for FY
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2008 and ¥0.9 percentage point for FY
2009.
As discussed in prior year
rulemaking, and most recently in the FY
2017 IPPS/LTCH PPS final rule (81 FR
56780 through 56782), we implemented
a series of adjustments required under
sections 7(b)(1)(A) and 7(b)(1)(B) of
Public Law 110–90, based on a
retrospective review of FY 2008 and FY
2009 claims data. We completed these
adjustments in FY 2013, but indicated
in the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53274 through 53275) that
delaying full implementation of the
adjustment required under section
7(b)(1)(A) of Public Law 110–90 until
FY 2013 resulted in payments in FY
2010 through FY 2012 being overstated,
and that these overpayments could not
be recovered.
2. Recoupment or Repayment
Adjustment Authorized by Section 631
of the American Taxpayer Relief Act of
2012 (ATRA)
Section 631 of the ATRA amended
section 7(b)(1)(B) of Public Law 110–90
to require the Secretary to make a
recoupment adjustment or adjustments
totaling $11 billion by FY 2017. This
adjustment represented the amount of
the increase in aggregate payments as a
result of not completing the prospective
adjustment authorized under section
7(b)(1)(A) of Public Law 110–90 until
FY 2013. As discussed earlier, this delay
in implementation resulted in
overstated payment rates in FYs 2010,
2011, and 2012. The resulting
overpayments could not have been
recovered under Public Law 110–90.
Similar to the adjustments authorized
under section 7(b)(1)(B) of Public Law
110–90, the adjustment required under
section 631 of the ATRA was a one-time
recoupment of a prior overpayment, not
a permanent reduction to payment rates.
Therefore, we anticipated that any
adjustment made to reduce payment
rates in one year would eventually be
offset by a positive adjustment in 2018,
once the necessary amount of
overpayment was recovered. However,
section 414 of the Medicare Access and
CHIP Reauthorization Act (MACRA) of
2015, Public Law 114–10, enacted on
April 16, 2015, replaced the single
positive adjustment we intended to
make in FY 2018 with a 0.5 percentage
point positive adjustment for each of
FYs 2018 through 2023. We stated in the
FY 2016 IPPS/LTCH PPS final rule (80
FR 49345) that we would address this
MACRA provision in future rulemaking.
However, section 15005 of the 21st
Century Cures Act (Pub. L. 114–255),
enacted on December 13, 2016, reduced
the adjustment for FY 2018 from 0.5
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percentage points to 0.4588 percentage
points. We are addressing these
provisions of MACRA and the 21st
Century Cures Act in section II.D.3. of
the preamble of this final rule.
As we stated in the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50515
through 50517), our actuaries estimated
that a ¥9.3 percentage point adjustment
to the standardized amount would be
necessary if CMS were to fully recover
the $11 billion recoupment required by
section 631 of the ATRA in FY 2014. It
is often our practice to phase in
payment rate adjustments over more
than one year, in order to moderate the
effect on payment rates in any one year.
Therefore, consistent with the policies
that we have adopted in many similar
cases, and after consideration of the
public comments we received, in the FY
2014 IPPS/LTCH PPS final rule (78 FR
50515 through 50517), we implemented
a ¥0.8 percentage point recoupment
adjustment to the standardized amount
in FY 2014. We estimated that if
adjustments of approximately ¥0.8
percentage point were implemented in
FYs 2014, 2015, 2016, and 2017, using
standard inflation factors, the entire $11
billion would be accounted for by the
end of the statutory 4-year timeline. As
estimates of any future adjustments are
subject to variations in total savings, we
did not provide for specific adjustments
for FYs 2015, 2016, or 2017 at that time.
Consistent with the approach
discussed in the FY 2014 rulemaking for
recouping the $11 billion required by
section 631 of the ATRA, in the FY 2015
IPPS/LTCH PPS final rule (79 FR 49874)
and the FY 2016 IPPS/LTCH PPS final
rule (80 FR 49345), we implemented
additional ¥0.8 percentage point
recoupment adjustments to the
standardized amount in FY 2015 and FY
2016, respectively. We estimated that
these adjustments, combined with
leaving the prior ¥0.8 percentage point
adjustments in place, would recover up
to $2 billion in FY 2015 and another $3
billion in FY 2016. When combined
with the approximately $1 billion
adjustment made in FY 2014, we
estimated that approximately $5 to $6
billion would be left to recover under
section 631 of the ATRA by the end of
FY 2016.
As indicated in the FY 2017 IPPS/
LTCH PPS proposed rule (81 FR 24966),
due to lower than previously estimated
inpatient spending, we determined that
an adjustment of ¥0.8 percentage point
in FY 2017 would not recoup the $11
billion under section 631 of the ATRA.
For the FY 2017 IPPS/LTCH PPS final
rule (81 FR 56785), based on the
Midsession Review of the President’s
FY 2017 Budget, our actuaries estimated
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that, to the nearest tenth of a percentage
point, the FY 2017 documentation and
coding adjustment factor that will
recoup as closely as possible $11 billion
from FY 2014 through FY 2017 without
exceeding this amount is ¥1.5
percentage points. Based on those
updated estimates by the Office of the
Actuary using the Midsession Review of
the President’s FY 2017 Budget, we
made a ¥1.5 percentage point
adjustment for FY 2017 as the final
adjustment required under section 631
of the ATRA. The estimates by our
actuaries related to this finalized
adjustment were included in a
memorandum that we made publicly
available on the CMS Web site at:
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/FY2017-IPPS-FinalRule-Home-Page-Items/FY2017-IPPSFinal-Rule-OACT.html.
3. Adjustment for FY 2018 Required
Under Section 414 of Public Law 114–
10 (MACRA) and Section 15005 of
Public Law 114–255
As stated in the FY 2017 IPPS/LTCH
PPS final rule (81 FR 56785), once the
recoupment required under section 631
of the ATRA was complete, we had
anticipated making a single positive
adjustment in FY 2018 to offset the
reductions required to recoup the $11
billion under section 631 of the ATRA.
However, section 414 of the MACRA
(which was enacted on April 16, 2015)
replaced the single positive adjustment
we intended to make in FY 2018 with
a 0.5 percentage point positive
adjustment for each of FYs 2018 through
2023. In the FY 2017 rulemaking, we
indicated that we would address the
adjustments for FY 2018 and later fiscal
years in future rulemaking. As noted
previously, section 15005 of the 21st
Century Cures Act (Pub. L. 114–255),
which was enacted on December 13,
2016, amended section 7(b)(1)(B) of the
TMA, as amended by section 631 of the
ATRA and section 414 of the MACRA,
to reduce the adjustment for FY 2018
from a 0.5 percentage point to a 0.4588
percentage point. We believe the
directive under section 15005 of Public
Law 114–255 is clear. Therefore, in the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 19816) for FY 2018, we proposed
to implement the required +0.4588
percentage point adjustment to the
standardized amount. This is a
permanent adjustment to payment rates.
While we did not propose future
adjustments required under section 414
of the MACRA and section 15005 of
Public Law 114–255 at that time, we
stated in the proposed rule that we
expect to propose positive 0.5
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percentage point adjustments to the
standardized amounts for FYs 2019
through 2023.
Comment: Several commenters
reiterated their disagreement with the
¥1.5 percentage point adjustment that
CMS made for FY 2017 under section
631 of the ATRA, which exceeded the
estimated adjustment of approximately
¥0.8 percentage point described in the
FY 2014 IPPS/LTCH PPS rulemaking.
Commenters contended that, as a result,
hospitals would be left with a larger
permanent cut than Congress intended
following the enactment of MACRA.
They asserted that CMS’ proposal to
apply a 0.4588 percent positive
adjustment for FY 2018 misinterprets
the relevant statutory authority, and
urged CMS to align with their view of
Congress’ intent by restoring an
additional +0.7 percentage point
adjustment to the standardized amount
in FY 2018; that is, the difference
between the ¥1.5 percentage point
adjustment made in FY 2017 and the
initial estimate of ¥0.8 percentage point
discussed in the FY 2014 IPPS/LTCH
PPS rulemaking. Commenters also urged
CMS to use its discretion under section
1886(d)(5)(I) of the Act to increase the
FY 2018 adjustment by 0.7 percentage
point. Other commenters requested that,
despite current law, CMS ensure that
adjustments totaling the full 3.9
percentage points withheld under
section 631 of the ATRA be returned.
Response: As discussed in the FY
2017 IPPS/LTCH PPS final rule (81 FR
56783 through 56785), CMS completed
the $11 billion recoupment required
under section 631 of the ATRA. We
continue to disagree that section 414 of
the MACRA was intended to augment or
limit our separate obligation under the
ATRA to fully offset $11 billion by FY
2017, as we discussed in response to
comments in the FY 2017 IPPS/LTCH
PPS final rule (81 FR 56784). Moreover,
as we discussed in the FY 2018 IPPS/
LTCH PPS proposed rule, we believe the
directive regarding the applicable
adjustment for FY 2018 is clear. While
we had anticipated making a positive
adjustment in FY 2018 to offset the
reductions required to recoup the $11
billion under section 631 of the ATRA,
section 414 of the MACRA requires that
we not make the single positive
adjustment we intended to make in FY
2018 but instead make a 0.5 percentage
point positive adjustment for each of
FYs 2018 through 2023. As noted by the
commenters, and discussed in the FY
2017 IPPS/LTCH PPS final rule, by
phasing in a total positive adjustment of
only 3.0 percentage points, section 414
of the MACRA would not fully restore
even the 3.2 percentage point
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adjustment originally estimated by CMS
in the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50515). Finally, Public Law
114–255, which further reduced the
positive adjustment required for FY
2018 from 0.5 percentage point to
0.4588 percentage point, was enacted on
December 13, 2016, after CMS proposed
and finalized the ¥1.5 percentage point
adjustment as the final adjustment
required under section 631 of the ATRA
in the FY 2017 rulemaking.
After consideration of the public
comments we received, we are
finalizing the +0.4588 percentage point
adjustment to the standardized amount
for FY 2018, as required under section
15005 of Public Law 114–255.
E. Refinement of the MS–DRG Relative
Weight Calculation
1. Background
Beginning in FY 2007, we
implemented relative weights for DRGs
based on cost report data instead of
charge information. We refer readers to
the FY 2007 IPPS final rule (71 FR
47882) for a detailed discussion of our
final policy for calculating the costbased DRG relative weights and to the
FY 2008 IPPS final rule with comment
period (72 FR 47199) for information on
how we blended relative weights based
on the CMS DRGs and MS–DRGs. We
also refer readers to the FY 2017 IPPS/
LTCH PPS final rule (81 FR 56785
through 56787) for a detailed discussion
of the history of changes to the number
of cost centers used in calculating the
DRG relative weights. Since FY 2014,
we calculate the IPPS MS–DRG relative
weights using 19 CCRs, which now
include distinct CCRs for implantable
devices, MRIs, CT scans, and cardiac
catheterization.
2. Discussion of Policy for FY 2018
Consistent with our established
policy, we calculated the final MS–DRG
relative weights for FY 2018 using two
data sources: The MedPAR file as the
claims data source and the HCRIS as the
cost report data source. We adjusted the
charges from the claims to costs by
applying the 19 national average CCRs
developed from the cost reports. The
description of the calculation of the 19
CCRs and the MS–DRG relative weights
for FY 2018 is included in section II.G.
of the preamble to this FY 2018 IPPS/
LTCH PPS final rule. As we did with the
FY 2018 IPPS/LTCH PPS proposed rule,
we are providing the version of the
HCRIS from which we calculated these
19 CCRs on the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/. Click on the link on the
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left side of the screen titled, ‘‘FY 2018
IPPS Final Rule Home Page’’ or ‘‘Acute
Inpatient Files for Download.’’
Comment: One commenter
recommended that CMS work with
stakeholders to update cost reporting
instructions and improve the accuracy
and validity of the national average
CCRs. The commenter expressed
concern that the differences between
hospitals’ use of nonstandard cost
center codes and CMS’ procedures for
mapping and rolling up nonstandard
codes to the standard cost centers will
continue to result in invalid CCRs and
inaccurate payments. The commenter
stressed the need for flexibility in cost
reporting, to accommodate any new or
unique services that certain hospitals
may provide, which may not be easily
captured through the cost reporting
software. Finally, the commenter again
recommended, as it had done in
response to prior IPPS rules, that CMS
pay particular attention to data used for
CT scan and MRI cost centers; the
commenter believed that the hospital
payment rates established by CMS from
the CT scan and MRI CCRs simply do
not correlate with resources used for
these capital-intensive services.
Response: We received a similar
public comment last year and
responded to it in the FY 2017 IPPS/
LTCH PPS final rule. We refer readers
to the FY 2017 IPPS/LTCH PPS final
rule (81 FR 56787) for our response to
these issues. We note that we will
continue to explore ways in which we
can improve the accuracy of the cost
report data and calculated CCRs used in
the cost estimation process.
Comment: One commenter requested
that CMS use a single diagnostic
radiology CCR to set weights, rather
than using the separate CT and MRI cost
centers. The commenter requested that
if CMS maintains the separate CT and
MRI cost centers, CMS should not
include cost reports from hospitals that
use the ‘‘square foot’’ allocation
methodology. The commenter provided
an analysis to support its assertion that
the CCRs for CT and MRI are incorrect
and are inappropriately reducing
payments under the IPPS. The
commenter indicated that the chargecompression hypothesis has been
shown to be false with the use of the
separate CT and MRI cost centers. The
commenter discussed problems with
cost allocation to the CT and MRI cost
centers. The commenter referenced
discussions in prior IPPS/LTCH PPS
rules about this issue. The commenter
acknowledged that CMS did not include
a specific proposal in the FY 2018
proposed rule regarding this issue.
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Response: As the commenter noted,
we did not make any proposals for FY
2018 relating to the number of cost
centers used to calculate the relative
weights. As noted previously and
discussed in detail in prior rulemaking,
we have calculated the IPPS MS–DRG
relative weights using 19 CCRs,
including distinct CCRs for MRIs and
CT scans, since FY 2014. We refer
readers to the FY 2017 IPPS/LTCH PPS
final rule (81 FR 56785) for a detailed
discussion of the basis for establishing
these 19 CCRs. We further note that in
the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50518 through 50523), we
presented data analyses using distinct
CCRs for implantable devices, MRIs, CT
scans, and cardiac catheterization. As
we noted, we will continue to explore
ways in which we can improve the
accuracy of the cost report data and
calculated CCRs used in the cost
estimation process.
F. Changes to Specific MS–DRG
Classifications
1. Discussion of Changes to Coding
System and Basis for FY 2018 MS–DRG
Updates
a. Conversion of MS–DRGs to the
International Classification of Diseases,
10th Revision (ICD–10)
As of October 1, 2015, providers use
the International Classification of
Diseases, 10th Revision (ICD–10) coding
system to report diagnoses and
procedures for Medicare hospital
inpatient services under the MS–DRG
system instead of the ICD–9–CM coding
system, which was used through
September 30, 2015. The ICD–10 coding
system includes the International
Classification of Diseases, 10th
Revision, Clinical Modification (ICD–
10–CM) for diagnosis coding and the
International Classification of Diseases,
10th Revision, Procedure Coding
System (ICD–10–PCS) for inpatient
hospital procedure coding, as well as
the Official ICD–10–CM and ICD–10–
PCS Guidelines for Coding and
Reporting. For a detailed discussion of
the conversion of the MS–DRGs to ICD–
10, we refer readers to the FY 2017
IPPS/LTCH PPS final rule (81 FR 56787
through 56789).
b. Basis for FY 2018 MS–DRG Updates
CMS has previously encouraged input
from our stakeholders concerning the
annual IPPS updates when that input is
made available to us by December 7 of
the year prior to the next annual
proposed rule update. For example, to
be considered for any updates or
changes in FY 2018, comments and
suggestions should have been submitted
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by December 7, 2016. The comments
that were submitted in a timely manner
for FY 2018 are discussed in this section
of the preamble of this final rule. As
CMS works with the public to examine
the ICD–10 claims data used for updates
to the ICD–10 MS–DRGs, we would like
to examine areas where the MS–DRGs
can be improved. This will require
additional time for us to review requests
from the public to make specific
updates, analyze claims data, and
consider any proposed updates. As
discussed in the proposed rule, given
the need for more time to carefully
evaluate requests and propose updates,
we are changing the deadline to request
updates to MS–DRGs to November 1 of
each year. This will provide an
additional 5 weeks for the data analysis
and review process. Interested parties
should submit any comments and
suggestions for FY 2019 by November 1,
2017, via the CMS MS–DRG
Classification Change Requests Mailbox
located at: MSDRGClassification
Change@cms.hhs.gov.
Following are the changes that we
proposed to the MS–DRGs for FY 2018
in the FY 2018 IPPS/LTCH PPS
proposed rule. We invited public
comments on each of the MS–DRG
classification proposed changes as well
as our proposals to maintain certain
existing MS–DRG classifications
discussed in the proposed rule. In some
cases, we proposed changes to the MS–
DRG classifications based on our
analysis of claims data. In other cases,
we proposed to maintain the existing
MS–DRG classification based on our
analysis of claims data. For the FY 2018
proposed rule, our MS–DRG analysis
was based on ICD–10 claims data from
the December 2016 update of the FY
2016 MedPAR file, which contains
hospital bills received through
September 30, 2016, for discharges
occurring through September 30, 2016.
In our discussion of the proposed MS–
DRG reclassification changes, we
referred to our analysis of claims data
from the ‘‘December 2016 update of the
FY 2016 MedPAR file’’.
In this FY 2018 IPPS/LTCH PPS final
rule, we summarize the public
comments we received on our
proposals, present our responses, and
state our final policies. For this FY 2018
final rule, we performed limited
additional MS–DRG analysis of claims
data. Therefore, all of the data analysis
is based on claims data from the
December 2016 update of the FY 2016
MedPAR file, which contains hospital
bills received through September 30,
2016, for discharges occurring through
September 30, 2016, except where
specifically noted that it is based on the
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March 2017 update of the FY 2016
MedPAR file, which contains hospital
bills received through March 31, 2017,
for discharges occurring through
September 30, 2016.
As explained in previous rulemaking
(76 FR 51487), in deciding whether to
propose to make further modification to
the MS–DRGs for particular
circumstances brought to our attention,
we consider whether the resource
consumption and clinical characteristics
of the patients with a given set of
conditions are significantly different
than the remaining patients represented
in the MS–DRG. We evaluate patient
care costs using average costs and
lengths of stay and rely on the judgment
of our clinical advisors to determine
whether patients are clinically distinct
or similar to other patients represented
in the MS–DRG. In evaluating resource
costs, we consider both the absolute and
percentage differences in average costs
between the cases we select for review
and the remainder of cases in the MS–
DRG. We also consider variation in costs
within these groups; that is, whether
observed average differences are
consistent across patients or attributable
to cases that are extreme in terms of
costs or length of stay, or both. Further,
we consider the number of patients who
will have a given set of characteristics
and generally prefer not to create a new
MS–DRG unless it would include a
substantial number of cases.
In our examination of the claims data,
we apply the following criteria
established in FY 2008 (72 FR 47169) to
determine if the creation of a new
complication or comorbidity (CC) or
major complication or comorbidity
(MCC) subgroup within a base MS–DRG
is warranted:
• A reduction in variance of costs of
at least 3 percent.
• At least 5 percent of the patients in
the MS–DRG fall within the CC or MCC
subgroup.
• At least 500 cases are in the CC or
MCC subgroup.
• There is at least a 20-percent
difference in average costs between
subgroups.
• There is a $2,000 difference in
average costs between subgroups.
In order to warrant creation of a CC
or MCC subgroup within a base MS–
DRG, the subgroup must meet all five of
the criteria.
Comment: Several commenters
expressed concern regarding the use of
ICD–10 claims data for proposed
updates to the FY 2018 ICD–10 MS–
DRGs Version 35 and in recalibrating
the proposed FY 2018 MS–DRG relative
weights. Commenters reported that the
proposed relative weights for certain
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MS–DRGs had large reductions when
compared to the current FY 2017 ICD–
10 MS–DRG Version 34 relative weights.
Specifically, commenters noted that
MS–DRG 215 (Other Heart Assist
System Implant) appeared to have the
largest decrease by approximately 35%
although it was not the subject of a new
proposal in the FY 2018 IPPS/LTCH
PPS proposed rule. According to the
commenters, the proposed reductions
for certain relative weights are a direct
result of the transition from ICD–9 to
ICD–10 coded claims data that was
utilized in setting the proposed FY 2018
MS–DRG relative weights. The
commenters stated that, if finalized as
proposed, these reductions could limit
access to the necessary services for
Medicare beneficiaries and urged CMS
to consider phasing in these significant
fluctuations that they asserted cause
instability of the weights and hinder
providers in their ability to project
anticipated payment rates. Many
commenters also recommended that
CMS limit the percentage by which an
MS–DRG’s relative weight can be
reduced.
Commenters also believed that the
fluctuations in the proposed relative
weights do not appear to be consistent
with the deliberate approach CMS has
taken to ensure a smooth transition from
ICD–9 to ICD–10. The commenters
noted that, in the past, CMS has
appropriately recognized and made
efforts to maintain stability within the
IPPS during the transition, such as
providing several versions of the ICD–10
MS–DRG Grouper for review,
contracting for studies to evaluate the
impact of converting the MS–DRGs to
ICD–10 and assembling various public
meetings. The commenters also noted
that CMS has observed broader
principles in prior rulemaking with
regard to payment stability such as
during the transition from charge-based
weights to cost-based weights in FY
2007 and the conversion of the CMS
DRGs to MS–DRGs in FY 2008.
Consistent with those past policy
refinements and the steps taken to
mitigate fluctuations potentially
affecting IPPS payment, commenters
requested that CMS once again exercise
its authority to do so. We refer readers
to section II.G. of the preamble of this
FY 2018 IPPS/LTCH PPS final rule for
further discussion regarding
recalibration of the FY 2018 MS–DRG
relative weights, including our response
to comments requesting a transition
period for substantial reductions in
relative weights in order to facilitate
payment stability.
As stated above, commenters noted
that MS–DRG 215 (Other Heart Assist
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38011
System Implant) appeared to have the
largest decrease by approximately 35%
although it was not the subject of a new
proposal in the FY 2018 IPPS/LTCH
PPS proposed rule. We received
multiple comments stating that the
American Hospital Association
published Coding Clinic advice that
changed coding guidance for external
heart assist devices and that this will
result in higher-cost patients with more
ICU days and increased lengths of stay
that are assigned to MS–DRG 215 in FY
2018. The commenters noted there will
be a substantial difference in coding for
this patient population that is not
reflected in the current cost data used to
set the FY 2018 payment rates and a
commenter urged CMS to revise the
structure of MS–DRG 215 as an
alternative option to address the
decrease in the FY 2018 proposed
relative weight for this MS–DRG.
According to the commenter,
restructuring this MS–DRG would more
accurately reflect the resources required
for cases that will be assigned to this
MS–DRG in FY 2018 and is consistent
with the agency’s continuing efforts to
ensure accurate replication between the
ICD–9 and ICD–10 based MS–DRGs.
The commenter noted that currently,
patients who receive heart assist devices
may be assigned to the Pre-MDC MS–
DRGs 001 and 002 (Heart Transplant or
Implant of Heart Assist System) or MS–
DRG 215 (Other Heart Assist System
Implant). The commenter asserted that
the transition from using ICD–9 codes to
ICD–10 codes as the basis for MS–DRG
assignment has been impacted by the
significant increase in the number of
codes relevant to the assignment of a
MS–DRG because ICD–10 is more
granular. This commenter
recommended that CMS revise the
assignments for the ICD–10 procedure
codes grouping to MS–DRG 215 to
accurately replicate the logic used to
assign ICD–9 procedure codes to MS–
DRG 215.
An example of how the MS–DRG
assignment has been impacted by the
transition to ICD–10 was provided by
the commenter who noted that under
the ICD–9 based MS–DRGs, procedure
code 37.62 (Insertion of temporary nonimplantable extracorporeal circulatory
assist device) was reported for both the
insertion and removal of an external
heart assist device and was assigned to
MS–DRG 215. However, under ICD–10,
two codes are required, one for the
insertion and one for the removal of the
device where the logic for the
combination of those two codes results
in assignment to Pre-MDC MS–DRGs
001 and 002 (Heart transplant or
Implant of Heart Assist System).
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Another example offered by the
commenter included ICD–9 procedure
code 37.63 (Repair of heart assist
system) where, under ICD–10, these
cases could be reported with a code
describing revision of an external heart
assist device or these cases could be
reported with a combination of codes,
one for the removal and one for the
revision of an external heart assist
device. The commenter suggested that
the combinations of insertion and
removal codes and the combinations of
removal and revision codes be
reassigned from the Pre-MDC MS–DRGs
001 and 002 to MS–DRG 215 to
accurately replicate the logic that was
used in the ICD–9 based MS–DRGs.
The commenter performed its own
analysis of MS–DRG 215 using the FY
2016 MedPAR data and noted that its
findings indicated there was a decrease
in the volume of procedures involving
a repair or revision of a heart assist
system device and an increase in the
number of insertion or implantation of
heart assist system devices when
compared to the FY 2015 MedPAR data.
The commenter’s findings also
indicated that there was a decrease in
the average total standardized charges,
as well as a decrease in the severity of
illness of the patients grouping to this
MS–DRG in FY 2016 compared to FY
2015. For example, the commenter
noted that its analysis showed
approximately 95 percent of insertion or
implant of heart assist system cases also
reported a secondary diagnosis of an
MCC in FY 2015; however, this number
dropped to 84 percent in FY 2016.
Additionally, the commenter reported
that approximately 73 percent of the
revision of heart assist system cases also
reported a secondary diagnosis of an
MCC in FY 2015; however, this number
dropped to 67 percent in FY 2016. The
commenter stated that the clinical and
usage changes for these devices do not
account for this dramatic 1-year
reversal.
Response: We agree with the
commenter that under the ICD–9 based
MS–DRGs, procedure code 37.62
(Insertion of temporary non-implantable
extracorporeal circulatory assist device)
was reported for both the insertion and
removal of an external heart assist
device and was assigned to MS–DRG
215. We also agree with the commenter
that, under ICD–10, two codes are
currently required to describe this same
procedure, one for the insertion and one
for the removal of the device where the
logic for the combination of those two
codes results in assignment to Pre-MDC
MS–DRGs 001 and 002 (Heart transplant
or Implant of Heart Assist System).
Lastly, we agree with the example
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offered by the commenter that included
ICD–9 procedure code 37.63 (Repair of
heart assist system) where under ICD–
10, these cases could be reported with
a code describing revision of a heart
assist device or these cases could be
reported with a combination of codes,
one for the removal and one for the
revision of a heart assist device.
We also are aware that the American
Hospital Association published Coding
Clinic advice that clarified coding and
reporting for certain external heart assist
devices due to the technology being
approved for new indications. We point
out that coding advice is issued
independently from payment policy.
That is, in our annual IPPS rulemaking,
in considering updates to the MS–DRGs,
it is typically not our process to analyze
changes in published coding advice. We
generally do not make proposals for
MS–DRG reclassification changes in the
absence of data and clinical input from
our clinical advisors.
In response to the commenters’
request to ensure accurate replication
between the ICD–9 and ICD–10 based
MS–DRGs for external heart assist
devices in conjunction with the public
comments requesting that we maintain
stability in the MS–DRG relative
payment weights, we note that, for FY
2018 and beyond, we are no longer
replicating the ICD–9 MS–DRGs. As
stated in the FY 2018 IPPS/LTCH PPS
proposed rule and this final rule, we are
using ICD–10 coded claims data for the
first time to propose changes to the ICD–
10 MS–DRG classifications and to
compute the relative weights. Therefore,
our proposals and final policies for FY
2018 are based only on the ICD–10
claims data from the FY 2016 MedPAR
file. However, similar to our efforts in
identifying areas where improvements
could be made to better account for
severity of illness and resource
utilization during the transition from
the CMS DRGs to the MS–DRGs, we are
making concerted efforts to continue
refining the ICD–10 MS–DRGs after
transitioning from the ICD–9 MS–DRGs.
We appreciate the commenters’
acknowledgement of our efforts to
maintain stability within the IPPS
during the transition period to ICD–10
as noted above. We also acknowledge
and appreciate the analysis that was
conducted by the commenter for MS–
DRG 215. We believe it is important to
be able to fully evaluate the effects and
the impact of restructuring any MS–
DRGs for which all heart assist system
procedures are currently assigned under
ICD–10. As part of this evaluation, we
believe it would be advantageous to
consider additional ICD–10 coded
claims data as well as changes in a
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hospital’s case-mix (for example, patient
characteristics) to determine if the
patients undergoing a heart assist
system procedure or a combination of
heart assist system procedures
demonstrate a greater severity of illness
and/or increased treatment difficulty as
a result of the surgical approach that is
used (for example, open, percutaneous,
percutaneous endoscopic, among
others). Finally, consultation with our
clinical advisors is also important to
properly analyze the appropriateness of
any modifications to the MS–DRGs
where a heart assist device is currently
assigned.
Therefore, in response to the public
comments received, we are planning to
review for FY 2019 the current ICD–10
logic for Pre-MDC MS–DRGs 001 and
002 (Heart Transplant or Implant of
Heart Assist System with and without
MCC, respectively), MS–DRG 215 (Other
Heart Assist System Implant) and MS–
DRGs 268 and 269 (Aortic and Heart
Assist Procedures Except Pulsation
Balloon with and without MCC,
respectively) where procedures
involving the heart assist devices are
currently assigned. We refer the reader
to the ICD–10 MS–DRG Definitions
Manual version 34, which is available
via the Internet on the CMS Web site at:
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/FY2017-IPPS-FinalRule-Home-Page-Items/FY2017-IPPSFinal-Rule-Data-Files.html?DLPage=
1&DLEntries=10&DLSort=0&DLSortDir=
ascending for complete documentation
of the GROUPER logic for Pre-MDC MS–
DRGs 001 and 002, MS–DRG 215, and
MS–DRGs 268 and 269. We also
encourage the public to submit any
comments on restructuring the MS–
DRGs for heart assist system procedures
to the CMS MS–DRG Classification
Change Request Mailbox located at:
MSDRGClassificationChange@
cms.hhs.gov by November 1, 2017.
As previously stated, we are making
concerted efforts to continue refining
the ICD–10 MS–DRGs after transitioning
from the ICD–9 MS–DRGs. We believe
that it is important to include the PreMDC MS–DRGs and the other MS–DRGs
comprised of heart assist system
procedures as part of our
comprehensive review of each MDC and
the corresponding MS–DRGs assigned to
them. After consideration of the public
comments we received, we are
maintaining the current structure of
MS–DRG 215 for FY 2018, under the
ICD–10 MS–DRGs Version 35.
We are making the FY 2018 ICD–10
MS–DRG GROUPER and Medicare Code
Editor (MCE) Software Version 35
available to the public on our CMS Web
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site at: https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/ through
the FY 2018 IPPS Final Rule Home
Page.
2. MDC 1 (Diseases and Disorders of the
Nervous System)
a. Functional Quadriplegia
We received a request to reassign
cases identified by diagnosis code R53.2
(Functional quadriplegia) from MS–
DRGs 052 and 053 (Spinal Disorders
and Injuries with and without CC/MCC,
respectively). The requestor stated that
because functional quadriplegia does
not involve any spinal injury or
pathology, cases identified by the
diagnosis code should not be assigned
to MS–DRGs 052 and 053. However, the
requestor did not suggest an alternative
MS–DRG assignment.
Section I.C.18.f. of the FY 2017 ICD–
10–CM Official Coding Guidelines
addresses the coding for the diagnosis of
functional quadriplegia. Section I.C.18.f.
states that functional quadriplegia
(described by diagnosis code R53.2) is
the lack of ability to use one’s limbs or
to ambulate due to extreme debility. The
condition is not associated with
neurologic deficit or injury, and
diagnosis code R53.2 should not be used
to identify cases of neurologic
quadriplegia. In addition, the
38013
Guidelines state that the diagnosis code
should only be assigned if functional
quadriplegia is specifically documented
by a physician in the medical record,
and the diagnosis of functional
quadriplegia is not associated with a
neurologic deficit or injury. A physician
may document the diagnosis of
functional quadriplegia as occurring
with a variety of conditions.
As discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19817
through 19818), we examined claims
data from the December 2016 update of
the FY 2016 MedPAR file on cases
reporting diagnosis code R53.2 in MS–
DRGs 052 and 053. Our findings are
shown in the table below.
CASES REPORTING FUNCTIONAL QUADRIPLEGIA IN MS–DRGS 052 AND 053
Number of
cases
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
052—All cases ............................................................................................................
052—Cases reporting diagnosis code R53.2 .............................................................
053—All cases ............................................................................................................
053— Cases reporting diagnosis code R53.2 ............................................................
sradovich on DSK3GMQ082PROD with RULES2
As shown in the table above, for MS–
DRG 052, there were a total of 865 cases
with an average length of stay of 5.4
days and average costs of $10,247. Of
the 865 cases in MS–DRG 052, there
were 63 cases that reported a principal
diagnosis of functional quadriplegia,
with an average length of stay of 4.9
days and average costs of $6,420. For
MS–DRG 053, there were a total of 239
cases, with an average length of stay of
3.3 days and average costs of $6,326. Of
the 239 cases in MS–DRG 053, there
were 16 cases that reported a principal
diagnosis of functional quadriplegia,
with an average length of stay of 3.3
days and average costs of $2,318.
To address the request to reassign
cases reporting a diagnosis of functional
quadriplegia to a different MS–DRG, we
reviewed the data for a total of 79 cases
(63 cases in MS–DRG 052 and 16 cases
in MS–DRG 053) that reported a
principal diagnosis of functional
quadriplegia in MS–DRGs 052 and 053.
As shown in the table above, our data
analysis demonstrates that the average
costs for these 79 cases are lower than
the average costs of all cases in MS–
DRGs 052 and 053 ($6,420 compared to
$10,247 for all cases in MS–DRG 052,
and $2,318 compared to $6,326 for all
cases in MS–DRG 053), and the average
lengths of stay are shorter for cases
reporting a diagnosis of functional
quadriplegia in MS–DRG 052 (4.9 days
compared to 5.4 days for all cases in
MS–DRG 052), but equal for cases in
MS–DRG 053 (3.3 days for cases
reporting a diagnosis of functional
quadriplegia and for all cases).
As we discussed in the proposed rule,
our clinical advisors reviewed this issue
and agreed that a diagnosis of functional
quadriplegia does not involve a spinal
disorder or injury, and may be
associated with, or the result of, a
variety of underlying conditions. Our
clinical advisors also agreed that it is
not clinically appropriate to include
cases reporting a diagnosis of functional
quadriplegia within MS–DRGs 052 and
053 because these cases do not involve
a spinal disorder or injury. Therefore,
given the fact that functional
quadriplegia can be the result of a
variety of other conditions, we reviewed
the MS–DRGs in order to identify a
Average
length
of stay
865
63
239
16
Average
costs
5.4
4.9
3.3
3.3
$10,247
6,420
6,326
2,318
more appropriate placement for cases
reporting this diagnosis. Our clinical
advisors recommended assigning cases
representing a diagnosis of functional
quadriplegia from MS–DRGs 052 and
053 to MS–DRGs 091, 092, and 093
(Other Disorders of Nervous System
with MCC, with CC, and without CC/
MCC, respectively). Within each MDC,
there are MS–DRGs that describe a
variety of other conditions that do not
have the clinical characteristics of the
more specific MS–DRGs. In this case,
MS–DRGs 091, 092, and 093 describe a
variety of other disorders of the nervous
system that are not clinically similar in
characteristics to the disorders
described by MS–DRGs 052 and 053.
We stated in the proposed rule that our
clinical advisors believe that MS–DRGs
091, 092, and 093 are more appropriate
MS–DRG assignments for cases
representing a diagnosis of functional
quadriplegia.
We examined claims data from the
December 2016 update of the FY 2016
MedPAR file on cases in MS–DRGs 091,
092, and 093. Our findings are shown in
the table below.
CASES IN MS–DRGS 091, 092, AND 093
Number of
cases
MS–DRG
MS–DRG 091—All cases ............................................................................................................
MS–DRG 092—All cases ............................................................................................................
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12,607
19,392
E:\FR\FM\14AUR2.SGM
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Average
length
of stay
Average
costs
5.6
3.9
$10,815
6,706
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CASES IN MS–DRGS 091, 092, AND 093—Continued
Number of
cases
MS–DRG
MS–DRG 093—All cases ............................................................................................................
As shown in the table above, for MS–
DRG 091, there were a total of 12,607
cases, with an average length of stay of
5.6 days and average costs of $10,815.
For MS–DRG 092, there were a total of
19,392 cases, with an average length of
stay of 3.9 days and average costs of
$6,706. For MS–DRG 093, there were a
total of 8,120 cases, with an average
length of stay of 2.7 days and average
costs of $5,253. As stated earlier, of the
865 total cases in MS–DRG 052, there
were 63 cases that reported a principal
diagnosis of functional quadriplegia,
with an average length of stay of 4.9
days and average costs of $6,420. Of the
239 total cases in MS–DRG 053, there
were 16 cases that reported a principal
diagnosis of functional quadriplegia,
with an average length of stay of 3.3
days and average costs of $2,318. The
average lengths of stay for cases
reporting a diagnosis of functional
quadriplegia in MS–DRGs 052 and 053
are similar to the average lengths of stay
for cases found in MS–DRGs 091, 092
and 093 (4.9 days and 3.3 days for cases
in MS–DRGs 052 and 053, respectively,
compared to 5.6 days, 3.9 days, and 2.7
days, respectively, for cases in MS–
DRGs 091, 092, and 093). The average
costs for cases reporting a diagnosis of
functional quadriplegia in MS–DRGs
052 and 053 are $6,420 and $2,318,
respectively, compared to $10,815,
$6,706, and $5,253 for all cases in MS–
DRGs 091, 092, and 093. The average
costs for cases reporting a diagnosis of
functional quadriplegia in MS–DRG 053
are lower than the average costs for all
cases in MS–DRG 093 without a CC or
MCC ($2,318 compared to $5,253,
respectively). The average costs for
cases reporting a diagnosis of functional
quadriplegia in MS–DRG 052 are
$6,420, which is lower than the average
costs of $10,815 for all cases in MS–
DRG 091, but close to the average costs
of $6,706 for all cases in MS–DRG 092.
We stated in the proposed rule that
while we acknowledge that the average
costs for cases reporting a diagnosis of
functional quadriplegia are lower than
those cases within MS–DRGs 091, 092,
and 093, as stated earlier, the average
costs of cases reporting a diagnosis of
functional quadriplegia also are lower
than the average costs of all cases in
MS–DRGs 052 and 053 where these
cases are currently assigned.
Our clinical advisors reviewed the
clinical issues as well as the claims data
for MS–DRGs 052, 053, 091, 092, and
093. As a result of this review, they
recommended that cases reporting a
diagnosis of functional quadriplegia be
reassigned from MS–DRGs 052 and 053
to MS–DRGs 091, 092, and 093 because
the current MS–DRG assignment is not
clinically appropriate. We stated in the
proposed rule that our clinical advisors
stated that reassigning these cases to
MS–DRGs 091, 092, and 093 is more
appropriate because this set of MS–
DRGs includes a variety of nervous
system disorders that are not
appropriately classified to more specific
MS–DRGs within MDC 1. Therefore, in
the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 19817 through 19818), we
proposed to reassign cases identified by
diagnosis code R53.2 from MS–DRGs
052 and 053 to MS–DRGs 091, 092, and
093 for FY 2018.
We invited public comments on our
proposal.
Comment: Several commenters
supported CMS’ statement that
diagnosis code R53.2 does not belong in
MS–DRGs 052 and 053 because this
Average
length
of stay
8,120
Average
costs
2.7
5,253
condition does not involve a spinal
disorder or injury. The commenters
supported reassigning the code from
MS–DRGs 052 and 053. However, one
commenter suggested that instead of
assigning diagnosis code R53.2 to MS
DRGs 091, 092, and 093 (Other
Disorders of Nervous System with MCC,
with CC, and without CC/MCC,
respectively) for FY 2018, CMS instead
reassign it to MS–DRGs 947 and 948
(Signs and Symptoms with MCC and
without MCC, respectively). The
commenter stated that the ICD–10–CM
code for functional quadriplegia, R53.2,
is located in Chapter 18, Symptoms,
Signs and Abnormal Findings because it
can be the result of a variety of
underlying conditions. Therefore, the
commenter believed it was not
appropriate to classify this diagnosis as
a nervous system disorder. The
commenter pointed out that other codes
in ICD–10–CM category R53 are
assigned to MS–DRGs 947 and 948.
Therefore, the commenter believed that
it was appropriate to reassign code
R53.2 from MS–DRGs 052 and 053 to
MS–DRGs 947 and 948.
Response: We agree with the
commenter that diagnosis code R53.2 is
located in Chapter 18, Symptoms, Signs
and Abnormal Findings because it can
be the result of a variety of underlying
conditions. We also agree that this code
cannot be labeled as a nervous system
disorder. Therefore, we agree that there
is merit in reassigning diagnosis code
R53.2 where other codes in category R53
are assigned in MS–DRGs 947 and 948.
We examined claims data from the
December 2016 update of the FY 2016
MedPAR file on cases in MS–DRGs 947
and 948. Our findings are shown in the
table below.
CASES IN MS–DRGS 947 AND 948
Number
of cases
sradovich on DSK3GMQ082PROD with RULES2
MS–DRG
MS–DRG 947–All cases ..............................................................................................................
MS–DRG 948–All cases ..............................................................................................................
As stated earlier, of the 865 total cases
in MS–DRG 052, there were 63 cases
that reported a principal diagnosis of
functional quadriplegia, with an average
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length of stay of 4.9 days and average
costs of $6,420. This compares to all
cases in MS–DRG 947 which had an
average length of stay of 4.7 days and
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10,799
36,123
Average
length
of stay
Average
costs
4.7
3.3
$8,225
5,494
average costs of $8,225. Therefore, the
average length of stay for functional
quadriprlegia cases in MS–DRG 052 was
0.2 days longer and the average costs
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were $1,805 lower than all cases in MS–
DRG 947. Of the 239 total cases in MS–
DRG 053, there were 16 cases that
reported a principal diagnosis of
functional quadriplegia, with an average
length of stay of 3.3 days and average
costs of $2,318. This compares to all
cases in MS–DRG 948 which had an
average length of stay of 3.3 days and
average costs of $5,494. Therefore, the
average length of stay for functional
quadriprlegia cases in MS–DRG 053 is
the same as all cases in MS–DRG 948
and the average costs are $3,176 lower
than all cases in MS–DRG 948. The
average costs of functional quadriplegia
cases are lower than all cases in MS–
DRGs 091, 092, and 093 as well as in
MS–DRGs 947 and 948. The average
length of stay of functional quadriplegia
cases are similar to those in MS–DRGs
947 and 948. We agree with the
commenter that the more appropriate
MS–DRG assignment would be MS–
DRGs 947 and 948 because these MS–
DRGs capture similar symptom codes.
Our clinical advisors reviewed this
clinical issue along with the claims data
for MS–DRGs 947 and 948. Our clinical
advisors agree that because diagnosis
code R53.2 is a symptom code that
could be the result of a variety of
underlying conditions, it would not be
appropriate to assign it to nervous
system MS–DRGs such as MS DRGs 091,
092, and 093 as we proposed. Our
clinical advisors agreed with the
commenter that this symptom code
should be assigned to MS–DRGs 947
and 948 where other symptom codes are
assigned.
After consideration of the public
comments that we received and the
advice of our clinical advisors, we are
finalizing the assignment of code R53.2
(Functional quadriplegia) to MS–DRGs
947 and 948 (Signs and Symptoms with
MCC and without MCC, respectively).
sradovich on DSK3GMQ082PROD with RULES2
b. Responsive Neurostimulator (RNS©)
System
We received a request to modify the
MS–DRG assignment for cases involving
the use of the RNS© neurostimulator, a
cranially implanted neurostimulator
that is a treatment option for persons
diagnosed with medically intractable
epilepsy. Cases involving the use of the
RNS© neurostimulator are assigned to
MS–DRG 023 (Craniotomy with Major
Device Implant or Acute Complex
Central Nervous System (CNS) Principal
Diagnosis (PDX) with MCC or Chemo
Implant) and MS–DRG 024 (Craniotomy
with Major Device Implant or Acute
Complex Central Nervous System (CNS)
Principal Diagnosis (PDX) without
MCC).
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Cases involving the use of the RNS©
neurostimulator generator and leads are
captured within the descriptions of four
ICD–10–PCS codes. ICD–10–PCS code
0NH00NZ (Insertion of neurostimulator
generator into skull, open approach)
captures the use of the neurostimulator
generator, and the other three ICD–10–
PCS codes, 00H00MZ (Insertion of
neurostimulator lead into brain, open
approach), 00H03MZ (Insertion of
neurostimulator lead into brain,
percutaneous approach), and 00H04MZ
(Insertion of neurostimulator lead into
brain, percutaneous endoscopic
approach) describe the insertions of the
leads, depending on the approach used.
The combination of an ICD–10–PCS
code capturing the use of the generator
and another ICD–10–PCS code
describing the specific approach used to
insert the leads would capture the
performance of the entire procedure.
The requestor stated that the RNS©
neurostimulator received FDA premarket approval on November 14, 2013.
The RNS© neurostimulator includes a
cranially implanted programmable
neurostimulator connected to one or
two depth and/or subdural cortical strip
leads that are surgically placed in or on
the brain at the seizure focus. The
neurostimulator and leads are typically
implanted during a single acute
inpatient hospital procedure at a
Comprehensive Epilepsy Center (CEC).
The implanted neurostimulator
continuously monitors brain electrical
activity and is programmed by a
physician to detect abnormal patterns of
electrical activity that the physician
believes may lead to seizures
(epileptiform activity). In response to
the detection of epileptiform activity,
the device delivers brief, mild electrical
pulses (responsive stimulation) to one
or two epileptic foci. Detection and
stimulation parameters are adjusted
noninvasively by the physician to
optimize control of epileptic seizures for
each patient.
As the neurostimulator monitors brain
activity, electrocorticograms (ECoGs)
recorded immediately before and after
certain events are stored for later review
by the physician. The physician reviews
the stored recordings to see the
detections and the effects of stimulation.
The physician can reprogram the
neurostimulator at an in-person office
appointment to change detection and
stimulation settings based on this
information, as well as review the
patient’s seizures.
The RNS© neurostimulator was
approved for new technology add-on
payments for FY 2015 and FY 2016, and
new technology add-on payments were
discontinued for FY 2017. The new
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Sfmt 4700
38015
technology add-on payment application
was discussed in the FY 2015 IPPS/
LTCH PPS proposed and final rules (79
FR 28051 through 28054 and 79 FR
49946 through 49950, respectively), the
FY 2016 IPPS/LTCH PPS proposed and
final rules (80 FR 24427 through 24448
and 80 FR 49442 through 49443,
respectively), and the FY 2017 IPPS/
LTCH PPS proposed and final rules (81
FR 25036 through 25037 and 81 FR
56882 through 56884, respectively).
The requestor suggested the following
three options for MS–DRG assignment
updates for cases involving the RNS©
neurostimulator:
• Create new MS–DRGs for cases
involving the use of the RNS©
neurostimulator. The requestor
suggested MS–DRG XXX (Cranially
Implanted Neurostimulators with MCC)
and MS–DRG XXX (Cranially Implanted
Neurostimulators without MCC) as
possible MS–DRG titles. The requestor
acknowledged that the number of cases
assigned to this MS–DRG would be low,
but anticipated that the number of cases
would increase in the future.
• Reassign cases involving the use of
the RNS© neurostimulator to MS–DRGs
020 and 021 (Intracranial Vascular
Procedures with Principal Diagnosis of
Hemorrhage with MCC, with CC,
respectively) and update the MS–DRG
logic and titles. The requestor asked
CMS to reassign all cases involving the
use of the RNS© neurostimulator that
currently map to MS–DRG 023
(Craniotomy with Major Device
Implant/Acute Complex CNS Principal
Diagnosis with MCC or Chemo Implant)
to MS–DRG 20, and change the title of
MS–DRG 20 to ‘‘Intracranial Vascular
Procedures with Principal Diagnosis of
Hemorrhage or Cranially Implanted
Neurostimulator with MCC.’’ In
addition, the requestor asked CMS to
reassign all cases involving the use of
the RNS© neurostimulator that currently
map to MS–DRG 024 (Craniotomy with
Major Device Implant/Acute Complex
CNS Principal Diagnosis without MCC)
to MS–DRG 021, and change the title of
MS–DRG 021 to ‘‘Intracranial Vascular
Procedures with Principal Diagnosis of
Hemorrhage with CC or Cranially
Implanted Neurostimulator without
MCC’’. The requestor believed that the
majority of cases involving the use of
the RNS© neurostimulator that map to
MS–DRG 024 do not include a
secondary diagnosis that is classified as
a CC, and the average cost of cases
involving the use of the RNS©
neurostimulator without a CC is
significantly higher than the average
cost of all cases in MS–DRG 022
(Intracranial Vascular Procedures with
Principal Diagnosis of Hemorrhage
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without CC/MCC). Therefore, the
requestor stated that it would not be
adequate to assign cases involving the
use of the RNS© neurostimulator
without a CC to MS–DRG 022.
• Reassign cases involving the use of
the RNS© neurostimulator to other
higher paying MS–DRGs that would
provide adequate payment.
The requestor stated that it had
analyzed data from two sources, which
demonstrated that the average cost of
cases involving the use of the RNS©
neurostimulator was higher than the
average cost of all cases in MS–DRGs
023 and 024 (the current MS–DRGs for
cases involving the use of the RNS©
neurostimulator). The requestor
indicated that the data used for its
analysis was obtained from hospitals
performing the procedure, as well as
from the FY 2015 MedPAR file.
The requestor also asked that CMS
examine the cases representing cranially
implanted neurostimulators and leads
that were inserted for the treatment of
epilepsy. The requestor pointed out that
neurostimulators also are used in the
treatment of movement disorders such
as Parkinson’s disease, essential tremor,
or dystonia. The requestor asked that
CMS identify those cases with a
principal diagnosis of epilepsy, and
identified the following ICD–10–CM
codes that it believed were
representative of potential epilepsy
cases.
ICD–10–CM
code
ICD–10–CM code title
G40.001 ...............
Localization-related (focal) (partial) idiopathic epilepsy and epileptic syndromes with seizures of localized onset, not intractable, with status epilepticus.
Localization-related (focal) (partial) idiopathic epilepsy and epileptic syndromes with seizures of localized onset, not intractable, without status epilepticus.
Localization-related (focal) (partial) idiopathic epilepsy and epileptic syndromes with seizures of localized onset, intractable,
with status epilepticus.
Localization-related (focal) (partial) idiopathic epilepsy and epileptic syndromes with seizures of localized onset, intractable,
without status epilepticus.
Localization-related (focal) (partial) symptomatic epilepsy and epileptic syndromes with simple partial seizures, not intractable, with status epilepticus.
Localization-related (focal) (partial) symptomatic epilepsy and epileptic syndromes with simple partial seizures, intractable,
without status epilepticus.
Localization-related (focal) (partial) symptomatic epilepsy and epileptic syndromes with complex partial seizures, not intractable, with status epilepticus.
Localization-related (focal) (partial) symptomatic epilepsy and epileptic syndromes with complex partial seizures, not intractable, without status epilepticus.
Localization-related (focal) (partial) symptomatic epilepsy and epileptic syndromes with complex partial seizures, intractable,
with status epilepticus.
Localization-related (focal) (partial) symptomatic epilepsy and epileptic syndromes with complex partial seizures, intractable,
without status epilepticus.
Generalized idiopathic epilepsy and epileptic syndromes, not intractable, with status epilepticus.
Generalized idiopathic epilepsy and epileptic syndromes, not intractable, without status epilepticus.
Generalized idiopathic epilepsy and epileptic syndromes, intractable, with status epilepticus.
Generalized idiopathic epilepsy and epileptic syndromes, intractable, without status epilepticus.
Other generalized epilepsy and epileptic syndromes, not intractable, with status epilepticus.
Other generalized epilepsy and epileptic syndromes, not intractable, without status epilepticus.
Other generalized epilepsy and epileptic syndromes, intractable, with status epilepticus.
Other generalized epilepsy and epileptic syndromes, intractable, without status epilepticus.
Epileptic seizures related to external causes, not intractable, with status epilepticus.
Epileptic seizures related to external causes, not intractable, without status epilepticus.
Other epilepsy, not intractable, with status epilepticus.
Other epilepsy, not intractable, without status epilepticus.
Other epilepsy, intractable, with status epilepticus.
Other epilepsy, intractable, without status epilepticus.
Lennox-Gastaut syndrome, not intractable, with status epilepticus.
Lennox-Gastaut syndrome, not intractable, without status epilepticus.
Lennox-Gastaut syndrome, intractable, with status epilepticus.
Lennox-Gastaut syndrome, intractable, without status epilepticus.
Epileptic spasms, not intractable, with status epilepticus.
Epileptic spasms, not intractable, without status epilepticus.
Epileptic spasms, intractable, with status epilepticus.
Epileptic spasms, intractable, without status epilepticus.
Other seizures.
Epilepsy, unspecified, not intractable, with status epilepticus.
Epilepsy, unspecified, not intractable, without status epilepticus.
Epilepsy, unspecified, intractable, with status epilepticus.
Epilepsy, unspecified, intractable, without status epilepticus.
G40.009 ...............
G40.011 ...............
G40.019 ...............
G40.101 ...............
G40.119 ...............
G40.201 ...............
G40.209 ...............
G40.211 ...............
G40.219 ...............
sradovich on DSK3GMQ082PROD with RULES2
G40.301 ...............
G40.309 ...............
G40.311 ...............
G40.319 ...............
G40.401 ...............
G40.409 ...............
G40.411 ...............
G40.419 ...............
G40.501 ...............
G40.509 ...............
G40.801 ...............
G40.802 ...............
G40.803 ...............
G40.804 ...............
G40.811 ...............
G40.812 ...............
G40.813 ...............
G40.814 ...............
G40.821 ...............
G40.822 ...............
G40.823 ...............
G40.824 ...............
G40.89 .................
G40.901 ...............
G40.909 ...............
G40.911 ...............
G40.919 ...............
MS–DRGs 023 and 024 contain a
number of cases representing
neurostimulator generator and lead code
combinations that are captured under a
list referred to as ‘‘Major Device
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Implant.’’ The neurostimulator
generators on this list are inserted into
the skull, as well as into the
subcutaneous areas of the chest, back, or
abdomen. The leads are all inserted into
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the brain. The RNS© neurostimulator
generators are inserted into the skull
and the leads are inserted into the brain.
The following three ICD–10–PCS code
combinations capture the use of the
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RNS© neurostimulator and leads that
would determine an assignment of a
case to MS–DRGs 023 and 024, as
shown in the ‘‘Major Device Implant’’
list:
• 0NH00NZ (Insertion of
neurostimulator generator into skull,
open approach), in combination with
00H00MZ (Insertion of neurostimulator
lead into brain, open approach);
• 0NH00NZ (Insertion of
neurostimulator generator into skull,
open approach), in combination with
00H03MZ (Insertion of neurostimulator
lead into brain, percutaneous approach);
and
• 0NH00NZ (Insertion of
neurostimulator generator into skull,
open approach), in combination with
00H04MZ (Insertion of neurostimulator
lead into brain, percutaneous
endoscopic approach).
As discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19818
through 19822), we examined claims
data from the December 2016 update of
the FY 2016 MedPAR file for all cases
representing the use of a
neurostimulator in MS–DRGs 023 and
38017
024 listed under the ‘‘Major Device
Implant’’ list. As requested, we also
examined the cases represented by the
three neurostimulator code
combinations, which capture the use of
the RNS© neurostimulator that are a
subset of the cases listed on the ‘‘Major
Device Implant’’ list using the code
combinations listed above, and that had
a principal diagnosis of epilepsy from
the list supplied by the requestor. The
following tables show our findings for
those cases in MS–DRGs 023 and 024 as
well as findings for cases in MS–DRGs
020 and 021.
MS–DRGS 023 AND 024
[Neurostimulator Cases]
Number of
cases
MS–DRG
MS–DRG 023—All cases ............................................................................................................
MS–DRG 023—Cases with neurostimulators (Major Device Implant list cases) .......................
MS–DRG 023—Cases with neurostimulator generators inserted into skull (includes cases involving the use of the RNS© neurostimulator) and cases with a principal diagnosis of epilepsy .........................................................................................................................................
MS–DRG 024—All cases ............................................................................................................
MS–DRG 024—Cases with neurostimulators (Major Device Implant list cases) .......................
MS–DRG 024—Cases with neurostimulator generators inserted into skull (includes cases involving the use of the RNS© neurostimulator) and cases with a principal diagnosis of epilepsy .........................................................................................................................................
Average
length of stay
Average
costs
6,723
21
10.9
6.7
$39,014
48,821
7
2,275
394
8.0
5.5
2.1
63,365
27,574
31,669
54
4.3
51,041
CASES IN MS–DRGS 020 AND 021
Number of
cases
MS–DRG
sradovich on DSK3GMQ082PROD with RULES2
MS–DRG 020–All cases ..............................................................................................................
MS–DRG 021–All cases ..............................................................................................................
As shown by the table above, for MS–
DRG 023, we identified a total of 6,723
cases, with an average length of stay of
10.9 days and average costs of $39,014.
Of the 6,723 cases in MS–DRG 023,
there were 21 cases representing the
implantation of any type of
neurostimulator generator with an
average length of stay of 6.7 days, and
average costs of $48,821. Of the 21
neurostimulator generator cases, there
were 7 cases with the neurostimulator
generators inserted into skull (including
cases involving the use of the RNS©
neurostimulator) and a principal
diagnosis of epilepsy with an average
length of stay of 8.0 days and average
costs of $63,365. For MS–DRG 024, we
identified a total of 2,275 cases, with an
average length of stay of 5.5 days and
average costs of $27,574. Of the 2,275
cases in MS–DRG 024, there were 394
cases representing the implantation of
any type of neurostimulator generator
with an average length of stay of 2.1
days and average costs of $31,669. Of
the 394 neurostimulator generator cases,
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there were 54 cases with the
neurostimulator generators inserted into
skull (including cases involving the use
of the RNS© neurostimulator) and a
principal diagnosis of epilepsy with an
average length of stay of 4.3 days and
average costs of $51,041.
There were only 61 cases involving
the use of the RNS© neurostimulator
with a principal diagnosis of epilepsy in
MS–DRGs 023 and 024 (7 and 54,
respectively). As we stated in the
proposed rule, our clinical advisors
reviewed this issue, and agreed that this
number of cases is too small on which
to base a rationale for creating a new
MS–DRG. Basing a new MS–DRG on
such a small number of cases (61) could
lead to distortion in the relative
payment weights for the MS–DRG
because several expensive cases could
impact the overall relative payment
weight. Having larger clinical cohesive
groups within an MS–DRG provides
greater stability for annual updates to
the relative payment weights.
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1,372
336
Average
length of stay
16.7
13.5
Average
costs
$72,926
54,385
We also examined the possibility of
reassigning cases involving the use of
the RNS© neurostimulator to MS–DRGs
020 and 021. As the table above shows,
for MS–DRG 020, there were a total of
1,372 cases with an average length of
stay of 16.7 days and average costs of
$72,926. For MS–DRG 021, there were a
total of 336 cases with an average length
of stay of 13.5 days and average costs of
$54,385. The cases in MS–DRG 023 with
neurostimulator generators inserted into
skull (including cases involving the use
of the RNS© neurostimulator) and a
principal diagnosis of epilepsy have
average costs that are $9,561 lower than
that for all cases in MS–DRG 020
($63,365 compared to $72,926), and the
average length of stay is 8.7 days shorter
(8.0 days compared to 16.7 days). We
stated in the proposed rule that we do
not believe these data support
reassigning the cases in MS–DRG 023
with neurostimulator generators
inserted into the skull (including cases
involving the use of the RNS©
neurostimulator) and a principal
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diagnosis of epilepsy to MS–DRG 020.
While the cases in MS–DRG 024 with
neurostimulator generators inserted into
the skull (including cases involving the
use of the RNS© neurostimulator) and a
principal diagnosis of epilepsy have
average costs that are similar to the
average costs of cases in MS–DRG 021
($51,041 compared to $54,385), they
have an average length of stay that is 9.2
days shorter (4.3 days compared to 13.5
days). Our clinical advisors reviewed
the clinical issues and the claims data
and, as we discussed in the proposed
rule, did not support reassigning the
cases with neurostimulator generators
inserted into skull (including cases
involving the use of the RNS©
neurostimulator) and a principal
diagnosis of epilepsy from MS–DRGs
023 and 024 to MS–DRGs 020 and 021.
Our clinical advisors pointed out that
the cases in MS–DRGs 020 and 021 have
a principal diagnosis of a hemorrhage.
The RNS© neurostimulator generators
are not used to treat patients with
diagnosis of a hemorrhage. Therefore,
our clinical advisors stated that it was
inappropriate to reassign cases
representing a principal diagnosis of
epilepsy to an MS–DRG that contains
cases that represent the treatment of
intracranial hemorrhage. They also
stated that the differences in average
length of stay and average costs support
this recommendation.
We then explored alternative MS–
DRG assignments, as was requested. We
noted that the 7 cases with the
neurostimulator generators inserted into
the skull (including cases involving the
use of the RNS© neurostimulator) and a
principal diagnosis of epilepsy had an
average length of stay of 8.0 days and
average costs of $63,365, as compared to
the 6,723 cases in MS–DRG 023 that had
an average length of stay of 10.9 days
and average costs of $39,014. While
these neurostimulator cases had average
costs that were $24,351 higher than the
average costs of all cases in MS–DRG
023, there were only a total of 7 cases.
There may have been other factors
contributing to the higher costs. We
noted that the 54 cases with the
neurostimulator generators inserted into
skull (including cases involving the use
of the RNS© neurostimulator) and a
principal diagnosis of epilepsy in MS–
DRG 024 had average costs of $51,041
and an average length of stay of 4.3
days, compared to average costs of
$27,574 and average length of stay of 5.5
days for all cases in MS–DRG 024. By
reassigning all cases with the
neurostimulator generators inserted into
the skull (including cases involving the
use of the RNS© neurostimulator) and a
principal diagnosis of epilepsy to MS
DRG 023, even if there is not a MCC
present, the cases would receive higher
payment. The average costs of MS–DRG
023 were $39,014, compared to the
average costs of $51,041 for the cases
with the neurostimulator generators
inserted into skull (including cases
involving the use of the RNS©
neurostimulator) and a principal
diagnosis of epilepsy in MS–DRG 024.
Our clinical advisors reviewed the
clinical issues and the claims data, and
supported the recommendation to
reassign the cases with the
neurostimulator generators inserted into
skull (including cases involving the use
of the RNS© neurostimulator) and a
principal diagnosis of epilepsy to MS–
DRG 023, even if there is not a MCC
reported. Therefore, in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19818 through 19822), we proposed to
reassign all cases with a principal
diagnosis of epilepsy from the epilepsy
diagnosis list provided earlier, and one
of the following ICD–10–PCS code
combinations capturing cases with the
neurostimulator generators inserted into
the skull (including cases involving the
use of the RNS© neurostimulator), to
MS–DRG 023, even if there is no MCC
reported:
• 0NH00NZ (Insertion of
neurostimulator generator into skull,
open approach), in combination with
00H00MZ (Insertion of neurostimulator
lead into brain, open approach);
• 0NH00NZ (Insertion of
neurostimulator generator into skull,
open approach), in combination with
00H03MZ (Insertion of neurostimulator
lead into brain, percutaneous approach);
and
• 0NH00NZ (Insertion of
neurostimulator generator into skull,
open approach), in combination with
00H04MZ (Insertion of neurostimulator
lead into brain, percutaneous
endoscopic approach).
We also proposed to change the title
of MS–DRG 023 from ‘‘Craniotomy with
Major Device Implant or Acute Complex
Central Nervous System (CNS) Principal
Diagnosis (PDX) with MCC or Chemo
Implant’’ to ‘‘Craniotomy with Major
Device Implant or Acute Complex
Central Nervous System (CNS) Principal
Diagnosis (PDX) with MCC or
Chemotherapy Implant or Epilepsy with
Neurostimulator’’ to reflect the
proposed modifications to MS–DRG
assignments.
We invited public comments on our
proposals.
Comment: Commenters supported
CMS’ proposal to reassign cases with
insertion of a neurostimulator generator
and a principal diagnosis of epilepsy to
MS–DRG 023. The commenters also
agreed with the proposed change in the
title of MS–DRG 023. The commenters
stated that the updates were necessary
for Comprehensive Epilepsy Centers to
be able to offer the RNS©
neurostimulator. One commenter who
supported this MS–DRG update
recommended that codes in
subcategories G40.A and G40.B be
included in the list of epilepsy
diagnosis codes classified to MS–DRG
023 because these subcategory codes are
also epilepsy codes.
Response: We appreciate the
commenters’ support for our
recommendations. We identified the
following list of epilepsy codes that are
included under categories G40.A and
G40.B.
• G40.A01 Absence epileptic syndrome,
not intractable, with status epilepticus
• G40.A09 Absence epileptic syndrome,
not intractable, without status
epilepticus
• G40.A11 Absence epileptic syndrome,
intractable, with status epilepticus
• G40.A19 Absence epileptic syndrome,
intractable, without status epilepticus
• G40.B01 Juvenile myoclonic epilepsy,
not intractable, with status epilepticus
• G40.B09 Juvenile myoclonic epilepsy,
not intractable, without status
epilepticus
• G40.B11 Juvenile myoclonic epilepsy,
intractable, with status epilepticus
• G40.B19 Juvenile myoclonic epilepsy,
intractable, without status epilepticus
We agree that the codes listed above
are also epilepsy codes and should be
added to the list of epilepsy codes
assigned to MS–DRG 023 because they
also capture a type of epilepsy. Our
clinical advisors reviewed this issue and
agree with adding the additional
epilepsy codes.
For FY 2018, the complete list of
epilepsy codes assigned to MS–DRG 023
under our finalized policy is as follows:
ICD–10–CM code
ICD–10–CM code title
G40.001 ...............
Localization-related (focal) (partial) idiopathic epilepsy and epileptic syndromes with seizures of localized onset, not intractable, with status epilepticus.
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38019
ICD–10–CM code
ICD–10–CM code title
G40.009 ...............
Localization-related (focal) (partial) idiopathic epilepsy and epileptic syndromes with seizures of localized onset, not intractable, without status epilepticus.
Localization-related (focal) (partial) idiopathic epilepsy and epileptic syndromes with seizures of localized onset, intractable,
with status epilepticus.
Localization-related (focal) (partial) idiopathic epilepsy and epileptic syndromes with seizures of localized onset, intractable,
without status epilepticus.
Localization-related (focal) (partial) symptomatic epilepsy and epileptic syndromes with simple partial seizures, not intractable, with status epilepticus.
Localization-related (focal) (partial) symptomatic epilepsy and epileptic syndromes with simple partial seizures, intractable,
without status epilepticus.
Localization-related (focal) (partial) symptomatic epilepsy and epileptic syndromes with complex partial seizures, not intractable, with status epilepticus.
Localization-related (focal) (partial) symptomatic epilepsy and epileptic syndromes with complex partial seizures, not intractable, without status epilepticus.
Localization-related (focal) (partial) symptomatic epilepsy and epileptic syndromes with complex partial seizures, intractable,
with status epilepticus.
Localization-related (focal) (partial) symptomatic epilepsy and epileptic syndromes with complex partial seizures, intractable,
without status epilepticus.
Generalized idiopathic epilepsy and epileptic syndromes, not intractable, with status epilepticus.
Generalized idiopathic epilepsy and epileptic syndromes, not intractable, without status epilepticus.
Generalized idiopathic epilepsy and epileptic syndromes, intractable, with status epilepticus.
Generalized idiopathic epilepsy and epileptic syndromes, intractable, without status epilepticus.
Absence epileptic syndrome, not intractable, with status epilepticus.
Absence epileptic syndrome, not intractable, without status epilepticus.
Absence epileptic syndrome, intractable, with status epilepticus.
Absence epileptic syndrome, intractable, without status epilepticus.
Juvenile myoclonic epilepsy, not intractable, with status epilepticus.
Juvenile myoclonic epilepsy, not intractable, without status epilepticus.
Juvenile myoclonic epilepsy, intractable, with status epilepticus.
Juvenile myoclonic epilepsy, intractable, without status epilepticus.
Other generalized epilepsy and epileptic syndromes, not intractable, with status epilepticus.
Other generalized epilepsy and epileptic syndromes, not intractable, without status epilepticus.
Other generalized epilepsy and epileptic syndromes, intractable, with status epilepticus.
Other generalized epilepsy and epileptic syndromes, intractable, without status epilepticus.
Epileptic seizures related to external causes, not intractable, with status epilepticus.
Epileptic seizures related to external causes, not intractable, without status epilepticus.
Other epilepsy, not intractable, with status epilepticus.
Other epilepsy, not intractable, without status epilepticus.
Other epilepsy, intractable, with status epilepticus.
Other epilepsy, intractable, without status epilepticus.
Lennox-Gastaut syndrome, not intractable, with status epilepticus.
Lennox-Gastaut syndrome, not intractable, without status epilepticus.
Lennox-Gastaut syndrome, intractable, with status epilepticus.
Lennox-Gastaut syndrome, intractable, without status epilepticus.
Epileptic spasms, not intractable, with status epilepticus.
Epileptic spasms, not intractable, without status epilepticus.
Epileptic spasms, intractable, with status epilepticus.
Epileptic spasms, intractable, without status epilepticus.
Other seizures.
Epilepsy, unspecified, not intractable, with status epilepticus.
Epilepsy, unspecified, not intractable, without status epilepticus.
Epilepsy, unspecified, intractable, with status epilepticus.
Epilepsy, unspecified, intractable, without status epilepticus.
G40.011 ...............
G40.019 ...............
G40.101 ...............
G40.119 ...............
G40.201 ...............
G40.209 ...............
G40.211 ...............
G40.219 ...............
sradovich on DSK3GMQ082PROD with RULES2
G40.301 ...............
G40.309 ...............
G40.311 ...............
G40.319 ...............
G40.A01 ...............
G40.A09 ...............
G40.A11 ...............
G40.A19 ...............
G40.B01 ...............
G40.B09 ...............
G40.B11 ...............
G40.B19 ...............
G40.401 ...............
G40.409 ...............
G40.411 ...............
G40.419 ...............
G40.501 ...............
G40.509 ...............
G40.801 ...............
G40.802 ...............
G40.803 ...............
G40.804 ...............
G40.811 ...............
G40.812 ...............
G40.813 ...............
G40.814 ...............
G40.821 ...............
G40.822 ...............
G40.823 ...............
G40.824 ...............
G40.89 .................
G40.901 ...............
G40.909 ...............
G40.911 ...............
G40.919 ...............
After consideration of the public
comments that we received, we are
finalizing our proposal to reassign all
cases with a principal diagnosis of
epilepsy from the epilepsy diagnosis list
provided above, and one of the
following ICD–10–PCS code
combinations capturing cases with the
neurostimulator generators inserted into
the skull (including cases involving the
use of the RNS© neurostimulator), to
MS–DRG 023, even if there is no MCC
reported:
• 0NH00NZ (Insertion of
neurostimulator generator into skull,
open approach), in combination with
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23:27 Aug 11, 2017
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00H00MZ (Insertion of neurostimulator
lead into brain, open approach);
• 0NH00NZ (Insertion of
neurostimulator generator into skull,
open approach), in combination with
00H03MZ (Insertion of neurostimulator
lead into brain, percutaneous approach);
and
• 0NH00NZ (Insertion of
neurostimulator generator into skull,
open approach), in combination with
00H04MZ (Insertion of neurostimulator
lead into brain, percutaneous
endoscopic approach).
We also finalizing our proposed
change to the title of MS–DRG 023 from
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‘‘Craniotomy with Major Device Implant
or Acute Complex Central Nervous
System (CNS) Principal Diagnosis (PDX)
with MCC or Chemo Implant’’ to
‘‘Craniotomy with Major Device Implant
or Acute Complex Central Nervous
System (CNS) Principal Diagnosis (PDX)
with MCC or Chemotherapy Implant or
Epilepsy with Neurostimulator’’ to
reflect the modifications to MS–DRG
assignments.
c. Precerebral Occlusion or Transient
Ischemic Attack with Thrombolytic
We received a request to add the ICD–
10–CM diagnosis codes currently
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assigned to MS–DRGs 067 and 068
(Nonspecific CVA and Precerebral
Occlusion without Infarction with MCC
and without MCC, respectively) and the
ICD–10–CM diagnosis codes currently
assigned to MS–DRG 069 (Transient
Ischemia) to the GROUPER logic for
MS–DRGs 061, 062, and 063 (Acute
Ischemic Stroke with Use of
Thrombolytic Agent with MCC, with
CC, and without CC/MCC, respectively)
when those conditions are sequenced as
the principal diagnosis and reported
with an ICD–10–PCS procedure code
ICD–10–CM code
I65.01 ...................
I65.02 ...................
I65.03 ...................
I65.09 ...................
I65.1 .....................
I65.21 ...................
I65.22 ...................
I65.23 ...................
I65.29 ...................
I65.8 .....................
I65.9 .....................
I66.01 ...................
I66.02 ...................
I66.03 ...................
I66.09 ...................
I66.11 ...................
I66.12 ...................
I66.13 ...................
I66.19 ...................
I66.21 ...................
I66.22 ...................
I66.23 ...................
I66.29 ...................
I66.3 .....................
I66.8 .....................
I66.9 .....................
Code description
Occlusion
Occlusion
Occlusion
Occlusion
Occlusion
Occlusion
Occlusion
Occlusion
Occlusion
Occlusion
Occlusion
Occlusion
Occlusion
Occlusion
Occlusion
Occlusion
Occlusion
Occlusion
Occlusion
Occlusion
Occlusion
Occlusion
Occlusion
Occlusion
Occlusion
Occlusion
and
and
and
and
and
and
and
and
and
and
and
and
and
and
and
and
and
and
and
and
and
and
and
and
and
and
stenosis
stenosis
stenosis
stenosis
stenosis
stenosis
stenosis
stenosis
stenosis
stenosis
stenosis
stenosis
stenosis
stenosis
stenosis
stenosis
stenosis
stenosis
stenosis
stenosis
stenosis
stenosis
stenosis
stenosis
stenosis
stenosis
of
of
of
of
of
of
of
of
of
of
of
of
of
of
of
of
of
of
of
of
of
of
of
of
of
of
The ICD–10–CM diagnosis codes
displayed in the table below identify the
conditions that are assigned to MS–DRG
right vertebral artery.
left vertebral artery.
bilateral vertebral arteries.
unspecified vertebral artery.
basilar artery.
right carotid artery.
left carotid artery.
bilateral carotid arteries.
unspecified carotid artery.
other precerebral arteries.
unspecified precerebral artery.
right middle cerebral artery.
left middle cerebral artery.
bilateral middle cerebral arteries.
unspecified middle cerebral artery.
right anterior cerebral artery.
left anterior cerebral artery.
bilateral anterior cerebral arteries.
unspecified anterior cerebral artery.
right posterior cerebral artery.
left posterior cerebral artery.
bilateral posterior cerebral arteries.
unspecified posterior cerebral artery.
cerebellar arteries.
other cerebral arteries.
unspecified cerebral artery.
069 when reported as a principal
diagnosis.
ICD–10–CM code
G45.0 ...................
G45.1 ...................
G45.2 ...................
G45.8 ...................
G45.9 ...................
G46.0 ...................
G46.1 ...................
G46.2 ...................
I67.81 ...................
I67.82 ...................
I67.841 .................
I67.848 .................
I67.89 ...................
Code description
Vertebro-basilar artery syndrome.
Carotid artery syndrome (hemispheric).
Multiple and bilateral precerebral artery syndromes.
Other transient cerebral ischemic attacks and related syndromes.
Transient cerebral ischemic attack, unspecified.
Middle cerebral artery syndrome.
Anterior cerebral artery syndrome.
Posterior cerebral artery syndrome.
Acute cerebrovascular insufficiency.
Cerebral ischemia.
Reversible cerebrovascular vasoconstriction syndrome.
Other cerebrovascular vasospasm and vasoconstriction.
Other cerebrovascular disease.
The ICD–10–PCS procedure codes
displayed in the table below describe
use of a thrombolytic agent. These
procedure codes are designated as nonO.R. procedure codes affecting the MS–
sradovich on DSK3GMQ082PROD with RULES2
ICD–10–PCS code
3E03017
3E03317
3E04017
3E04317
3E05017
3E05317
3E06017
3E06317
...............
...............
...............
...............
...............
...............
...............
...............
VerDate Sep<11>2014
describing use of a thrombolytic agent
(for example, tPA).
The ICD–10–CM diagnosis codes
displayed in the table below identify the
conditions that are assigned to MS–
DRGs 067 and 068 when reported as a
principal diagnosis.
DRG assignment for MS–DRGs 061, 062,
and 063.
Code description
Introduction
Introduction
Introduction
Introduction
Introduction
Introduction
Introduction
Introduction
23:27 Aug 11, 2017
of
of
of
of
of
of
of
of
other
other
other
other
other
other
other
other
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thrombolytic
thrombolytic
thrombolytic
thrombolytic
thrombolytic
thrombolytic
thrombolytic
thrombolytic
PO 00000
into
into
into
into
into
into
into
into
peripheral vein, open approach.
peripheral vein, percutaneous approach.
central vein, open approach.
central vein, percutaneous approach.
peripheral artery, open approach.
peripheral artery, percutaneous approach.
central artery, open approach.
central artery, percutaneous approach.
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ICD–10–PCS code
3E08017 ...............
3E08317 ...............
38021
Code description
Introduction of other thrombolytic into heart, open approach.
Introduction of other thrombolytic into heart, percutaneous approach.
At the onset of stroke symptoms, tPA
must be given within 3 hours (or up to
4.5 hours for certain eligible patients) in
an attempt to dissolve a clot and
improve blood flow to the specific area
affected in the brain. If, upon receiving
the tPA, the stroke symptoms
completely resolve within 24 hours and
imaging studies (if performed) are
negative, the patient has suffered what
is clinically defined as a transient
ischemic attack, not a stroke. According
to the requestor, the current MS–DRG
assignments do not account for this
subset of patients who were successfully
treated with tPA to prevent a stroke.
In addition, the requestor expressed
concerns regarding documentation and
quality of the data. For example, the
requestor noted that the terms ‘‘strokein-evolution’’ and ‘‘aborted stroke’’ may
be documented as a ‘‘workaround’’ for
a patient exhibiting symptoms of a
stroke who receives tPA and, regardless
of the outcome, would result in
assignment to MS–DRG 061, 062, or
063. Therefore, in cases where the
patient’s stroke symptoms completely
resolved upon receiving tPA and the
patient clinically suffered a precerebral
occlusion or transient ischemia, this
documentation practice is incorrectly
labeling these patients as having had a
stroke and ultimately leading to
inaccurate data.
As discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19822
through 19824), we analyzed claims
data from the December 2016 update of
the FY 2016 MedPAR file for MS–DRGs
061, 062, and 063. Our findings are
shown in the tables below.
MS–DRGS FOR ACUTE ISCHEMIC STROKE WITH USE OF THROMBOLYTIC AGENT
Number of
cases
MS–DRG
MS–DRG 061–All cases ..............................................................................................................
MS–DRG 062–All cases ..............................................................................................................
MS–DRG 063–All cases ..............................................................................................................
Our analysis also consisted of claims
data for MS–DRGs 067 and 068 when
reported with a procedure code
describing the use of tPA. As shown in
the table below, the total number of
cases reported in MS–DRG 067 was 811,
with an average length of stay of 4.8
days and average costs of $10,248. There
were 9 cases in MS–DRG 067 with a
precerebral occlusion receiving tPA,
with an average length of stay of 5.2
days and average costs of $20,156. The
total number of cases reported in MS–
DRG 068 was 3,809, with an average
Average
length of stay
4,528
8,600
1,859
6.4
4.2
3.0
Average costs
$20,270
14,124
11,898
length of stay of 2.8 days and average
costs of $6,555. There were 33 cases in
MS–DRG 068 with a precerebral
occlusion receiving tPA, with an
average length of stay of 4.3 days and
average costs of $13,814.
MS–DRGS FOR PRECEREBRAL OCCLUSION WITH USE OF THROMBOLYTIC AGENT
Number of
cases
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
067—All cases ............................................................................................................
067—Cases with tPA ..................................................................................................
068—All cases ............................................................................................................
068—Cases with tPA ..................................................................................................
As we stated in the proposed rule, we
recognize that while the volume of cases
for patients with a diagnosis of
precerebral occlusion receiving tPA in
MS–DRGs 067 and 068 is relatively low,
the average length of stay is longer, and
the average costs for this subset of
patients is approximately twice the
amount of the average costs in
comparison to all cases in MS–DRGs
067 and 068.
We then analyzed claims data for
cases in MS–DRG 069 when reported
with a procedure code describing the
use of tPA. As shown in the table below,
Average
length of stay
811
9
3,809
33
4.8
5.2
2.8
4.3
Average costs
$10,248
20,156
6,555
13,814
the total number of cases reported in
MS–DRG 069 was 50,633, with an
average length of stay of 2.5 days and
average costs of $5,518. There were 554
cases of transient ischemia receiving
tPA, with an average length of stay of
3.2 days and average costs of $12,481.
MS–DRG FOR TRANSIENT ISCHEMIA WITH USE OF THROMBOLYTIC AGENT
Number of
cases
sradovich on DSK3GMQ082PROD with RULES2
MS–DRG
MS–DRG 069—All cases ............................................................................................................
MS–DRG 069—Cases with tPA ..................................................................................................
Similar to the findings for MS–DRGs
067 and 068, the number of cases for
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transient ischemia receiving tPA in MS–
DRG 069 was relatively low in
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50,633
554
Average
length of stay
2.5
3.2
Average costs
$5,518
12,481
comparison to all the cases in the MS–
DRG, with a longer average length of
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stay and approximately twice the
amount of average costs in comparison
to all cases in MS–DRG 069.
We stated in the proposed rule that
the results of analysis of the data and
the advice of our clinical advisors
support adding the ICD–10–CM
diagnosis codes in MS–DRGs 067, 068,
and 069 to the list of principal
diagnoses in MS–DRGs 061, 062, and
063 to better account for this subset of
patients who were successfully treated
with tPA to prevent a stroke, to identify
the increasing use of thrombolytics at
the onset of symptoms of a stroke, to
further encourage appropriate physician
documentation for a precerebral
occlusion or transient ischemic attack
when patients are treated with tPA, and
to reflect more appropriate payment for
the resources involved in evaluating and
treating these patients. We stated that
we believe this approach will improve
accuracy of the data and assist in
addressing the concern that facilities
may be reporting incorrect diagnoses for
this subset of patients.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19824), for FY
2018, we proposed to add the ICD–10–
CM diagnosis codes listed earlier in this
section that are currently assigned to
MS–DRGs 067 and 068 and the ICD–10–
CM diagnosis codes currently assigned
to MS–DRG 069 to the GROUPER logic
for MS–DRGs 061, 062, and 063 when
those conditions are sequenced as the
principal diagnosis and reported with
an ICD–10–PCS procedure code
describing use of a thrombolytic agent
(for example, tPA). We invited public
comments on our proposal.
We also proposed to retitle MS–DRGs
061, 062, and 063 as ‘‘Ischemic Stroke,
Precerebral Occlusion or Transient
Ischemia with Thrombolytic Agent with
MCC, with CC and without CC/MCC’’,
respectively, and to retitle MS–DRG 069
as ‘‘Transient Ischemia without
Thrombolytic’’.
We invited public comments on our
proposals.
Comment: Several commenters
supported the proposal to modify the
GROUPER logic for MS–DRGs 061, 062,
and 063 to better account for the subset
of patients who are treated successfully
with tPA at the onset of stroke
symptoms. The commenters agreed that
this change will encourage appropriate
physician documentation for a
precerebral occlusion or transient
ischemic attack when patients are
treated with tPA and that it will more
accurately reflect proper payment for
stroke care. Commenters also agreed
with retitling MS–DRGs 061, 062, 063
and 069. One commenter who
supported the proposals also suggested
that CMS consider developing new MS–
DRGs in the future to specifically
distinguish acute ischemic strokes from
precerebral occlusions and transient
ischemia, with and without
thrombolytics, with and without MCC/
CC, respectively.
Response: We appreciate the
commenters’ support. As additional
ICD–10 claims data become available,
we will continue to welcome input from
the public and consider further
modifications to the ICD–10 MS–DRGs
if warranted.
After consideration of the public
comments that we received, we are
finalizing our proposal to add the ICD–
10–CM diagnosis codes listed earlier in
this section that are currently assigned
to MS–DRGs 067 and 068 and the ICD–
10–CM diagnosis codes currently
assigned to MS–DRG 069 to the
GROUPER logic for MS–DRGs 061, 062,
and 063 when those conditions are
sequenced as the principal diagnosis
and reported with an ICD–10–PCS
procedure code describing use of a
thrombolytic agent (for example, tPA).
We also are finalizing our proposal to
retitle MS–DRGs 061, 062, and 063 as
‘‘Ischemic Stroke, Precerebral Occlusion
or Transient Ischemia with
Thrombolytic Agent with MCC, with CC
and without CC/MCC’’, respectively,
and to retitle MS–DRG 069 as
‘‘Transient Ischemia without
Thrombolytic’’ effective October 1, 2017
for the ICD–10 MS–DRGs Version 35.
3. MDC 2 (Diseases and Disorders of the
Eye: Swallowing Eye Drops
(Tetrahydrozoline)
We received a request to reassign the
following ICD–10–CM diagnosis codes
that capture swallowing eye drops from
MS–DRGs 124 and 125 (Other Disorders
of the Eye with and without MCC,
respectively) to MS–DRGs 917 and 918
(Poisoning and Toxic Effects of Drugs
with and without MCC, respectively).
The requestor described a case where a
patient was treated following
swallowing eye drops, specifically
Tetrahydrozoline, which the provider
considers to be a poisoning, not a
disorder of the eye.
• T49.5X1A (Poisoning by
ophthalmological drugs and
preparations, accidental (unintentional),
initial encounter);
• T49.5X2A (Poisoning by
ophthalmological drugs and
preparations, intentional self-harm,
initial encounter);
• T49.5X3A (Poisoning by
ophthalmological drugs and
preparations, assault, initial encounter);
and
• T49.5X4A (Poisoning by
ophthalmological drugs and
preparations, undetermined, initial
encounter).
As stated in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19824
through 19825), we agree with the
requestor that the four diagnosis codes
describe a poisoning, not a disorder of
the eye. We examined claims data for
cases in MS–DRGs 124 and 125 from the
December 2016 update of the FY 2016
MedPAR file. Our findings are shown in
the table below.
MS–DRG 124 AND 125 CASES
Number of
cases
MS–DRG
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MS–DRG
MS–DRG
MS–DRG
MS–DRG
124—All cases ............................................................................................................
124—Cases reporting poisoning by ophthalmological drugs and preparations code
125—All cases ............................................................................................................
125—Cases reporting poisoning by ophthalmological drugs and preparations code
As shown in the table above, there
were only 2 cases of poisoning by
ophthalmological drugs and
preparations—1 case in MS–DRG 124
with an average length of stay of 2 days
and average costs of $3,007 and 1 case
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in MS–DRG 125 with an average length
of stay of 2 days and average costs of
$1,446. The case of poisoning by
ophthalmological drugs and
preparations in MS–DRG 124 had a
shorter average length of stay than the
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874
1
3,205
1
Average
length of stay
4.8
2.0
3.3
2.0
Average
costs
$8,826
3,007
5,565
1,446
average length of stay for all cases in
MS–DRG 124 (2.0 days compared to 4.8
days) and lower average costs than the
average costs for all cases in MS–DRG
124 ($3,007 compared to $8,826). The
case of poisoning by ophthalmological
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drugs and preparations in MS–DRG 125
also had a shorter average length of stay
than the average length of stay for all
cases in MS–DRG 125 (2.0 days
compared to 3.3 days) and lower
average costs than the average costs for
all cases in MS–DRG 125 ($1,446
compared to $5,565).
We also examined claims data on
cases reported in MS–DRGs 917 and 918
from the December 2016 update of the
FY 2016 MedPAR file. Our findings are
shown in the table below.
MS–DRGS 917 AND 918 CASES
Number of
cases
MS–DRG
MS–DRG 917— All cases ...........................................................................................................
MS–DRG 918—All cases ............................................................................................................
As shown in the table above, the 2
cases of poisoning by ophthalmological
drugs and preparations also had shorter
average lengths of stay than the average
length of stay for all cases in MS–DRGs
917 and 918 (2.0 days compared to 4.8
days in MS–DRG 917 and 2.0 days
compared to 3.0 days in MS–DRG 918).
The average costs also were lower for
the 2 cases of poisoning by
ophthalmological drugs and
preparations than the average costs for
all cases in MS–DRGs 917 and 918
($3,007 compared to $9,882 for all cases
in MS–DRG 917 and $1,446 compared
to $5,326 for all cases in MS–DRG 918).
Therefore, cases with this type of
poisoning had lower average lengths of
stay and lower average costs than all
other cases assigned to MS–DRGs 124
and 125 and cases in MS–DRGs 917 and
918 where poisonings are assigned.
Because the codes clearly capture a
poisoning and not an eye disorder, we
stated in the proposed rule that we
believe that these codes are more
appropriately assigned to MS–DRGs 917
and 918 where other poisonings are
assigned. Our clinical advisors also
reviewed this issue and agreed that the
codes should be moved from MS–DRGs
124 and 125 to MS–DRGs 917 and 918
because they clearly capture a poisoning
and not a disorder of the eye. Because
MS–DRGs 917 and 918 contain cases
with multiple types of poisonings, it is
expected that some types of poisoning
cases will have longer lengths of stay
and greater average costs than other
types of poisoning cases. Therefore, in
the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 19824 through 19825), we
proposed to reassign the following ICD–
10–CM diagnosis codes from MS–DRGs
124 and 125 to MS–DRGs 917 and 918
for FY 2018: T49.5X1A; T49.5X2A;
T49.5X3A; and T49.5X4A.
We invited public comments on our
proposal.
Comment: Several commenters
supported CMS’ proposal to reassign
four poisoning codes from MS–DRGs
124 and 125 to MS–DRGs 917 and 918.
The commenters stated that the
proposal was reasonable considering the
information provided.
Response: We appreciate the
commenters’ support for our proposal.
After consideration of the public
comments that we received, we are
finalizing our proposal to reassign the
following ICD–10–CM diagnosis codes
from MS–DRGs 124 and 125 to MS–
DRGs 917 and 918 for FY 2018:
ICD–10–PCS code
sradovich on DSK3GMQ082PROD with RULES2
0WHC01Z
0WHC31Z
0WHC41Z
0WHD01Z
0WHD31Z
0WHD41Z
............
............
............
............
............
............
Average
costs
4.8
3.0
$9,882
5,326
T49.5X1A; T49.5X2A; T49.5X3A; and
T49.5X4A.
4. MDC 5 (Diseases and Disorders of the
Circulatory System)
a. Percutaneous Cardiovascular
Procedures and Insertion of a
Radioactive Element
Currently, under ICD–10–PCS, the
logic for MS–DRG 246 (Percutaneous
Cardiovascular Procedures with DrugEluting Stent with MCC or 4+ Vessels or
Stents), MS–DRG 247 (Percutaneous
Cardiovascular Procedures with DrugEluting Stent without MCC), MS–DRG
248 (Percutaneous Cardiovascular
Procedures with Non-Drug-Eluting Stent
with MCC or 4+ Vessels or Stents), and
MS–DRG 249 (Percutaneous
Cardiovascular Procedures with NonDrug-Eluting Stent without MCC)
includes six procedure codes that
describe the insertion of a radioactive
element. When any of these six
procedure codes are reported without
the reporting of a percutaneous
cardiovascular procedure code, they are
assigned to MS–DRG 264 (Other
Circulatory System O.R. Procedures).
The six specific procedure codes are
shown in the table below.
Code description
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
of
of
of
of
of
of
radioactive
radioactive
radioactive
radioactive
radioactive
radioactive
Unlike procedures involving the
insertion of stents, none of the
procedures described by the procedure
codes listed above are performed in
conjunction with a percutaneous
cardiovascular procedure, and two of
the six procedures described by these
procedure codes (ICD–10–PCS codes
0WHC01Z and 0WHD01Z) are not
performed using a percutaneous
approach, but rather describe an open
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24,061
Average
length of stay
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element
element
element
element
element
element
into
into
into
into
into
into
mediastinum, open approach.
mediastinum, percutaneous approach.
mediastinum, percutaneous endoscopic approach.
pericardial cavity, open approach.
pericardial cavity, percutaneous approach.
pericardial cavity, percutaneous endoscopic approach.
approach to performing the specific
procedure. We stated in the proposed
rule that our clinical advisors agreed
that these procedures should not be
used to classify cases within MS–DRGs
246 through 249 because they are not
performed in conjunction with a
percutaneous cardiovascular procedure.
Furthermore, the indications for the
insertion of a radioactive element
typically involve a diagnosis of cancer,
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Fmt 4701
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whereas the indications for the insertion
of a coronary artery stent typically
involve a diagnosis of coronary artery
disease.
We conducted an analysis for the six
procedures described by these
procedure codes by reviewing the
claims data for MS–DRGs 246 through
249 from the December 2016 update of
the FY 2016 MedPAR file. We did not
find any cases where any one of the six
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procedure codes listed above was
reported. As noted earlier, when any of
these six procedure codes are reported
without the reporting of a percutaneous
cardiovascular procedure code, the case
is assigned to MS–DRG 264. Therefore,
as we discussed in the proposed rule,
our clinical advisors also agreed that it
would be more appropriate to remove
these six procedure codes from MS–
DRGs 246 through 249, but maintain
their current assignment in MS–DRG
264. Based on our analysis and the
advice from our clinical advisors, in the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 19825 through 19826), for FY
2018, we proposed to remove ICD–10–
PCS procedure codes 0WHC01Z,
0WHC31Z, 0WHC41Z, 0WHD01Z,
0WHD31Z, and 0WHD41Z from MS–
DRGs 246 through 249, but maintain
their current assignment in MS–DRG
264.
We invited public comments on our
proposal to remove the six procedure
codes listed above from MS–DRGs 246
through 249. We also invited public
comments on our proposal to maintain
their current assignment in MS–DRG
264.
Comment: Commenters supported the
proposal to remove the six procedure
codes describing insertion of radioactive
element into the mediastinum and
insertion of radioactive element into the
pericardial cavity from MS–DRGs 246
through 249 and to maintain their
assignment in MS–DRG 264.
Response: We appreciate the
commenters’ support.
Comment: One commenter noted that
CMS did not discuss how we identified
the listed procedure codes or why CMS
believes these procedure codes were
assigned to MS–DRGs 246 through 249
erroneously. However, the commenter
also agreed with the proposal to remove
the six procedure codes describing
insertion of radioactive element into the
mediastinum and insertion of
radioactive element into the pericardial
cavity from MS–DRGs 246 through 249
and to maintain their assignment in
MS–DRG 264. The commenter
acknowledged that eliminating
erroneous assignments that may have
occurred as a result of the transition to
ICD–10 is important and requires
ongoing efforts.
Response: We appreciate the
commenter’s support. In response to the
comment regarding how these
procedure codes were identified, as
discussed in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19825), we
recognized the fact that two of the six
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procedure codes describing insertion of
radioactive element (0WHC01Z and
0WHD01Z) are not performed using a
percutaneous approach, but rather
described an open approach to
performing the specific procedure and
their assignment was to a group of
‘‘percutaneous’’ cardiovascular
procedure MS–DRGs. Because the
comparable translation of these
procedure codes under ICD–9–CM,
procedure code 92.27 (Implantation or
insertion of radioactive element) did not
specify an approach, all comparable
ICD–10–PCS translations of the ICD–9–
CM code were automatically replicated
to the same ICD–10 MS–DRGs during
the transition. We agree with the
commenter that eliminating erroneous
assignments that may have occurred as
a result of the transition to ICD–10 is
important and requires ongoing efforts.
After consideration of the public
comments that we received, we are
finalizing our proposal to remove ICD–
10–PCS procedure codes 0WHC01Z,
0WHC31Z, 0WHC41Z, 0WHD01Z,
0WHD31Z, and 0WHD41Z from MS–
DRGs 246 through 249, and maintain
their current assignment in MS–DRG
264 effective October 1, 2017 for ICD–
10 MS–DRGs Version 35.
b. Proposed Modification of the Titles
for MS–DRG 246 (Percutaneous
Cardiovascular Procedures With DrugEluting Stent With MCC or 4+ Vessels
or Stents) and MS–DRG 248
(Percutaneous Cardiovascular
Procedures With Non-Drug-Eluting
Stent With MCC or 4+ Vessels or Stents)
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19826), we
proposed to revise the titles for MS–
DRGs 246 (Percutaneous Cardiovascular
Procedures with Drug-Eluting Stent
with MCC or 4+ Vessels or Stents) and
MS–DRG 248 (Percutaneous
Cardiovascular Procedures with NonDrug-Eluting Stent with MCC or 4+
Vessels or Stents) to better reflect the
ICD–10–PCS terminology of ‘‘arteries’’
versus ‘‘vessels’’ as used in the
procedure code titles within the
classification. Specifically, we proposed
to revise the title of MS–DRG 246 to
‘‘Percutaneous Cardiovascular
Procedures with Drug-Eluting Stent
with MCC or 4+ Arteries or Stents’’. We
proposed to revise the title of MS–DRG
248 to ‘‘Percutaneous Cardiovascular
Procedures with Non-Drug-Eluting Stent
with MCC or 4+ Arteries or Stents’’. We
invited public comments on our
proposals.
PO 00000
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Fmt 4701
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Comment: Commenters agreed with
the proposal to update the titles for MS–
DRG 246 and MS–DRG 248 to better
reflect the ICD–10–PCS terminology of
‘‘arteries’’ versus ‘‘vessels’’ as used in
the procedure code titles within the
classification. One commenter noted
that this change adds specificity and
makes sense anatomically because
percutaneous coronary intervention
procedures are performed in arteries,
which are a type of vessel.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments that we received, we are
finalizing our proposal to revise the
titles for MS–DRGs 246 and MS–DRG
248. We are finalizing the title of MS–
DRG 246 to ‘‘Percutaneous
Cardiovascular Procedures with DrugEluting Stent with MCC or 4+ Arteries
or Stents’’ and the title of MS–DRG 248
to ‘‘Percutaneous Cardiovascular
Procedures with Non-Drug-Eluting Stent
with MCC or 4+ Arteries or Stents’’
effective October 1, 2017 for ICD–10
MS–DRGs Version 35.
c. Transcatheter Aortic Valve
Replacement (TAVR) and Left Atrial
Appendage Closure (LAAC)
We received a request to create new
MS–DRGs for cases involving
transcatheter aortic valve replacement
(TAVR) and left atrial appendage
closure (LAAC) procedures when
performed in combination in the same
operative episode. The requestor stated
that there are both clinical and financial
advantages for the patient when
performing concomitant procedures. For
example, the requestor indicated that
the clinical advantages for the patient
may include single exposure to
anesthesia and a reduction in overall
procedure time, while the financial
advantages may include lower costsharing. The requestor further believed
that a single hospitalization for these
concomitant procedures could be costeffective for various providers and
payers.
TAVR is indicated and approved as a
treatment option for patients diagnosed
with symptomatic aortic stenosis who
are not surgical candidates for
traditional open surgical techniques.
Cases involving TAVR procedures are
assigned to MS–DRGs 266 and 267
(Endovascular Cardiac Valve
Replacement with MCC and without
MCC, respectively), and are identified
by the following ICD–10–PCS procedure
codes shown in the table below.
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ICD–10–PCS code
02RF37Z
02RF38Z
02RF3JZ
02RF3KZ
02RF37H
02RF38H
02RF3JH
02RF3KH
..............
..............
..............
..............
..............
..............
..............
.............
38025
Code description
Replacement
Replacement
Replacement
Replacement
Replacement
Replacement
Replacement
Replacement
of
of
of
of
of
of
of
of
aortic
aortic
aortic
aortic
aortic
aortic
aortic
aortic
valve
valve
valve
valve
valve
valve
valve
valve
LAAC is indicated and approved as a
treatment option for patients diagnosed
with atrial fibrillation. Cases involving
LAAC procedures are assigned to MS–
DRGs 273 and 274 (Percutaneous
Intracardiac Procedures with MCC and
without MCC, respectively), and are
identified by ICD–10–PCS procedure
code 02L73DK (Occlusion of left atrial
appendage with intraluminal device,
percutaneous approach).
The requestor suggested that the
structure of the possible new MS–DRGs
for TAVR procedures performed in
combination with LAAC procedures
could be modeled similar to the
structure of MS–DRGs 266 and 267.
While contemplating creation of the
new MS–DRGs, the requestor asked
CMS to also consider subdividing the
with
with
with
with
with
with
with
with
autologous tissue substitute, percutaneous approach.
zooplastic tissue, percutaneous approach.
synthetic substitute, percutaneous approach.
nonautologous tissue substitute, percutaneous approach.
autologous tissue substitute, transapical, percutaneous approach.
zooplastic tissue, transapical, percutaneous approach.
synthetic substitute, transapical, percutaneous approach.
nonautologous tissue substitute, transapical, percutaneous approach.
possible new MS–DRGs into two
severity levels and title them as follows:
• Suggested MS–DRG 26x
(Endovascular Cardiac Valve
Replacement with LAAC with MCC);
and
• Suggested MS–DRG 26x
(Endovascular Cardiac Valve
Replacement with LAAC without MCC).
As discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19826
through 19827), we analyzed claims
data from the December 2016 update of
the FY 2016 MedPAR file for MS–DRGs
266 and 267 and identified the cases
reporting TAVR procedures with and
without an LAAC procedure. As shown
in the table below, the data findings
show that the total number of cases
reported in MS–DRG 266 was 9,949,
with an average length of stay of 7.2
days and average costs of $56,762. There
were 9,872 cases involving a TAVR
procedure, with an average length of
stay of 7.2 days and average costs of
$56,628. There was only one case
identified in MS–DRG 266 where both
a TAVR and an LAAC procedure were
reported. This case had an average
length of stay of 21.0 days and average
costs of $60,226. For MS–DRG 267, the
total number of cases found was 13,290,
with an average length of stay of 3.5
days and average costs of $45,297. There
were 13,245 cases involving a TAVR
procedure, with an average length of
stay of 3.5 days and average costs of
$45,302. There were no cases identified
in MS–DRG 267 where both a TAVR
and an LAAC procedure were reported.
MS–DRGS FOR TAVR PROCEDURES
Number of
cases
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
266—All cases ............................................................................................................
266—Cases with TAVR ..............................................................................................
266—Cases TAVR and LAAC ....................................................................................
267—All cases ............................................................................................................
267—Cases with TAVR ..............................................................................................
267—Cases TAVR and LAAC ....................................................................................
We then analyzed claims data in MS–
DRGs 273 and 274 for cases reporting an
LAAC procedure. As shown in the table
below, the data findings show that the
total number of cases reported in MS–
DRG 273 was 6,541, with an average
length of stay of 7.7 days and average
costs of $26,042. There were 179 cases
involving an LAAC procedure, with an
average length of stay of 3.6 days and
average costs of $30,131. For MS–DRG
274, the total number of cases found
9,949
9,872
1
13,290
13,245
0
Average
length of stay
7.2
7.2
21.0
3.5
3.5
0
Average
costs
$56,762
56,628
60,226
45,297
45,302
0
was 14,441, with an average length of
stay of 3.0 days and average costs of
$20,267. There were 2,428 cases
involving an LAAC procedure, with an
average length of stay of 1.2 days and
average costs of $26,213.
MS–DRGS FOR LAAC PROCEDURES
Number of
cases
MS–DRG
sradovich on DSK3GMQ082PROD with RULES2
MS–DRG
MS–DRG
MS–DRG
MS–DRG
273—All cases ............................................................................................................
273—Cases with LAAC ..............................................................................................
274—All cases ............................................................................................................
274—Cases with LAAC ..............................................................................................
We stated in the proposed rule that
the analysis of claims data for MS–DRGs
266, 267, 273, and 274 and input from
our clinical advisors do not support
creating new MS–DRGs for TAVR and
LAAC procedures when performed in
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23:27 Aug 11, 2017
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combination in the same operative
episode. We found only one case in
MS–DRG 266 where both a TAVR and
an LAAC procedure were reported and
the claims data for cases reporting an
LAAC procedure in MS–DRGs 273 and
PO 00000
Frm 00037
Fmt 4701
Sfmt 4700
6,541
179
14,441
2,428
Average
length of stay
7.7
3.6
3.0
1.2
Average
costs
$26,042
30,131
20,267
26,213
274 support their current assignment.
Our clinical advisors agreed the current
MS–DRG assignments are appropriate
for each respective procedure.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19827), we
E:\FR\FM\14AUR2.SGM
14AUR2
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did not propose to create new MS–DRGs
for cases involving TAVR and LAAC
procedures when performed in
combination in the same operative
episode. We invited public comments
on our proposal to maintain the current
MS–DRG structure for TAVR procedures
in MS–DRGs 266 and 267, as well as the
current MS–DRG structure for LAAC
procedures in MS–DRGs 273 and 274.
Comment: Commenters supported the
proposal to maintain the current MS–
DRG structure for TAVR and LAAC
procedures when performed in
combination in the same operative
episode.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments that we received, we are
finalizing our proposal to maintain the
current MS–DRG structure for TAVR
procedures in MS–DRGs 266 and 267, as
well as the current MS–DRG structure
for LAAC procedures in MS–DRGs 273
and 274 effective October 1, 2017 for
ICD–10 MS–DRGs Version 35.
d. Percutaneous Mitral Valve
Replacement Procedures
We received a request to reassign four
ICD–10–PCS procedure codes that
describe percutaneous mitral valve
replacement procedures from MS–DRGs
216 through 221 (Cardiac Valve and
Other Major Cardiothoracic Procedures
with and without Cardiac
Catheterization with MCC, with CC and
without CC/MCC, respectively) to MS–
DRGs 266 and 267 (Endovascular
Cardiac Valve Replacement with MCC
and without MCC, respectively). The
requestor indicated that there are
inconsistencies in the current
GROUPER logic for endovascular
cardiac valve replacement procedures.
Specifically, the requestor stated that
ICD–10–PCS
procedure code
02RG37Z ..............
02RG38Z ..............
02RG3JZ ..............
02RG3KZ .............
Code description
Replacement
Replacement
Replacement
Replacement
of
of
of
of
mitral
mitral
mitral
mitral
valve
valve
valve
valve
We stated in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19827
through 19828) that we agree with the
requestor regarding the intent of the
creation of MS–DRGs 266 and 267. As
discussed in the FY 2015 IPPS/LTCH
PPS final rule (79 FR 49890 through
49893), MS–DRGs 266 and 267 were
created to uniquely classify the subset of
high-risk cases representing patients
who undergo a cardiac valve
replacement procedure performed by a
percutaneous (endovascular) approach.
As such, we agree that all cardiac valve
replacement procedures should be
grouped within the same MS–DRG. In
FY 2015, under the ICD–9–CM
classification, there was not a specific
procedure code for a percutaneous
mitral valve replacement procedure.
Therefore, when we converted from the
with
with
with
with
autologous tissue substitute, percutaneous approach.
zooplastic tissue, percutaneous approach.
synthetic substitute, percutaneous approach.
nonautologous tissue substitute, percutaneous approach.
ICD–9 based MS–DRGs to the ICD–10
MS–DRGs, there was not a code
available from which to replicate. We
refer the reader to the FY 2015 IPPS/
LTCH PPS final rule (79 FR 49890
through 49893) for a detailed discussion
on the initial request to create new MS–
DRGs for endovascular cardiac valve
replacement procedures, as well as the
FY 2016 IPPS/LTCH PPS final rule (80
FR 49354 through 49358) and the FY
2017 IPPS/LTCH PPS final rule (81 FR
56787 through 56790) for a detailed
discussion of the conversion to ICD–10
MS–DRGs, including our analysis of
claims data and the need to accurately
replicate the ICD–9–CM based MS–
DRGs.
The requestor also noted that a
proposal was discussed at the
September 13–14, 2016 ICD–10
Coordination and Maintenance
sradovich on DSK3GMQ082PROD with RULES2
ICD–10–PCS
procedure code
02RJ37H ..............
02RJ37Z ...............
02RJ38H ..............
02RJ38Z ...............
02RJ3JH ..............
02RJ3JZ ...............
02RJ3KH ..............
02RJ3KZ ..............
VerDate Sep<11>2014
the procedure codes that describe both
the percutaneous approach and the
transapical, percutaneous approach for
the aortic and pulmonary valves are
included in MS–DRGs 266 and 267.
However, for the mitral valve, the
GROUPER logic only includes the
procedure codes that describe the
transapical, percutaneous approach.
The requestor also stated that when
MS–DRGs 266 and 267 were created, the
intent was to include percutaneous
replacement procedures for all cardiac
valves. Therefore, the requestor
recommended that CMS reassign the
four ICD–10–PCS procedure codes
shown in the table below that describe
mitral valve replacement procedures,
performed with the percutaneous
approach from MS–DRGs 216 through
221 to MS–DRGs 266 and 267 to more
appropriately group these procedures
within the MS–DRG structure.
Committee meeting involving the
creation of procedure codes that
describe percutaneous tricuspid valve
replacement procedures and, if
finalized, these new procedure codes
would also be assigned to MS–DRGs 266
and 267.
As shown in the table below and in
Table 6B.–New Procedure Codes, which
is associated with the proposed rule and
this final rule and available via the
Internet on the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/, there are eight new
procedure codes that describe tricuspid
valve replacement procedures
performed with percutaneous and
transapical types of percutaneous
approaches that will be effective
October 1, 2017.
Code description
Replacement
Replacement
Replacement
Replacement
Replacement
Replacement
Replacement
Replacement
23:27 Aug 11, 2017
of
of
of
of
of
of
of
of
tricuspid
tricuspid
tricuspid
tricuspid
tricuspid
tricuspid
tricuspid
tricuspid
Jkt 241001
valve
valve
valve
valve
valve
valve
valve
valve
PO 00000
with
with
with
with
with
with
with
with
autologous tissue substitute, transapical, percutaneous Approach.
autologous tissue substitute, percutaneous approach.
zooplastic tissue, transapical, percutaneous approach.
zooplastic tissue, percutaneous approach.
synthetic substitute, transapical, percutaneous approach.
synthetic substitute, percutaneous approach.
nonautologous tissue substitute, transapical, percutaneous approach.
nonautologous tissue substitute, percutaneous approach.
Frm 00038
Fmt 4701
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14AUR2
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We stated in the proposed rule that
we agree with the requestor and believe
that, in addition to the four procedure
codes that describe the percutaneous
mitral valve replacement procedures
listed earlier in this section, the eight
codes that describe percutaneous and
transapical types of percutaneous
tricuspid valve replacement procedures
also should be grouped with the other
endovascular cardiac valve replacement
procedures. Therefore, in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19827 through 19828), we proposed to
reassign the four percutaneous mitral
valve replacement procedures described
by the procedure codes listed in the
table above from MS–DRGs 216 through
221 to MS–DRGs 266 and 267. In
addition, we proposed to assign the
eight new procedure codes (also listed
in a separate table above) that describe
percutaneous and transapical,
percutaneous tricuspid valve
replacement procedures to MS–DRGs
266 and 267.
We invited public comments on our
proposals.
Comment: Many commenters
supported the proposal to reassign the
four percutaneous mitral valve
replacement procedures from MS–DRGs
216 through 221 to MS–DRGs 266 and
267 and to assign the eight new
procedure codes that describe
percutaneous and transapical,
percutaneous tricuspid valve
replacement procedures to MS–DRGs
266 and 267. Commenters noted that
these updates will appropriately reflect
the clinical characteristics and resource
use for this group of endovascular
cardiac valve replacement procedures.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments that we received, we are
finalizing our proposal to reassign the
four percutaneous mitral valve
replacement procedures described by
the procedure codes listed in the table
above from MS–DRGs 216 through 221
to MS–DRGs 266 and 267 and assign the
eight new procedure codes (also listed
in a separate table above) that describe
percutaneous and transapical,
percutaneous tricuspid valve
replacement procedures to MS–DRGs
266 and 267 effective October 1, 2017
for ICD–10 MS–DRGs Version 35.
e. Percutaneous Tricuspid Valve Repair
We received a request to reassign
cases reporting ICD–10–PCS procedure
code 02UJ3JZ (Supplement tricuspid
valve with synthetic substitute,
percutaneous approach) from MS–DRGs
216 through 221 (Cardiac Valve and
Other Major Cardiothoracic Procedures
with and without Cardiac
Catheterization with MCC, with CC and
without CC/MCC, respectively) to MS–
DRGs 228 and 229 (Other
Cardiothoracic Procedures with MCC
and without MCC, respectively).
According to the requestor, reassigning
cases involving these procedures would
more appropriately align the
cohesiveness with other clinically
similar procedures, such as
percutaneous mitral valve repair (for
38027
example, procedures involving the
Mitraclip) described by procedure code
02UG3JZ (Supplement mitral valve with
synthetic substitute, percutaneous
approach), which are assigned to MS–
DRGs 228 and 229.
The requestor noted that the FORMA
Tricuspid Transcatheter Repair System
(herein after referred to as the FORMA
system) is currently in clinical trials in
the United States, Europe, and Canada,
but has not received FDA approval/
clearance marketing authorization.
However, the FORMA system is
presently available through a
compassionate use program. The
FORMA system technology is indicated
for use in the treatment of patients
diagnosed with tricuspid regurgitation
and occupies the regurgitant area of the
affected valve, providing a surface for
native leaflet coaptation. The requestor
stated that the technology offers a viable
alternative treatment using traditional
tricuspid valve surgery. According to
the requestor, the technology consists of
a rail and a spacer, and the procedure
to insert the device involves
fluoroscopic imaging guidance.
As discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19828
through 19829), we analyzed claims
data from the December 2016 update of
the FY 2016 MedPAR file for MS–DRGs
216 through 221 for cases reporting
procedure code 02UJ3JZ (Supplement
tricuspid valve with synthetic
substitute, percutaneous approach). Our
findings are shown in the following
table.
MS–DRGS FOR CARDIAC VALVE AND OTHER MAJOR CARDIOTHORACIC PROCEDURES
Number of
cases
MS–DRG
sradovich on DSK3GMQ082PROD with RULES2
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
216—All cases ............................................................................................................
216—Cases with percutaneous tricuspid valve repair ...............................................
217—All cases ............................................................................................................
217—Cases with percutaneous tricuspid valve repair ...............................................
218—All cases ............................................................................................................
218—Cases with percutaneous tricuspid valve repair ...............................................
219—All cases ............................................................................................................
219—Cases with percutaneous tricuspid valve repair ...............................................
220—All cases ............................................................................................................
220—Cases with percutaneous tricuspid valve repair ...............................................
221—All cases ............................................................................................................
221—Cases with percutaneous tricuspid valve repair ...............................................
9,139
1
3,536
1
498
0
16,011
6
18,476
1
3,547
0
Average
length of stay
14.4
5.0
8.9
3.0
5.9
0
11.1
9.0
6.8
5.0
5.0
0
Average
costs
$68,304
14,954
45,857
16,234
41,274
0
54,519
58,075
37,506
90,155
33,606
0
We also analyzed claims data for MS–
DRGs 228 and 229. Our findings are
shown in the following table below.
MS–DRGS FOR OTHER CARDIOTHORACIC PROCEDURES
Number of
cases
MS–DRG
MS–DRG 228—All cases ............................................................................................................
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23:27 Aug 11, 2017
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PO 00000
Frm 00039
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E:\FR\FM\14AUR2.SGM
3,466
14AUR2
Average
length of stay
9.8
Average
costs
$47,435
38028
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MS–DRGS FOR OTHER CARDIOTHORACIC PROCEDURES—Continued
Number of
cases
MS–DRG
sradovich on DSK3GMQ082PROD with RULES2
MS–DRG 229—All cases ............................................................................................................
The claims data show that there were
very few cases reported for performing
a percutaneous tricuspid valve repair
procedure in MS–DRGs 216 through
221. Of the 6 cases found in MS–DRG
219, with average costs of $58,075, the
average cost of these cases aligned with
the average cost of all cases in the MS–
DRG assignment ($54,519). We stated in
the proposed rule that the data analysis
and our clinical advisors do not support
reassigning cases reporting procedure
code 02UJ3JZ to MS–DRGs 228 and 229.
The current MS–DRG assignment for
percutaneous tricuspid valve repair
procedures to MS–DRGs 216 through
221 is clinically coherent with the other
percutaneous procedures performed on
the heart valves that are currently
assigned to these MS–DRGs.
Percutaneous repair of the aortic,
pulmonary and tricuspid valves
utilizing various tissue substitutes
(autologous, nonautologous, zooplastic,
and synthetic) are assigned to MS–DRGs
216 through 221. The exception is the
percutaneous mitral valve repair, which,
as the requestor pointed out, is assigned
to MS–DRGs 228 and 229 as discussed
in the FY 2017 IPPS/LTCH PPS final
rule (81 FR 56809 through 56813). Our
clinical advisors also agreed that the
limited number of cases reported in
MS–DRGs 216 through 221 does not
warrant reassignment.
As a result of our review and the
input from our clinical advisors, in the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 19829), we did not propose to
reassign cases reporting procedure code
02UJ3JZ from MS–DRGs 216 through
221 to MS–DRGs 228 and 229.
We invited public comments on our
proposal to maintain the current MS–
DRG assignment for cases reporting
procedure code 02UJ3JZ.
Comment: Commenters supported the
proposal to maintain the current MS–
DRG assignment for ICD–10–PCS
procedure code 02UJ3JZ in MS–DRGs
216 through 221. One commenter also
noted that, while CMS’ analysis
demonstrated the current assignment is
appropriate, CMS should consider
revisiting this procedure in the future in
the event it becomes more common and
warrants further consideration for
reassignment. The commenter believed
that there could be value in creating
MS–DRGs for endovascular cardiac
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23:27 Aug 11, 2017
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repair similar to those MS–DRGs for
endovascular cardiac valve replacement.
Response: We appreciate the
commenters’ support. As additional
ICD–10 claims data become available,
we will continue to welcome input from
the public and consider further
modifications to the ICD–10 MS–DRGs
if warranted.
Comment: One commenter did not
agree with the proposal to maintain the
current MS–DRG assignment for ICD–
10–PCS procedure code 02UJ3JZ in MS–
DRGs 216 through 221. The commenter
stated that transcatheter tricuspid valve
repair procedures are clinically coherent
with other percutaneous transcatheter
cardiac valve repair procedures. This
commenter asserted that the devices
utilized in these procedures are
currently under clinical investigation
and the utilization of these technologies
is expected to increase through clinical
trials. Therefore, the commenter
suggested that these procedures should
be assigned to MS–DRGs 228 and 229.
Response: As we noted in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19829), the results of our analysis of the
current MS–DRG assignment for
percutaneous tricuspid valve repair
procedures to MS–DRGs 216 through
221 and the advice of our clinical
advisors demonstrate that this
procedure is clinically coherent with
the other percutaneous procedures
performed on the heart valves that are
currently assigned to these MS–DRGs
because percutaneous repair of the
aortic, pulmonary, and tricuspid valves
utilizing various tissue substitutes
(autologous, nonautologous, zooplastic,
and snythetic) are assigned to MS–DRGs
216 through 221. We will continue to
consider further modifications to the
ICD–10 MS–DRGs as additional ICD–10
claims data become available that
support suggested changes.
After consideration of the public
comments that we received, we are
finalizing our proposal to maintain the
current MS–DRG assignment for cases
reporting procedure code 02UJ3JZ
(Supplement tricuspid valve with
synthetic substitute, percutaneous
approach) to MS–DRGs 216 through 221
for FY 2018.
PO 00000
Frm 00040
Fmt 4701
Sfmt 4700
4,553
Average
length of stay
4.9
Average
costs
33,347
5. MDC 8 (Diseases and Disorders of the
Musculoskeletal System and Connective
Tissue)
a. Total Ankle Replacement (TAR)
Procedures
For FY 2018, we again received two
requests for the reassignment of total
ankle replacement (TAR) procedures to
a different MS–DRG. TAR procedures
are currently assigned to MS–DRGs 469
and 470 (Major Joint Replacement or
Reattachment of Lower Extremity with
and without MCC, respectively). This
topic was discussed previously in the
FY 2015 IPPS/LTCH PPS proposed and
final rules (79 FR 28013 through 28015
and 79 FR 49896 through 49899,
respectively) and in the FY 2017 IPPS/
LTCH PPS proposed and final rules (81
FR 24989 through 24990 and 81 FR
56814 through 56816, respectively). For
FY 2015 and FY 2017, we did not
change the MS–DRG assignment for
TAR procedures. The requestors
indicated that TAR procedures are
currently assigned to MS–DRGs 469 and
470, to which total hip replacement and
total knee replacement procedures also
are assigned. The requestors stated that
there are significant clinical and cost
differences among these procedures,
which results in underpayment for TAR
procedures. The requestors asked CMS
to examine claims data for the following
six ICD–10–PCS codes within MS–DRGs
469 and 470:
• 0SRF0J9 (Replacement of right
ankle joint with synthetic substitute,
cemented, open approach);
• 0SRF0JA (Replacement of right
ankle joint with synthetic substitute,
uncemented, open approach);
• 0SRF0JZ (Replacement of right
ankle joint with synthetic substitute,
open approach);
• 0SRG0J9 (Replacement of left ankle
joint with synthetic substitute,
cemented, open approach);
• 0SRG0JA (Replacement of left ankle
joint with synthetic substitute,
uncemented, open approach); and
• 0SRG0JZ (Replacement of left ankle
joint with synthetic substitute, open
approach).
The requestors recommended that, if
the claims data show a disparity in costs
between TAR procedures and total hip
and knee replacement procedures, the
TAR procedures be reassigned to a more
appropriate MS–DRG.
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The requestors also stated that total
ankle replacement is a complicated
surgery that involves the replacement of
the damaged parts of the three bones
that comprise the ankle joint, as
compared to the two bones in hip and
knee replacement procedures.
Furthermore, as the smallest weightbearing large joint in the body, the
requestors stated that TAR procedures
demand a complexity of implant device
design, engineering, and manufacture to
exacting functional specifications that is
vastly different from that of total hip
and knee replacement devices. One of
the requestors stated that the ankle
region typically has poorer circulation
and thinner soft tissue coverage than the
hip and knee, leading to a higher risk of
wound complications and infection that
may be more challenging and expensive
to treat. In addition, this requestor
stated that the unique anatomical
characteristics and function of the ankle
joint require a specialized surgical skill
set, operative technique, and level of
38029
operating room resource utilization that
is vastly dissimilar from that of total hip
and knee replacement procedures.
As discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19829
through 19830), we examined claims
data from the December 2016 update of
the FY 2016 MedPAR file on reported
cases of TAR procedures in MS–DRGs
469 and 470. Our findings are shown in
the table below.
TOTAL ANKLE REPLACEMENTS PROCEDURES
Number of
cases
MS–DRG
sradovich on DSK3GMQ082PROD with RULES2
MS–DRG
MS–DRG
MS–DRG
MS–DRG
469—All cases ............................................................................................................
469—Cases reporting TAR procedure codes .............................................................
470—All cases ............................................................................................................
470—Cases reporting TAR procedure codes .............................................................
As shown in the table above, for MS–
DRG 469, there were a total of 25,778
cases, with an average length of stay of
6.7 days and average costs of $22,139.
Of the 25,778 cases in MS–DRG 469,
there were 31 cases reporting a TAR
procedure, with an average length of
stay of 4.6 days and average costs of
$23,828. For MS–DRG 470, there were a
total of 461,553 cases, with an average
length of stay of 2.7 days and average
costs of $14,751. Of the 461,553 cases in
MS–DRG 470, there were 2,114 cases
reporting a TAR procedure, with an
average length of stay of 1.9 days and
average costs of $20,862. As mentioned
earlier, there were only 31 TAR
procedure cases in MS–DRG 469, and
these cases had average costs of $1,689
higher than the average costs of all cases
within MS–DRG 469. The relatively
small number of cases may have been
impacted by other factors. Several
expensive cases could impact the
average costs for a very small number of
patients. We also note that the average
length of stay for the TAR procedure
cases was 4.6 days, as compared to 6.7
days for all cases within MS–DRG 469.
The 2,114 TAR procedure cases in MS–
DRG 470 had average costs that were
$6,111 higher than the average costs of
all cases in MS–DRG 470 ($20,862
compared to $14,751 for all cases). We
stated in the proposed rule that the data
support reassigning all of the TAR
procedures to MS–DRG 469, even when
there is no MCC reported. While the
average costs of the TAR procedures in
MS–DRG 470 are lower than the average
costs for all cases in MS–DRG 469
($20,862 compared to $22,139), the
average costs are much closer to the
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23:27 Aug 11, 2017
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average costs of TAR procedure cases in
MS–DRG 470.
We stated in the proposed rule that
our clinical advisors reviewed this
clinical issue and the claims data, and
agreed that it is clinically appropriate to
reassign all of the TAR procedure cases
from MS–DRG 470 to MS–DRG 469,
even when there is no MCC reported.
The claims data support the fact that
these cases require more resources than
other cases assigned to MS–DRG 470.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19829
through 19830), we proposed to reassign
the following TAR procedure codes
from MS–DRG 470 to MS–DRG 469,
even if there is no MCC reported:
0SRF0J9; 0SRF0JA; 0SRF0JZ; 0SRG0J9;
0SRG0JA; and 0SRG0JZ for FY 2018.
We proposed to change the titles of
MS–DRGs 469 and 470 to the following
to reflect these proposed MS–DRG
reassignments:
• Proposed retitle of MS–DRG 469:
‘‘Major Hip and Knee Joint Replacement
or Reattachment of Lower Extremity
with MCC or Total Ankle Replacement’’;
and
• Proposed retitle of MS–DRG 470:
‘‘Major Hip and Knee Joint Replacement
or Reattachment of Lower Extremity
without MCC.’’
We invited public comments on our
proposals.
Comment: Several commenters
supported CMS’ recommendation to
reassign the following TAR procedure
codes from MS DRG 470 to MS DRG
469, even if there is no MCC reported:
0SRF0J9; 0SRF0JA; 0SRF0JZ; 0SRG0J9;
0SRG0JA; and 0SRG0JZ for FY 2018.
The commenters also supported the
change in MS–DRG titles for MS–DRG
PO 00000
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Fmt 4701
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25,778
31
461,553
2,114
Average
length of stay
6.7
4.6
2.7
1.9
Average
costs
$22,139
23,828
14,751
20,862
469 and 470 to reflect this MS–DRG
update. One commenter stated that
claims data supported this
recommendation because, as CMS
pointed out, the average costs of TAR
cases in MS–DRG 470 are much closer
to the average costs of all cases in MS–
DRG 469 ($20,862 versus $22,139). The
commenter also agreed with the CMS
clinical advisors that it was clinically
appropriate to reassign all TAR
procedure cases from MS–DRG 470 to
MS–DRG 469, even when there is no
MCC reported. The commenter stated
that the update will remedy a historical
cost-to-payment disparity, and thus
enable hospitals to continue offering
Primary TAR surgery to Medicare
beneficiaries as an economically
sustainable, and clinically viable,
alternative to ankle fusion when
medically appropriate. The commenter
commended CMS for its consideration
of how to address this MS–DRG issue.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments that we received, we are
reassigning the following TAR
procedure codes from MS DRG 470 to
MS DRG 469, even if there is no MCC
reported: 0SRF0J9; 0SRF0JA; 0SRF0JZ;
0SRG0J9; 0SRG0JA; and 0SRG0JZ for FY
2018. We are changing the titles of MS–
DRGs 469 and 470 to the following to
reflect these MS–DRG reassignments:
• MS–DRG 469: ‘‘Major Hip and Knee
Joint Replacement or Reattachment of
Lower Extremity with MCC or Total
Ankle Replacement’’; and
• MS–DRG 470: ‘‘Major Hip and Knee
Joint Replacement or Reattachment of
Lower Extremity without MCC.’’
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b. Revision of Total Ankle Replacement
(TAR) Procedures
We received two requests to modify
the MS–DRG assignment for revision of
total ankle replacement (TAR)
procedures, which the requestors
indicated are assigned to MS–DRGs 515,
516, and 517 (Other Musculoskeletal
System and Connective Tissue O.R.
Procedures with MCC, with CC, and
without CC/MCC, respectively). This
topic was discussed in the FY 2015
IPPS/LTCH PPS proposed and final
rules (79 FR 28013 through 28015 and
79 FR 49896 through 49899,
respectively) and in the FY 2017 IPPS/
LTCH PPS proposed and final rules (81
FR 24992 through 24993 and 81 FR
56819 through 56820, respectively). For
FY 2015 and FY 2017, we did not
change the MS–DRG assignment for
revision of TAR procedures.
The requestors asked that CMS
examine the following eight ICD–10–
PCS codes which they indicated
identify revision of TAR procedures and
which are assigned to MS–DRGs 515,
516, and 517. As we discuss later in this
section in response to public comments,
while the requestors requested that we
analyze these eight procedure codes for
revisions of TAR procedures in the
proposed rule, these procedures are in
fact represented by a combination of
other codes that capture the root
operation removal and replacement of
joint devices.
• 0SWF0JZ (Revision of synthetic
substitute in right ankle joint, open
approach);
• 0SWF3JZ (Revision of synthetic
substitute in right ankle joint,
percutaneous approach);
• 0SWF4JZ (Revision of synthetic
substitute in right ankle joint,
percutaneous endoscopic approach);
• 0SWFXJZ (Revision of synthetic
substitute in right ankle joint, external
approach);
• 0SWG0JZ (Revision of synthetic
substitute in left ankle joint, open
approach);
• 0SWG3JZ (Revision of synthetic
substitute in left ankle joint,
percutaneous approach);
• 0SWG4JZ (Revision of synthetic
substitute in left ankle joint,
percutaneous endoscopic approach);
and
• 0SWGXJZ (Revision of synthetic
substitute in left ankle joint, external
approach).
One requestor stated that these ICD–
10–PCS codes more specifically identify
the revision of TAR procedures than the
prior ICD–9–CM codes. Specifically,
ICD–9–CM code 81.59 (Revision of joint
replacement of lower extremity, not
elsewhere classified) was an unspecified
code, which included toe and foot joint
revision procedures in addition to
revision of TAR procedures. The
requestor stated that claims data
reporting these ICD–10–PCS codes
would allow CMS to better identify
revisions of TAR procedures, and
determine if the procedures are assigned
to the appropriate MS–DRGs.
One requestor suggested the following
three options for MS–DRG assignments:
• Assign the ICD–10–PCS ankle
revision procedure codes to MS–DRGs
466, 467, and 468 (Revision of Hip or
Knee Replacement with MCC, with CC,
and without CC/MCC, respectively), and
rename MS–DRGs 466, 467, and 468 as
‘‘Revision of Hip, Knee or Ankle with
MCC, with CC, and without CC/MCC,’’
respectively);
• Assign the ICD–10–PCS ankle
revision procedure codes to MS–DRG
469 (Major Joint Replacement or
Reattachment of Lower Extremity with
MCC) to more appropriately recognize
higher hospital procedure costs
associated with revision of TAR
procedures; or
• Establish a new MS–DRG for the
assignment of revision of TAR
procedures.
The other requestor asked that CMS
consider reassigning revision of TAR
procedures to MS–DRGs that better
address the cost-to-payment differential,
such as MS–DRGs 466, 467, and 468.
As discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19830
through 19831), we examined claims
data from the December 2016 update of
the FY 2016 MedPAR file on cases
reporting the eight revision codes listed
above as well as cases assigned to MS–
DRGs 466, 467, 468, and MS–DRG 469.
Our findings are shown in the tables
below.
REVISIONS OF JOINT REPLACEMENTS PROCEDURES
Number of
cases
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
515—All cases ............................................................................................................
515—Cases reporting revision of total ankle replacement procedure codes ............
516—All cases ............................................................................................................
516—Cases reporting revision of total ankle replacement procedure codes ............
517—All cases ............................................................................................................
517—Cases reporting revision of total ankle replacement procedure codes ............
5,038
0
13,276
2
13,330
4
Average
length of stay
8.0
0
4.8
2.5
2.8
1.5
Average
costs
$20,562
0
13,524
11,400
10,003
7,423
CASES IN MS–DRGS 466, 467, 468, AND 469
Number of
cases
MS–DRG
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MS–DRG
MS–DRG
MS–DRG
MS–DRG
466—All
467—All
468—All
469—All
cases
cases
cases
cases
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
As shown in the tables above, there
were only 6 cases identified with the
eight revision codes suggested by the
requestor with no cases in MS–DRG
515, two cases in MS–DRG 516, and
four cases in MS–DRG 517. We stated in
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the proposed rule that the limited
number of six cases does not justify the
creation of a new MS–DRG for the
assignment of revision of TAR
procedures. Our data analysis
demonstrates that the average length of
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3,886
19,145
16,529
25,778
Average
length of stay
8.4
4.2
2.7
6.7
Average costs
$33,720
24,609
20,208
22,139
stay for these revision procedures was
lower than that for all cases in MS–DRG
516 (2.5 days compared to 4.8 days),
and the average costs were lower
($11,400 compared to $13,524). The
average length of stay for these revision
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procedures also was lower than that for
all cases in MS–DRG 517 (1.5 days
compared to 2.8 days), and the average
costs were lower ($7,423 compared to
$10,003). We stated that the data do not
support reassigning the cases from MS–
DRGs 515, 516, and 517.
Furthermore, we stated that the
average length of stay and average costs
of cases in MS–DRGs 466, 467, 468, and
469 are significantly higher than those
for these revision procedures in MS–
DRG 516 and 517. We stated that the
average length of stay for all cases in
MS–DRGs 466, 467, 468, and 469 is 8.4,
4.2, 2.7, and 6.7 days, respectively,
compared to the average length of stay
of 2.5 and 1.5 days for cases
representing these revision procedures
in MS–DRGs 516 and 517, respectively.
The average costs for all cases in MS–
DRGs 466, 467, 468, and 469 are
$33,720, $24,609, $20,208, and $22,139,
respectively, compared to the average
costs of $11,400 and $7,423 for cases
representing these revision procedures
in MS–DRGs 516 and 517, respectively.
Therefore, we stated that in the
proposed rule that the data do not
support reassigning the cases to MS–
DRGs 466, 467, 468, or 469.
We stated in the proposed rule that
our clinical advisors reviewed the
clinical issue and the claims data and
agreed that the eight revision codes are
appropriately assigned to MS–DRGs
515, 516, and 517, along with other
procedures that describe revisions of
joint replacements of the lower
extremities, including the foot and toe.
Our clinical advisors did not support
reassigning these cases to MS–DRGs
466, 467, 468, or 469, or creating a new
MS–DRG. Therefore, based on the
findings of our analysis of claims data
and the advice of our clinical advisors,
in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19830 through
19831), we proposed to maintain the
current MS–DRG assignment for these
revision procedures within MS–DRGs
515, 516, and 517 for FY 2018.
Comment: Commenters supported
CMS’ proposal to maintain the current
MS–DRG assignments for procedures
within MS–DRGs 515, 516, and 517 for
FY 2018.
Several commenters questioned the
reliability of the revision of TAR data
presented in the proposed rule. The
commenters questioned the codes used
in the analysis and stated that revision
of TAR procedures are not captured
with the Revision of synthetic substitute
codes identified in the proposed rule.
The commenters stated that the
procedures are captured by reporting a
combination of codes that capture the
removal of a prior device and the
replacement of the device with a new
device. The commenters stated that the
correct root operations for these codes
would be Removal and Replacement
instead of Revision as stated in the
proposed rule. The commenters
provided the following codes which
reported in combination would identify
revision of TAR procedures. The
commenters stated that revisions of TAR
procedures are performed with an open
approach.
Removals
• 0SPG0JZ (Removal of Synthetic
Substitute from Left Ankle Joint, Open
Approach); and
• 0SPF0JZ (Removal of Synthetic
Substitute from Right Ankle Joint, Open
Approach)
Replacements
• 0SRF0J9 (Replacement of right
ankle joint with synthetic substitute,
cemented, open approach);
• 0SRF0JA (Replacement of right
ankle joint with synthetic substitute,
uncemented, open approach);
• 0SRF0JZ (Replacement of right
ankle joint with synthetic substitute,
open approach);
• 0SRG0J9 (Replacement of left ankle
joint with synthetic substitute,
cemented, open approach);
• 0SRG0JA (Replacement of left ankle
joint with synthetic substitute,
uncemented, open approach); and
• 0SRG0JZ (Replacement of left ankle
joint with synthetic substitute, open
approach).
The commenters requested that CMS
encourage the correct coding of revision
of TAR cases through additional
educational materials. The commenters
requested that CMS review hospital
claims data for revision of TAR
procedures using the list of Removal
and Replacement code combinations
provided to identify revision of TAR
cases. The commenter stated that an
increasing number of claims for revision
of TAR procedures will become
38031
identifiable in the future as patients and
implants naturally age into a need for
revision surgery.
Response: We appreciate the
commenters’ support for our proposal to
maintain the current MS–DRG
assignment for procedures within MS–
DRGs 515, 516, and 517 for FY 2018.
We conducted an analysis of the
correct coding of revision of TARs and
agree with the commenters that these
cases are not captured with ICD–10–PCS
codes with the root operation Revision
as stated in the proposed rule. The
commenters are correct that the revision
of TAR cases are correctly coded using
a combination of codes with the root
operation Removal and Replacement as
the commenters suggested. Updates
were made to the ICD–10–PCS index on
October 1, 2015 to reinforce this
direction. The index entry is shown
below:
Revision
Correcting a portion of existing device
see Revision of device in Removal of
device without replacement
see Removal of device from
Replacement of existing device
see Removal of device from
see Root operation to place new
device, e.g., Insertion, Replacement,
Supplement
We agree that this index entry clearly
indicates that the correct root operations
for revision of TARs would be Removal
and Replacement. The codes with the
root operation Revision (included in the
Revision of synthetic substitute codes
used in our original analysis) would not
be used to capture revision of TAR
procedures. Cases reporting the
combination codes are assigned to MS–
DRGs 469 and 470 (Major Joint
Replacement or Reattachment of Lower
Extremity with and without MCC,
respectively).
As requested by the commenters, we
identified revision of TAR cases using
the correct ICD–10–PCS codes that are
captured with the root operation of
Removal and Replacement. We
examined our claims data for cases
within MDC 8 that reported one of the
Removal codes with one of the
Replacement codes for ankle joint
devices. These codes accurately capture
revision of TAR cases. The following
table shows our findings.
REVISION OF TOTAL ANKLE REPLACEMENT PROCEDURES USING CODE COMBINATIONS
Number
of cases
MS–DRG
MS–DRG 469—All cases ............................................................................................................
MS–DRG 469—Cases reporting revision of TAR code combinations ........................................
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25,778
0
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Average
length
of stay
Average
costs
6.7
........................
$22,139
........................
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REVISION OF TOTAL ANKLE REPLACEMENT PROCEDURES USING CODE COMBINATIONS—Continued
Number
of cases
MS–DRG
MS–DRG 470—All cases ............................................................................................................
MS–DRG 470—Cases reporting revision of TAR code combinations ........................................
Using the updated correct ICD–10–
PCS codes, we found that there were 59
revision of TAR procedures in MS–DRG
470 with average costs of $19,594 and
average length of stay of 1.7 days
compared to average costs of $14,751
and average length of stay of 2.7 days for
all cases in MS–DRG 470. There were no
revision of TAR procedures in MS–DRG
469. As discussed in section II.5.a. of
the preamble of this final rule on Total
Ankle Replacements, we are finalizing
updates to reassign all of the TAR
procedure codes to MS–DRG 469, even
if there is no MCC present, for FY 2018.
This update will also impact revision of
TAR cases because the same total ankle
replacement codes are also used to
identify revision of TAR procedures.
Therefore, the MS–DRG 469 and 470
updates result in all revision of TAR
procedures being assigned to MS–DRG
469 even if there is no MCC reported in
FY 2018.
Revisions of TARs were assigned to
MS–DRGs 515, 516, and 517 under the
ICD–9–CM MS–DRGs. However, an
error in replication for the ICD–10 MS–
DRGs resulted in the revision of TAR
procedure cases being assigned to MS–
DRGs 469 and 470. This replication
error was not noticed until the
commenters on the FY 2018 IPPS/LTCH
PPS proposed rule pointed out that
accurate coding of revision of TARs
would result in cases not being assigned
to MS–DRGs 515, 516, and 517. Since
the implementation of ICD–10 MS–
DRGs, revision of TAR procedure cases
have not been assigned to MS–DRGs
515, 516, and 517. Therefore, we do not
need to modify MS–DRG logic to
reassign revision of TAR procedures
from MS–DRGs 515, 516, and 517
because correctly coded cases are not
assigned there, but instead to MS–DRGs
469 and 470. As noted earlier, under our
finalized policy for FY 2018, all revision
of TAR procedures will be assigned to
MS–DRG 469, even if there is no MCC
reported.
We agree with the commenters that it
is important to encourage the accurate
and consistent use of ICD–10–PCS to
capture procedures such as revision of
TAR. Therefore, we have asked the
American Hospital Association to
provide additional information on how
to capture revision of TARs in a future
issue of Coding Clinic for ICD–10. We
encourage any providers that have
revision of TAR cases on which they
need ICD–10 coding assistance to
submit this information and their
questions to the American Hospital
Association’s Central Office on ICD–10
at https://www.codingclinic
advisor.com/. We share information
included in Coding Clinic for ICD–10
with our contractors.
After consideration of the public
comments that we received, we are not
finalizing any changes to MS–DRGs 515,
516, and 517 for FY 2018 because, as
noted, the revision of TAR procedures
are not assigned to these MS–DRGs.
Under our finalized policy regarding
TAR procedures, as discussed in section
II.5.a. of the preamble of this final rule,
all TAR procedure cases, as well as
revision of TAR procedure cases, will be
assigned to MS–DRG 469 for FY 2018,
even if there is no MCC present.
c. Magnetic Controlled Growth Rods
(MAGEC® System)
We received a request to add six ICD–
10–PCS procedure codes that describe
461,553
59
Average
length
of stay
Average
costs
2.7
1.7
14,751
19,594
the use of magnetically controlled
growth rods for the treatment of early
onset scoliosis (MAGEC® System) to
MS–DRGs 456, 457, and 458 (Spinal
Fusion Except Cervical with Spinal
Curvature or Malignancy or Infection or
Extensive Fusions with MCC, with CC
or without CC/MCC, respectively). The
MAGEC® System was discussed in the
FY 2017 IPPS/LTCH PPS proposed rule
(81 FR 25040 through 25042) and final
rule (81 FR 56888 through 56891) as a
new technology add-on payment
application. The application was
approved for FY 2017 new technology
add-on payments, effective with
discharges occurring on and after
October 1, 2016. The request for new
procedure codes to identify the
MAGEC® System technology was
discussed at the March 9–10, 2016 ICD–
10 Coordination and Maintenance
Committee meeting. Six new procedure
codes were approved, effective October
1, 2016, and were displayed in Table
6B.—New Procedure Codes associated
with the FY 2017 IPPS/LTCH PPS final
rule (which is available via the Internet
on the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/FY2017-IPPS-Final-Rule-HomePage.html). These six procedure codes
are currently assigned to MS–DRGs 518,
519, and 520 (Back and Neck Procedure
Except Spinal Fusion with MCC or Disc
Device/Neurostimulator, with CC, or
without CC/MCC, respectively) and are
shown in the table below.
Code description
XNS0032 ..............
XNS0432 ..............
sradovich on DSK3GMQ082PROD with RULES2
ICD–10–PCS
code
Reposition of lumbar vertebra using magnetically controlled growth rod(s), open approach, new technology group 2.
Reposition of lumbar vertebra using magnetically controlled growth rod(s), percutaneous endoscopic approach, new technology group 2.
Reposition of cervical vertebra using magnetically controlled growth rod(s), open approach, new technology group 2.
Reposition of cervical vertebra using magnetically controlled growth rod(s), percutaneous endoscopic approach, new technology group 2.
Reposition of thoracic vertebra using magnetically controlled growth rod(s), open approach, new technology group 2.
Reposition of thoracic vertebra using magnetically controlled growth rod(s), percutaneous endoscopic approach, new technology group 2.
XNS3032 ..............
XNS3432 ..............
XNS4032 ..............
XNS4432 ..............
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According to the requestor, adding
these six procedure codes will allow
these cases to group to MS–DRGs that
more accurately reflect the diagnosis of
early onset scoliosis for which the
MAGEC® System is indicated. In
addition, the requestor stated that
because this technology is utilized on a
small subset of patients with
approximately 2,500 cases per year,
adding these procedure codes to MS–
DRGs 456, 457, and 458 would have
little impact.
We stated in the proposed rule that
because these six procedure codes
shown in the table above were effective
as of October 1, 2016, there are no
MedPAR claims data available to
analyze. More importantly, we noted
that cases are assigned to MS–DRGs 456,
457, and 458 when an actual spinal
fusion procedure is performed. We
stated that our clinical advisors agree
that use of the MAGEC® System’s
magnetically controlled growth rods
technology alone does not constitute a
spinal fusion. Therefore, because there
were no claims data available at the
time of development of the proposed
rule and based on the advice of our
clinical advisors, in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19832),
we did not propose to add the six
procedure codes to MS–DRGs 456, 457,
or 458. We stated that if a spinal fusion
procedure is performed along with the
procedure to insert the MAGEC®
System’s magnetically controlled
growth rods, it would be appropriate to
report that a spinal fusion was
performed and the case would be
assigned to one of the spinal fusion MS–
DRGs.
We invited public comments on our
proposal to maintain the current
GROUPER logic for cases assigned to
MS–DRGs 456, 457, and 458 and not
add the six procedure codes describing
the use of the MAGEC® System
magnetically controlled growth rods.
We also invited public comments on our
proposal to maintain the assignment of
the six procedure codes in MS–DRGs
518, 519, and 520.
38033
Comment: Commenters agreed with
CMS’ proposal to maintain the
assignment of the six procedure codes
in MS–DRGs 518, 519, and 520 and to
not reassign the six procedure codes
describing the use of the MAGEC®
System magnetically controlled growth
rods to the spinal fusion MS–DRGs 456,
457 and 458.
Response: We appreciate the
commenters’ support. We also take this
time to point out that the three ICD–10–
PCS procedure codes describing
reposition of the vertebra using
magnetically controlled growth rods
with a percutaneous endoscopic
approach listed below have been
deleted as displayed in Table 6D.—
Invalid Procedure Codes associated with
this FY 2018 IPPS/LTCH PPS final rule
(which is available via the Internet on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) effective October 1,
2017 in the ICD–10 MS–DRGs Version
35.
ICD–10–PCS
code
Code description
XNS0432 ..............
Reposition of lumbar vertebra using magnetically controlled growth rod(s), percutaneous endoscopic approach, new technology group 2.
Reposition of cervical vertebra using magnetically controlled growth rod(s), percutaneous endoscopic approach, new technology group 2.
Reposition of thoracic vertebra using magnetically controlled growth rod(s), percutaneous endoscopic approach, new technology group 2.
XNS3432 ..............
XNS4432 ..............
The three ICD–10–PCS procedure
codes listed in the table above were
discussed in a proposal at the March 7–
8, 2017 ICD–10 Coordination and
Maintenance Committee meeting.
Decisions for proposals presented at that
meeting were not finalized at the time
of publication of the FY 2018 IPPS/
LTCH PPS proposed rule. Additional
information relating to the discussion of
these codes can be located via the
Internet on the CMS Web site at: https://
www.cms.gov/Medicare/Coding/ICD9
ProviderDiagnosticCodes/ICD-9-CM-Cand-M-Meeting-Materials.html. Also
included in that discussion was a
proposal to add a new approach value
to the procedures describing Reposition
of the vertebra. As displayed in Table
6B.—New Procedure Codes associated
with this FY 2018 IPPS/LTCH PPS final
rule (which is available via the Internet
on the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/), the following three
ICD–10–PCS codes have been created
effective October 1, 2017 in the ICD–10
MS–DRGs Version 35 and are assigned
to MS–DRGs 518, 519 and 520.
ICD–10–PCS
code
Code description
XNS0332 ..............
Reposition of lumbar vertebra using magnetically controlled growth rod(s), percutaneous approach, new technology group
2.
Reposition of cervical vertebra using magnetically controlled growth rod(s), percutaneous approach, new technology group
2.
Reposition of thoracic vertebra using magnetically controlled growth rod(s), percutaneous approach, new technology group
2.
XNS3332 ..............
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XNS4332 ..............
After consideration of the public
comments that we received, we are
finalizing our proposal to maintain the
current GROUPER logic for cases
assigned to MS–DRGs 456, 457, and
458. We also are finalizing our proposal
to maintain the assignment of the three
existing ICD–10–PCS procedure codes
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(describing an open approach) and
finalizing assignment of the three new
ICD–10–PCS codes (describing a
percutaneous approach) for the use of
magnetically controlled growth rods in
the treatment of early onset scoliosis to
MS–DRGs 518, 519, and 520 for FY
2018.
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d. Combined Anterior/Posterior Spinal
Fusion
It was brought to our attention that 7
of the 10 new ICD–10–PCS procedure
codes describing fusion using a
nanotextured surface interbody fusion
device were not added to the
appropriate GROUPER logic list for MS–
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DRGs 453, 454, and 455 (Combined
Anterior/Posterior Spinal Fusion with
MCC, with CC and without CC/MCC,
respectively), effective October 1, 2016.
The logic for MS–DRGs 453, 454, and
455 is comprised of two lists: An
anterior spinal fusion list and a
posterior spinal fusion list. Assignment
to one of the combined spinal fusion
MS–DRGs requires that a code from
each list be reported.
The seven new ICD–10–PCS
procedure codes currently included in
the posterior spinal fusion list for MS–
DRGs 453, 454, and 455 are shown in
the table below.
ICD–10–PCS
code
Code description
XRG6092 .............
Fusion of thoracic vertebral joint using nanotextured surface interbody fusion device, open approach, new technology group
2.
Fusion of 2 to 7 thoracic vertebral joints using nanotextured surface interbody fusion device, open approach, new technology group 2.
Fusion of 8 or more thoracic vertebral joints using nanotextured surface interbody fusion device, open approach, new technology group 2.
Fusion of thoracolumbar vertebral joint using nanotextured surface interbody fusion device, open approach, new technology
group 2.
Fusion of lumbar vertebral joint using nanotextured surface interbody fusion device, open approach, new technology group
2.
Fusion of 2 or more lumbar vertebral joints using nanotextured surface interbody fusion device, open approach, new technology group 2.
Fusion of lumbosacral joint using nanotextured surface interbody fusion device, open approach, new technology group 2.
XRG7092 .............
XRG8092 .............
XRGA092 .............
XRGB092 .............
XRGC092 .............
XRGD092 .............
We note that the remaining three new
procedure codes are accurately reflected
in the anterior spinal fusion list; that is,
ICD–10–PCS code XRG1092 (Fusion of
cervical vertebral joint using
nanotextured surface interbody fusion
device, open approach, new technology
group 2); ICD–10–PCS code XRG2092
(Fusion of 2 or more cervical vertebral
joints using nanotextured surface
interbody fusion device, open approach,
new technology group 2); and ICD–10–
PCS code XRG4092 (Fusion of
cervicothoracic vertebral joint using
nanotextured surface interbody fusion
device, open approach, new technology
group 2).
The seven procedure codes currently
included in the posterior spinal fusion
list describe an anterior spinal fusion by
use of the interbody fusion device. In an
interbody fusion, the anterior column of
the spine is being fused. We stated in
the proposed rule that the results of our
review of these procedure codes
discussed below and the advice of our
clinical advisors support moving the
seven procedure codes from the
posterior spinal fusion list to the
anterior spinal fusion list in the
GROUPER logic for MS–DRGs 453, 454,
and 455. We stated that this will
improve clinical accuracy and allow
appropriate assignment to these MS–
DRGs when both an anterior and
posterior spinal fusion is performed.
During our review of the spinal fusion
codes using a nanotextured surface
interbody fusion device in MS–DRGs
453, 454, and 455, we identified 149
additional procedure codes that should
be moved from the posterior spinal
fusion list to the anterior spinal fusion
list. These codes describe spinal fusion
of the anterior column with a posterior
approach. As mentioned earlier, the
logic for MS–DRGs 453, 454, and 455 is
dependent upon a code from the
anterior spinal fusion list and a code
from the posterior spinal fusion list.
Spinal fusion codes involving the
anterior column should be included on
the anterior spinal fusion list only. In
the FY 2018 IPPS/LTCH PPS proposed
rule, we proposed to move the 149 ICD–
10–PCS procedure codes listed in Table
6P.3a. associated with the proposed rule
(which is available via the Internet on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) from the posterior
spinal fusion list to the anterior spinal
fusion list in MS–DRGs 453, 454, and
455.
In addition, we also identified 33
ICD–10–PCS procedure codes in the
posterior spinal fusion list in MS–DRGs
453, 454, and 455 that describe an
interbody fusion device in the posterior
column and, therefore, are not
considered clinically valid spinal fusion
procedures. These procedure codes are
shown in the table below.
ICD–10–PCS
code
Code description
0RG00A1 .............
0RG03A1 .............
0RG04A1 .............
Fusion of occipital-cervical joint with interbody fusion device, posterior approach, posterior column, open approach.
Fusion of occipital-cervical joint with interbody fusion device, posterior approach, posterior column, percutaneous approach.
Fusion of occipital-cervical joint with interbody fusion device, posterior approach, posterior column, percutaneous
endoscopic approach.
Fusion of cervical vertebral joint with interbody fusion device, posterior approach, posterior column, open approach.
Fusion of cervical vertebral joint with interbody fusion device, posterior approach, posterior column, percutaneous approach.
Fusion of cervical vertebral joint with interbody fusion device, posterior approach, posterior column, percutaneous
endoscopic approach.
Fusion of 2 or more cervical vertebral joints with interbody fusion device, posterior approach, posterior column, open approach.
Fusion of 2 or more cervical vertebral joints with interbody fusion device, posterior approach, posterior column,
percutaneous approach.
Fusion of 2 or more cervical vertebral joints with interbody fusion device, posterior approach, posterior column,
percutaneous endoscopic approach.
Fusion of cervicothoracic vertebral joint with interbody fusion device, posterior approach, posterior column, open approach.
Fusion of cervicothoracic vertebral joint with interbody fusion device, posterior approach, posterior column, percutaneous
approach.
0RG10A1 .............
0RG13A1 .............
0RG14A1 .............
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0RG20A1 .............
0RG23A1 .............
0RG24A1 .............
0RG40A1 .............
0RG43A1 .............
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ICD–10–PCS
code
Code description
0RG44A1 .............
Fusion of cervicothoracic vertebral joint with interbody fusion device, posterior approach, posterior column, percutaneous
endoscopic approach.
Fusion of thoracic vertebral joint with interbody fusion device, posterior approach, posterior column, open approach.
Fusion of thoracic vertebral joint with interbody fusion device, posterior approach, posterior column, percutaneous approach.
Fusion of thoracic vertebral joint with interbody fusion device, posterior approach, posterior column, percutaneous
endoscopic approach.
Fusion of 2 to 7 thoracic vertebral joints with interbody fusion device, posterior approach, posterior column, open approach.
Fusion of 2 to 7 thoracic vertebral joints with interbody fusion device, posterior approach, posterior column, percutaneous
approach.
Fusion of 2 to 7 thoracic vertebral joints with interbody fusion device, posterior approach, posterior column, percutaneous
endoscopic approach.
Fusion of 8 or more thoracic vertebral joints with interbody fusion device, posterior approach, posterior column, open approach.
Fusion of 8 or more thoracic vertebral joints with interbody fusion device, posterior approach, posterior column,
percutaneous approach.
Fusion of 8 or more thoracic vertebral joints with interbody fusion device, posterior approach, posterior column,
percutaneous endoscopic approach.
Fusion of thoracolumbar vertebral joint with interbody fusion device, posterior approach, posterior column, open approach.
Fusion of thoracolumbar vertebral joint with interbody fusion device, posterior approach, posterior column, percutaneous approach.
Fusion of thoracolumbar vertebral joint with interbody fusion device, posterior approach, posterior column, percutaneous
endoscopic approach.
Fusion of lumbar vertebral joint with interbody fusion device, posterior approach, posterior column, open approach.
Fusion of lumbar vertebral joint with interbody fusion device, posterior approach, posterior column, percutaneous approach.
Fusion of lumbar vertebral joint with interbody fusion device, posterior approach, posterior column, percutaneous
endoscopic approach.
Fusion of 2 or more lumbar vertebral joints with interbody fusion device, posterior approach, posterior column, open approach.
Fusion of 2 or more lumbar vertebral joints with interbody fusion device, posterior approach, posterior column,
percutaneous approach.
Fusion of 2 or more lumbar vertebral joints with interbody fusion device, posterior approach, posterior column,
percutaneous endoscopic approach.
Fusion of lumbosacral joint with interbody fusion device, posterior approach, posterior column, open approach.
Fusion of lumbosacral joint with interbody fusion device, posterior approach, posterior column, percutaneous approach.
Fusion of lumbosacral joint with interbody fusion device, posterior approach, posterior column, percutaneous endoscopic
approach.
0RG60A1 .............
0RG63A1 .............
0RG64A1 .............
0RG70A1 .............
0RG73A1 .............
0RG74A1 .............
0RG80A1 .............
0RG83A1 .............
0RG84A1 .............
0RGA0A1 .............
0RGA3A1 .............
0RGA4A1 .............
0SG00A1 ..............
0SG03A1 ..............
0SG04A1 ..............
0SG10A1 ..............
0SG13A1 ..............
0SG14A1 ..............
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0SG30A1 ..............
0SG33A1 ..............
0SG34A1 ..............
In the proposed rule, we proposed to
delete these 33 procedure codes from
MS–DRGs 453, 454, and 455 for FY
2018. We also noted that some of the
above listed codes also may be included
in the logic for MS–DRGs 456, 457, and
458 (Spinal Fusion Except Cervical with
Spinal Curvature or Malignancy or
Infection or Extensive Fusions with
MCC, with CC or without CC/MCC,
respectively), MS–DRGs 459 and 460
(Spinal Fusion Except Cervical with
MCC and without MCC, respectively),
and MS–DRGs 471, 472, and 473
(Cervical Spinal Fusion with MCC, with
CC and without CC/MCC, respectively).
Therefore, we proposed to delete the 33
procedure codes from the logic for those
spinal fusion MS–DRGs as well. In
addition, we proposed to delete the 33
procedure codes from the ICD–10–PCS
classification as shown in Table 6D.—
Invalid Procedure Codes associated with
the proposed rule (which is available
via the Internet on the CMS Web site at:
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/).
In summary, we invited public
comments on our proposal to move the
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seven procedure codes describing spinal
fusion using a nanotextured surface
interbody fusion device from the
posterior spinal fusion list to the
anterior spinal fusion list in the
GROUPER logic for MS–DRGs 453, 454,
and 455. We also invited public
comments on our proposal to move the
149 procedure codes describing spinal
fusion of the anterior column with a
posterior approach from the posterior
spinal fusion list to the anterior spinal
fusion list in the GROUPER logic for
MS–DRGs 453, 454, and 455. In
addition, we invited public comments
on our proposal to delete the 33
procedure codes describing spinal
fusion of the posterior column with an
interbody fusion device from MS–DRGs
453, 454, 455, 456, 457, 458, 459, 460,
471, 472, and 473, as well as from the
ICD–10–PCS classification.
Comment: Many commenters
supported CMS’ proposals related to the
combined anterior/posterior spinal
fusion MS–DRGs, including (1) support
to move the seven procedure codes
describing spinal fusion using a
nanotextured surface interbody fusion
device from the posterior spinal fusion
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list to the anterior spinal fusion list in
the GROUPER logic for MS–DRGs 453,
454, and 455; (2) support to move the
149 procedure codes describing spinal
fusion of the anterior column with a
posterior approach from the posterior
spinal fusion list to the anterior spinal
fusion list in the GROUPER logic for
MS–DRGs 453, 454, and 455; and (3) to
delete the 33 procedure codes
describing spinal fusion of the posterior
column with an interbody fusion device
from MS–DRGs 453, 454, 455, 456, 457,
458, 459, 460, 471, 472, and 473, as well
as from the ICD–10–PCS classification.
Response: We appreciate the
commenters’ support.
Comment: One commenter expressed
concern with the proposal to move the
149 ICD–10–PCS procedure codes
describing spinal fusion of the anterior
column with a posterior approach that
are currently on the posterior spinal
fusion list to the anterior spinal fusion
list and indicated that the proposed
decrease in payment weights for this set
of MS–DRGs would affect providers’
ability to continue treating patients
necessitating these procedures. The
commenter noted that results from an
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independent analysis it had conducted
demonstrated that reassignment of these
procedure codes and the resulting
combinations for anterior/posterior
spinal fusion are less costly in
comparison to other procedure
combinations assigned to MS–DRGs
453, 454 and 455. This commenter
acknowledged that ICD–10 coded claims
data enable CMS to make important
clinical refinements to the ICD–10 MS–
DRGs. However, the commenter stated,
the resource homogeneity of the MS–
DRGs may be adversely affected. The
commenter also stated that it
understood that the greater specificity of
ICD–10 codes will naturally lead to
changes in the MS–DRG weights and
assignments and that these changes
should generally lead to improved
payment accuracy within the IPPS.
However, the commenter pointed out
that not all weight fluctuations
occurring during the early stages of the
ICD–10 transition necessarily reflect
improvements in coding and payment.
The commenter stated that providers
should not be subject to such disruptive
fluctuations in their payments in a
single year. The commenter
recommended applying a cap to the
decline in the MS–DRG payment
weights relative to the FY 2017 payment
weights until the fluctuations in the
number of cases and the case weights
can be determined and Medicare’s
utilization reflects hospital adaptation
to ICD–10 coding. The commenter
stated that applying a cap would allow
CMS to move forward with the proposal
to move the 149 ICD–10–PCS spinal
fusion procedure codes from the
posterior spinal fusion list to the
anterior spinal fusion list.
Response: We acknowledge the
commenter’s concerns and appreciate
the analysis that was conducted. In
response to the recommendation that we
implement a cap to the decline in the
MS–DRG payment weights relative to
the FY 2017 payment weights, we refer
readers to section II.G. of the preamble
of this FY 2018 IPPS/LTCH PPS final
rule for further discussion regarding
recalibration of the FY 2018 MS–DRG
relative weights, including our response
to comments requesting a transition
period for substantial reductions in
relative weights in order to facilitate
payment stability.
We also believe it is important to be
able to fully evaluate the MS–DRGs for
which all spinal fusion procedures are
currently assigned under ICD–10 with
additional claims data. Therefore, in
response to the public comments
received, we are planning to review the
ICD–10 logic for the MS–DRGs where
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procedures involving spinal fusion are
currently assigned for FY 2019.
After consideration of the public
comments we received, we are
finalizing our proposal to: (1) Move the
seven procedure codes describing spinal
fusion using a nanotextured surface
interbody fusion device from the
posterior spinal fusion list to the
anterior spinal fusion list in the
GROUPER logic for MS–DRGs 453, 454,
and 455; (2) move the 149 procedure
codes describing spinal fusion of the
anterior column with a posterior
approach from the posterior spinal
fusion list to the anterior spinal fusion
list in the GROUPER logic for MS–DRGs
453, 454, and 455; and (3) delete the 33
procedure codes describing spinal
fusion of the posterior column with an
interbody fusion device from MS–DRGs
453, 454, 455, 456, 457, 458, 459, 460,
471, 472, and 473, as well as from the
ICD–10–PCS classification for FY 2018.
6. MDC 14 (Pregnancy, Childbirth and
the Puerperium)
a. Vaginal Delivery and Complicating
Diagnoses
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 56854), we noted that the
code list as displayed in the ICD–10
MS–DRG Version 33 Definitions Manual
for MS–DRG 774 (Vaginal Delivery with
Complicating Diagnoses) required
further analysis to clarify what
constitutes a vaginal delivery to satisfy
the ICD–10 MS–DRG logic. We stated
our plans to conduct further analysis of
the diagnosis code lists in MS–DRG 774
for FY 2018. We stated in the proposed
rule that we believe that the Version 34
Definitions Manual and GROUPER logic
for MS–DRG 774 continues to require
additional analysis to determine how
best to classify a vaginal delivery. For
example, under MS–DRG 774, the
Definitions Manual currently states that
three conditions must be met, the first
of which is a vaginal delivery. To satisfy
this first condition, codes that describe
conditions or circumstances from
among three lists of codes must be
reported. The first list is comprised of
ICD–10–CM diagnosis codes that may be
reported as a principal diagnosis or a
secondary diagnosis. These diagnosis
codes describe conditions in which it is
assumed that a vaginal delivery has
occurred. The second list of codes is a
list of ICD–10–PCS procedure codes that
also describe circumstances in which it
is assumed that a vaginal delivery
occurred. The third list of codes
identifies diagnoses describing the
outcome of the delivery. Therefore, if
any code from one of those three lists
is reported, the first condition (vaginal
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delivery) is considered to be met for
assignment to MS–DRG 774.
As discussed in the proposed rule,
our continued concern with the first list
of ICD–10–CM diagnosis codes as
currently displayed in the Definitions
Manual under the first condition is that
not all of the conditions necessarily
reflect that a vaginal delivery occurred.
Several of the diagnosis codes listed
could also reflect that a cesarean
delivery occurred. For example, ICD–
10–CM diagnosis code O10.02 (Preexisting essential hypertension
complicating childbirth) does not
specify that a vaginal delivery took
place; yet it is included in the list of
conditions that may be reported as a
principal diagnosis or a secondary
diagnosis in the GROUPER logic for a
vaginal delivery. The reporting of this
code also could be appropriate for a
delivery that occurred by cesarean
section.
As noted earlier, the second list of
codes for the first condition are
comprised of ICD–10–PCS procedure
codes. As we stated in the proposed
rule, while we agree that the current list
of procedure codes in MS–DRG 774 may
appropriately describe that a vaginal
delivery occurred, we also believe this
list could be improved and warrants
closer review.
The third list of codes for the first
condition in MS–DRG 774 includes
conditions describing the outcome of
the delivery that would be reported as
secondary diagnoses. Similar to
concerns with the first list of codes, we
believe the conditions do not
necessarily reflect that a vaginal
delivery occurred because they also can
be reported on claims where a cesarean
delivery occurred.
For the second condition in MS–DRG
774 to be met, diagnosis codes that are
identified as a complicating diagnosis
from among two lists may be reported.
The first list is comprised of ICD–10–
CM diagnosis codes that may be
reported as a principal or secondary
diagnosis. The second list is comprised
of ICD–10–CM diagnosis codes that may
be reported as a secondary diagnosis.
Currently, there is only one code listed
under the secondary diagnosis list. We
have concerns with these lists and what
is classified as a complicating diagnosis
when reviewing the code lists for this
and other MS–DRGs that use that logic
in MDC 14.
For the third condition in MS–DRG
774 to be met, a limited set of O.R.
procedures, including both extensive
and nonextensive procedures, are listed.
We have concerns with this third
condition as being needed to satisfy the
logic for a vaginal delivery MS–DRG.
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In summary, the MS–DRG logic
involving a vaginal delivery under MDC
14 is technically complex as a result of
the requirements that must be met to
satisfy assignment to the affected MS–
DRGs. As discussed in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19834), upon review and discussion,
our clinical advisors recommended, and
we agreed, that we should solicit public
comments on further refinement to the
following four MS–DRGs related to
vaginal delivery: MS–DRG 767 (Vaginal
Delivery with Sterilization and/or D&C);
MS–DRG 768 (Vaginal Delivery with
O.R. Procedure Except Sterilization and/
or D&C); MS–DRG 774 (Vaginal Delivery
with Complicating Diagnosis); and MS–
DRG 775 (Vaginal Delivery without
Complicating Diagnosis).
In addition, our clinical advisors
agreed that we should solicit public
comments on further refinement to the
conditions defined as a complicating
diagnosis in MS–DRG 774 and MS–DRG
781 (Other Antepartum Diagnoses with
Medical Complications).
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19834), we
solicited public comments on which
diagnosis or procedure codes, or both,
should be considered in the logic to
identify a vaginal delivery and which
diagnosis codes should be considered in
the logic to identify a complicating
diagnosis. As MS–DRGs 767, 768, 774,
775, and 781 incorporate one or both
aspects (vaginal delivery or
complicating diagnosis), we stated that
public comments that we receive from
this solicitation will be helpful in
determining what proposed revisions to
the current logic should be made. We
indicated that we will review public
comments received in response to this
solicitation as we continue to evaluate
these areas under MDC 14 and, if
warranted, we would propose
refinements for FY 2019. We requested
that all comments be directed to the
CMS MS–DRG Classification Change
Request Mailbox located at: MSDRG
ClassificationChange@cms.hhs.gov by
November 1, 2017.
Comment: Commenters agreed that
the MS–DRG logic for a vaginal delivery
under MDC 14 is technically complex.
One commenter stated its intention to
provide separate comments related to
the solicitation in accordance with the
November 1, 2017 deadline.
Response: We thank the commenters
for their acknowledgment of the
complexity with the GROUPER logic for
vaginal deliveries under MDC 14 and for
their support and consideration of these
issues as we continue to consider
possible refinement to the logic. We will
review the comments received in
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response to the solicitation as we
continue to evaluate this area and, if
warranted, we will propose refinements
for the FY 2019 rulemaking.
b. MS–DRG 998 (Principal Diagnosis
Invalid as Discharge Diagnosis)
The logic for MS–DRG 998 (Principal
Diagnosis Invalid as Discharge
Diagnosis) currently includes a list of
diagnoses that are considered
inappropriate for reporting as a
principal diagnosis on an inpatient
hospital claim. In other words, these
conditions would reasonably be
expected not to necessitate an inpatient
admission. Examples of these diagnosis
codes include what are referred to as the
‘‘Supervision of pregnancy’’ codes, as
well as pregnancy, maternal care and
fetal related codes with an ‘‘unspecified
trimester’’. We refer the reader to the
ICD–10 Version 34 Definitions Manual
which is available via the Internet on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/FY2017-IPPS-Final-Rule-HomePage-Items/FY2017-IPPS-Final-RuleData-Files.html?DLPage=1&DLEntries=
10&DLSort=0&DLSortDir=ascending for
the complete list of diagnosis codes in
MS–DRG 998 under MDC 14.
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 56840 through 56841), there
was discussion regarding the
supervision of ‘‘high-risk’’ pregnancy
codes, including elderly primigravida
and multigravida specifically, with
regard to removing them from the
Unacceptable principal diagnosis edit
code list in the Medicare Code Editor
(MCE). After consultation with the staff
at the CDC’s NCHS, we learned that the
FY 2017 ICD–10–CM Official Guidelines
for Coding and Reporting were updated
to explain appropriate coding for this
set of codes. As a result, the codes
describing supervision of high-risk
pregnancy (and other supervision of
pregnancy codes) remained on the
Unacceptable principal diagnosis edit
code list in the MCE. Therefore, the
MCE code edit is consistent with the
logic of MS–DRG 998 (Principal
Diagnosis Invalid as Discharge
Diagnosis) for these supervision of
pregnancy codes.
However, as a result of our review and
consultation with our clinical advisors
regarding the ‘‘unspecified trimester’’
codes in MS–DRG 998, as discussed in
the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 19835), we determined that
there are more appropriate MS–DRG
assignments for this set of codes.
Although it may seem unlikely that a
patient would be admitted and
ultimately discharged or transferred
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38037
without the caregiver or medical
personnel having any further knowledge
of the exact trimester, it is conceivable
that a situation may present itself. For
example, the pregnant patient may be
from out of town or unable to
communicate effectively. The fact that
the specific trimester is not known or
documented does not preclude the
resources required to care for the patient
with the particular diagnosis.
Therefore, as shown in Table 6P.3b.
associated with the proposed rule
(which is available via the Internet on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/), we proposed to
remove the 314 ICD–10–CM diagnosis
codes identified with ‘‘unspecified
trimester’’ from MS–DRG 998 and
reassign them to the MS–DRGs in which
their counterparts (first trimester,
second trimester, or third trimester) are
currently assigned as specified in
Column C. We stated that this would
enable more appropriate MS–DRG
assignments and payment for these
cases. We invited public comments on
our proposal.
Comment: Commenters agreed with
the proposal to remove the 314 ICD–10–
CM diagnosis codes identified with
‘‘unspecified trimester’’ from MS–DRG
998 and reassign them to the MS–DRGs
in which their counterparts (first
trimester, second trimester, or third
trimester) are currently assigned.
However, one commenter disagreed
with the proposal and noted that lack of
documentation that specifies the
trimester on an inpatient record is
representative of poor documentation
and should not be acceptable for valid
MS–DRG assignment. This commenter
believed that the trimester could
reasonably be determined or estimated,
despite the patient’s circumstances,
such as being from out of town or
unable to communicate effectively.
Response: We appreciate the
commenters’ support. In response to the
commenter who did not support our
proposal, we acknowledge that any
diagnosis involving the term
‘‘unspecified’’ in a code title can appear
to be the result of poor documentation.
However, there are several instances
across the ICD–10 MS–DRG GROUPER
logic where an ‘‘unspecified’’ principal
diagnosis leads to a valid MS–DRG
assignment as a result of the resources
and/or complexities involved regarding
the condition itself. The ‘‘unspecified
trimester’’ diagnoses involved in the
proposal included significant clinical
conditions such as eclampsia,
preexisting hypertensive heart disease,
and cerebral venous thrombosis, to
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name a few. The fact that the trimester
is not specified does not preclude the
significance of these conditions nor the
resources involved in caring for the
patients with these conditions.
Therefore, while we encourage
providers to continue to focus efforts on
improving their respective facilities
medical record documentation
practices, we also believe that the MS–
DRG assignment should appropriately
reflect the resources involved in
evaluating and caring for these patients.
After consideration of the public
comments we received, we are
finalizing our proposal to remove the
314 ICD–10–CM diagnosis codes
identified with ‘‘unspecified trimester’’
from MS–DRG 998 as shown in Table
6P.3b. associated with this final rule
(which is available via the Internet on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/ and reassign them to
the MS–DRGs in which their
counterparts (first trimester, second
ICD–10–CM
code
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O09.41 .................
O09.42 .................
O09.43 .................
c. MS–DRG 782 (Other Antepartum
Diagnoses Without Medical
Complications)
The following three ICD–10–CM
diagnosis codes are currently on the
principal diagnosis list for the MS–DRG
782 (Other Antepartum Diagnoses
without Medical Complications) logic.
Code description
Supervision of pregnancy with grand multiparity, first trimester.
Supervision of pregnancy with grand multiparity, second trimester.
Supervision of pregnancy with grand multiparity, third trimester.
It was brought to our attention that
these codes also are included in the
MCE Unacceptable principal diagnosis
code edit list. As discussed in section
II.F.6.b. of the preamble of the FY 2018
IPPS/LTCH PPS proposed rule, the
supervision of pregnancy codes are
accurately reflected in the MCE code
edit list for Unacceptable principal
diagnosis. Therefore, we stated that it is
not appropriate to include the three
above listed codes in MS–DRG 782.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19835), we
proposed to remove the three codes
describing supervision of pregnancy
from MS–DRG 782 and reassign them to
MS–DRG 998 (Principal Diagnosis
Invalid as Discharge Diagnosis) to reflect
a more appropriate MS–DRG
assignment. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to remove the three codes
(ICD–10–CM diagnosis codes O09.41,
O09.42 and O09.43) describing
supervision of pregnancy and reassign
them to a more appropriate MS–DRG
assignment.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to remove ICD–
10–CM diagnosis codes O09.41, O09.42
and O09.43, which describe supervision
of pregnancy, from MS–DRG 782 and
reassign them to MS–DRG 998
(Principal Diagnosis Invalid as
Discharge Diagnosis) in the ICD–10 MS–
DRGs Version 35, effective October 1,
2017.
VerDate Sep<11>2014
trimester, or third trimester) are
currently assigned as specified in
Column C, in the ICD–10 MS–DRGs
Version 35, effective October 1, 2017.
23:27 Aug 11, 2017
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d. Shock During or Following Labor and
Delivery
We received a request to review ICD–
10–CM diagnosis code O75.1 (Shock
during or following labor and delivery),
which is currently assigned to MS–DRG
774 (Vaginal Delivery with
Complicating Diagnosis), MS–DRG 767
(Vaginal Delivery with Sterilization
and/or D&C), and MS–DRG 768 (Vaginal
Delivery with O.R. Procedure Except
Sterilization and/or D&C).
The requestor provided an example of
a patient that delivered at Hospital A
and was transferred to Hospital B for
specialized care related to the diagnosis
of shock. The claim for Hospital B
resulted in assignment to a delivery
MS–DRG, despite the fact that a delivery
did not occur during that
hospitalization. The requestor noted
that, by not reporting the diagnosis code
for shock, the claim grouped to a
postpartum MS–DRG and recommended
that we evaluate the issue further.
Our analysis initially involved
reviewing the GROUPER logic for MS–
DRGs 774, 767 and 768. As discussed in
section II.F.14.a. of the preamble of the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 19835 through 19836) and this
final rule, the GROUPER logic for
classification and assignment to MS–
DRG 774 requires that three conditions
must be met, the first of which is a
vaginal delivery. Similar GROUPER
logic applies for assignment to MS–
DRGs 767 and 768, except that only two
conditions must be met, with the first
condition being a vaginal delivery. For
each of these three MS–DRGs, to satisfy
the first condition, one code that
describes a condition or circumstance
from among the three separate lists of
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Fmt 4701
Sfmt 4700
codes must be reported. The first list is
comprised of ICD–10–CM diagnosis
codes that may be reported as a
principal or secondary diagnosis. These
diagnosis codes describe conditions in
which it is assumed that a vaginal
delivery has occurred. Among this first
list is ICD–10–CM diagnosis code O75.1,
which is included in the GROUPER
logic for MS–DRGs 774, 767 and 768
(under the first condition-vaginal
delivery). We refer readers to the ICD–
10 MS–DRG Version 34 Definitions
Manual located via the Internet on the
CMS Web site at: https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/FY2017IPPS-Final-Rule-Home-Page-Items/
FY2017-IPPS-Final-Rule-DataFiles.html?DLPage=1&DLEntries=10&
DLSort=0&DLSortDir=ascending for
documentation of the GROUPER logic
associated with these MS–DRGs.
In addition, in MS–DRG 774, to
satisfy the second condition, diagnosis
codes that are identified as a
complicating diagnosis from among two
lists may be reported. The first list is
comprised of ICD–10–CM diagnosis
codes that may be reported as a
principal or secondary diagnosis. The
second list is comprised of ICD–10–CM
diagnosis codes that may be reported as
a secondary diagnosis. Currently, there
is only one code listed under the
secondary diagnosis list.
Next, our analysis involved reviewing
the GROUPER logic for assignment to
post-partum MS–DRG 769 (Postpartum
and Post Abortion Diagnoses with Major
Procedure) and MS–DRG 776
(Postpartum and Post Abortion
Diagnoses without O.R. Procedure). The
GROUPER logic for these postpartum
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MS–DRGs requires that a principal
diagnosis be reported from a list of
several conditions, such as those
following pregnancy, those
complicating the puerperium,
conditions that occurred during or
following delivery and conditions
associated with lactation disorders. For
assignment to MS–DRG 769, the
GROUPER logic also requires that a
major procedure be reported in addition
to a principal diagnosis from the list of
conditions.
We stated in the proposed rule that as
a result of our analysis, we agree with
the requestor that ICD–10–CM diagnosis
code O75.1 should be added to the
GROUPER logic for assignment to the
postpartum MS–DRGs. This diagnosis
code is consistent with other diagnosis
codes structured within the GROUPER
logic for assignment to MS–DRGs 769
and 776, and clearly represents a postpartum diagnosis with the terminology
‘‘during or following labor and
delivery’’ in the title. We stated that we
believe that adding this diagnosis code
to the postpartum MS–DRGs will enable
more appropriate MS–DRG assignment
for cases where a delivery did not occur.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19835
through 19836), we proposed the
following:
• Removing ICD–10–CM diagnosis
code O75.1 from the list of principal or
secondary diagnosis under the first
condition-vaginal delivery GROUPER
logic in MS–DRGs 774, 767, and 768;
• Moving ICD–10–CM diagnosis code
O75.1 from the list of principal or
secondary diagnosis under the second
condition-complicating diagnosis for
MS–DRG 774 to the secondary diagnosis
list only; and
• Adding ICD–10–CM diagnosis code
O75.1 to the principal diagnosis list
GROUPER logic in MS–DRGs 769 and
776.
We invited public comments on our
proposals.
Comment: Many commenters
supported all of CMS’ proposals
involving diagnosis code O75.1 and
MS–DRGs 767, 768, 769, 774, and 776.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing the following in the ICD–10
ICD–10–CM
code
sradovich on DSK3GMQ082PROD with RULES2
Z05.0 ....................
Z05.1 ....................
Z05.2 ....................
Z05.3 ....................
Z05.41 ..................
Z05.42 ..................
Z05.43 ..................
Z05.5 ....................
Z05.6 ....................
Z05.71 ..................
Z05.72 ..................
Z05.73 ..................
Z05.8 ....................
Z05.9 ....................
MS–DRGs Version 35, effective October
1, 2017:
• Removing ICD–10–CM diagnosis
code O75.1 from the list of principal or
secondary diagnosis under the first
condition-vaginal delivery GROUPER
logic in MS–DRGs 774, 767, and 768;
• Moving ICD–10–CM diagnosis code
O75.1 from the list of principal or
secondary diagnosis under the second
condition-complicating diagnosis for
MS–DRG 774 to the secondary diagnosis
list only; and
• Adding ICD–10–CM diagnosis code
O75.1 to the principal diagnosis list
GROUPER logic in MS–DRGs 769 and
776.
7. MDC 15 (Newborns and Other
Neonates With Conditions Originating
in Perinatal Period): Observation and
Evaluation of Newborn
We received a request to add the ICD–
10–CM diagnosis codes describing
observation and evaluation of newborns
for suspected conditions that are ruled
out to MS–DRG 795 (Normal Newborn).
The 14 diagnosis codes describing
observation and evaluation of newborn
for suspected conditions ruled out are
displayed in the table below.
Code description
Observation
Observation
Observation
Observation
Observation
Observation
Observation
Observation
Observation
Observation
Observation
Observation
Observation
Observation
and
and
and
and
and
and
and
and
and
and
and
and
and
and
evaluation
evaluation
evaluation
evaluation
evaluation
evaluation
evaluation
evaluation
evaluation
evaluation
evaluation
evaluation
evaluation
evaluation
The requestor expressed concern that
currently when one of these ruled out.
codes is added to a newborn encounter
with a principal diagnosis described by
ICD–10–CM code Z38.00 (Single
liveborn infant, delivered vaginally), the
case is assigned to MS–DRG 794
(Neonate with Other Significant
Problems). The requestor stated that this
assignment appears to be in error and
that the assignment should instead be to
MS–DRG 795 (Normal Newborn).
As discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19836),
we reviewed Section I.C.16.b. of the
2017 ICD–10–CM Official Guidelines for
Coding and Reporting which includes
VerDate Sep<11>2014
38039
23:27 Aug 11, 2017
Jkt 241001
of
of
of
of
of
of
of
of
of
of
of
of
of
of
newborn
newborn
newborn
newborn
newborn
newborn
newborn
newborn
newborn
newborn
newborn
newborn
newborn
newborn
for
for
for
for
for
for
for
for
for
for
for
for
for
for
suspected cardiac condition ruled out.
suspected infectious condition ruled out.
suspected neurological condition ruled out.
suspected respiratory condition ruled out.
suspected genetic condition ruled out.
suspected metabolic condition ruled out.
suspected immunologic condition ruled out.
suspected gastrointestinal condition ruled out.
suspected genitourinary condition ruled out.
suspected skin and subcutaneous tissue condition ruled out.
suspected musculoskeletal condition ruled out.
suspected connective tissue condition ruled out.
other specified suspected condition ruled out.
unspecified suspected condition ruled out.
the following instructions for the
diagnosis codes listed in the table
above:
• Assign a code from category Z05
(Observation and evaluation of
newborns and infants for suspected
conditions ruled out.) to identify those
instances when a healthy newborn is
evaluated for a suspected condition that
is determined after study not to be
present. Do not use a code from category
Z05 when the patient has identified
signs or symptoms of a suspected
problem; in such cases code the sign or
symptom.
• A code from category Z05 may also
be assigned as a principal or first-listed
PO 00000
Frm 00051
Fmt 4701
Sfmt 4700
code for readmissions or encounters
when the code from category Z38 code
no longer applies. Codes from category
Z05 are for use only for healthy
newborns and infants for which no
condition after study is found to be
present.
• A code from category Z05 is to be
used as a secondary code after the code
from category Z38, Liveborn infants
according to place of birth and type of
delivery.
We stated in the proposed rule that
after review of the guidelines and
discussion with our clinical advisors,
we agree with the requestor that the
assignment of these codes to MS–DRG
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794 is not accurate because the
assignment incorrectly labels the
newborns as having a significant
problem when the condition does not
truly exist. We stated that we and our
clinical advisors also agree that the
above list of diagnosis codes should be
added to MS–DRG 795. Therefore, in the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 19836), we proposed to add the
14 diagnosis codes describing
observation and evaluation of newborns
for suspected conditions that are ruled
out listed in the table above to the
GROUPER logic for MS–DRG 795. We
invited public comments on our
proposals.
Comment: Commenters supported the
proposal to add the 14 diagnosis codes
describing observation and evaluation of
newborn for suspected conditions ruled
out to the MS–DRG logic for normal
newborn.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to add the 14
diagnosis codes describing observation
and evaluation of newborns for
suspected conditions that are ruled out
listed in the table above to the
GROUPER logic for MS–DRG 795
(Normal newborn) in the ICD–10 MS–
DRGs Version 35, effective October 1,
2017.
8. MDC 21 (Injuries, Poisonings and
Toxic Effects of Drugs): Complication
Codes
We received a request to examine the
ICD–10–CM diagnosis codes in the
T85.8-series of codes that describe other
specified complications of internal
prosthetic devices, implants and grafts,
not elsewhere classified and their
respective MS–DRG assignments.
According to the requestor, the 7th
character values in this series of codes
impact the MS–DRG assignment under
MDC 21 (Injuries, Poisonings and Toxic
Effects of Drugs) and MDC 23 (Factors
Influencing Health Status & Other
Contacts with Health Services) that have
resulted in inconsistencies (that is,
shifts) between the MS–DRG
assignments under Version 33 and
Version 34 of the ICD–10 MS–DRGs.
Under ICD–10–CM, diagnosis codes
in the range of S00 through T88 require
a 7th character value of ‘‘A-’’ initial
encounter, ‘‘D-’’subsequent encounter,
or ‘‘S-’’sequela to identify if the patient
is undergoing active treatment for a
condition. For complication codes,
active treatment refers to treatment for
ICD–10–CM diagnosis code
T85.818A
T85.828A
T85.838A
T85.848A
T85.858A
T85.868A
T85.898A
..............
..............
..............
..............
..............
..............
..............
Code description
Embolism due to other internal prosthetic devices, implants and grafts, initial encounter.
Fibrosis due to other internal prosthetic devices, implants and grafts, initial encounter.
Hemorrhage due to other internal prosthetic devices, implants and grafts, initial encounter.
Pain due to other internal prosthetic devices, implants and grafts, initial encounter.
Stenosis due to other internal prosthetic devices, implants and grafts, initial encounter.
Thrombosis due to other internal prosthetic devices, implants and grafts, initial encounter.
Other specified complication of other internal prosthetic devices, implants and grafts, initial encounter.
The requestor believed that the above
list of diagnosis codes with the 7th
character ‘‘A’’ (initial encounter) would
be more appropriately assigned under
MDC 21 to MS–DRGs 919, 920, and 921
(Complications of Treatment with MCC,
with CC and without CC/MCC,
respectively), according to its review of
the 2017 Official Coding Guidelines for
use of the 7th character and assignment
of other diagnoses of associated
complications of care. The requestor
also noted that these codes were new,
effective October 1, 2016 (FY 2017), and
the predecessor codes grouped to MS–
DRGs 919, 920, and 921 in MDC 21
under Version 33 of the ICD–10 MS–
DRGs in FY 2016.
In addition, the requestor suggested
that the following list of diagnosis codes
with the 7th character ‘‘D’’ (subsequent
encounter) may have been inadvertently
sradovich on DSK3GMQ082PROD with RULES2
ICD–10–CM diagnosis code
T85.810D
T85.820D
T85.830D
T85.840D
T85.850D
T85.860D
T85.890D
.............
.............
.............
.............
.............
.............
.............
VerDate Sep<11>2014
the condition described by the code,
even though it may be related to an
earlier precipitating problem.
The requestor suggested that the
following list of diagnosis codes with
the 7th character ‘‘A’’ (initial encounter)
may have been inadvertently assigned to
the GROUPER logic in the list of
diagnoses (Assignment of Diagnosis
Codes) under MDC 23 because when
one of these diagnosis codes was
reported with an O.R. procedure, the
requestor found claims grouping to MS–
DRG 939, 940, or 941 (O.R. Procedures
with Diagnoses of Other Contact with
Health Services with MCC, with CC and
without CC/MCC, respectively) that had
previously grouped to MDC 21 under
Version 33 of the ICD–10 MS–DRGs.
The requestor also suggested these
codes may have been inadvertently
assigned to the GROUPER logic list of
principal diagnoses for MS–DRGs 949
and 950 (Aftercare with CC/MCC and
without CC/MCC, respectively) under
MDC 23 because it found claims that
grouped to these MS–DRGs (949 and
950) when one of the following
diagnosis codes was reported as a
principal diagnosis that had previously
grouped to MDC 21 under Version 33 of
the ICD–10 MS–DRGs.
assigned to the GROUPER logic list of
principal diagnoses for MS–DRG 919,
920, or 921 in MDC 21. The requestor
noted that these codes were new,
effective October 1, 2016 (FY 2017), and
the predecessor codes grouped to MS–
DRGs 949 and 950 (Aftercare with CC/
MCC and without CC/MCC,
respectively) in MDC 23 under Version
33 of the ICD–10 MS–DRGs in FY 2016.
Code description
Embolism due to nervous system prosthetic devices, implants and grafts, subsequent encounter.
Fibrosis due to nervous system prosthetic devices, implants and grafts, subsequent encounter.
Hemorrhage due to nervous system prosthetic devices, implants and grafts, subsequent encounter.
Pain due to nervous system prosthetic devices, implants and grafts, subsequent encounter.
Stenosis due to nervous system prosthetic devices, implants and grafts, subsequent encounter.
Thrombosis due to nervous system prosthetic devices, implants and grafts, subsequent encounter.
Other specified complication of nervous system prosthetic devices, implants and grafts, subsequent encounter.
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The requestor also suggested that the
following list of additional diagnosis
codes with the 7th character ‘‘D’’
(subsequent encounter) may have been
inadvertently assigned to the GROUPER
logic list of principal diagnoses for MS–
DRGs 922 and 923 (Other Injury,
Poisoning and Toxic Effect with MCC
and without MCC, respectively) also
under MDC 21. The requestor noted
ICD–10–CM diagnosis code
T85.818D
T85.828D
T85.838D
T85.848D
T85.858D
T85.868D
T85.898D
.............
.............
.............
.............
.............
.............
.............
Embolism due to other internal prosthetic devices, implants and grafts, subsequent encounter.
Fibrosis due to other internal prosthetic devices, implants and grafts, subsequent encounter.
Hemorrhage due to other internal prosthetic devices, implants and grafts, subsequent encounter.
Pain due to other internal prosthetic devices, implants and grafts, subsequent encounter.
Stenosis due to other internal prosthetic devices, implants and grafts, subsequent encounter.
Thrombosis due to other internal prosthetic devices, implants and grafts, subsequent encounter.
Other specified complication of other internal prosthetic devices, implants and grafts, subsequent encounter.
Version 33 and Version 34 of the ICD–
10 MS–DRGs. Results of our review
were consistent with the requestor’s
findings. We found that the T85.8series of diagnosis codes with the 7th
character of ‘‘A’’ (initial encounter) and
7th character of ‘‘D’’ (subsequent
encounter) were inadvertently assigned
to the incorrect MDC for Version 34 of
the ICD–10 MS–DRGs, which led to
inconsistencies (MS–DRG shifts) when
compared to Version 33 of the ICD–10
MS–DRGs. Our analysis also included
review of all of the diagnosis codes in
the T85.8- series and their current MDC
and MS–DRG assignments, as well as
ICD–10–CM diagnosis code
..............
..............
..............
..............
..............
..............
..............
Embolism due to nervous system prosthetic devices, implants and grafts, sequela.
Fibrosis due to nervous system prosthetic devices, implants and grafts, sequela.
Hemorrhage due to nervous system prosthetic devices, implants and grafts, sequela.
Pain due to nervous system prosthetic devices, implants and grafts, sequela.
Stenosis due to nervous system prosthetic devices, implants and grafts, sequela.
Thrombosis due to nervous system prosthetic devices, implants and grafts, sequela.
Other specified complication of nervous system prosthetic devices, implants and grafts, sequela.
CM diagnosis codes with the 7th
character ‘‘D’’ (subsequent encounter)
from MS–DRGs 919, 920, 921, 922, and
923 in MDC 21 to MS–DRGs 949 and
950 in MDC 23; and (3) reassign the
ICD–10–CM diagnosis codes with the
7th character ‘‘S’’ (sequela) from MS–
DRGs 949 and 950 in MDC 23 to MS–
Current V34
MDC
ICD–10–CM code
Code description
T85.810D ..............
Embolism due to nervous system prosthetic devices,
implants and grafts, subsequent encounter.
Embolism due to nervous system prosthetic devices,
implants and grafts, sequela.
Embolism due to other internal prosthetic devices, implants and grafts, initial encounter.
Embolism due to other internal prosthetic devices, implants and grafts, subsequent encounter.
Fibrosis due to nervous system prosthetic devices, implants and grafts, subsequent encounter.
Fibrosis due to nervous system prosthetic devices, implants and grafts, sequela.
sradovich on DSK3GMQ082PROD with RULES2
T85.818A ..............
T85.818D ..............
T85.820D ..............
T85.820S ..............
VerDate Sep<11>2014
review of the 2017 Official Coding
Guidelines for use of the 7th character
and assignment of other diagnoses of
associated complications of care. Based
on the results of our review, we agreed
with the requestor’s findings.
In addition, we identified the
following list of diagnosis codes with
the 7th character ‘‘S’’ (sequela) that
appear to have been inadvertently
assigned to MS–DRGs 949 and 950 in
MDC 23 rather than MDC 21 in MS–
DRGs 922 and 923 (Other Injury,
Poisoning and Toxic Effect with MCC
and without MCC, respectively).
Code description
In the FY 2018 IPPS/LTCH PPS
proposed rule, we invited public
comment on our proposals to (1)
reassign the ICD–10–CM diagnosis
codes with the 7th character ‘‘A’’ (initial
encounter) from MS–DRGs 949 and 950
in MDC 23 to MS–DRGs 919, 920 and
921 in MDC 21; (2) reassign the ICD–10–
T85.810S ..............
these codes were also new, effective
October 1, 2016 (FY 2017) and that the
predecessor codes grouped to MS–DRGs
949 and 950 in MDC 23 under Version
33 of the ICD–10 MS–DRGs in FY 2016.
Code description
The requestor believed that the lists of
diagnosis codes above with 7th
character ‘‘D’’ (subsequent encounter)
would be more appropriately assigned
to MS–DRGs 949 and 950 under MDC
23, according to its review of the 2017
Official Coding Guidelines for use of the
7th character and assignment of other
diagnoses of associated complications of
care.
As discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19837
through 19839), we ran test cases to
determine if we could duplicate the
requestor’s findings with regard to the
shifts in MS–DRG assignment between
T85.810S
T85.820S
T85.830S
T85.840S
T85.850S
T85.860S
T85.890S
38041
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DRGs 922 and 923 in MDC 21 for FY
2018. The table below displays the
current Version 34 MDC and MS–DRG
assignments and the proposed Version
35 MDC and MS–DRG assignments on
which we sought public comment for
the respective ICD–10–CM diagnosis
codes.
Current V34
MS–DRG
Proposed V35
MDC
Proposed V35
MS–DRG
21
919, 920, 921
23
949, 950
23
949, 950
21
922, 923
23
949, 950
21
919, 920, 921
21
922, 923
23
949, 950
21
919, 920, 921
23
949, 950
23
949, 950
21
922, 923
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Current V34
MDC
ICD–10–CM code
Code description
T85.828A ..............
Fibrosis due to other internal prosthetic devices, implants and grafts, initial encounter.
Fibrosis due to other internal prosthetic devices, implants and grafts, subsequent encounter.
Hemorrhage due to nervous system prosthetic devices, implants and grafts, subsequent encounter.
Hemorrhage due to nervous system prosthetic devices, implants and grafts, sequela.
Hemorrhage due to other internal prosthetic devices,
implants and grafts, initial encounter.
Hemorrhage due to other internal prosthetic devices,
implants and grafts, subsequent encounter.
Pain due to nervous system prosthetic devices, implants and grafts, subsequent encounter.
Pain due to nervous system prosthetic devices, implants and grafts, sequela.
Pain due to other internal prosthetic devices, implants
and grafts, initial encounter.
Pain due to other internal prosthetic devices, implants
and grafts, subsequent encounter.
Stenosis due to nervous system prosthetic devices,
implants and grafts, subsequent encounter.
Stenosis due to nervous system prosthetic devices,
implants and grafts, sequela.
Stenosis due to other internal prosthetic devices, implants and grafts, initial encounter.
Stenosis due to other internal prosthetic devices, implants and grafts, subsequent encounter.
Thrombosis due to nervous system prosthetic devices, implants and grafts, subsequent encounter.
Thrombosis due to nervous system prosthetic devices, implants and grafts, sequela.
Thrombosis due to other internal prosthetic devices,
implants and grafts, initial encounter.
Thrombosis due to other internal prosthetic devices,
implants and grafts, subsequent encounter.
Other specified complication of nervous system prosthetic devices, implants and grafts, subsequent encounter.
Other specified complication of nervous system prosthetic devices, implants and grafts, sequela.
Other specified complication of other internal prosthetic devices, implants and grafts, initial encounter.
Other specified complication of other internal prosthetic devices, implants and grafts, subsequent encounter.
T85.828D ..............
T85.830D ..............
T85.830S ..............
T85.838A ..............
T85.838D ..............
T85.840D ..............
T85.840S ..............
T85.848A ..............
T85.848D ..............
T85.850D ..............
T85.850S ..............
T85.858A ..............
T85.858D ..............
T85.860D ..............
T85.860S ..............
T85.868A ..............
T85.868D ..............
T85.890D ..............
T85.890S ..............
T85.898A ..............
sradovich on DSK3GMQ082PROD with RULES2
T85.898D ..............
Comment: Commenters supported the
proposals to (1) reassign the ICD–10–CM
diagnosis codes with the 7th character
‘‘A’’ (initial encounter) from MS–DRGs
949 and 950 in MDC 23 to MS–DRGs
919, 920 and 921 in MDC 21; (2)
reassign the ICD–10–CM diagnosis
codes with the 7th character ‘‘D’’
(subsequent encounter) from MS–DRGs
919, 920, 921, 922, and 923 in MDC 21
to MS–DRGs 949 and 950 in MDC 23;
and (3) reassign the ICD–10–CM
diagnosis codes with the 7th character
‘‘S’’ (sequela) from MS–DRGs 949 and
950 in MDC 23 to MS–DRGs 922 and
923 in MDC 21 for FY 2018. However,
one commenter did not support the
reassignment of ICD–10–CM diagnosis
codes with the 7th character ‘‘S’’
(sequela) from MS–DRGs 949 and 950 in
MDC 23 to MS–DRGs 922 and 923 in
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Proposed V35
MDC
Proposed V35
MS–DRG
23
949, 950
21
919, 920, 921
21
922, 923
23
949, 950
21
919, 920, 921
23
949, 950
23
949, 950
21
922, 923
23
949, 950
21
919, 920, 921
21
922, 923
23
949, 950
21
919, 920, 921
23
949, 950
23
949, 950
21
922, 923
23
949, 950
21
919, 920, 921
21
922, 923
23
949, 950
21
919, 920, 921
23
949, 950
23
949, 950
21
922, 923
23
949, 950
21
919, 920, 921
21
922, 923
23
949, 950
21
919, 920, 921
23
949, 950
23
949, 950
21
922, 923
23
949, 950
21
919, 920, 921
21
922, 923
23
949, 950
21
919, 920, 921
23
949, 950
23
949, 950
21
922, 923
23
949, 950
21
919, 920, 921
21
922, 923
23
949, 950
MDC 21. This commenter agreed that
the codes with the 7th character ‘‘S’’
should not be assigned to MS–DRGs 949
and 950. However, the commenter
disagreed with the proposed
reassignment to MS–DRGs 922 and 923
and referenced language from the FY
2017 ICD–10–CM Official Guidelines for
Coding and Reporting under Section
I.B.10. Sequela (Late Effects) which
states: ‘‘A sequela is the residual effect
(condition produced) after the acute
phase of an illness or injury has
terminated. The condition or nature of
the sequela is sequenced first. The
sequela code is sequenced second.’’
According to the commenter, sequela
cases are appropriately classified to the
MS–DRGs corresponding to the reported
residual condition rather than MS–
PO 00000
Current V34
MS–DRG
DRGs 922 and 923 or MS–DRGs 949 and
950.
Response: We appreciate the support
of the commenters on our proposals. In
response to the commenter who did not
agree with the reassignment of ICD–10–
CM diagnosis codes with the 7th
character ‘‘S’’ (sequela) from MS–DRGs
949 and 950 in MDC 23 to MS–DRGs
922 and 923 in MDC 21, we note that
the proposal for the ICD–10–CM
diagnosis codes with the 7th character
‘‘S’’ (sequela) is consistent with the
assignments under Version 33 of the
ICD–10 MS–DRGs from which their
respective predecessor codes were
derived. For example, under Version 33
of the ICD–10 MS–DRGs, ICD–10–CM
diagnosis code T85.81XS (Embolism
due to internal prosthetic devices,
implants and grafts, not elsewhere
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classified, sequela) was assigned to
MDC 21 under MS–DRGs 922 and 923.
Similar to the inadvertent errors in MDC
and MS–DRG assignments that occurred
with the ICD–10–CM diagnosis codes
involving 7th characters ‘‘A’’ (initial
encounter) and ‘‘D’’ (subsequent
encounter) from Version 33 to Version
34 of the ICD–10 MS–DRGs, the ICD–
10–CM diagnosis codes involving 7th
character ‘‘S’’ were also inadvertently
assigned to the incorrect MDC and MS–
DRGs under Version 34 of the ICD–10
MS–DRGs. Therefore, the proposal is
consistent for all the 7th characters. In
addition, while the commenter
disagreed with our proposed MDC and
MS–DRG assignments, the commenter
did not offer suggestions on alternative
assignments.
After consideration of the public
comments we received, we are
finalizing our proposals as set forth in
the FY 2018 IPPS/LTCH PPS proposed
rule for the complication codes
discussed above in the ICD–10 MS–
DRGs Version 35, effective October 1,
2017.
9. MDC 23 (Factors Influencing Health
Status and Other Contacts With Health
Services): Updates to MS–DRGs 945 and
946 (Rehabilitation With CC/MCC and
Without CC/MCC, Respectively)
In FY 2016, we received requests to
modify the MS–DRG assignment for
MS–DRGs 945 and 946 (Rehabilitation
with CC/MCC and without CC/MCC,
respectively). This issue was addressed
in the FY 2017 IPPS/LTCH PPS
proposed and final rules (81 FR 24998
through 25000 and 81 FR 56826 through
56831). For FY 2017, we did not change
the MS–DRG assignments for MS–DRGs
945 and 946.
We did not receive a request to
address this issue as part of the FY 2018
IPPS/LTCH PPS proposed rule or
suggestions on how to update the MS–
DRGs 945 and 946 logic. However, we
did refer the FY 2016 requests for a new
ICD–10–CM diagnosis code to the
Centers for Disease Control and
Prevention (CDC) for consideration at a
future meeting of the ICD–10
Coordination and Maintenance
Committee. CDC has the lead on
updating and maintaining ICD–10–CM
codes. CDC did not address the issue at
the September 13–14, 2016 ICD–10
Coordination and Maintenance
Committee meeting. When the topic was
not addressed at the September 13–14,
2016 ICD–10 Coordination and
Maintenance Committee meeting, we
asked CDC to address the code request
at the March 7–8, 2017 meeting of the
ICD–10 Coordination and Maintenance
Committee. The topic was on the agenda
for the March 7–8, 2017 ICD–10
Coordination and Maintenance
Committee meeting. The deadline for
providing comments on proposals
considered at this meeting was April 7,
2017. Any new codes approved after
this meeting which will be implemented
on October 1, 2017 were posted on the
CMS Web site at: https://www.cms.gov/
Medicare/Coding/ICD10/ and
on the CDC Web site at: https://
www.cdc.gov/nchs/icd/icd10.html in
June 2017. New codes also are included
in Table 6A associated with this FY
2018 IPPS/LTCH PPS final rule (which
is available via the Internet on the CMS
Web site at: https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/
index.html).
As addressed in the FY 2017 IPPS/
LTCH PPS final rule, the ICD–9–CM
MS–DRGs used ICD–9–CM codes
reported as the principal diagnosis that
clearly identified an encounter for
rehabilitation services, such as
diagnosis codes V57.89 (Care involving
other specified rehabilitation procedure)
and V57.9 (Care involving unspecified
rehabilitation procedure), and these
codes were not included in ICD–10–CM.
Given this lack of ICD–10–CM codes to
indicate that the reason for the
encounter was for rehabilitation, the
ICD–10 MS–DRG logic could not reflect
the logic of the ICD–9–CM MS–DRGs.
Commenters on the final rule
recommended that CDC create new
diagnosis codes for these concepts in
ICD–10–CM so that the MS–DRG logic
could be updated to more closely reflect
that of the ICD–9–CM MS–DRGs.
As we stated in the proposed rule, if
new ICD–10–CM codes are created for
encounter for rehabilitation services, we
would address any updates to MS–DRGs
945 and 946 utilizing these new codes
in future rulemaking. In the meantime,
we welcome other specific
recommendations on how to update
MS–DRGs 945 and 946. We are sharing
the following data on these MS–DRGs
from the MedPAR file.
Number of
cases
FY 2015 MS–DRGs with ICD–9–CM codes
MS–DRG 945 ..............................................................................................................................
MS–DRG 946 ..............................................................................................................................
3,991
1,184
Number of
cases
FY 2016 MS–DRGs with ICD–10–CM codes
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MS–DRG 945 ..............................................................................................................................
MS–DRG 946 ..............................................................................................................................
As shown by the tables above, there
was a decrease of 3,320 MS–DRG 945
cases (from 3,991 to 671) from FY 2015,
when claims were submitted with ICD–
9–CM codes, to FY 2016 when ICD–10
codes were submitted. There was a
decrease of 1,027 MS–DRG 946 cases
(from 1,184 to 157) from FY 2015 to FY
2016. The average length of stay
increased 0.5 days (from 10.3 to 10.8
days) for MS–DRG 945 and decreased
0.7 days (from 8.0 to 7.3 days) for MS–
DRG 946. The average costs decreased
by $428 (from $8,242 to $7,814) for MS–
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DRG 945 cases and increased by $350
(from $7,322 to $7,672) for MS–DRG 946
cases. The number of cases was
significantly lower in FY 2016
compared to FY 2015. However, the
difference in average length of stay and
average costs did not show large
changes.
As discussed in the FY 2018 IPPS/
LTCH PPS proposed rule, we also
examined possible MS–DRGs where
these cases may have been assigned in
FY 2016 based on increases in the
number of claims. Because there is not
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38043
671
157
Average
length of stay
10.3
8.0
Average
length of stay
10.8
7.3
Average
cost
$8,242
7,322
Average
cost
$7,814
7,672
a diagnosis code that could be reported
as a principal diagnosis, which would
indicate if the admissions were for
rehabilitation services, we are unable to
determine if these were cases admitted
for rehabilitation that moved from MS–
DRGs 945 and 946 because of the lack
of a code for encounter for
rehabilitation, or if there was simply a
change in the number of cases. The
following tables show our findings for
MS–DRG 056 (Degenerative Nervous
System Disorders with MCC); MS–DRG
057 (Degenerative Nervous System
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Disorders without MCC); MS–DRG 079
(Hypertensive Encephalopathy without
CC/MCC); MS DRG 083 (Traumatic
Stupor & Coma, Coma >1 Hour with
CC); MS–DRG 084 (Traumatic Stupor &
Coma, Coma >1 Hour without CC/MCC);
MS–DRG 092 (Other Disorders of
Nervous System with MCC); and MS–
Number of
cases
FY 2015 MS–DRGs with ICD–9–CM codes
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
056
057
079
083
084
092
093
..............................................................................................................................
..............................................................................................................................
..............................................................................................................................
..............................................................................................................................
..............................................................................................................................
..............................................................................................................................
..............................................................................................................................
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056
057
079
083
084
092
093
..............................................................................................................................
..............................................................................................................................
..............................................................................................................................
..............................................................................................................................
..............................................................................................................................
..............................................................................................................................
..............................................................................................................................
As shown by the tables above, some
of the MS–DRGs that show the largest
increase in number of cases do not show
significant changes in the average length
of stay or average costs. For instance,
MS–DRG 079 cases doubled from FY
2015 to FY 2016 (from 618 to 1,233).
However, the average length of stay did
not change from 2.7 days and the
average costs increased only $367 (from
$5,212 to $5,579). MS–DRG 083 cases
increased by 1,542 (from 2,516 to 4,058)
with a 1.9 day increase in the average
length of stay (from 4.3 to 6.2 days);
however, the average costs decreased
only $312 (from $9,446 to $9,134).
There were large changes for MS–DRG
092 with cases increasing by 6,749 (from
12,643 to 19,392), the average length of
stay decreasing by 1.8 days (from 5.7 to
3.9) and the average costs decreasing by
$4,452 (from $11,158 to $6,706). Once
again, it is not possible to determine if
any changes are a result of the impact
of not having a code for the encounter
for rehabilitation services to report as a
principal diagnosis, or if other factors
such as changes in types of patient
admissions were involved.
Given the lack of a diagnosis code to
capture the principal diagnosis of
encounter for rehabilitation, we stated
in the FY 2018 proposed rule that we
were unable to update MS–DRG 945 or
MS–DRG 946 to better identify those
cases in which patients are admitted for
rehabilitation services. If the CDC
creates a new code, we will consider
proposing updates to MS–DRGs 945 and
946 in the future.
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We invited public comments on our
proposal not to update MS–DRGs 945
and 946 for FY 2018.
Comment: Several commenters
acknowledged that CMS’ analysis
indicates that there was a decrease in
the number of cases reported in MS–
DRG 945 and 946 from FY 2015 to FY
2016 and there was an increase in
average length of stay for MS–DRG 945
and a decrease in average length of stay
for MS–DRG 946 from FY 2015 to FY
2016. The commenters stated that,
without an ICD–10–CM diagnosis code
to capture encounters for rehabilitation
therapy, it was not possible to identify
any specific shifts in these cases. The
commenters stated that they had written
to CDC to support the creation of a new
diagnosis code to capture these
admissions after the topic was presented
at the March 7–8, 2017 ICD–10
Coordination and Maintenance
Committee meeting. The commenters
stated that if CDC creates a new ICD–
10–CM code for encounters for
rehabilitation therapy, it recommended
that CMS propose adding the new code
as part of the MS–DRG logic for MS–
DRGs 945 and 946 as part of the FY
2019 IPPS/LTCH PPS proposed rule.
The commenters stated that if CDC
decides not to create a new ICD–10–CM
code for encounters for rehabilitation
therapy, CMS should consider
assembling a technical advisory panel
made up of stakeholders, such as
rehabilitation providers and other
representation, to conduct an evaluation
of this issue and recommend options to
improve the MS–DRG logic and changes
PO 00000
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9,548
25,652
618
2,516
1,955
12,643
7,928
Number of
cases
FY 2016 MS–DRGs with ICD–10–CM codes
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
DRG 093 (Other Disorders of Nervous
System without CC/MCC).
Sfmt 4700
10,817
28,336
1,233
4,058
3,016
19,392
8,120
Average
length of stay
7.3
5.1
2.7
4.3
2.8
5.7
2.8
Average
length of stay
7.6
5.3
2.7
6.2
2.7
3.9
2.7
Average
cost
$12,606
7,918
5,212
9,446
6,824
11,158
5,182
Average
cost
$12,930
7,902
5,579
9,134
6,508
6,706
5,253
that could be proposed as part of future
rulemaking.
Response: We agree with the
commenters that without a specific
ICD–10–CM code for encounters for
rehabilitation therapy, it is not possible
to identify any specific shifts in these
cases. If the CDC creates a new code
effective October 1, 2018, we will
evaluate potential updates to the MS–
DRGs utilizing this new code as part of
the FY 2019 IPPS/LTCH PPS proposed
rule. If the CDC decides not to create a
new code, we welcome
recommendations from the public on
how the MS–DRG logic could be
updated to better capture patients
within MS–DRGs 945 and 946.
After consideration of the public
comments that we received, we are
finalizing our proposal not to update
MS–DRGs 945 and 946 for FY 2018.
10. Changes to the Medicare Code Editor
(MCE)
The Medicare Code Editor (MCE) is a
software program that detects and
reports errors in the coding of Medicare
claims data. Patient diagnoses,
procedure(s), and demographic
information are entered into the
Medicare claims processing systems and
are subjected to a series of automated
screens. The MCE screens are designed
to identify cases that require further
review before classification into an MS–
DRG.
As discussed in the FY 2017 IPPS/
LTCH PPS final rule (81 FR 56831
through 56844), we made available the
FY 2017 ICD–10 MCE Version 34
manual file and an ICD–9–CM MCE
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Version 34.0A manual file (for analysis
purposes only). The links to these MCE
manual files, along with the links to
purchase the mainframe and computer
software for the MCE Version 34 (and
ICD–10 MS–DRGs) are posted on the
CMS Web site at: https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/
through the FY 2017 IPPS Final Rule
Home Page.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19840 through
19846), we addressed the MCE requests
we received by the December 7, 2016
deadline. We also discussed the
proposals we made based on our
internal review and analysis. In
addition, as a result of new and
modified code updates approved after
the annual spring ICD–10 Coordination
and Maintenance Committee meeting,
we routinely make changes to the MCE.
In the past, in both the IPPS proposed
and final rules, we have only provided
the list of changes to the MCE that were
brought to our attention after the prior
year’s final rule. We historically have
not listed the changes we have made to
the MCE as a result of the new and
modified codes approved after the
annual spring ICD–10 Coordination and
Maintenance Committee meeting. These
changes are approved too late in the
rulemaking schedule for inclusion in
the proposed rule. Furthermore,
although our MCE policies have been
described in our proposed and final
rules, we have not provided the detail
of each new or modified diagnosis and
procedure code edit in the final rule.
However, we make available the
finalized Definitions of Medicare Code
Edits (MCE) file. Therefore, we have
made available the FY 2018 ICD–10
MCE Version 35 manual file. The link
to this MCE manual file, along with the
link to the mainframe and computer
software for the MCE Version 35 (and
ICD–10 MS–DRGs) are posted on the
CMS Web site at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/
through the FY 2018 IPPS Final Rule
Home Page.
a. Age Conflict Edit
In the MCE, the Age Conflict edit
exists to detect inconsistencies between
a patient’s age and any diagnosis on the
patient’s record; for example, a 5-yearold patient with benign prostatic
hypertrophy or a 78-year-old patient
coded with a delivery. In these cases,
the diagnosis is clinically and virtually
impossible for a patient of the stated
age. Therefore, either the diagnosis or
the age is presumed to be incorrect.
Currently, in the MCE, the following
four age diagnosis categories appear
under the Age Conflict edit and are
ICD–10–CM code
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Z00.00 ..................
Z00.01 ..................
Z00.121 ................
Z00.129 ................
listed in the manual and written in the
software program:
• Perinatal/Newborn—Age of 0 years
only; a subset of diagnoses which will
only occur during the perinatal or
newborn period of age 0 (for example,
tetanus neonatorum, health examination
for newborn under 8 days old).
• Pediatric—Age is 0 to 17 years
inclusive (for example, Reye’s
syndrome, routine child health
examination).
• Maternity—Age range is 12 to 55
years inclusive (for example, diabetes in
pregnancy, antepartum pulmonary
complication).
• Adult—Age range is 15 to 124 years
inclusive (for example, senile delirium,
mature cataract).
We received a request to provide
clarification regarding the overlapping
age ranges (0 to 17 years and 15 to 124
years) in the Pediatric and Adult
categories under the Age Conflict edit.
The requestor questioned which
diagnosis code would be most
appropriate to identify when a general
or routine health examination is
performed on patients who are within
the age range of 15 to 17 years. The
specific ICD–10–CM diagnosis codes
that the requestor inquired about related
to a child or to an adult encounter for
a health examination are displayed in
the table below.
Code description
Encounter
Encounter
Encounter
Encounter
for
for
for
for
general adult medical examination without abnormal findings.
general adult medical examination with abnormal findings.
routine child health examination with abnormal findings.
routine child health examination without abnormal findings.
The age ranges defined within the Age
Conflict edits were established with the
implementation of the IPPS. The adult
age range includes the minimum age of
15 years for those patients who are
declared emancipated minors. We note
that, historically, we have not provided
coding advice in rulemaking with
respect to policy. We collaborate with
the American Hospital Association
(AHA) through the Coding Clinic for
ICD–10–CM and ICD–10–PCS to
promote proper coding. We recommend
that the requestor and other interested
parties submit any questions pertaining
to correct coding practices for this
specific issue to the AHA.
Comment: Some commenters believe
that CMS is responsible for addressing
questions relating to the pediatric and
adult age ranges in the Age Conflict edit.
Other commenters stated that, while the
Coding Clinic for ICD–10–CM and ICD–
10–PCS addresses proper coding, it
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cannot address issues related to payerspecific edits or definitions.
Response: We believe there is some
confusion with regard to the issue
presented in the FY 2018 IPPS/LTCH
PPS proposed rule pertaining to the Age
Conflict edit. We specifically responded
to a request that sought clarification
regarding the overlapping age ranges (0
to 17 years and 15 to 124 years) in the
Pediatric and Adult categories under the
Age Conflict edit. We responded that
the age ranges defined within the Age
Conflict edits were established with the
implementation of the IPPS and noted
that the adult age range includes the
minimum age of 15 years for those
patients who are declared emancipated
minors. Therefore, we fully responded
to the request that we clarify the Age
ranges in the MCE. However, in
addition to the request regarding the
overlapping age ranges in the Age
Conflict edit, the requester specifically
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Fmt 4701
Sfmt 4700
asked for coding advice. As noted
earlier, ‘‘The requester questioned
which diagnosis code would be most
appropriate to identify when a general
or routine health examination is
performed on patients who are within
the age range of 15 to 17 years.’’ We
provided the specific ICD–10–CM
diagnosis codes that the requestor
inquired about related to a child or to
an adult encounter for a health
examination as displayed in the table
above. The statement recommending
that the requester and other interested
parties submit questions pertaining to
correct coding practices for this specific
issue to the AHA was with regard to
reporting the most appropriate diagnosis
code based on the clarification provided
regarding the Age Conflict edit. As
stated in the FY 2018 IPPS/LTCH PPS
proposed rule, we have not provided
coding advice in rulemaking with
respect to policy. Accordingly, any
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questions regarding which diagnosis
code would be most appropriate to
report when a general or routine health
examination is performed on patients
who are within the age range of 15 to
17 years would be best addressed by the
Coding Clinic.
(1) Perinatal/Newborn Diagnosis
Category
Under the ICD–10 MCE, the Perinatal/
Newborn Diagnosis category under the
Age Conflict edit considers the age of 0
years only; a subset of diagnoses which
will only occur during the perinatal or
newborn period of age 0 to be inclusive.
This includes conditions that have their
origin in the fetal or perinatal period
(before birth through the first 28 days
after birth) even if morbidity occurs
later. For that reason, the diagnosis
codes on this Age Conflict edit list
would be expected to apply to
conditions or disorders specific to that
age group only.
In the ICD–10–CM classification,
there are two diagnosis codes that
describe conditions as occurring during
infancy and the neonatal period that are
currently not on the Perinatal/Newborn
Diagnosis category edit code list. We
consulted with staff at the Centers for
Disease Control’s (CDC’s) National
Center for Health Statistics (NCHS)
because NCHS has the lead
responsibility for the ICD–10–CM
diagnosis codes. The NCHS’ staff
confirmed that, although diagnosis
codes D80.7 (Transient
hypogammaglobulinemia of infancy)
and diagnosis code E71.511 (Neonatal
adrenoleukodystrophy) do occur during
infancy and the neonatal period, both
conditions can last beyond the 28-day
timeframe which is used to define the
perinatal/newborn period. These
diagnosis codes are not intended to be
restricted for assignment to newborn
patients. Therefore, in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19841), we proposed to not add these
two diagnosis codes to the Perinatal/
Newborn Diagnosis category under the
Age Conflict edit. We invited public
comments on our proposal.
Comment: Commenters agreed that
ICD–10–CM diagnosis codes D80.7 and
E71.511 should not be added to the
Perinatal/Newborn Diagnosis category
under the Age Conflict edit.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments that we received, we are
finalizing our proposal to not add
diagnosis code D80.7 (Transient
hypogammaglobulinemia of infancy)
and diagnosis code E71.511 (Neonatal
adrenoleukodystrophy) to the Perinatal/
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Newborn Diagnosis category under the
Age Conflict edit.
(2) Pediatric Diagnosis Category
Under the ICD–10 MCE, the Pediatric
diagnosis category under the Age
Conflict edit considers the age range of
0 to 17 years inclusive. For that reason,
the diagnosis codes on this Age Conflict
edit list would be expected to apply to
conditions or disorders specific to that
age group only.
The ICD–10–CM diagnosis code list
for the Pediatric diagnosis category
under the Age Conflict edit currently
includes a diagnosis code pertaining to
dandruff that is not intended to apply to
pediatric patients only. We consulted
with staff at the Centers for Disease
Control’s (CDC’s) National Center for
Health Statistics (NCHS) because NCHS
has the lead responsibility for the ICD–
10–CM diagnosis codes. The NCHS’
staff confirmed that, although diagnosis
code L21.0 (Seborrhea capitis) has an
inclusion term of ‘‘Cradle cap,’’ the
description of the diagnosis code is not
intended to be restricted for assignment
of pediatric patients. Therefore, in the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 19841), we proposed to remove
diagnosis code L21.0 from the list of
diagnosis codes for the Pediatric
diagnosis category under the Age
Conflict edit. We invited public
comments on our proposal.
Comment: Commenters agreed that
diagnosis code L21.0 should be removed
from the list of diagnosis codes for the
Pediatric diagnosis category under the
Age Conflict edit.
Response: We appreciate the
commenters support.
After consideration of the public
comments that we received, we are
finalizing our proposal to remove
diagnosis code L21.0 (Seborrhea capitis)
from the Pediatric diagnosis category
under the Age Conflict edit in the ICD–
10 MCE Version 35, effective October 1,
2017.
(3) Maternity Diagnoses
Under the ICD–10 MCE, the Maternity
diagnosis category under the Age
Conflict edit considers the age range of
12 to 55 years inclusive. For that reason,
the ICD–10–CM diagnosis codes on this
Age Conflict edit list would be expected
to apply to conditions or disorders
specific to that age group only.
As discussed in section II.F.12. of the
preamble of the proposed rule and this
final rule, Table 6A.—New Diagnosis
Codes lists the new ICD–10–CM
diagnosis codes that have been
approved to date, which will become
effective with discharges occurring on
and after October 1, 2017. Included on
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this list are a number of diagnosis codes
associated with pregnancy and maternal
care that we believe are appropriate to
add to the list of diagnosis codes for the
Maternity diagnoses category under the
Age Conflict edit. We refer readers to
Table 6P.1a. associated with the FY
2018 IPPS/LTCH PPS proposed rule
(which is available via the Internet on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) for a review of the
ICD–10–CM diagnosis codes that we
proposed to add to the Age Conflict edit
list. We invited public comments on our
proposal.
Comment: Commenters supported the
proposal to add the list of diagnosis
codes displayed in Table 6P.1a.
associated with the FY 2018 IPPS/LTCH
PPS proposed rule to the Maternity
diagnoses category under the Age
Conflict edit. Commenters
recommended that this same list of
diagnosis codes also be added to the
Diagnoses for Females Only edit.
Response: We appreciate the
commenters’ support. We agree that the
diagnosis codes proposed to be added to
the Maternity diagnoses category under
the Age Conflict edit are also
appropriate to be added to the
Diagnoses for Females Only edit code
list under the Sex Conflict edit with
other diagnosis codes associated with
pregnancy and maternal care.
After consideration of the public
comments that we received, we are
finalizing our proposal to add the list of
diagnosis codes displayed in Table
6P.1a. associated with the FY 2018
IPPS/LTCH PPS proposed rule and this
final rule (which is available via the
Internet on the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) to the Maternity
diagnoses category under the Age
Conflict edit and we are adding this
same list of diagnosis codes to the
Diagnoses for Females Only code list
under the Sex Conflict edit, effective
October 1, 2017.
b. Sex Conflict Edit
In the MCE, the Sex Conflict edit
detects inconsistencies between a
patient’s sex and any diagnosis or
procedure on the patient’s record; for
example, a male patient with cervical
cancer (diagnosis) or a female patient
with a prostatectomy (procedure). In
both instances, the indicated diagnosis
or the procedure conflicts with the
stated sex of the patient. Therefore, the
patient’s diagnosis, procedure, or sex is
presumed to be incorrect.
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(1) Diagnoses for Males Only Edit
We received a request to review the
following ICD–10–CM diagnosis codes
pertaining to conditions associated with
males for possible inclusion on the list
ICD–10–CM
code
B37.42 ..................
N35.011 ................
N35.012 ................
N35.013 ................
N35.112 ................
N35.113 ................
N35.114 ................
N99.115 ................
Candidal balanitis.
Post-traumatic bulbous urethral stricture.
Post-traumatic membranous urethral stricture.
Post-traumatic anterior urethral stricture.
Postinfective bulbous urethral stricture, not elsewhere classified.
Postinfective membranous urethral stricture, not elsewhere classified.
Postinfective anterior urethral stricture, not elsewhere classified.
Postprocedural fossa navicularis urethral stricture.
the opening of the urethra can occur in
both males and females.
In addition, as discussed in section
II.F.12. of the preamble of the proposed
rule, Table 6A.—New Diagnosis Codes
associated with the proposed rule listed
the new ICD–10–CM diagnosis codes
that had been approved to date, which
will become effective with discharges
occurring on and after October 1, 2017.
Included on this list are a number of
diagnosis codes associated with male
body parts that we believe are
appropriate to add to the list of
diagnosis codes for the Diagnoses for
Males Only category under the Sex
Conflict edit. We refer readers to Table
6P.1b. associated with the proposed rule
(which is available via the Internet on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) for a review of the
ICD–10–CM diagnosis codes that we
proposed to add to the list of diagnosis
codes for the Diagnoses for Males Only
category.
We invited public comments on our
proposals.
Comment: Commenters supported the
proposal to add the diagnosis codes
listed in the table in the proposed rule
describing conditions applicable to
males to the Diagnoses for Males Only
edit. Commenters also supported the
addition of new diagnosis codes
associated with male body parts as
displayed in Table 6P.1b. associated
ICD–10–CM code
sradovich on DSK3GMQ082PROD with RULES2
with the proposed rule to the Diagnoses
for Males Only edit. In addition,
commenters supported the proposal to
remove diagnosis code Q64.0
(Epispadias) from the list of diagnosis
codes for the Diagnoses for Males Only
edit because this condition can occur in
both males and females.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments that we received, we are
finalizing our proposals to add the eight
diagnosis codes displayed in the table
above and the new diagnosis codes
associated with male body parts as
displayed in Table 6P.1b. associated
with the proposed rule and this final
rule (which is available via the Internet
on the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) to the Diagnoses for
Males Only edit, effective October 1,
2017. We are also finalizing our
proposal to remove diagnosis code
Q64.0 (Epispadias) from the list of
diagnosis codes for the Diagnoses for
Males Only edit, effective October 1,
2017.
(2) Diagnoses for Females Only
We received a request to review the
following ICD–10–CM diagnosis codes
for possible removal from the list of
diagnosis codes for the Diagnoses for
Females Only edit.
Code description
Dyspareunia not due to a substance or known physiological condition.
Lymphangioleiomyomatosis.
Elevated cancer antigen 125 [CA 125].
The requestor noted that, in the ICD–
10–CM classification, the term
‘‘Dyspareunia’’ (painful sexual
intercourse) has specified codes for
males and females located in the
Alphabetic Index to Diseases for
VerDate Sep<11>2014
of diagnosis codes for the Diagnoses for
Males Only edit.
Code description
As discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19842),
we agreed with the requestor that
diagnosis code B37.42 describes a
condition that is applicable only to
males. Balanitis is the inflammation of
the glans (rounded head) of the penis.
We also agreed that the diagnosis codes
listed above that align under
subcategory N35.01 (Post-traumatic
urethral stricture, male) and subcategory
N35.11 (Postinfection urethral stricture,
not elsewhere classified, male) are
appropriate to add to the list of
diagnosis codes for the Diagnoses for
Males Only edit because these diagnosis
codes include specific terminology that
is applicable only to males. Further, we
agreed that diagnosis code N99.115 is
appropriate to add to the list of
diagnosis codes for the Diagnoses for
Males Only edit because subcategory
N99.11 (Postprocedural urethral
stricture, male) includes specific
terminology that is applicable to males
only as well. Therefore, in the FY 2018
IPPS/LTCH PPS proposed rule, we
proposed to add the ICD–10–CM
diagnosis codes listed in the table above
to the list of diagnosis codes for the
Diagnoses for Males Only edit.
We also proposed to remove ICD–10–
CM diagnosis code Q64.0 (Epispadias)
from the list of diagnosis codes for the
Diagnoses for Males Only edit because
this rare, congenital condition involving
F52.6 ....................
J84.81 ..................
R97.1 ....................
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Reporting Physiological Dyspareunia.
However, the indexing for diagnosis
code F52.6 (Dyspareunia not due to a
substance or known physiological
condition) specifies that it is not due to
a physiological condition and the entry
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is not gender specific. According to the
requestor, while the condition is most
often associated with female sexual
dysfunction, there is a subset of males
who also suffer from this condition.
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In addition, the requestor stated that
diagnosis code J84.81
(Lymphangioleiomyomatosis) describes
a rare form of lung disease believed to
occur more often in patients with
tuberous sclerosis complex (TSC), a
disorder due to genetic mutation.
Although the condition is described as
being exclusive to women, unique cases
for men with TSC have also been
reported.
Lastly, the requestor indicated that
diagnosis code R97.1 (Elevated cancer
antigen 125 [CA 125]) describes the
tumor marker that commonly identifies
ovarian cancer cells in women.
However, the requestor stated that high
levels have also been demonstrated in
men (and women) with lung cancer as
well.
As discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19842
through 19843), we reviewed ICD–10–
CM diagnosis codes F52.6, J84.81, and
R97.1, and we agree with the requestor
that Dyspareunia, not due to a
physiological condition, can also occur
in males. We also agree that the
condition of
Lymphangioleiomyomatosis and
Elevated CA 125 levels can be found in
males. Therefore, we proposed to
remove these three diagnosis codes from
the list of diagnosis codes for the
Diagnoses for Females Only edit. We
invited public comments on our
proposals.
In addition, we proposed to add new
diagnosis code Z40.03 (Encounter for
prophylactic removal of fallopian
tube(s)) to the list of diagnosis codes for
the Diagnoses for Females Only edit.
Currently, diagnosis code Z40.02
(Encounter for prophylactic removal of
ovary) is on the edit’s code list;
therefore, inclusion of new diagnosis
code Z40.03 would be consistent. We
referred readers to Table 6A.—New
Diagnosis Codes associated with the FY
2018 IPPS/LTCH PPS proposed rule
(which is available via the Internet on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) for the list of new ICD–
10–CM diagnosis codes that had been
finalized to date. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to remove diagnosis codes
F52.6, J84.81, and R97.1 from the list of
diagnosis codes for the Diagnoses for
Females Only edit. Commenters also
supported the proposal to add new
diagnosis code Z40.03 to the list of
diagnosis codes for the Diagnoses for
Females Only edit.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments that we received, we are
finalizing our proposal to remove
diagnosis codes F52.6 (Dyspareunia not
due to a substance or known
physiological condition), J84.81
(Lymphangioleiomyomatosis) and
diagnosis code R97.1 (Elevated cancer
antigen 125 [CA 125]) from the
Diagnoses for Females Only edit,
effective October 1, 2017. We are also
finalizing our proposal to add new
diagnosis code Z40.03 (Encounter for
prophylactic removal of fallopian
tube(s)) to the list of diagnosis codes for
the Diagnoses for Females Only edit,
effective Octber 1, 2017.
ICD–10–PCS code
sradovich on DSK3GMQ082PROD with RULES2
0W4M070
0W4M0J0
0W4M0K0
0W4M0Z0
0W4N071
0W4N0J1
0W4N0K1
0W4N0Z1
.............
.............
............
.............
.............
.............
.............
.............
In the MCE, the Non-Covered
Procedure edit identifies procedures for
which Medicare does not provide
payment. Payment is not provided due
to specific criteria that are established in
the National Coverage Determination
(NCD) process. We refer readers to the
Web site at: https://www.cms.gov/
Medicare/Coverage/
DeterminationProcess/
howtorequestanNCD.html for additional
information on this process. In addition,
there are procedures that would
normally not be paid by Medicare but,
due to the presence of certain diagnoses,
are paid.
We issued instructions on June 27,
2014, as a one-time notification, Pub.
100–03, Transmittal 169, Change
Request 8825, effective May 30, 2014,
announcing to MACs the invalidation of
National Coverage Determination (NCD)
140.3 for Transsexual Surgery. As a
result, MACs determined coverage on a
case-by-case basis. The transmittal is
available via the Internet on the CMS
Web site at: https://www.cms.gov/
Regulations-and-Guidance/Guidance/
Transmittals/2014-Transmittals-Items/
R169NCD.html?DLPage=1&DLEntries=
10&DLFilter=Transsexual&DLSort=1&
DLSortDir=ascending.
It was brought to our attention that
the ICD–10–PCS procedure codes
shown in the table below are currently
included on the list of procedure codes
for the Non-Covered Procedure edit. As
a result, when one of these procedure
codes is reported on a claim, the edit for
Non-Covered Procedure is triggered and
claims are not able to process correctly.
Code description
Creation
Creation
Creation
Creation
Creation
Creation
Creation
Creation
of
of
of
of
of
of
of
of
vagina in male perineum with autologous tissue substitute, open approach.
vagina in male perineum with synthetic substitute, open approach.
vagina in male perineum with nonautologous tissue substitute, open approach.
vagina in male perineum, open approach.
penis in female perineum with autologous tissue substitute, open approach.
penis in female perineum with synthetic substitute, open approach.
penis in female perineum with nonautologous tissue substitute, open approach.
penis in female perineum, open approach.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19843), we
proposed to remove the ICD–10–PCS
procedure codes included in the table
above from the list of procedure codes
for the Non-Covered Procedure edit to
help resolve claims processing issues
associated with the reporting of these
procedure codes. We invited public
comments on our proposal.
Comment: Commenters agreed with
the proposal to remove the ICD–10–PCS
VerDate Sep<11>2014
c. Non-Covered Procedure Edit: Gender
Reassignment Surgery
23:27 Aug 11, 2017
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procedure codes included in the table in
the proposed rule from the list of
procedure codes under the Non-Covered
Procedure edit. One commenter who
supported the proposal also requested
that CMS review current policies related
to breast implant procedures for
transgender females. This commenter
noted that estrogen therapy by itself
does not provide adequate growth
tissue. Another commenter stated that
these gender reassignment procedures
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should remain noncovered as they are a
form of plastic surgery and, in principle,
are not unlike elective abortion
procedures.
Response: We appreciate the
commenters’ support. In response to the
commenter who requested that we
review current policies related to breast
implant procedures for transgender
females, we recommend that the
commenter contact its local MAC for
additional information because there is
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no national coverage determination
(NCD) for this service. With regard to
the commenter who stated that the
procedure codes describing gender
reassignment surgery listed in the table
in the proposed rule should remain
noncovered, we note that, as mentioned
earlier in this section, NCD 140.3 for
Transsexual Surgery was invalidated
effective May 30, 2014, and therefore,
the MACs determine coverage on a caseby-case basis.
After consideration of the public
comments we received, we are
finalizing our proposal to remove the
ICD–10–PCS procedure codes included
in the table above from the list of
procedure codes for the Non-Covered
Procedure edit to help resolve claims
processing issues associated with the
reporting of these procedure codes.
sradovich on DSK3GMQ082PROD with RULES2
d. Unacceptable Principal Diagnosis
Edit
In the MCE, there are select codes that
describe a circumstance that influences
an individual’s health status, but does
not actually describe a current illness or
injury. There also are codes that are not
specific manifestations but may be due
to an underlying cause. These codes are
considered unacceptable as a principal
diagnosis. In limited situations, there
are a few codes on the MCE
Unacceptable Principal Diagnosis edit
code list that are considered
‘‘acceptable’’ when a specified
secondary diagnosis is also coded and
reported on the claim.
(1) Bacterial and Viral Infectious Agents
(B95 Through B97)
As discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19843),
we examined ICD–10–CM diagnosis
codes in Chapter 1 (Certain Infectious
and Parasitic Diseases) of the
Classification Manual that fall within
the range of three code categories for
‘‘Bacterial and Viral Infectious Agents’’
(B95 through B97). The instructional
note provided at this section states that
these categories are provided for use as
supplementary or additional codes to
identify the infectious agent(s) in
diseases classified elsewhere. We
identified 45 ICD–10–CM diagnosis
codes within the range of these code
categories for ‘‘Bacterial and Viral
Infectious Agents’’ (B95 through B97)
that, as a result of the instructional note,
are not appropriate to report as a
principal diagnosis. In the FY 2018
IPPS/LTCH PPS proposed rule, we
proposed to add the 45 ICD–10–CM
diagnosis codes shown in Table 6P.1c.
associated with the proposed rule
(which is available via the Internet on
the CMS Web site at: https://
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23:27 Aug 11, 2017
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www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) to the list of codes for
the Unacceptable Principal Diagnosis
edit. We invited public comments on
our proposal.
Comment: Commenters supported the
proposal to add the 45 ICD–10–CM
diagnosis codes shown in Table 6P.1c.
associated with the proposed rule to the
list of codes for the Unacceptable
Principal Diagnosis edit.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to add the 45
ICD–10–CM diagnosis codes shown in
Table 6P.1c. associated with the
proposed rule and this final rule (which
is available via the Internet on the CMS
Web site at: https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/
index.html) to the list of codes for the
Unacceptable Principal Diagnosis edit,
effective October 1, 2017.
(2) Mental Disorders Due to Known
Physiological Conditions (F01 Through
F09)
We examined ICD–10–CM diagnosis
codes in Chapter 5 (Mental and
Behavioral Disorders) of the
Classification Manual that fall within
the range of nine code categories for
‘‘Mental Disorders Due to Known
Physiological Conditions’’ (F01 through
F09). The instructional note provided at
this section states that this block
comprises a range of mental disorders
grouped together on the basis of their
having in common a demonstrable
etiology in cerebral disease, brain
injury, or other insult leading to cerebral
dysfunction. The dysfunction may be
primary, as in diseases, injuries, and
insults that affect the brain directly and
selectively; or secondary, as in systemic
diseases and disorders that attack the
brain only as one of the multiple organs
or systems of the body that are involved.
We identified 21 ICD–10–CM
diagnosis codes that fall within the
range of these code categories for
‘‘Mental Disorders Due to Known
Physiological Conditions’’ (F01 through
F09). Of these nine code categories,
seven have a ‘‘Code first the underlying
physiological condition’’ note. For
example, at code category F01—
Vascular dementia, the note reads,
‘‘Code first the underlying physiological
condition or sequelae of cerebrovascular
disease.’’ We stated in the proposed rule
that there are a total of 19 diagnosis
codes that fall under these 7 code
categories with a ‘‘Code first’’ note and,
therefore, are not appropriate to report
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38049
as a principal diagnosis. Therefore, in
the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 19843 through 19844), we
proposed to add the 19 ICD–10–CM
diagnosis codes shown in Table 6P.1d.
associated with the proposed rule
(which is available via the Internet on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) to the list of codes for
the Unacceptable Principal Diagnosis
edit. We invited public comments on
our proposal.
Comment: Some commenters
disagreed with the proposal to add the
19 ICD–10–CM diagnosis codes shown
in Table 6P.1d. associated with the
proposed rule to the list of codes for the
Unacceptable Principal Diagnosis edit.
The commenters suggested that CMS
consult with the NCHS to determine if
any of the codes may appropriately be
sequenced as a principal diagnosis in
certain circumstances. One commenter
noted it had been informed through
communications with the NCHS and
AHA that, within the ICD–10–CM
classification, there are instances where
some ‘‘Code first’’ notes are intended to
be interpreted as ‘‘Code first, if
applicable’’ or ‘‘Code first, if known,’’
although those terms are not explicitly
stated in the instructional note. The
commenter acknowledged that while
some of the diagnosis codes that were
proposed to be added to the
Unacceptable Principal Diagnosis edit
appear straightforward, such as
diagnosis code F04 (Amnestic disorder
due to known physiological condition),
other diagnosis codes are not as clear,
such as diagnosis code F01.5 (Vascular
dementia) or diagnosis code F07.81
(Postconcussional syndrome).
Response: We appreciate the
commenters’ review and input regarding
the proposal. We consulted with the
staff at NCHS and they acknowledged
that this group of codes was modified
from the original World Health
Organization (WHO) version of ICD–10.
They indicated that while some code
titles do include the language ‘‘due to
known physiological condition,’’ they
are evaluating these ‘‘Code first’’
instructional notes further as they
perform their annual review of the
coding guidelines and consider updates
for FY 2018.
After consideration of the public
comments that we received and for the
reasons described, we are not finalizing
our proposal to add the 19 ICD–10–CM
diagnosis codes shown in Table 6P.1d.
associated with the proposed rule to the
list of codes for the Unacceptable
Principal Diagnosis edit.
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(3) Other Obstetric Conditions, Not
Elsewhere Classified (O94 Through
O9A)
sradovich on DSK3GMQ082PROD with RULES2
We examined ICD–10–CM diagnosis
codes in Chapter 15 (Pregnancy,
Childbirth and the Puerperium) of the
Classification Manual that fall within
the range of four code categories for
‘‘Other Obstetric Conditions, Not
Elsewhere Classified’’ (O94 through
O9A). The instructional note provided
at this section under category O94 states
that ‘‘this category is to be used to
indicate conditions in O00 through O77,
O85 through O94 and O98 through O9A
as the cause of late effects. The sequelae
include conditions specified as such, or
as late effects, which may occur at any
time after the puerperium. Code first
condition resulting from (sequela) of
complication of pregnancy, childbirth,
and the puerperium.’’
We stated in the proposed rule that
we identified one ICD–10–CM diagnosis
code within the range of these code
categories for ‘‘Other Obstetric
Conditions, Not Elsewhere Classified’’
(O94 through O9A) that, as a result of
the instructional note, is not appropriate
to report as a principal diagnosis
because that code identifies the cause of
the late effect. This ICD–10–CM
diagnosis code is O94 (Sequelae of
complication of pregnancy, childbirth,
and the puerperium). In the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19844), we proposed to add ICD–10–CM
diagnosis code O94 to the list of codes
for the Unacceptable Principal
Diagnosis edit. We invited public
comments on our proposal.
Comment: Commenters agreed with
the proposal to add diagnosis code O94
to the list of codes for the Unacceptable
Principal Diagnosis edit.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments that we received, we are
finalizing our proposal to add diagnosis
code O94 (Sequelae of complication of
pregnancy, childbirth, and the
puerperium) to the list of codes for the
Unacceptable Principal Diagnosis edit,
effective October 1, 2017.
(4) Symptoms and Signs Involving
Cognition, Perception, Emotional State
and Behavior (R40 Through R46)
We examined ICD–10–CM diagnosis
codes in Chapter 18 (Symptoms, Signs
and Abnormal Findings) of the
Classification Manual that fall within
the range of code categories for
‘‘Symptoms and Signs Involving
Cognition, Perception, Emotional State
and Behavior’’ (R40 through R46),
specifically under code category R40—
Somnolence, stupor and coma. At
subcategory R40.2—Coma, there is an
instructional note, which states ‘‘Code
first any associated: Fracture of skull
(S02.–); Intracranial injury (S06.–).’’ We
stated in the proposed rule that we
identified 96 ICD–10–CM diagnosis
codes under this subcategory that, as a
result of the instructional note, are not
appropriate to report as a principal
diagnosis. In the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19844), we
proposed to add the 96 ICD–10–CM
diagnosis codes shown in Table 6P.1e.
associated with the proposed rule
(which is available via the Internet on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) to the list of codes for
the Unacceptable Principal Diagnosis
edit. We invited public comments on
our proposal.
Comment: Commenters agreed with
the proposed addition of 95 of the 96
diagnosis codes included in Table
6P.1e. associated with the proposed
rule. The commenters specifically
disagreed with the proposal to include
diagnosis code R40.20 (Unspecified
coma) to the Unacceptable Principal
Diagnosis edit because the term ‘‘any’’
in the instructional note ‘‘Code first any
associated: Fracture of skull (S02.–);
Intracranial injury (S06.–)’’ indicates
that if there is not a documented skull
fracture or intracranial injury, then
diagnosis code R40.20 could
appropriately be reported as a Principal
Diagnosis.
Response: We appreciate the
commenters’ support to add 95 of the 96
diagnosis codes included in our
proposal as shown in Table 6P.1e.
associated with the proposed rule. We
agree with the commenters that there
ICD–10–CM
code
R65.10
R65.11
R65.20
R65.21
..................
..................
..................
..................
VerDate Sep<11>2014
could be circumstances in which
diagnosis code R40.20 would
appropriately be reported as the
principal diagnosis in the absence of a
documented fracture of skull or
intracranial injury.
After consideration of the public
comments we received, we are
finalizing the addition of 95 of the 96
diagnosis codes shown in Table 6P.1e.
associated with the proposed rule
(which is available via the Internet on
the CMS Web site) to the list of codes
for the Unacceptable Principal
Diagnosis edit. For the reasons stated,
we are not finalizing the proposal to add
diagnosis code R40.20 (Unspecified
coma) to the Unacceptable Principal
Diagnosis edit. Table 6P.1e. associated
with this final rule (which is available
via the Internet on the CMS Web site at:
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/) sets
forth the 95 diagnosis codes that we are
adding to the list of codes for the
Unacceptable Principal Diagnosis edit,
consistent with our finalized policy.
(5) General Symptoms and Signs (R50
Through R69)
We examined ICD–10–CM diagnosis
codes in Chapter 18 (Symptoms, Signs
and Abnormal Findings) of the
Classification Manual that fall within
the range of code categories for ‘‘General
Symptoms and Signs’’ (R50 through
R69), specifically, at code category
R65—Symptoms and signs associated
with systemic inflammation and
infection. There is an instructional note
at subcategory R65.1—Systemic
inflammatory response syndrome (SIRS)
of non-infectious origin, which states
‘‘Code first underlying condition, such
as: Heatstroke (T67.0); Injury and
trauma (S00–T88).’’ There is also an
instructional note at subcategory
R65.2—Severe sepsis, which states
‘‘Code first underlying infection, such
as:’’ and provides a list of examples.
We identified four ICD–10–CM
diagnosis codes in these subcategories
that, as a result of the instructional
notes described above, are not
appropriate to report as a principal
diagnosis. These four ICD–10–CM codes
are shown in the table below.
Code description
Systemic inflammatory response syndrome (SIRS) of non-infectious origin without acute organ dysfunction.
Systemic inflammatory response syndrome (SIRS) of non-infectious origin with acute organ dysfunction.
Severe sepsis without septic shock.
Severe sepsis with septic shock.
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In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19844), we
proposed to add the four ICD–10–CM
diagnosis codes shown in the table
above to the list of codes for the
Unacceptable Principal Diagnosis edit.
We invited public comments on our
proposal.
Comment: Commenters agreed with
the proposal to add the four diagnosis
codes listed in the table in the proposed
rule to the Unacceptable Principal
Diagnosis edit. However, another
commenter disagreed with adding
diagnosis code R65.10 (Systemic
inflammatory response syndrome (SIRS)
of non-infectious origin without acute
organ dysfunction) and diagnosis code
R65.11 (Systemic inflammatory
response syndrome (SIRS) of noninfectious origin with acute organ
dysfunction) to the edit. According to
the commenter, if the underlying
condition is not known, it would be
appropriate to report either one of the
two codes (R65.10 and R65.11) as the
principal diagnosis.
Response: We appreciate the
commenters’ support. We disagree with
the commenter who asserted that if the
underlying condition is not known, it
would be appropriate to report either
diagnosis code R65.10 or R65.11 as a
principal diagnosis. The current FY
2017 ICD–10–CM Official Guidelines for
Coding and Reporting at Section
1.C.18.g. states, ‘‘The systemic
inflammatory response syndrome (SIRS)
can develop as a result of certain noninfectious disease processes, such as
trauma, malignant neoplasm, or
pancreatitis. When SIRS is documented
with a noninfectious condition, and no
subsequent infection is documented, the
code for the underlying condition, such
as an injury, should be assigned,
followed by code R65.10, Systemic
inflammatory response syndrome (SIRS)
of non-infectious origin without acute
organ dysfunction, or code R65.11,
Systemic inflammatory response
syndrome (SIRS) of non-infectious
origin with acute organ dysfunction.’’
Therefore, the underlying condition (for
example, trauma, neoplasm,
pancreatitis, amongothers) responsible
for causing the systemic inflammatory
response syndrome (SIRS) should be
readily available in the medical record
documentation due to its clinical
significance for the care and treatment
of the patient.
After consideration of the public
comments that we received, we are
finalizing our proposal to add the four
diagnosis codes shown in the table
above from code category R65
(Symptoms and signs associated with
systemic inflammation and infection) to
the Unacceptable Principal Diagnosis
edit code list, effective October 1, 2017.
(6) Poisoning by, Adverse Effects of, and
Underdosing of Drugs, Medicaments
and Biological Substances (T36 Through
T50)
We examined ICD–10–CM diagnosis
codes in Chapter 19 (Injury and
Poisoning) of the Classification Manual
that fall within the range of code
categories for ‘‘Poisoning by, Adverse
Effects of and Underdosing of Drugs,
Medicaments and Biological
Substances’’ (T36 through T50). The
instructional note provided at this
section states ‘‘Code first, for adverse
effects, the nature of the adverse effect,
such as:’’ and provides a list of
examples. In addition, the FY 2017 ICD–
10–CM Official Guidelines for Coding
and Reporting at Section I.C.19.e.5.c.,
state that ‘‘Codes for underdosing
should never be assigned as principal or
first-listed codes.’’
We identified 996 ICD–10–CM
diagnosis codes that, as a result of the
instructional note for adverse effects
and the guideline for reporting
diagnosis codes for underdosing, are not
appropriate to report as a principal
diagnosis. In the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19844
through 19845), we proposed to add the
996 ICD–10–CM diagnosis codes shown
in Table 6P.1f. associated with the
proposed rule (which is available via
ICD–10–CM
code
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T81.12XD .............
T81.12XS .............
the Internet on the CMS Web site at:
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/) to the
list of codes for the Unacceptable
Principal Diagnosis edit. We invited
public comments on our proposal.
Comment: Commenters supported the
proposal to add the 996 ICD–10–CM
diagnosis codes shown in Table 6P.1f.
associated with the proposed rule
describing adverse effects and
underdosing to the Unacceptable
Principal Diagnosis edit.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments that we received, we are
finalizing our proposal to add the 996
ICD–10–CM diagnosis codes shown in
Table 6P.1f. associated with the
proposed rule and this final rule (which
is available via the Internet on the CMS
Web site at: https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/
index.html) to the list of codes for the
Unacceptable Principal Diagnosis edit
code list, effective October 1, 2017.
(7) Complications of Surgical and
Medical Care, Not Elsewhere Classified
(T80 Through T88)
We examined ICD–10–CM diagnosis
codes in Chapter 19 (Injury and
Poisoning) of the Classification Manual
that fall within the range of code
categories for ‘‘Complications of
Surgical and Medical Care, Not
Elsewhere Classified’’ (T80 through
T88), specifically, at code category
T81—Complications of procedures, not
elsewhere classified. There is an
instructional note at subcategory
T81.12x—Postprocedural septic shock,
which states, ‘‘Code first underlying
infection.’’
We identified two ICD–10–CM
diagnosis codes in this subcategory that,
as a result of the instructional note, are
not appropriate to report as a principal
diagnosis. These two ICD–10–CM codes
are shown in the table below.
Code description
Postprocedural septic shock, subsequent encounter.
Postprocedural septic shock, sequela.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19845), we
proposed to add the two ICD–10–CM
diagnosis codes shown in the table
above to the list of codes for the
Unacceptable Principal Diagnosis edit.
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We invited public comments on our
proposal.
Comment: Commenters supported the
proposal to add the two diagnosis codes
shown in the table in the proposed rule
to the Unacceptable Principal Diagnosis
edit.
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Response: We appreciate the
commenters’ support.
After consideration of the public
comments that we received, we are
finalizing our proposal to add the two
diagnosis codes describing
postprocedural septic shock listed in the
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proposed rule and above in this final
rule to the list of codes for the
Unacceptable Principal Diagnosis edit,
effective October 1, 2017.
(8) Persons Encountering Health
Services for Examinations (Z00 Through
Z13)
We examined ICD–10–CM diagnosis
codes in Chapter 21 (Factors Influencing
Health Status) of the Classification
Manual that fall within the range of
code categories for ‘‘Persons
Encountering Health Services for
Examinations’’ (Z00 through Z13),
specifically, at code category Z00—
Encounter for general examination
without complaint, suspected or
reported diagnosis. The FY 2017 ICD–
10–CM Official Guidelines for Coding
and Reporting at Section I.C.21.c.16.,
state that the following ICD–10–CM Zcodes/categories may only be reported
as the principal/first-listed diagnosis,
except when there are multiple
encounters on the same day and the
medical records for the encounters are
combined:
• Z00 (Encounter for general
examination without complaint,
suspected or reported diagnosis); except
Z00.6 (Encounter for examination for
normal comparison and control in
clinical research program).
Therefore, we stated in the proposed
rule that diagnosis code Z00.6 should
not be reported as a principal/first-listed
diagnosis. In the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19845), we
proposed to add ICD–10–CM diagnosis
code Z00.6 to the list of codes for the
Unacceptable Principal Diagnosis edit.
We invited public comments on our
proposal.
Comment: Commenters did not
support the proposal to add diagnosis
code Z00.6 to the list of codes for the
Unacceptable Principal Diagnosis edit.
The commenters stated that, although
this diagnosis code is listed as an
exception in the FY 2017 ICD–10–CM
Official Guidelines for Coding and
Reporting, the code is not prohibited
from ever being reported as a principal
diagnosis, rather, it is not required to be
reported as a principal diagnosis.
According to the commenters, there are
circumstances when a control subject in
a clinical research program may be
admitted to the hospital and diagnosis
code Z00.6 would be appropriate to
report as the principal diagnosis. One
commenter also noted that while
Medicare may not be the responsible
payer in these circumstances, other
payers use the MCE edits, and these
edits are frequently programmed in their
billing software. Therefore, the
commenter believed that including
diagnosis code Z00.6 on the edit could
cause unintended coding and reporting
issues.
Response: We appreciate the
commenters’ feedback on our proposal.
We agree that there could be
circumstances where it would be
appropriate to report diagnosis code
Z00.6 as the principal diagnosis. We
have noted previously (72 FR 47152)
that we encourage other payers to
develop refinements to Medicare’s DRG
system, which includes the Medicare
code edits, consistent with their
population’s needs. However, we also
recognize that tother payers use the
MCE edits in their systems.
After consideration of the public
comments we received and for the
reasons described, we are not finalizing
our proposal to add diagnosis code
Z00.6 (Encounter for examination for
normal comparison and control in
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ICD–10–CM
code
Z05.0 ....................
Z05.1 ....................
Z05.2 ....................
Z05.3 ....................
Z05.41 ..................
Z05.42 ..................
Z05.43 ..................
Z05.5 ....................
Z05.6 ....................
Z05.71 ..................
Z05.72 ..................
Z05.73 ..................
Z05.8 ....................
Z05.9 ....................
Code description
Observation
Observation
Observation
Observation
Observation
Observation
Observation
Observation
Observation
Observation
Observation
Observation
Observation
Observation
and
and
and
and
and
and
and
and
and
and
and
and
and
and
evaluation
evaluation
evaluation
evaluation
evaluation
evaluation
evaluation
evaluation
evaluation
evaluation
evaluation
evaluation
evaluation
evaluation
We invited public comments on our
proposal.
VerDate Sep<11>2014
clinical research program) to the list of
codes for the Unacceptable Principal
Diagnosis edit.
To address a separate issue, in the FY
2018 IPPS/LTCH PPS proposed rule (82
FR 19845), we proposed to remove the
diagnosis codes under category Z05
(Encounter for observation and
examination of newborn for suspected
diseases and conditions ruled out) from
the list of codes for the Unacceptable
Principal Diagnosis edit. The FY 2017
ICD–10–CM Official Guidelines for
Coding and Reporting at Section
I.C.16.b. state the following:
• Assign a code from category Z05,
Observation and evaluation of newborns
and infants for suspected conditions
ruled out, to identify those instances
when a healthy newborn is evaluated
for a suspected condition that is
determined after study not to be present.
Do not use a code from category Z05
when the patient has identified signs or
symptoms of a suspected problem; in
such cases code the sign or symptom.
• A code from category Z05 may also
be assigned as a principal or first-listed
code for readmissions or encounters
when the code from category Z38 no
longer applies. Codes from category Z05
are for use only for healthy newborns
and infants for which no condition after
study is found to be present.
• A code from category Z05 is to be
used as a secondary code after the code
from category Z38, Liveborn infants
according to place of birth and type of
delivery.
Therefore, the ICD–10–CM diagnosis
codes under category Z05 are allowed to
be reported as a principal diagnosis. We
proposed to remove the 14 ICD–10–CM
diagnosis codes shown in the table
below from the list of codes for the
Unacceptable Principal Diagnosis edit.
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of
of
of
of
of
of
of
of
of
of
of
of
of
of
newborn
newborn
newborn
newborn
newborn
newborn
newborn
newborn
newborn
newborn
newborn
newborn
newborn
newborn
for
for
for
for
for
for
for
for
for
for
for
for
for
for
suspected cardiac condition ruled out.
suspected infectious condition ruled out.
suspected neurological condition ruled out.
suspected respiratory condition ruled out.
suspected genetic condition ruled out.
suspected metabolic condition ruled out.
suspected immunologic condition ruled out.
suspected gastrointestinal condition ruled out.
suspected genitourinary condition ruled out.
suspected skin and subcutaneous tissue condition ruled out.
suspected musculoskeletal condition ruled out.
suspected connective tissue condition ruled out.
other specified suspected condition ruled out.
unspecified suspected condition ruled out.
Comment: Commenters agreed with
the proposal to remove the 14 ICD–10–
CM diagnosis codes describing
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observation and evaluation of newborn
for various suspected conditions that
have been ruled out as shown in the
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table in the proposed rule from the list
of codes for the Unacceptable Principal
Diagnosis edit.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to remove the 14
ICD–10–CM diagnosis codes as shown
in the table above from the list of codes
for the Unacceptable Principal
Diagnosis edit, effective October 1,
2017.
(9) Encounters for Other Specific Health
Care (Z40 Through Z53)
We examined ICD–10–CM diagnosis
codes in Chapter 21 (Factors Influencing
Health Status) of the Classification
Manual that fall within the range of
code categories for ‘‘Encounters for
Other Specific Health Care’’ (Z40
through Z53), specifically, at code
category Z52—Donors of organs and
tissues. The FY 2017 ICD–10–CM
Official Guidelines for Coding and
Reporting at Section I.C.21.c.16. state
that the following Z-codes/categories
may only be reported as the principal/
first-listed diagnosis, except when there
are multiple encounters on the same day
and the medical records for the
encounters are combined:
• Z52 (Donors of organs and tissues);
except Z52.9 (Donor of unspecified
organ or tissue).
Therefore, we stated in the proposed
rule that ICD–10–CM diagnosis code
Z52.9 should not be reported as a
principal/first-listed diagnosis. In the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 19846), we proposed to add ICD–
10–CM diagnosis code Z52.9 to the list
of codes for the Unacceptable Principal
Diagnosis edit. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to add diagnosis code Z52.9 to
the list of codes for the Unacceptable
Principal Diagnosis edit. Commenters
stated that this code is on the list of
‘‘non-specific Z codes’’ in the FY 2017
ICD–10–CM Official Guidelines for
Coding and Reporting, indicating that
this code is so nonspecific that there is
little justification for its use in the
hospital inpatient setting. However,
another commenter disagreed with
adding diagnosis code Z52.9 to the list
of codes for the Unacceptable Principal
Diagnosis edit. Similar to the
circumstances with diagnosis code
Z00.6 (Encounter for examination for
normal comparison and control in
clinical research program) discussed
earlier in this section, this commenter
stated that the FY 2017 ICD–10–CM
Official Guidelines for Coding and
Reporting does not prohibit diagnosis
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23:27 Aug 11, 2017
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code Z52.9 from ever being reported as
a principal diagnosis; rather, it is not
required to be reported as a principal
diagnosis.
Response: We thank the commenters
for their support and feedback. Upon
further review, we agree that, consistent
with the FY 2017 ICD–10–CM Official
Guidelines for Coding and Reporting,
the interpretation of the exception for
diagnosis code Z52.9 is that it does not
prohibit the code from ever being
reported as a principal diagnosis; rather,
the exception is indicating that the code
is not required to be reported as a
principal diagnosis.
After consideration of the public
comments we received and for the
reasons described, we are not finalizing
our proposal to add ICD–10–CM
diagnosis code Z52.9 to the list of codes
for the Unacceptable Principal
Diagnosis edit.
(10) Persons Encountering Health
Services in Other Circumstances (Z69
Through Z76)
We examined ICD–10–CM diagnosis
codes in Chapter 21 (Factors Influencing
Health Status) of the Classification
Manual that fall within the range of
code categories for ‘‘Persons
Encountering Health Services in Other
Circumstances’’ (Z69 through Z76),
specifically, at subcategory Z71.8—
Other specified counseling. Consistent
with ICD–10–CM diagnosis codes
Z71.81 (Spiritual or religious
counseling) and Z71.89 (Other specified
counseling), in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19846), we
proposed to add new diagnosis code
Z71.82 (Exercise counseling) to the list
of codes for the Unacceptable Principal
Diagnosis edit. We referred readers to
Table 6A.—New Diagnosis Codes
associated with the proposed rule
(which is available via the Internet on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) for the list of new ICD–
10–CM diagnosis codes that had been
finalized to date. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to add new diagnosis code
Z71.82 (Exercise counseling) to the list
of codes for the Unacceptable Principal
Diagnosis edit.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments that we received, we are
finalizing our proposal to add new ICD–
10–CM diagnosis code Z71.82 (Exercise
counseling) to the list of codes for the
Unacceptable Principal Diagnosis edit,
effective October 1, 2017.
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38053
(11) Persons With Potential Health
Hazards Related to Family and Personal
History and Certain Conditions
Influencing Health Status (Z77 Through
Z99)
We examined ICD–10–CM diagnosis
codes in Chapter 21 (Factors Influencing
Health Status) of the Classification
Manual that fall within the range of
code categories for ‘‘Persons with
Potential Health Hazards Related to
Family and Personal History and
Certain Conditions Influencing Health
Status’’ (Z77 through Z99), specifically,
at code category Z91.8—Other specified
personal risk factors, not elsewhere
classified. Consistent with ICD–10–CM
diagnosis codes Z91.81 (History of
falling), Z91.82 (Personal history of
military deployment), and Z91.89
(Other specified personal risk factors,
not elsewhere classified), in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19846), we proposed to add new ICD–
10–CM diagnosis codes Z91.841 (Risk
for dental caries, low), Z91.842 (Risk for
dental caries, moderate), Z91.843 (Risk
for dental caries, high), and Z91.849
(Unspecified risk for dental caries) to
the list of codes for the Unacceptable
Principal Diagnosis edit. We referred
readers to Table 6A.—New Diagnosis
Codes associated with the proposed rule
(which is available via the Internet on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) for the list of new ICD–
10–CM diagnosis codes that had been
finalized to date. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to add new diagnosis codes in
subcategory Z91.84, Risk for dental
caries, to the list of codes for the
Unacceptable Principal Diagnosis edit.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to add new ICD–
10–CM diagnosis codes Z91.841 (Risk
for dental caries, low), Z91.842 (Risk for
dental caries, moderate), Z91.843 (Risk
for dental caries, high), and Z91.849
(Unspecified risk for dental caries) to
the list of codes for the Unacceptable
Principal Diagnosis edit, effective
October 1, 2017.
e. Future Enhancement
Similar to our discussion in the FY
2017 IPPS/LTCH PPS final rule (81 FR
56843 through 56844), with the
implementation of ICD–10, it is clear
that there are several new concepts in
the classification. Looking ahead to the
needs and uses of coded data as the data
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continue to evolve from the reporting,
collection, processing, coverage,
payment and analysis aspects, we
believe the need to ensure the accuracy
of the coded data becomes increasingly
significant.
The purpose of the MCE is to ensure
that errors and inconsistencies in the
coded data are recognized during
Medicare claims processing. As we
continue to evaluate the purpose and
function of the MCE with respect to
ICD–10, we encourage public input for
future discussion. As we discussed in
the FY 2017 IPPS/LTCH PPS final rule,
we recognize a need to further examine
the current list of edits and the
definitions of those edits. We continue
to encourage public comments on
whether there are additional concerns
with the current edits, including
specific edits or language that should be
removed or revised, edits that should be
combined, or new edits that should be
added to assist in detecting errors or
inaccuracies in the coded data.
Comments should be directed to the
MS–DRG Classification Change Mailbox
located at MSDRGClassification
Change@cms.hhs.gov by November 1,
2017 for FY 2019.
11. Changes to Surgical Hierarchies
Some inpatient stays entail multiple
surgical procedures, each one of which,
occurring by itself, could result in
assignment of the case to a different
MS–DRG within the MDC to which the
principal diagnosis is assigned.
Therefore, it is necessary to have a
decision rule within the GROUPER by
which these cases are assigned to a
single MS–DRG. The surgical hierarchy,
an ordering of surgical classes from
most resource-intensive to least
resource-intensive, performs that
function. Application of this hierarchy
ensures that cases involving multiple
surgical procedures are assigned to the
MS–DRG associated with the most
resource-intensive surgical class.
As discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19846),
because the relative resource intensity
of surgical classes can shift as a function
of MS–DRG reclassification and
recalibrations, for FY 2018, we reviewed
the surgical hierarchy of each MDC, as
we have for previous reclassifications
and recalibrations, to determine if the
ordering of classes coincides with the
intensity of resource utilization.
A surgical class can be composed of
one or more MS–DRGs. For example, in
MDC 11, the surgical class ‘‘kidney
transplant’’ consists of a single MS–DRG
(MS–DRG 652) and the class ‘‘major
bladder procedures’’ consists of three
MS–DRGs (MS–DRGs 653, 654, and
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23:27 Aug 11, 2017
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655). Consequently, in many cases, the
surgical hierarchy has an impact on
more than one MS–DRG. The
methodology for determining the most
resource-intensive surgical class
involves weighting the average
resources for each MS–DRG by
frequency to determine the weighted
average resources for each surgical class.
For example, assume surgical class A
includes MS–DRGs 001 and 002 and
surgical class B includes MS–DRGs 003,
004, and 005. Assume also that the
average costs of MS–DRG 001 are higher
than that of MS–DRG 003, but the
average costs of MS–DRGs 004 and 005
are higher than the average costs of MS–
DRG 002. To determine whether
surgical class A should be higher or
lower than surgical class B in the
surgical hierarchy, we would weigh the
average costs of each MS–DRG in the
class by frequency (that is, by the
number of cases in the MS–DRG) to
determine average resource
consumption for the surgical class. The
surgical classes would then be ordered
from the class with the highest average
resource utilization to that with the
lowest, with the exception of ‘‘other
O.R. procedures’’ as discussed in this
rule.
This methodology may occasionally
result in assignment of a case involving
multiple procedures to the lowerweighted MS–DRG (in the highest, most
resource-intensive surgical class) of the
available alternatives. However, given
that the logic underlying the surgical
hierarchy provides that the GROUPER
search for the procedure in the most
resource-intensive surgical class, in
cases involving multiple procedures,
this result is sometimes unavoidable.
We note that, notwithstanding the
foregoing discussion, there are a few
instances when a surgical class with a
lower average cost is ordered above a
surgical class with a higher average cost.
For example, the ‘‘other O.R.
procedures’’ surgical class is uniformly
ordered last in the surgical hierarchy of
each MDC in which it occurs, regardless
of the fact that the average costs for the
MS–DRG or MS–DRGs in that surgical
class may be higher than those for other
surgical classes in the MDC. The ‘‘other
O.R. procedures’’ class is a group of
procedures that are only infrequently
related to the diagnoses in the MDC, but
are still occasionally performed on
patients with cases assigned to the MDC
with these diagnoses. Therefore,
assignment to these surgical classes
should only occur if no other surgical
class more closely related to the
diagnoses in the MDC is appropriate.
A second example occurs when the
difference between the average costs for
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Fmt 4701
Sfmt 4700
two surgical classes is very small. We
have found that small differences
generally do not warrant reordering of
the hierarchy because, as a result of
reassigning cases on the basis of the
hierarchy change, the average costs are
likely to shift such that the higherordered surgical class has lower average
costs than the class ordered below it.
We received a request to examine a
case involving the principal procedure
for excision of pituitary gland (ICD–10–
PCS code 0GB00ZZ (Excision of
pituitary gland, open approach)) with a
secondary procedure for harvesting of a
fat graft (ICD–10–PCS code 0JB80ZZ
(Excision of abdomen subcutaneous
tissue and fascia, open approach)) to
treat a condition of pituitary adenoma
(ICD–10–CM diagnosis code D35.2
(Benign neoplasm of pituitary gland))
and the resulting sella turcica defect.
The requestor noted that when the
procedure code for harvesting of the fat
graft is reported on the claim, the case
currently groups to MS–DRGs 622, 623,
and 624 (Skin Grafts and Wound
Debridement for Endocrine, Nutritional,
and Metabolic Disorders with MCC,
with CC and without CC/MCC,
respectively). However, when the
procedure code for harvesting of the fat
graft is not reported on the claim, the
case groups to MS–DRGs 614 and 615
(Adrenal and Pituitary Procedures with
CC/MCC and without CC/MCC,
respectively), which appears to be a
more appropriate assignment. The
requester expressed concern regarding
the procedure code for harvesting of the
fat graft in the secondary position
driving the MS–DRG assignment versus
the principal procedure of the excision
of pituitary gland.
As discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19847),
we analyzed the codes provided by the
requestor in the GROUPER to determine
if we could duplicate the requestor’s
findings. The findings from our analysis
were consistent with the requestor’s
findings. Our clinical advisors reviewed
this issue and agreed that it should be
the procedure code for excision of the
pituitary gland that is used to determine
the MS–DRG assignment in this
scenario and not the harvesting of the
fat graft procedure code.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule, we proposed to
move MS–DRGs 614 and 615 above MS–
DRGs 622, 623, and 624 in the surgical
hierarchy to enable more appropriate
MS–DRG assignment for these types of
cases.
We invited public comments on our
proposal.
Comment: Commenters supported the
proposal to move MS–DRGs 614 and
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615 above MS–DRGs 622, 623, and 624
in the surgical hierarchy. Another
commenter expressed concern that the
proposal to move MS–DRGs 614 and
615 above MS–DRGs 622, 623, and 624
in the surgical hierarchy was made as
the result of a single scenario and
recommended that a more thorough
analysis be performed to determine the
potential impact of such a change prior
to modifying existing GROUPER logic.
Response: We appreciate the
commenters’ support. In response to the
commenter who expressed concern that
the proposal to move MS–DRGs 614 and
615 above MS–DRGs 622, 623, and 624
in the surgical hierarchy was made as
the result of a single scenario and that
additional analysis should be performed
to determine potential impacts, we are
unclear as to what specific impacts the
commenter is referring to and what type
38055
of analysis the commenter is
recommending. However, we did
analyze claims from the December 2016
update of the FY 2016 MedPAR file for
MS–DRGs 614 and 615, as well as from
MS–DRGs 622, 623 and 624, to
determine the volume of cases where
procedure codes from both sets of MS–
DRGs were reported. Our findings are
shown in the tables below.
MS–DRGS FOR ADRENAL AND PITUITARY PROCEDURES
Number of
cases
MS–DRG
MS–DRG 614—All cases ............................................................................................................
MS–DRG 615—All cases ............................................................................................................
Average
length of stay
1,526
1,007
5
2.4
Average
costs
$16,957
10,680
MS–DRGS FOR SKIN GRAFTS AND WOUND DEBRIDEMENT PROCEDURES
Number of
cases
MS–DRG
MS–DRG 622—All cases ............................................................................................................
MS–DRG 623—All cases ............................................................................................................
MS–DRG 624—All cases ............................................................................................................
As shown in the tables above, there
were a total of 1,526 cases in MS–DRG
614 with an average length of stay of 5
days and average costs of $16,957. There
were a total of 1,007 cases in MS–DRG
615 with an average length of stay of 2.4
days and average costs of $10,680. For
MS–DRG 622, there were a total of 1,289
cases with an average length of stay of
10.7 days and average costs of $23,954.
For MS–DRG 623, there were a total of
4,423 cases with an average length of
stay of 6.3 days and average costs of
$12,522. For MS–DRG 624, there were a
total of 454 cases with an average length
of stay of 3.5 days and average costs of
$9,345.
1,289
4,423
454
Average
length of stay
10.7
6.3
3.5
Average
costs
$23,954
12,522
9,345
We then analyzed claims from the
March 2017 update of the FY 2016
MedPAR file to determine the number
of cases where a procedure code from
MS–DRG 614 or MS–DRG 615 was
reported with a procedure code from
MS–DRGs 622, 623 or 624 on the same
claim. Our findings are shown in the
table below.
MS–DRGS FOR ADRENAL, PITUITARY, SKIN GRAFTS AND WOUND DEBRIDEMENT PROCEDURES
Number of
cases
MS–DRG
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MS–DRG 614 procedures with MS–DRG 622 procedures .........................................................
MS–DRG 614 procedures with MS–DRG 623 procedures .........................................................
MS–DRG 615 procedures with MS–DRG 624 procedures .........................................................
As shown in the table above, there
were a total of 46 cases reporting
procedures from MS–DRG 614 and 622
on the same claim with an average
length of stay of 10.15 days and average
costs of $12,977. There were a total of
240 cases reporting procedures from
MS–DRG 614 and MS–DRG 623 on the
same claim with an average length of
stay of 4.42 days and average costs of
$11,540. Lastly, there were a total of 125
cases reporting procedures from MS–
DRG 615 and MS–DRG 624 on the same
claim with an average length of stay of
2.93 days and average costs of $14,494.
We then examined the redistribution
of cases that is anticipated to occur as
a result of the proposal to move MS–
DRGs 614 and 615 above MS–DRGs 622,
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623, and 624 in the surgical hierarchy
for Version 35 of the ICD–10 MS–DRGs,
by processing the claims data from the
March update of the FY 2016 MedPAR
file through the ICD–10 MS–DRG
GROUPER Version 34 and then
processing the same claims data through
the ICD–10 MS–DRG GROUPER Version
35 for comparison. The number of cases
from this comparison that result in
different MS–DRG assignments is the
number of the cases that are anticipated
to potentially shift or be redistributed.
We found that the number of cases
moving out of MS–DRG 622 and into
MS–DRG 614 is approximately 46 cases,
the number of cases moving out of MS–
DRG 623 and into MS–DRG 614 is
approximately 240 cases and the
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Fmt 4701
Sfmt 4700
46
240
125
Average
length of stay
10.2
4.4
2.9
Average
costs
$12,977
11,540
14,494
number of cases moving out of MS–DRG
624 and into MS–DRG 615 is
approximately 125 cases. We believe
that overall, the impact of this change is
limited because the subset of cases that
would be reclassified is approximately
6.7 percent of the total cases currently
grouping to MS–DRGs 622, 623 and 624.
Additionally, as shown above, in the
analysis of claims where a procedure
code from MS–DRG 614 or MS–DRG
615 was reported with a procedure code
from MS–DRGs 622, 623, or 624 on the
same claim, the average costs for those
cases are consistent with the average
costs for all cases in MS DRGs 614 and
615.
For issues pertaining to the surgical
hierarchy, as with other MS–DRG
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related requests, we encourage
commenters to submit requests to
examine ICD–10 claims data via the
CMS MS–DRG Classification Change
Requests Mailbox located at MSDRG
ClassificationChange@cms.hhs.gov by
November 1, 2017 for FY 2019
consideration.
After consideration of the public
comments we received, we are
finalizing our proposal to move MS–
DRGs 614 and 615 above MS–DRGs 622,
623, and 624 in the surgical hierarchy
effective October 1, 2017.
12. Changes to the MS–DRG Diagnosis
Codes for FY 2018
a. Background of the CC List and the CC
Exclusions List
Under the IPPS MS–DRG
classification system, we have
developed a standard list of diagnoses
that are considered CCs. Historically, we
developed this list using physician
panels that classified each diagnosis
code based on whether the diagnosis,
when present as a secondary condition,
would be considered a substantial
complication or comorbidity. A
substantial complication or comorbidity
was defined as a condition that, because
of its presence with a specific principal
diagnosis, would cause an increase in
the length-of-stay by at least 1 day in at
least 75 percent of the patients.
However, depending on the principal
diagnosis of the patient, some diagnoses
on the basic list of complications and
comorbidities may be excluded if they
are closely related to the principal
diagnosis. In FY 2008, we evaluated
each diagnosis code to determine its
impact on resource use and to
determine the most appropriate CC
subclassification (non-CC, CC, or MCC)
assignment. We refer readers to sections
II.D.2. and 3. of the preamble of the FY
2008 IPPS final rule with comment
period for a discussion of the refinement
of CCs in relation to the MS–DRGs we
adopted for FY 2008 (72 FR 47152
through 47171).
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b. Additions and Deletions to the
Diagnosis Code Severity Levels for FY
2018
We stated in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19847) that
the following tables identifying the
proposed additions and deletions to the
MCC severity levels list and the
proposed additions and deletions to the
CC severity levels list for FY 2018 are
available via the Internet on the CMS
Web site at: https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/
index.html.
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Table 6I.1—Proposed Additions to the
MCC List—FY 2018;
Table 6I.2—Proposed Deletions to the
MCC List—FY 2018;
Table 6J.1—Proposed Additions to the
CC List—FY 2018; and
Table 6J.2—Proposed Deletions to the
CC List—FY 2018.
We invited public comments on our
proposed severity level designations for
the diagnosis codes listed in Table 6I.1.
and Table 6J.1. We noted that, for Table
6I.2. and Table 6J.2., the proposed
deletions were a result of code
expansions. Therefore, the diagnosis
codes on these lists are no longer valid
codes, effective FY 2018. For example,
diagnosis code O00.10 (Tubal pregnancy
without intrauterine pregnancy) is a
current CC for FY 2017 under Version
34 of the ICD–10 MS–DRGs. Effective
FY 2018, under Version 35 of the ICD–
10 MS–DRGs, this single code has been
expanded into three diagnosis codes to
include laterality (left/right) and an
unspecified option with the addition of
a sixth character. Therefore, diagnosis
code O00.10 is included in Table 6J.2.
for deletion from the CC list because it
is no longer a valid code in FY 2018.
Comment: Commenters agreed with
the proposed additions and deletions to
the MCC and CC List severity level
designations for FY 2018. One
commenter suggested that CMS also
consider adding existing diagnosis
codes from subcategories L97.5 (Nonpressure chronic ulcer of other part of
foot) and L98.4 (Non-pressure chronic
ulcer of skin, not elsewhere classified)
to the CC List. This commenter noted
that new diagnosis codes from these
subcategories were proposed to be
added to the CC List. However,
according to the commenter, existing
codes from these same subcategories are
not currently included in the CC List
even though some of them represent a
greater severity level than the new codes
that were proposed to be added to the
CC List.
Response: We appreciate the
commenters’ support. In response to the
commenter who suggested that we
consider adding existing diagnosis
codes in subcategories L97.5 and L98.4
to the CC list, we were unable to fully
evaluate this request for FY 2018 but
will consider this recommendation as
part of our comprehensive review of the
CC and MCC lists. As discussed in the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 19848) and in the sections that
follow, we have plans to conduct a
comprehensive review of the CC and
MCC lists for FY 2019. Therefore, we
will be evaluating all of the ICD–10–CM
diagnosis codes for this effort.
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Fmt 4701
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After consideration of the public
comments we received, we are
finalizing our proposed additions and
deletions to the MCC severity levels list
and the proposed additions and
deletions to the CC severity levels list
for FY 2018. We refer readers to the
Tables 6I.1, 6I.2, 6J.1, and 6J.2
associated with this final rule, which
are available via the Internet on the
CMS Web site at: https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/
index.html.
c. Principal Diagnosis Is Its Own CC or
MCC
CMS’ initial goal in developing the
ICD–10 MS–DRGs was to ensure that a
patient case was assigned to the same
MS–DRG, regardless of whether the
patient record was to be coded in ICD–
9–CM or ICD–10. When certain ICD–10–
CM combination codes are reported as
a principal diagnosis, it implies that a
CC or MCC is present. This occurs as a
result of evaluating the cluster of ICD–
9–CM codes that would have been
coded on an ICD–9–CM record. If one of
the ICD–9–CM codes in the cluster was
a CC or an MCC, the single ICD–10–CM
combination code used as a principal
diagnosis also must imply that the CC
or MCC is present.
The ICD–10–CM diagnosis codes to
which this logic applies are included in
Appendix J of the ICD–10 MS–DRG
Version 34 Definitions Manual (which is
available via the Internet on the CMS
Web site at: https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/FY2017IPPS-Final-Rule-Home-Page-Items/
FY2017-IPPS-Final-Rule-DataFiles.html?DLPage=1&DLEntries=10&
DLSort=0&DLSortDir=ascending).
Appendix J includes two lists: Part 1 is
the list of principal diagnosis codes
where the ICD–10–CM code is its own
MCC. Part 2 is the list of principal
diagnosis codes where the ICD–10–CM
code is its own CC. Part 1 of Appendix
J corresponds to Table 6L.—Principal
Diagnosis Is Its Own MCC List, and Part
2 of Appendix J corresponds to Table
6M.—Principal Diagnosis Is Its Own CC
List.
We received a request to add the ICD–
10–CM diagnosis codes for acute
myocardial infarction, decompensated
heart failure and specified forms of
shock, which are currently designated
as a CC or an MCC when reported as a
secondary diagnosis, to Table 6L.—
Principal Diagnosis Is Its Own MCC
List. According to the requestor, the
addition of these codes to the list is
necessary for bundled payment
initiatives and so that facilities that
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accept these patients in transfer have
resources to care for them.
As we stated in the proposed rule, the
purpose of the Principal Diagnosis Is Its
Own CC or MCC Lists was to ensure
consistent MS–DRG assignment
between the ICD–9–CM and ICD–10
MS–DRGs due to the clusters and
combination codes. There are a number
of other ICD–10–CM combination codes
that, due to their prior designation as a
CC or an MCC when reported as a
secondary diagnosis, are not on either of
these lists. Having multiple lists for CC
and MCC diagnoses when reported as a
principal and/or secondary diagnosis
may not provide an accurate
representation of resource utilization for
the MS–DRGs. As discussed in further
detail below, we have plans to conduct
a comprehensive review of the CC and
MCC lists for FY 2019. We believe the
results of that review will help to inform
the future of these lists.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19848), we
did not propose to add the ICD–10–CM
diagnosis codes for acute myocardial
infarction, decompensated heart failure
and specified forms of shock to Table
6L.—Principal Diagnosis Is Its Own
MCC List. In addition, we did not
propose any changes to Table 6L.—
Principal Diagnosis Is Its Own MCC List
and Table 6M.—Principal Diagnosis Is
Its Own CC List. We invited public
comments on our proposal to maintain
the existing lists of principal diagnosis
codes in Tables 6L. and 6M for FY 2018.
Comment: Commenters supported the
proposal to not make changes to Table
6L and Table 6M. One commenter
acknowledged that CMS is delaying
further modifications to Tables 6L. and
6M. until the severity level (MCC and
CC) analysis is performed for FY 2019.
However, this commenter requested that
the proposed MS–DRG assignments for
the new myocardial infarction type 2
diagnosis codes be reviewed for more
appropriate assignments.
Response: We appreciate the
commenters’ support. In response to the
commenter’s request that we review the
proposed MS–DRG assignments for the
new myocardial infarction type 2
diagnosis codes for more appropriate
assignments, we point out that the codes
identifying myocardial infarction type 2
diagnoses were not finalized at the time
of publication of the FY 2018 IPPS/
LTCH PPS proposed rule and, therefore,
were not included in Table 6A.—New
Diagnosis Codes that was associated
with the proposed rule. As discussed in
the section that follows, we have made
available the final tables associated with
this final rule via the Internet on the
CMS Web site at: https://www.cms.gov/
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Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/
index.html. We refer readers to the final
rule Table 6A.—New Diagnosis Codes
for the MS–DRG assignments for the
acute myocardial infarction type 2
diagnosis codes for FY 2018, which are
based on our usual process of assigning
new codes to their predecessor code’s
MS–DRG assignment(s).
After consideration of the public
comments we received, we are
maintaining the current code lists for
Table 6L.—Principal Diagnosis Is Its
Own MCC and Table 6M.—Principal
Diagnosis Is Its Own CC List for FY
2018.
d. CC Exclusions List for FY 2018
In the September 1, 1987 final notice
(52 FR 33143) concerning changes to the
DRG classification system, we modified
the GROUPER logic so that certain
diagnoses included on the standard list
of CCs would not be considered valid
CCs in combination with a particular
principal diagnosis. We created the CC
Exclusions List for the following
reasons: (1) To preclude coding of CCs
for closely related conditions; (2) to
preclude duplicative or inconsistent
coding from being treated as CCs; and
(3) to ensure that cases are appropriately
classified between the complicated and
uncomplicated DRGs in a pair. As
previously indicated, we developed a
list of diagnoses, using physician
panels, to include those diagnoses that,
when present as a secondary condition,
would be considered a substantial
complication or comorbidity.
In previous years, we made changes to
the list of CCs, either by adding new
CCs or deleting CCs already on the list.
In the May 19, 1987 proposed notice
(52 FR 18877) and the September 1,
1987 final notice (52 FR 33154), we
explained that the excluded secondary
diagnoses were established using the
following five principles:
• Chronic and acute manifestations of
the same condition should not be
considered CCs for one another;
• Specific and nonspecific (that is,
not otherwise specified (NOS))
diagnosis codes for the same condition
should not be considered CCs for one
another;
• Codes for the same condition that
cannot coexist, such as partial/total,
unilateral/bilateral, obstructed/
unobstructed, and benign/malignant,
should not be considered CCs for one
another;
• Codes for the same condition in
anatomically proximal sites should not
be considered CCs for one another; and
• Closely related conditions should
not be considered CCs for one another.
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38057
The creation of the CC Exclusions List
was a major project involving hundreds
of codes. We have continued to review
the remaining CCs to identify additional
exclusions and to remove diagnoses
from the master list that have been
shown not to meet the definition of a
CC. We refer readers to the FY 2014
IPPS/LTCH PPS final rule (78 FR 50541
through 50544) for detailed information
regarding revisions that were made to
the CC and CC Exclusion Lists under the
ICD–9–CM MS–DRGs.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19848), for FY
2018, we proposed changes to the ICD–
10 MS–DRGs Version 35 CC Exclusion
List. Therefore, we developed Table
6G.1.—Proposed Secondary Diagnosis
Order Additions to the CC Exclusions
List—FY 2018; Table 6G.2.—Proposed
Principal Diagnosis Order Additions to
the CC Exclusions List—FY 2018; Table
6H.1.—Proposed Secondary Diagnosis
Order Deletions to the CC Exclusions
List—FY 2018; and Table 6H.2.—
Proposed Principal Diagnosis Order
Deletions to the CC Exclusions List—FY
2018. Each of these principal diagnosis
codes for which there is a CC exclusion
is shown in Table 6G.2. with an asterisk
and the conditions that will not count
as a CC are provided in an indented
column immediately following the
affected principal diagnosis. Beginning
with discharges on or after October 1 of
each year, the indented diagnoses are
not recognized by the GROUPER as
valid CCs for the asterisked principal
diagnoses. Tables 6G. and 6H.
associated with the proposed rule are
available via the Internet on the CMS
Web site at: https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/
index.html.
Comment: Commenters supported the
proposed modifications to the CC
Exclusion List for FY 2018 as displayed
in Table 6G.1., Table 6G.2., Table 6H.1.,
and Table 6H.2. that were associated
with the proposed rule and made
available via the Internet on the CMS
Web site.
Response: We appreciate the
commenters’ support.
We note that, for this FY 2018 IPPS/
LTCH PPS final rule, we have
developed Table 6K.—Complete List of
CC Exclusions. Table 6K. corresponds to
the Part 1 list of Appendix C in the ICD–
10 MS–DRG Definitions Manual as
described above.
The complete documentation of the
ICD–10 MS–DRG Version 35 GROUPER
logic, including the CC Exclusion List,
is available via the Internet on the CMS
Acute Inpatient PPS Web page at:
https://www.cms.gov/Medicare/
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AcuteInpatientPPS/.
To identify new, revised and deleted
diagnosis and procedure codes, for FY
2018, we developed Table 6A.—New
Diagnosis Codes, Table 6B.—New
Procedure Codes, Table 6C.—Invalid
Diagnosis Codes, Table 6D.—Invalid
Procedure Codes, Table 6E.—Revised
Diagnosis Code Titles, and Table 6F.—
Revised Procedure Code Titles for the
proposed rule and this final rule.
These tables are not published in the
Addendum to the proposed rule or the
final rule but are available via the
Internet on the CMS Web site at:
(https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/) as
described in section VI. of the
Addendum to this final rule. As
discussed in section II.F.15. of the
preamble of this final rule, the code
titles are adopted as part of the ICD–10
(previously ICD–9–CM) Coordination
and Maintenance Committee process.
Therefore, although we publish the code
titles in the IPPS proposed and final
rules, they are not subject to comment
in the proposed or final rules. In the FY
2018 IPPS/LTCH PPS proposed rule (82
FR 19849), we invited public comments
on the MDC and MS–DRG assignments
for the new diagnosis and procedure
codes as set forth in Table 6A.—New
Diagnosis Codes and Table 6B.—New
Procedure Codes. In addition, we
invited public comments on the
proposed severity level designations for
the new diagnosis codes as set forth in
Table 6A. and the proposed O.R. status
for the new procedure codes as set forth
in Table 6B.
Comment: One commenter disagreed
with the addition of new ICD–10–CM
diagnosis code R06.03 (Acute
respiratory distress) as displayed in
Table 6A.—New Diagnosis Codes
associated with the FY 2018 IPPS/LTCH
PPS proposed rule, stating that the
terminology for this code title is
outdated. The commenter stated that
physician documentation generally
supports either Acute Respiratory
Distress Syndrome (ARDS) or Acute
Respiratory Failure (ARF). The
commenter requested that new
diagnosis codes be created to avoid
confusion and to support appropriate
physician documentation.
Response: As noted earlier and
discussed in section II.F.15. of the
preamble of this final rule, the code
titles are adopted as part of the ICD–10
(previously ICD–9–CM) Coordination
and Maintenance Committee process.
Therefore, although we publish the code
titles in the IPPS proposed and final
rules, they are not subject to comment
in the proposed or final rules. We also
note that the condition of ARDS is
identified by ICD–10–CM diagnosis
code J80 (Acute respiratory distress
syndrome) and ARF is identified in
ICD–10–CM subcategory J96.0 (Acute
respiratory failure). Therefore, it is not
necessary to submit a request for new
diagnosis codes to the ICD–10
Coordination and Maintenance
Committee.
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ICD–10–PCS code
00H03YZ ..............
00H04YZ ..............
00H63YZ ..............
00H64YZ ..............
00HU0YZ .............
00HV0YZ ..............
00HV3YZ ..............
00HV4YZ ..............
02H43YZ ..............
02H44YZ ..............
02H63YZ ..............
02H64YZ ..............
02H73YZ ..............
02H74YZ ..............
02HA3YZ ..............
02HA4YZ ..............
02HK3YZ ..............
02HK4YZ ..............
02HL3YZ ..............
02HL4YZ ..............
02HN3YZ .............
02HN4YZ .............
02HP0YZ ..............
02HP3YZ ..............
02HP4YZ ..............
02HQ3YZ .............
02HQ4YZ .............
VerDate Sep<11>2014
Comment: Several commenters
disagreed with the proposed Non-O.R.
designations for certain procedure codes
displayed in Table 6B.—New Procedure
Codes associated with the FY 2018
IPPS/LTCH PPS proposed rule. The
commenters recommended that CMS
consider revising the designation of
these procedure codes from Non-O.R. to
O.R. The commenters identified
approximately 200 new procedure codes
describing the insertion, removal, or
revision of ‘‘other device’’ in various
body parts that they stated require an
O.R. setting or are most often performed
in the O.R. setting using sterile
technique. The commenters further
stated that patients undergoing these
procedures are placed under general
anesthesia and the procedures require
significant time and skill.
Response: We reexamined a
significant portion of the procedure
codes listed in Table 6B.—New
Procedure Codes that was associated
with the FY 2018 IPPS/LTCH PPS
proposed rule that the commenters
recommended we consider revising
from Non-O.R. to O.R. We note that we
were unable to fully reevaluate the
complete list for FY 2018, but we plan
to conduct a review for FY 2019. Based
upon our review, and upon further
consideration of whether these
procedures would be performed in an
O.R. setting, we are revising the
designation of the new procedure codes
in the following table from non-O.R. to
O.R.
Code description
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
of
of
of
of
of
of
of
of
of
of
of
of
of
of
of
of
of
of
of
of
of
of
of
of
of
of
of
23:27 Aug 11, 2017
Other
Other
Other
Other
Other
Other
Other
Other
Other
Other
Other
Other
Other
Other
Other
Other
Other
Other
Other
Other
Other
Other
Other
Other
Other
Other
Other
Device
Device
Device
Device
Device
Device
Device
Device
Device
Device
Device
Device
Device
Device
Device
Device
Device
Device
Device
Device
Device
Device
Device
Device
Device
Device
Device
Jkt 241001
into
into
into
into
into
into
into
into
into
into
into
into
into
into
into
into
into
into
into
into
into
into
into
into
into
into
into
Brain, Percutaneous Approach.
Brain, Percutaneous Endoscopic Approach.
Cerebral Ventricle, Percutaneous Approach.
Cerebral Ventricle, Percutaneous Endoscopic Approach.
Spinal Canal, Open Approach.
Spinal Cord, Open Approach.
Spinal Cord, Percutaneous Approach.
Spinal Cord, Percutaneous Endoscopic Approach.
Coronary Vein, Percutaneous Approach.
Coronary Vein, Percutaneous Endoscopic Approach.
Right Atrium, Percutaneous Approach.
Right Atrium, Percutaneous Endoscopic Approach.
Left Atrium, Percutaneous Approach.
Left Atrium, Percutaneous Endoscopic Approach.
Heart, Percutaneous Approach.
Heart, Percutaneous Endoscopic Approach.
Right Ventricle, Percutaneous Approach.
Right Ventricle, Percutaneous Endoscopic Approach.
Left Ventricle, Percutaneous Approach.
Left Ventricle, Percutaneous Endoscopic Approach.
Pericardium, Percutaneous Approach.
Pericardium, Percutaneous Endoscopic Approach.
Pulmonary Trunk, Open Approach.
Pulmonary Trunk, Percutaneous Approach.
Pulmonary Trunk, Percutaneous Endoscopic Approach.
Right Pulmonary Artery, Percutaneous Approach.
Right Pulmonary Artery, Percutaneous Endoscopic Approach.
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ICD–10–PCS code
sradovich on DSK3GMQ082PROD with RULES2
02HR3YZ .............
02HR4YZ .............
02HS3YZ ..............
02HS4YZ ..............
02HT3YZ ..............
02HT4YZ ..............
02HV3YZ ..............
02HV4YZ ..............
02HW0YZ .............
02HW3YZ .............
02HW4YZ .............
07HK0YZ ..............
07HK4YZ ..............
07HL0YZ ..............
07HL4YZ ..............
07HM0YZ .............
07HM4YZ .............
07HN0YZ .............
07HP0YZ ..............
09HY0YZ ..............
0BH04YZ ..............
0BH14YZ ..............
0BHK4YZ .............
0BHK8YZ .............
0BHL4YZ ..............
0BHL8YZ ..............
0BHQ4YZ .............
0BHQ8YZ .............
0BHT4YZ .............
0BPK4YZ .............
0BPK8YZ .............
0BPL4YZ ..............
0BPL8YZ ..............
0BPQ0YZ .............
0BPQ4YZ .............
0BPQ8YZ .............
0BPT4YZ ..............
0BWK4YZ ............
0BWK8YZ ............
0BWL4YZ .............
0BWL8YZ .............
0BWQ4YZ ............
0BWQ8YZ ............
0BWT4YZ .............
0HPT0YZ .............
0HPU0YZ .............
0HWT0YZ ............
0HWU0YZ ............
0JHS0YZ ..............
0JHT0YZ ..............
0JHV0YZ ..............
0JHW0YZ .............
0TH58YZ ..............
0TH98YZ ..............
0THB8YZ .............
0TP58YZ ..............
0TW98YZ .............
0TWB8YZ .............
Code description
Insertion of Other Device into Left Pulmonary Artery, Percutaneous Approach.
Insertion of Other Device into Left Pulmonary Artery, Percutaneous Endoscopic Approach.
Insertion of Other Device into Right Pulmonary Vein, Percutaneous Approach.
Insertion of Other Device into Right Pulmonary Vein, Percutaneous Endoscopic Approach.
Insertion of Other Device into Left Pulmonary Vein, Percutaneous Approach.
Insertion of Other Device into Left Pulmonary Vein, Percutaneous Endoscopic Approach.
Insertion of Other Device into Superior Vena Cava, Percutaneous Approach.
Insertion of Other Device into Superior Vena Cava, Percutaneous Endoscopic Approach.
Insertion of Other Device into Thoracic Aorta, Descending, Open Approach.
Insertion of Other Device into Thoracic Aorta, Descending, Percutaneous Approach.
Insertion of Other Device into Thoracic Aorta, Descending, Percutaneous Endoscopic Approach.
Insertion of Other Device into Thoracic Duct, Open Approach.
Insertion of Other Device into Thoracic Duct, Percutaneous Endoscopic Approach.
Insertion of Other Device into Cisterna Chyli, Open Approach.
Insertion of Other Device into Cisterna Chyli, Percutaneous Endoscopic Approach.
Insertion of Other Device into Thymus, Open Approach.
Insertion of Other Device into Thymus, Percutaneous Endoscopic Approach.
Insertion of Other Device into Lymphatic, Open Approach.
Insertion of Other Device into Spleen, Open Approach.
Insertion of Other Device into Sinus, Open Approach.
Insertion of Other Device into Tracheobronchial Tree, Percutaneous Endoscopic Approach.
Insertion of Other Device into Trachea, Percutaneous Endoscopic Approach.
Insertion of Other Device into Right Lung, Percutaneous Endoscopic Approach.
Insertion of Other Device into Right Lung, Via Natural or Artificial Opening Endoscopic.
Insertion of Other Device into Left Lung, Percutaneous Endoscopic Approach.
Insertion of Other Device into Left Lung, Via Natural or Artificial Opening Endoscopic.
Insertion of Other Device into Pleura, Percutaneous Endoscopic Approach.
Insertion of Other Device into Pleura, Via Natural or Artificial Opening Endoscopic.
Insertion of Other Device into Diaphragm, Percutaneous Endoscopic Approach.
Removal of Other Device from Right Lung, Percutaneous Endoscopic Approach.
Removal of Other Device from Right Lung, Via Natural or Artificial Opening Endoscopic.
Removal of Other Device from Left Lung, Percutaneous Endoscopic Approach.
Removal of Other Device from Left Lung, Via Natural or Artificial Opening Endoscopic.
Removal of Other Device from Pleura, Open Approach.
Removal of Other Device from Pleura, Percutaneous Endoscopic Approach.
Removal of Other Device from Pleura, Via Natural or Artificial Opening Endoscopic.
Removal of Other Device from Diaphragm, Percutaneous Endoscopic Approach.
Revision of Other Device in Right Lung, Percutaneous Endoscopic Approach.
Revision of Other Device in Right Lung, Via Natural or Artificial Opening Endoscopic.
Revision of Other Device in Left Lung, Percutaneous Endoscopic Approach.
Revision of Other Device in Left Lung, Via Natural or Artificial Opening Endoscopic.
Revision of Other Device in Pleura, Percutaneous Endoscopic Approach.
Revision of Other Device in Pleura, Via Natural or Artificial Opening Endoscopic.
Revision of Other Device in Diaphragm, Percutaneous Endoscopic Approach.
Removal of Other Device from Right Breast, Open Approach.
Removal of Other Device from Left Breast, Open Approach.
Revision of Other Device in Right Breast, Open Approach.
Revision of Other Device in Left Breast, Open Approach.
Insertion of Other Device into Head and Neck Subcutaneous Tissue and Fascia, Open Approach.
Insertion of Other Device into Trunk Subcutaneous Tissue and Fascia, Open Approach.
Insertion of Other Device into Upper Extremity Subcutaneous Tissue and Fascia, Open Approach.
Insertion of Other Device into Lower Extremity Subcutaneous Tissue and Fascia, Open Approach.
Insertion of Other Device into Kidney, Via Natural or Artificial Opening Endoscopic.
Insertion of Other Device into Ureter, Via Natural or Artificial Opening Endoscopic.
Insertion of Other Device into Bladder, Via Natural or Artificial Opening Endoscopic.
Removal of Other Device from Kidney, Via Natural or Artificial Opening Endoscopic.
Revision of Other Device in Ureter, Via Natural or Artificial Opening Endoscopic.
Revision of Other Device in Bladder, Via Natural or Artificial Opening Endoscopic.
After consideration of the public
comments that we received, we are
finalizing the designation of the
procedure codes listed in the table
above from non-O.R. to O.R., effective
October 1, 2017.
We note that, historically, when new
procedure codes were created, they
were proposed to be given the same O.R.
designation as their predecessor code.
VerDate Sep<11>2014
38059
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Jkt 241001
However, with the transition from ICD–
9 to ICD–10, the determination of when
a procedure code should be designated
as an O.R. procedure has become a
much more complex task. This is, in
part, due to the number of various
approaches available in the ICD–10–PCS
classification. While we have typically
evaluated procedures on the basis of
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Frm 00071
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whether or not they would be performed
in an operating room, we believe that
there may be other factors to consider,
particularly with the implementation of
ICD–10. Therefore, we are soliciting
comments on what factors or criteria to
consider in determining whether a
procedure should be designated as an
O.R. procedure in the ICD–10–PCS
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classification system. We encourage
commenters to submit comments via the
CMS MS–DRG Classification Change
Requests Mailbox located at MSDRG
ClassificationChange@cms.hhs.gov by
November 1, 2017 for FY 2019
consideration.
We are also making available on the
CMS Web site at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/
the following final tables associated
with this final rule:
• Table 6A.—New Diagnosis Codes–
FY 2018;
• Table 6B.—New Procedure Codes–
FY 2018;
• Table 6C.—Invalid Diagnosis
Codes–FY 2018;
• Table 6D.—Invalid Procedure
Codes–FY 2018;
• Table 6E.—Revised Diagnosis Code
Titles–FY 2018;
• Table 6F.—Revised Procedure Code
Titles–FY 2018;
• Table 6G.1.—Secondary Diagnosis
Order Additions to the CC Exclusions
List—FY 2018;
• Table 6G.2.—Principal Diagnosis
Order Additions to the CC Exclusions
List—FY 2018;
• Table 6H.1.—Secondary Diagnosis
Order Deletions to the CC Exclusions
List—FY 2018;
sradovich on DSK3GMQ082PROD with RULES2
Code
Diagnosis
23:27 Aug 11, 2017
13. Comprehensive Review of CC List
for FY 2019
In the FY 2008 IPPS final rule (72 FR
47153 through 47175), we discussed our
efforts to better recognize severity of
illness which began with a
comprehensive review of the CC list
and, ultimately, the implementation of
the MS–DRGs. Similar to the analysis
that was performed at that time, we are
providing the public with notice of our
plans to conduct a comprehensive
Cnt1
Count (Cnt) is the number of patients
in each subset and C1, C2, and C3 are
a measure of the impact on resource use
of patients in each of the subsets. The
C1, C2, and C3 values are a measure of
the ratio of average costs for patients
with these conditions to the expected
average costs across all cases. The C1
value reflects a patient with no other
secondary diagnosis or with all other
secondary diagnoses that are non-CCs.
The C2 value reflects a patient with at
least one other secondary diagnosis that
is a CC but none that is an MCC. The
C3 value reflects a patient with at least
one other secondary diagnosis that is an
MCC. A value close to 1.0 in the C1 field
would suggest that the code produces
the same expected value as a non-CC
diagnosis. That is, average costs for the
case are similar to the expected average
costs for that subset and the diagnosis
is not expected to increase resource
usage. A higher value in the C1 (or C2
and C3) field suggests more resource
usage is associated with the diagnosis
and an increased likelihood that it is
more like a CC or major CC than a nonCC. Thus, a value close to 2.0 suggests
the condition is more like a CC than a
VerDate Sep<11>2014
• Table 6H.2.—Principal Diagnosis
Order Deletions to the CC Exclusions
List—FY 2018;
• Table 6I.—Complete MCC List—FY
2018;
• Table 6I.1.—Additions to the MCC
List–FY 2018;
• Table 6I.2.–Deletions to the MCC
List—FY 2018;
• Table 6J.—Complete CC List—FY
2018;
• Table 6J.1.—Additions to the CC
List–FY 2018;
• Table 6J.2.—Deletions to the CC List
–FY 2018;
• Table 6K.—Complete List of CC
Exclusions–FY 2018;
• Table 6L.—Principal Diagnosis Is Its
Own MCC List–FY 2018; and
• Table 6M.—Principal Diagnosis Is
Its Own CC List–FY 2018.
Jkt 241001
C1
Cnt2
C2
non-CC but not as significant in
resource usage as an MCC. A value close
to 3.0 suggests the condition is expected
to consume resources more similar to an
MCC than a CC or non-CC. For example,
a C1 value of 1.8 for a secondary
diagnosis means that for the subset of
patients who have the secondary
diagnosis and have either no other
secondary diagnosis present, or all the
other secondary diagnoses present are
non-CCs, the impact on resource use of
the secondary diagnoses is greater than
the expected value for a non-CC by an
amount equal to 80 percent of the
difference between the expected value
of a CC and a non-CC (that is, the impact
on resource use of the secondary
diagnosis is closer to a CC than a nonCC).
We invited public comments
regarding other possible ways we can
incorporate meaningful indicators of
clinical severity.
We did not receive any public
comments offering suggestions on
alternate ways to incorporate
meaningful indicators of clinical
severity. Therefore, we expect to
continue to utilize this same statistical
PO 00000
Frm 00072
Fmt 4701
Sfmt 4700
review of the CC and MCC lists for FY
2019.
As discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19849),
as a result of the time that has elapsed
since that review and changes to how
inpatient care is currently delivered, we
plan to analyze if further refinements to
these lists are warranted. For example,
over the past several years, there has
been a steady increase in the proportion
of cases grouping to the MS–DRGs with
an MCC severity level than had
previously occurred. Our evaluation
will assist in determining if the
conditions designated as an MCC
continue to represent significant
increases in resource utilization that
support the MCC designation.
We currently utilize a statistical
algorithm to determine the impact on
resource use of each secondary
diagnosis. Each diagnosis for which
Medicare data are available is evaluated
to determine its impact on resource use
and to determine the most appropriate
CC subclass (non-CC, CC, or MCC)
assignment. In order to make this
determination, the average costs for
each subset of cases is compared to the
expected costs for cases in that subset.
The following format is used to evaluate
each diagnosis:
Cnt3
C3
algorithm to determine the impact on
resource use of each secondary
diagnosis to conduct our comprehensive
review of the CC and MCC lists for FY
2019.
14. Review of Procedure Codes in MS
DRGs 981 Through 983; 984 Through
986; and 987 Through 989
Each year, we review cases assigned
to MS–DRGs 981, 982, and 983
(Extensive O.R. Procedure Unrelated to
Principal Diagnosis with MCC, with CC,
and without CC/MCC, respectively);
MS–DRGs 984, 985, and 986 (Prostatic
O.R. Procedure Unrelated to Principal
Diagnosis with MCC, with CC, and
without CC/MCC, respectively); and
MS–DRGs 987, 988, and 989
(Nonextensive O.R. Procedure Unrelated
to Principal Diagnosis with MCC, with
CC, and without CC/MCC, respectively)
to determine whether it would be
appropriate to change the procedures
assigned among these MS–DRGs. MS–
DRGs 981 through 983, 984 through 986,
and 987 through 989 are reserved for
those cases in which none of the O.R.
procedures performed are related to the
principal diagnosis. These MS–DRGs
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are intended to capture atypical cases,
that is, those cases not occurring with
sufficient frequency to represent a
distinct, recognizable clinical group.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19849), we stated
that under the ICD–10 MS–DRGs
Version 34, MS–DRGs 984 through 986
are assigned when one or more of the
procedures described by ICD–10–PCS
codes in Table 6P.2. that was associated
with the FY 2018 proposed rule (which
is available via the Internet on the CMS
Web site at: https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/
index.html) are performed and are
unrelated to the principal diagnosis. All
remaining O.R. procedures are assigned
to MS–DRGs 981 through 983 and 987
through 989, with MS–DRGs 987
through 989 assigned to those
discharges in which the only procedures
performed are nonextensive procedures
that are unrelated to the principal
diagnosis.
We refer the reader to the FY 2017
IPPS/LTCH PPS final rule (81 FR 56847
through 56848) for a discussion of the
movement and redesignation of
procedure codes from MS–DRGs 984
through 986 related to the transition of
the ICD–10 MS–DRGs.
Our review of MedPAR claims data
showed that there are no cases that
merited movement or should logically
be reassigned from ICD–10 MS–DRGs
984 through 986 to any of the other
MDCs for FY 2018. Therefore, in the FY
2018 IPPS/LTCH PPS proposed rule (82
FR 19849 through 19850), for FY 2018,
we did not propose to change the
procedures assigned among these MS–
DRGs. We invited public comments on
our proposal to maintain the current
structure of these MS–DRGs.
Comment: Commenters supported the
proposal to maintain the current
structure of MS–DRGs 984 through 986
and not to reassign or change the
procedures assigned among these MS–
DRGs to other MDCs.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments that we received, we are
finalizing our proposal to maintain the
current structure of MS–DRGs 984
through 986 (Prostatic O.R. Procedure
Unrelated to Principal Diagnosis with
MCC, with CC, and without CC/MCC,
respectively) and not to reassign or
VerDate Sep<11>2014
23:27 Aug 11, 2017
Jkt 241001
change the procedures assigned among
these MS–DRGs to other MDCs for ICD–
10 MS–DRGs Version 35, effective
October 1, 2017.
a. Moving Procedure Codes From MS–
DRGs 981 Through 983 or MS–DRGs
987 Through 989 Into MDCs
We annually conduct a review of
procedures producing assignment to
MS–DRGs 981 through 983 (Extensive
O.R. Procedure Unrelated to Principal
Diagnosis with MCC, with CC, and
without CC/MCC, respectively) or MS–
DRGs 987 through 989 (Nonextensive
O.R. Procedure Unrelated to Principal
Diagnosis with MCC, with CC, and
without CC/MCC, respectively) on the
basis of volume, by procedure, to see if
it would be appropriate to move
procedure codes out of these MS–DRGs
into one of the surgical MS–DRGs for
the MDC into which the principal
diagnosis falls. The data are arrayed in
two ways for comparison purposes. We
look at a frequency count of each major
operative procedure code. We also
compare procedures across MDCs by
volume of procedure codes within each
MDC.
We identify those procedures
occurring in conjunction with certain
principal diagnoses with sufficient
frequency to justify adding them to one
of the surgical MS–DRGs for the MDC in
which the diagnosis falls. As we
indicated in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19850), upon
review of the claims data from the
December 2016 update of the FY 2016
MedPAR file, we did not find any cases
that merited movement or that should
logically be assigned to any of the other
MDCs. Therefore, for FY 2018, we did
not propose to remove any procedures
from MS–DRGs 981 through 983 or MS–
DRGs 987 through 989 into one of the
surgical MS–DRGs for the MDC into
which the principal diagnosis is
assigned. We invited public comments
on our proposal to maintain the current
structure of these MS–DRGs.
Comment: Commenters supported the
proposal to maintain the current
structure of MS–DRGs 981 through 983
and MS–DRGs 987 through 989.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments that we received, we are
finalizing our proposal to not remove
any procedures from MS–DRGs 981
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Fmt 4701
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38061
through 983 (Extensive O.R. Procedure
Unrelated to Principal Diagnosis with
MCC, with CC, and without CC/MCC,
respectively) or MS–DRGs 987 through
989 (Nonextensive O.R. Procedure
Unrelated to Principal Diagnosis with
MCC, with CC, and without CC/MCC,
respectively) into one of the surgical
MS–DRGs for the MDC into which the
principal diagnosis is assigned for ICD–
10 MS–DRGs Version 35, effective
October 1, 2017.
b. Reassignment of Procedures Among
MS–DRGs 981 Through 983, 984
Through 986, and 987 Through 989
We also review the list of ICD–10–
PCS procedures that, when in
combination with their principal
diagnosis code, result in assignment to
MS–DRGs 981 through 983, 984 through
986, or 987 through 989, to ascertain
whether any of those procedures should
be reassigned from one of those three
groups of MS–DRGs to another of the
three groups of MS–DRGs based on
average costs and the length of stay. We
look at the data for trends such as shifts
in treatment practice or reporting
practice that would make the resulting
MS–DRG assignment illogical. If we find
these shifts, we would propose to move
cases to keep the MS–DRGs clinically
similar or to provide payment for the
cases in a similar manner. Generally, we
move only those procedures for which
we have an adequate number of
discharges to analyze the data.
Based on the results of our review of
the December 2016 update of the FY
2016 MedPAR file, in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19850),
we proposed to reassign the procedure
codes currently assigned to MS–DRGs
984 through 986 (Prostatic O.R.
Procedure Unrelated to Principal
Diagnosis with MCC, with CC and
without CC/MCC, respectively) to MS–
DRGs 987 through 989 (Non-extensive
O.R. Procedure Unrelated to Principal
Diagnosis with MCC, with CC and
without CC/MCC, respectively). As
shown in the table below, we found a
total of 1,001 cases in MS–DRGs 984
through 986 with an average length-ofstay of 7.5 days and average costs of
$16,539. In MS–DRGs 987 through 989,
we found a total of 17,772 cases, with
an average length of stay of 7.5 days and
average costs of $16,193.
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O.R. PROCEDURES UNRELATED TO PRINCIPAL DIAGNOSIS
Number of
cases
MS–DRG
MS–DRGs 984, 985 and 986 (Prostatic O.R. Procedure Unrelated to Principal Diagnosis with
MCC, with CC, and without CC/MCC, respectively) ...............................................................
MS–DRGs 987, 988 and 989 (Non-extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) ..............................................
sradovich on DSK3GMQ082PROD with RULES2
The claims data demonstrate that it is
no longer necessary to maintain a
separate set of MS–DRGs specifically for
the prostatic O.R. procedures. The
average length of stay of 7.5 days is
identical in both sets of MS–DRGs and
the average costs are very similar with
a difference of only $346. As we
discussed in the proposed rule, our
clinical advisors reviewed the data and
support movement of these 1,001 cases
into the nonextensive O.R. procedures
MS–DRGs. They noted that treatment
practices have shifted since the
inception of the prostatic O.R.
procedures grouping and the average
costs are in alignment.
Therefore, for FY 2018, we proposed
to reassign the prostatic O.R. procedure
codes from MS–DRGs 984 through 986
to MS–DRGs 987 through 989 and to
delete MS–DRGs 984, 985 and 986
because they would no longer be needed
as a result of this proposed movement.
We invited public comments on our
proposals.
Comment: Commenters supported the
proposal to reassign the prostatic O.R.
procedure codes from MS–DRGs 984
through 986 to MS–DRGs 987 through
989 and to delete MS–DRGs 984, 985
and 986.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments that we received, we are
finalizing our proposal to reassign the
prostatic O.R. procedure codes from
MS–DRGs 984 through 986 to MS–DRGs
987 through 989 (Non-extensive O.R.
Procedure Unrelated to Principal
Diagnosis with MCC, with CC and
without CC/MCC, respectively) and to
delete MS–DRGs 984, 985 and 986
(Prostatic O.R. Procedure Unrelated to
Principal Diagnosis with MCC, with CC
and without CC/MCC, respectively) for
ICD–10 MS–DRGs Version 35, effective
October 1, 2017.
15. Changes to the ICD–10–CM and
ICD–10–PCS Coding Systems
In September 1985, the ICD–9–CM
Coordination and Maintenance
Committee was formed. This is a
Federal interdepartmental committee,
co-chaired by the National Center for
Health Statistics (NCHS), the Centers for
VerDate Sep<11>2014
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Disease Control and Prevention (CDC),
and CMS, charged with maintaining and
updating the ICD–9–CM system. The
final update to ICD–9–CM codes was
made on October 1, 2013. Thereafter,
the name of the Committee was changed
to the ICD–10 Coordination and
Maintenance Committee, effective with
the March 19–20, 2014 meeting. The
ICD–10 Coordination and Maintenance
Committee addresses updates to the
ICD–10–CM and ICD–10–PCS coding
systems. The Committee is jointly
responsible for approving coding
changes, and developing errata,
addenda, and other modifications to the
coding systems to reflect newly
developed procedures and technologies
and newly identified diseases. The
Committee is also responsible for
promoting the use of Federal and nonFederal educational programs and other
communication techniques with a view
toward standardizing coding
applications and upgrading the quality
of the classification system.
The official list of ICD–9–CM
diagnosis and procedure codes by fiscal
year can be found on the CMS Web site
at: https://cms.hhs.gov/Medicare/Coding/
ICD9ProviderDiagnosticCodes/
codes.html. The official list of ICD–10–
CM and ICD–10–PCS codes can be
found on the CMS Web site at: https://
www.cms.gov/Medicare/Coding/ICD10/
index.html.
The NCHS has lead responsibility for
the ICD–10–CM and ICD–9–CM
diagnosis codes included in the Tabular
List and Alphabetic Index for Diseases,
while CMS has lead responsibility for
the ICD–10–PCS and ICD–9–CM
procedure codes included in the
Tabular List and Alphabetic Index for
Procedures.
The Committee encourages
participation in the previously
mentioned process by health-related
organizations. In this regard, the
Committee holds public meetings for
discussion of educational issues and
proposed coding changes. These
meetings provide an opportunity for
representatives of recognized
organizations in the coding field, such
as the American Health Information
Management Association (AHIMA), the
American Hospital Association (AHA),
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length of stay
Average
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7.5
$16,539
17,772
7.5
16,193
and various physician specialty groups,
as well as individual physicians, health
information management professionals,
and other members of the public, to
contribute ideas on coding matters.
After considering the opinions
expressed at the public meetings and in
writing, the Committee formulates
recommendations, which then must be
approved by the agencies.
The Committee presented proposals
for coding changes for implementation
in FY 2018 at a public meeting held on
September 13–14, 2016, and finalized
the coding changes after consideration
of comments received at the meetings
and in writing by November 13, 2016.
The Committee held its 2017 meeting
on March 7–8, 2017. The deadline for
submitting comments on these code
proposals was April 7, 2017. It was
announced at this meeting that any new
ICD–10–CM/PCS codes for which there
was consensus of public support and for
which complete tabular and indexing
changes would be made by May 2017
would be included in the October 1,
2017 update to ICD–10–CM/ICD–10–
PCS. As discussed in earlier sections of
the preamble of the proposed rule and
this final rule, there are new, revised,
and deleted ICD–10–CM diagnosis
codes and ICD–10–PCS procedure codes
that are captured in Table 6A.—New
Diagnosis Codes, Table 6B.—New
Procedure Codes, Table 6C.—Invalid
Diagnosis Codes, Table 6D.—Invalid
Procedure Codes, Table 6E.—Revised
Diagnosis Code Titles, and Table 6F.—
Revised Procedure Code Titles for the
proposed rule and this final rule, which
are available via the Internet on the
CMS Web site at: https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/
index.html. Because of the length of
these tables, they are not published in
the Addendum to this final rule. Rather,
they are available via the Internet as
discussed in section VI. of the
Addendum to this final rule.
We note that after publication of the
FY 2018 IPPS/LTCH PPS proposed rule,
we were notified by the CDC of changes
to the FY 2018 ICD–10–CM diagnosis
codes that were listed in Table 6A.—
New Diagnosis Codes and Table 6C.—
Invalid Diagnosis Codes that were
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associated with the proposed rule.
Specifically, ICD–10–CM diagnosis code
K61.3 (Ischiorectal abscess) was listed
in Table 6C. as an invalid diagnosis, and
diagnosis codes K61.31 (Horseshoe
abscess) and K61.32 (Ischiorectal
abscess, NOS) were listed in Table 6A.
as new diagnosis codes. The CDC
informed us that they reversed their
decision with respect to these codes.
Therefore, diagnosis codes K61.31 and
K61.32 are not being created for FY
2018 and are not reflected in Table
6A.—New Diagnosis Codes associated
with this FY 2018 IPPS/LTCH PPS final
rule. In addition, diagnosis code K61.3
is no longer reflected in Table 6C.
associated with this final rule as an
invalid diagnosis. Diagnosis code K61.3
will continue to be a valid code for FY
2018 in the ICD–10–CM classification.
The CDC also informed us of changes
to diagnosis code K61.5 (Supralevator
abscess). This diagnosis code was listed
as a new diagnosis code in Table 6A.—
New Diagnosis Codes that was
associated with the proposed rule.
However, this decision was also
reversed. Therefore, diagnosis code
K61.5 is not reflected in Table 6A.
associated with this FY 2018 IPPS/
LTCH PPS final rule and will not be
reflected in the ICD–10–CM
classification.
We also note that after publication of
the FY 2018 IPPS/LTCH PPS proposed
rule, the CDC revised the title for
diagnosis code O00.212 from ‘‘Left
ovarian pregnancy without intrauterine
pregnancy’’ to ‘‘Left ovarian pregnancy
with intrauterine pregnancy’’. The
description of the code title changed
from ‘‘without’’ to ‘‘with’’ for this
diagnosis code. This change will not be
reflected in Table 6E.—Revised
Diagnosis Code Titles because it is a
new diagnosis code effective FY 2018.
Rather, the corrected code title
description will appear in Table 6A.—
New Diagnosis Codes associated with
this FY 2018 IPPS/LTCH PPS final rule.
Furthermore, the CDC issued an ICD–
10–CM Errata on June 27, 2017
regarding this code title change for
diagnosis code O00.212. The Errata
document is available via the Internet
on the CMS Web site at: https://
www.cms.gov/Medicare/Coding/ICD10/
2018-ICD-10-CM-and-GEMs.html.
Live Webcast recordings of the
discussions of procedure codes at the
Committee’s September 13–14, 2016
meeting and March 7–8, 2017 meeting
can be obtained from the CMS Web site
at: https://cms.hhs.gov/Medicare/Coding/
ICD9ProviderDiagnosticCodes/
index.html?redirect/icd9Provider
DiagnosticCodes/03_meetings.asp. The
minutes of the discussions of diagnosis
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codes at the September 13–14, 2016
meeting and March 7–8, 2017 meeting
can be found at: https://www.cdc.gov/
nchs/icd/icd10cm_maintenance.html.
These Web sites also provide detailed
information about the Committee,
including information on requesting a
new code, attending a Committee
meeting, and timeline requirements and
meeting dates.
We encourage commenters to address
suggestions on coding issues involving
diagnosis codes to: Donna Pickett, CoChairperson, ICD–10 Coordination and
Maintenance Committee, NCHS, Room
2402, 3311 Toledo Road, Hyattsville,
MD 20782. Comments may be sent by
Email to: nchsicd10cm@cdc.gov.
Questions and comments concerning
the procedure codes should be
addressed to: Patricia Brooks, CoChairperson, ICD–10 Coordination and
Maintenance Committee, CMS, Center
for Medicare Management, Hospital and
Ambulatory Policy Group, Division of
Acute Care, C4–08–06, 7500 Security
Boulevard, Baltimore, MD 21244–1850.
Comments may be sent by Email to:
ICDProcedureCodeRequest@
cms.hhs.gov.
In the September 7, 2001 final rule
implementing the IPPS new technology
add-on payments (66 FR 46906), we
indicated we would attempt to include
proposals for procedure codes that
would describe new technology
discussed and approved at the Spring
meeting as part of the code revisions
effective the following October.
Section 503(a) of Public Law 108–173
included a requirement for updating
diagnosis and procedure codes twice a
year instead of a single update on
October 1 of each year. This
requirement was included as part of the
amendments to the Act relating to
recognition of new technology under the
IPPS. Section 503(a) amended section
1886(d)(5)(K) of the Act by adding a
clause (vii) which states that the
Secretary shall provide for the addition
of new diagnosis and procedure codes
on April 1 of each year, but the addition
of such codes shall not require the
Secretary to adjust the payment (or
diagnosis-related group classification)
until the fiscal year that begins after
such date. This requirement improves
the recognition of new technologies
under the IPPS system by providing
information on these new technologies
at an earlier date. Data will be available
6 months earlier than would be possible
with updates occurring only once a year
on October 1.
While section 1886(d)(5)(K)(vii) of the
Act states that the addition of new
diagnosis and procedure codes on April
1 of each year shall not require the
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38063
Secretary to adjust the payment, or DRG
classification, under section 1886(d) of
the Act until the fiscal year that begins
after such date, we have to update the
DRG software and other systems in
order to recognize and accept the new
codes. We also publicize the code
changes and the need for a mid-year
systems update by providers to identify
the new codes. Hospitals also have to
obtain the new code books and encoder
updates, and make other system changes
in order to identify and report the new
codes.
The ICD–10 (previously the ICD–9–
CM) Coordination and Maintenance
Committee holds its meetings in the
spring and fall in order to update the
codes and the applicable payment and
reporting systems by October 1 of each
year. Items are placed on the agenda for
the Committee meeting if the request is
received at least 2 months prior to the
meeting. This requirement allows time
for staff to review and research the
coding issues and prepare material for
discussion at the meeting. It also allows
time for the topic to be publicized in
meeting announcements in the Federal
Register as well as on the CMS Web site.
Final decisions on code title revisions
are currently made by March 1 so that
these titles can be included in the IPPS
proposed rule. A complete addendum
describing details of all diagnosis and
procedure coding changes, both tabular
and index, is published on the CMS and
NCHS Web sites in June of each year.
Publishers of coding books and software
use this information to modify their
products that are used by health care
providers. This 5-month time period has
proved to be necessary for hospitals and
other providers to update their systems.
A discussion of this timeline and the
need for changes are included in the
December 4–5, 2005 ICD–9–CM
Coordination and Maintenance
Committee Meeting minutes. The public
agreed that there was a need to hold the
fall meetings earlier, in September or
October, in order to meet the new
implementation dates. The public
provided comment that additional time
would be needed to update hospital
systems and obtain new code books and
coding software. There was considerable
concern expressed about the impact this
April update would have on providers.
In the FY 2005 IPPS final rule, we
implemented section 1886(d)(5)(K)(vii)
of the Act, as added by section 503(a)
of Public Law 108–173, by developing a
mechanism for approving, in time for
the April update, diagnosis and
procedure code revisions needed to
describe new technologies and medical
services for purposes of the new
technology add-on payment process. We
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also established the following process
for making these determinations. Topics
considered during the Fall ICD–10
(previously ICD–9–CM) Coordination
and Maintenance Committee meeting
are considered for an April 1 update if
a strong and convincing case is made by
the requester at the Committee’s public
meeting. The request must identify the
reason why a new code is needed in
April for purposes of the new
technology process. The participants at
the meeting and those reviewing the
Committee meeting summary report are
provided the opportunity to comment
on this expedited request. All other
topics are considered for the October 1
update. Participants at the Committee
meeting are encouraged to comment on
all such requests. There were no
requests approved for an expedited
April l, 2017 implementation of a code
at the September 13–14, 2016
Committee meeting. Therefore, there
were no new codes implemented on
April 1, 2017.
ICD–9–CM addendum and code title
information is published on the CMS
Web site at: https://www.cms.hhs.gov/
Medicare/Coding/ICD9Provider
DiagnosticCodes/?redirect/
icd9ProviderDiagnosticCodes/01
overview.asp#TopofPage. ICD–10–CM
and ICD–10–PCS addendum and code
title information is published on the
CMS Web site at: https://www.cms.gov/
Medicare/Coding/ICD10/.
Information on ICD–10–CM diagnosis
codes, along with the Official ICD–10–
CM Coding Guidelines, can also be
found on the CDC Web site at: https://
www.cdc.gov/nchs/icd/icd10.htm.
Information on new, revised, and
deleted ICD–10–CM/ICD–10–PCS codes
is also provided to the AHA for
publication in the Coding Clinic for
ICD–10. AHA also distributes
information to publishers and software
vendors.
CMS also sends copies of all ICD–10–
CM and ICD–10–PCS coding changes to
its Medicare contractors for use in
updating their systems and providing
education to providers.
The code titles are adopted as part of
the ICD–10 (previously ICD–9–CM)
Coordination and Maintenance
Committee process. Therefore, although
we publish the code titles in the IPPS
proposed and final rules, they are not
subject to comment in the proposed or
final rules.
The following chart shows the
number of ICD–10–CM and ICD–10–PCS
codes and code changes since FY 2016
when ICD–10 was implemented.
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23:27 Aug 11, 2017
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Committee meetings. CMS and CDC
encourage comments on any ICD–10–
CM and ICD–10–PCS code updates
presented at the meetings. The ICD–10–
CM and ICD–10–PCS coding systems are
not clinical vocabularies. The coding
Fiscal year
Number
Change
systems do not attempt to clarify or
standardize how physicians describe
FY 2016
ICD–10–CM ......
69,823 .................... clinical conditions or procedures. The
ICD–10–PCS ....
71,974 .................... ICD–10–CM and ICD–10–PCS coding
FY 2017
systems are clinical classification
ICD–10–CM ......
71,486
+1,663 systems. Classification systems arrange
ICD–10–PCS ....
75,789
+3,815 and organize like or related clinical
FY 2018
conditions and procedures. The coding
ICD–10–CM ......
71,704
+218
ICD–10–PCS ....
78,705
+2,916 systems assign codes to capture
diagnoses and procedures as
documented by physicians. This can
As mentioned previously, the public
is provided the opportunity to comment involve multiple diagnosis and
procedure terms being captured in a
on any requests for new diagnosis or
single code. It is recognized that not all
procedure codes discussed at the ICD–
physicians use consistent terminology
10 Coordination and Maintenance
for identifying a condition or procedure.
Committee meeting.
The coding systems recognize this fact
At the September 12–13, 2016 and
and develop codes which capture this
March 7–8, 2017 Committee meetings,
group of similar terms into a single
we discussed any requests we had
code. The coding systems should not be
received for new ICD–10–CM diagnosis
codes and ICD–10–PCS procedure codes viewed as a means to standardize
that were to be implemented on October medical terminology.
In response to public requests for
1, 2017. We invited public comments on
updates to ICD–10–CM and ICD–10–
any code requests discussed at the
PCS, the ICD–10 Coordination and
September 12–13, 2016 and March 7–8,
Maintenance Committee presents the
2017 Committee meetings for
requested code updates and then solicits
implementation as part of the October 1, comments prior to making those
2017 update. The deadline for
updates. The ICD–9–CM and ICD–10
commenting on code proposals
coding systems have been updated
discussed at the September 12–13, 2016 through the Coordination and
Committee meeting was November 13,
Maintenance Committee since 1985,
2016. The deadline for commenting on
making updates to the coding systems
code proposals discussed at the March
that capture advances in medicine and
7–8, 2017 Committee meeting was April changes in medical practices. The
7, 2017.
Committee will continue to meet to
Comment: One commenter stated that allow the public to provide comments
coding updates interfere with consistent on any requests to update the ICD–10–
clinical vocabulary maintenance. The
CM and ICD–10–PCS coding systems.
commenter pointed to ICD–10–PCS
Comment: One commenter stated that
code updates for FY 2018 which involve it was a strong supporter of the
the addition of specificity beyond what
conversion from ICD–9–CM to ICD–10–
was included in the 2017 version of
CM, including the creation of the new
ICD–10–PCS. The commenter stated that Section ‘‘X’’ codes to identify new
a core principle of clinical vocabulary
medical services and technologies,
maintenance is that the meaning of a
because the newer, more robust coding
code should not change over time. The
system will allow for recognition of
commenter acknowledged that deadline more technologies, procedures, and
for submitting comments on code
variations in patients’ conditions on
proposals for the FY 2018 ICD–10–PCS
Medicare claims, which in turn will
had passed. The commenter stated that
support greater specificity in MS–DRGs.
clinical vocabulary maintenance should However, the commenter asked that
be a primary consideration of the ICD–
CMS provide additional information
10 Coordination and Maintenance
about how the ‘‘X’’ codes will be used
Committee before any further coding
and applied.
updates are proposed. The commenter
Response: We encourage the public to
looked forward to working with the
participate in the ICD–10 Coordination
ICD–10 Coordination and Maintenance
and Maintenance Committee meetings
Committee meeting on future code
to offer comments on code updates. Any
updates.
new codes that are finalized prior to the
Response: CMS and CDC welcome the IPPS/LTCH PPS proposed rules,
participation of the public at the ICD–
including ICD–10–PCS ‘‘X’’ codes, are
10 Coordination and Maintenance
included in the Table 6 series in the
TOTAL NUMBER OF CODES AND
CHANGES IN TOTAL NUMBER OF
CODES PER FISCAL YEAR ICD–10–
CM AND ICD–10–PCS CODES
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IPPS/LTCH PPS proposed rule along
with their proposed MS–DRG
classifications. The public is offered the
opportunity to comment on those MS–
DRG classifications. Any new codes that
are finalized after the IPPS/LTCH PPS
proposed rule are included in the IPPS/
LTCH PPS final rule along with their
MS–DRG classifications. We refer the
commenter to section II.H. of the
preamble of this final rule for additional
discussion of the section ‘‘X’’ codes.
payment for those MS–DRGs where the
hospital received a credit for a replaced
device equal to 50 percent or more of
the cost of the device.
In the FY 2012 IPPS/LTCH PPS final
rule (76 FR 51556 through 51557), we
clarified this policy to state that the
policy applies if the hospital received a
credit equal to 50 percent or more of the
cost of the replacement device and
issued instructions to hospitals
accordingly.
16. Replaced Devices Offered Without
Cost or With a Credit
b. Changes for FY 2018
a. Background
In the FY 2008 IPPS final rule with
comment period (72 FR 47246 through
47251), we discussed the topic of
Medicare payment for devices that are
replaced without cost or where credit
for a replaced device is furnished to the
hospital. We implemented a policy to
reduce a hospital’s IPPS payment for
certain MS–DRGs where the
implantation of a device that has been
recalled determined the base MS–DRG
assignment. At that time, we specified
that we will reduce a hospital’s IPPS
MDC
MS–DRG
1
1
1
1
1
1
............................
............................
............................
............................
............................
............................
024
025
026
027
040
041
1
3
3
5
5
5
5
5
5
5
............................
............................
............................
............................
............................
............................
............................
............................
............................
............................
042
129
130
215
216
217
218
219
220
221
5
5
5
5
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001
002
023
............................
............................
............................
............................
222
223
224
225
5
5
5
5
5
5
5
5
5
5
5
5
5
5
............................
............................
............................
............................
............................
............................
............................
............................
............................
............................
............................
............................
............................
............................
226
227
242
243
244
245
258
259
260
261
262
265
266
267
23:27 Aug 11, 2017
with credit and to not add any
additional MS–DRGs to the policy. We
noted that, as discussed in section
II.F.2.b. and in section II.F.5.a. of the
preamble of the proposed rule, we
proposed to revise the titles for MS–
DRG 023 and MS–DRGs 469 and 470.
We referred readers to those discussions
of the specific proposed MS–DRG titles.
We did not receive any public
comments opposing our proposal to
continue to include the existing MS–
DRGs currently subject to the policy and
to not add any additional MS–DRGs.
Therefore, we are finalizing the list of
MS–DRGs displayed in the table in the
proposed rule and below, with
conforming changes to the finalized
titles for MS–DRGs 023, 469, and 470,
that will be subject to the replaced
devices offered without cost or with a
credit policy, effective October 1, 2017.
As we indicated in the proposed rule,
we also will issue this final list of MS–
DRGs subject to the payment policy for
devices provided at no cost or with a
credit for FY 2018 to providers through
guidance and instructions in the form of
a Change Request (CR).
MS–DRG title
Pre-MDC ...............
Pre-MDC ...............
1 ............................
VerDate Sep<11>2014
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19852 through
19853), for FY 2018, we did not propose
to add any MS–DRGs to the policy for
replaced devices offered without cost or
with a credit. We proposed to continue
to include the existing MS–DRGs
currently subject to the policy as
displayed in a table in the proposed
rule.
In the proposed rule, we solicited
public comments on our proposal to
continue to include the existing MS–
DRGs currently subject to the policy for
replaced devices offered without cost or
38065
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Heart Transplant or Implant of Heart Assist System with MCC.
Heart Transplant or Implant of Heart Assist System without MCC.
Craniotomy with Major Device Implant or Acute CNS Principal Diagnosis with MCC or Chemotherapy
Implant or Epilepsy with Neurostimulator.
Craniotomy with Major Device Implant or Acute Complex CNS Principal Diagnosis without MCC.
Craniotomy & Endovascular Intracranial Procedures with MCC.
Craniotomy & Endovascular Intracranial Procedures with CC.
Craniotomy & Endovascular Intracranial Procedures without CC/MCC.
Peripheral, Cranial Nerve & Other Nervous System Procedures with MCC.
Peripheral, Cranial Nerve & Other Nervous System Procedures with CC or Peripheral
Neurostimulator.
Peripheral, Cranial Nerve & Other Nervous System Procedures without CC/MCC.
Major Head & Neck Procedures with CC/MCC or Major Device.
Major Head & Neck Procedures without CC/MCC.
Other Heart Assist System Implant.
Cardiac Valve & Other Major Cardiothoracic Procedure with Cardiac Catheterization with MCC.
Cardiac Valve & Other Major Cardiothoracic Procedure with Cardiac Catheterization with CC.
Cardiac Valve & Other Major Cardiothoracic Procedure with Cardiac Catheterization without CC/MCC.
Cardiac Valve & Other Major Cardiothoracic Procedure without Cardiac Catheterization with MCC.
Cardiac Valve & Other Major Cardiothoracic Procedure without Cardiac Catheterization with CC.
Cardiac Valve & Other Major Cardiothoracic Procedure without Cardiac Catheterization without CC/
MCC.
Cardiac Defibrillator Implant with Cardiac Catheterization with AMI/Heart Failure/Shock with MCC.
Cardiac Defibrillator Implant with Cardiac Catheterization with AMI/Heart Failure/Shock without MCC.
Cardiac Defibrillator Implant with Cardiac Catheterization without AMI/Heart Failure/Shock with MCC.
Cardiac Defibrillator Implant with Cardiac Catheterization without AMI/Heart Failure/Shock without
MCC.
Cardiac Defibrillator Implant without Cardiac Catheterization with MCC.
Cardiac Defibrillator Implant without Cardiac Catheterization without MCC.
Permanent Cardiac Pacemaker Implant with MCC.
Permanent Cardiac Pacemaker Implant with CC.
Permanent Cardiac Pacemaker Implant without CC/MCC.
AICD Generator Procedures.
Cardiac Pacemaker Device Replacement with MCC.
Cardiac Pacemaker Device Replacement without MCC.
Cardiac Pacemaker Revision Except Device Replacement with MCC.
Cardiac Pacemaker Revision Except Device Replacement with CC.
Cardiac Pacemaker Revision Except Device Replacement without CC/MCC.
AICD Lead Procedures.
Endovascular Cardiac Valve Replacement with MCC.
Endovascular Cardiac Valve Replacement without MCC.
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MDC
5
5
5
5
5
8
8
8
8
8
8
MS–DRG
MS–DRG title
............................
............................
............................
............................
............................
............................
............................
............................
............................
............................
............................
268
269
270
271
272
461
462
466
467
468
469
8 ............................
470
Aortic and Heart Assist Procedures Except Pulsation Balloon with MCC.
Aortic and Heart Assist Procedures Except Pulsation Balloon without MCC.
Other Major Cardiovascular Procedures with MCC.
Other Major Cardiovascular Procedures with CC.
Other Major Cardiovascular Procedures without CC/MCC.
Bilateral or Multiple Major Joint Procedures Of Lower Extremity with MCC.
Bilateral or Multiple Major Joint Procedures of Lower Extremity without MCC.
Revision of Hip or Knee Replacement with MCC.
Revision of Hip or Knee Replacement with CC.
Revision of Hip or Knee Replacement without CC/MCC.
Major Hip and Knee Joint Replacement or Reattachment of Lower Extremity with MCC or Total Ankle
Replacement.
Major Hip and Knee Joint Replacement or Reattachment of Lower Extremity without MCC.
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17. Other Policy Changes: Other
Operating Room (O.R.) and Non-O.R.
Issues
a. O.R. Procedures to Non-O.R.
Procedures
As discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19853),
we have continued our efforts to address
the recommendations for consideration
that we received in response to some of
the proposals set forth in the FY 2017
IPPS/LTCH PPS proposed rule
pertaining to changing the designation
of ICD–10–PCS procedure codes from
O.R. procedures to non-O.R. procedures.
As we stated in the FY 2017 IPPS/LTCH
PPS final rule (81 FR 56871), we
received requests and recommendations
for over 800 procedure codes that we
were not able to fully evaluate and
finalize for FY 2017. We discuss these
requests and recommendations below.
As discussed in the proposed rule, we
also are addressing separate requests
that we received regarding changing the
designation of specific ICD–10–PCS
procedure codes. For each group
summarized below, the detailed lists of
procedure codes are shown in Tables
6P.4a. through 6P.4p. (ICD–10–CM and
ICD–10–PCS Code Designations, MCE
and MS–DRG Changes—FY 2018)
associated with the FY 2018 proposed
rule and this final rule (which are
available via the Internet on the CMS
Web site at: https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/
index.html).
Comment: Some commenters
expressed concern with the proposed
changes from O.R. procedures to nonO.R. procedures for such a large number
of procedure codes without having more
detailed analysis of the impact to
specific MS–DRGs. The commenters
stated that many of the proposed
changes for FY 2018 go beyond last
year’s changes when the changes from
O.R. procedures to non-O.R. procedures
were done for purposes of replicating
the logic of the ICD–9 MS–DRGs.
VerDate Sep<11>2014
23:27 Aug 11, 2017
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Response: We acknowledge the
concerns of the commenters regarding
the volume of proposed changes for
procedures to be redesignated from O.R.
to non-O.R. As we stated in the FY 2018
IPPS/LTCH PPS proposed rule, we
continued our efforts to address the
recommendations that we received in
response to some of the proposals set
forth in the FY 2017 IPPS/LTCH PPS
proposed rule pertaining to changing
the designation of ICD–10–PCS
procedure codes from O.R. procedures
to non-O.R. procedures. We noted that
those recommendations were for over
800 procedure codes that we were not
able to fully evaluate and finalize for FY
2017. Therefore, we discussed the
proposed changes for FY 2018.
The commenters are correct that the
proposed changes for FY 2018 go
beyond the FY 2017 proposed (and
finalized) MS–DRG updates to change
the designation of procedure codes from
O.R. to non-O.R. that were done for
purposes of replicating the logic of the
ICD–9 MS–DRGs. We stated in the FY
2017 IPPS/LTCH PPS final rule (81 FR
56790) that some of the issues evaluated
for the FY 2017 MS–DRGs update
continued to relate to the need for the
ICD–10 MS–DRGs to accurately
replicate the logic of the ICD–9–CM
based version of the MS–DRGs. We
noted that replication was important
because both the logic for the MS–DRGs
and the data source used to calculate
and develop the relative payment
weights were based on the same
MedPAR claims data. We further noted
that the logic for the proposed and final
FY 2017 ICD–10 MS–DRGs was based
upon the FY 2015 ICD–9–CM MedPAR
claims data, which was also the data
source used to calculate and develop the
FY 2017 relative payment weights.
However, for FY 2018 and future fiscal
years, we are no longer replicating the
ICD–9 MS–DRGs. As discussed in the
FY 2018 IPPS/LTCH PPS proposed rule
and this final rule, we are using ICD–10
coded claims data for the first time to
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propose changes to the ICD–10 MS–DRG
classifications and to compute the
relative weights. Therefore, our
proposals and final policies for FY 2018
are based solely on the ICD–10 claims
data from the FY 2016 MedPAR file.
As such, procedures that were
designated as O.R. under ICD–9 will not
necessarily be appropriate to designate
as O.R. under ICD–10. Conversely,
procedures that were not designated as
O.R. under ICD–9 may be appropriate to
designate as O.R. under ICD–10. As
discussed elsewhere in this final rule,
with the transition from ICD–9 to ICD–
10, the determination of when a
procedure code should be designated as
an O.R. procedure has become a much
more complex task. This is, in part, due
to the number of various approaches
available in the ICD–10–PCS
classification, as well as changes in
medical practice. While we have
typically evaluated procedures on the
basis of whether or not they would be
performed in an operating room, we
believe that there may be other factors
to consider with regard to resource
utilization, particularly with the
implementation of ICD–10. Therefore,
we are soliciting comments on what
factors or criteria to consider in
determining whether a procedure is
designated as an O.R. procedure in the
ICD–10–PCS classification system for
FY 2019 consideration. Commenters
should submit their recommendations
to the following email address: MSDRG
ClassificationChange@cms.hhs.gov by
November 1, 2017.
(1) Percutaneous/Diagnostic Drainage
One commenter identified 135 ICD–
10–PCS procedure codes describing
procedures involving percutaneous
diagnostic and therapeutic drainage of
central nervous system, vascular and
other body sites that generally would
not require the resources of an operating
room and can be performed at the
bedside. The list includes procedure
codes that describe procedures
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involving drainage with or without
placement of a drainage device. We
stated in the proposed rule that we
agreed with the commenter. Therefore,
in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19853), we
proposed that the 135 ICD–10–PCS
procedure codes listed in Table 6P.4a.
associated with the proposed rule
(which is available via the Internet on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) be designated as nonO.R. procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
the 135 procedure codes describing
percutaneous diagnostic and therapeutic
drainage of central nervous system,
vascular and other body sites. However,
one commenter disagreed with
reclassifying procedure codes 009330Z
(Drainage of Epidural Space with
Drainage Device, Percutaneous
Approach) and 00933ZZ (Drainage of
Epidural Space, Percutaneous
Approach) to non-O.R. procedures.
According to the commenter, these two
codes are assigned for percutaneous
burr hole drainage of acute traumatic
and nontraumatic intracranial epidural
hematomas, and for drainage of
intracranial epidural abscesses. The
commenter noted that, although
percutaneous burr hole drainages are
performed through smaller openings in
the skull than open burr hole drainages,
they require drilling through the skull
under sterile technique and anesthesia
for pain control. The commenter also
noted that similar procedure codes such
as 009430Z (Drainage of Subdural Space
with Drainage Device, Percutaneous
Approach) and 00943ZZ (Drainage of
Subdural Space, Percutaneous
Approach) are currently classified as
O.R. procedures.
Response: We appreciate the
commenters’ support. In response to the
commenter who disagreed with
reclassifying procedure codes 009330Z
and 00933ZZ to non-O.R. procedures,
upon further review and consideration,
for the reasons the commenter pointed
out and consistent with the current
designation of procedure codes 009430Z
and 00943ZZ, which are classified as
O.R. procedures, we believe it is
appropriate to maintain the current O.R.
designation of procedure codes 009330Z
and 00933ZZ.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of 133 ICD–10–PCS
procedure codes listed in Table 6P.4a.
associated with this final rule (which is
available via the Internet on the CMS
Web site at: https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/
from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
We also are finalizing the designation of
procedure codes 009330Z and 00933ZZ
to remain O.R. procedures for FY 2018.
We note that, as shown in Table 6F.—
Revised Procedure Code Titles
associated with this final rule, the titles
for procedure codes 009330Z, 00933ZZ,
009430Z and 00943ZZ are revised to
include the term ‘‘intracranial.’’
Effective October 1, 2017, the title of
ICD–10–PCS procedure code 009330Z is
revised to read ‘‘Drainage of Intracranial
Epidural Space with Drainage Device,
Percutaneous Approach’’; the title of
ICD–10–PCS procedure code 00933ZZ is
revised to read ‘‘Drainage of Intracranial
Epidural Space, Percutaneous
Approach’’; the title of ICD–10–PCS
procedure code 009430Z is revised to
read ‘‘Drainage of Intracranial Subdural
Space with Drainage Device,
Percutaneous Approach’’; and the title
of ICD–10–PCS procedure code
00943ZZ is revised to read ‘‘Drainage of
Intracranial Subdural Space,
Percutaneous Approach’’.
(2) Percutaneous Insertion of
Intraluminal or Monitoring Device
One commenter identified 28 ICD–
10–PCS procedure codes describing
procedures involving the percutaneous
insertion of intraluminal and
monitoring devices into central nervous
system and other cardiovascular body
parts that generally would not require
sradovich on DSK3GMQ082PROD with RULES2
ICD–10–PCS code
02H43DZ ..............
02H63DZ ..............
02H73DZ ..............
02HK3DZ .............
02HL3DZ ..............
02HP3DZ .............
02HQ3DZ .............
02HR3DZ .............
02HS3DZ .............
02HT3DZ ..............
02HV3DZ .............
VerDate Sep<11>2014
the resources of an operating room and
can be performed at the bedside. We
stated in the proposed rule that we
agreed with the commenter. Therefore,
in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19853), we
proposed that the 28 ICD–10–PCS
procedure codes listed in Table 6P.4b.
associated with the proposed rule
(which is available via the Internet on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) be designated as nonO.R. procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
the 28 procedure codes describing
percutaneous insertion of intraluminal
or monitoring devices into central
nervous system and other
cardiovascular body parts. However,
one commenter disagreed with changing
the designation for 15 of the 28 listed
procedure codes. The commenter
disagreed with changing the designation
for ICD–10–PCS procedure codes
00H032Z (Insertion of Monitoring
Device into Brain, Percutaneous
Approach) and 00H632Z (Insertion of
Monitoring Device into Cerebral
Ventricle, Percutaneous Approach).
According to the commenter, these two
codes are assigned for inserting a
monitoring device into the brain or
cerebral ventricle by a percutaneous
burr hole which is most often performed
in the O.R. setting under sterile
technique and requires anesthesia for
pain control. In addition, the
commenter disagreed with changing the
designation for the following 13 ICD–
10–PCS procedure codes. The
commenter stated that these
intravascular procedures are performed
in specialized vascular suites and
involve insertion of a filter into the vena
cava for prevention of pulmonary
emboli or the insertion of vascular
stents for conditions such as stenosis
and other types of intraluminal devices
into the great vessels and are significant
procedures that warrant an O.R.
designation.
Code description
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
Insertion
of
of
of
of
of
of
of
of
of
of
of
23:27 Aug 11, 2017
intraluminal
intraluminal
intraluminal
intraluminal
intraluminal
intraluminal
intraluminal
intraluminal
intraluminal
intraluminal
intraluminal
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device
device
device
device
device
device
device
device
device
device
device
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into
into
into
into
into
into
into
into
into
into
into
coronary vein, percutaneous approach.
right atrium, percutaneous approach.
left atrium, percutaneous approach.
right ventricle, percutaneous approach.
left ventricle, percutaneous approach.
pulmonary trunk, percutaneous approach.
right pulmonary artery, percutaneous approach.
left pulmonary artery, percutaneous approach.
right pulmonary vein, percutaneous approach.
left pulmonary vein, percutaneous approach.
superior vena cava, percutaneous approach.
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Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
ICD–10–PCS code
02HW3DZ ............
06H03DZ ..............
Code description
Insertion of intraluminal device into thoracic aorta, percutaneous approach.
Insertion of intraluminal device into inferior vena cava, percutaneous approach.
Response: We appreciate the
commenters’ support. In response to the
commenter who disagreed with
changing the designation for 15 of the
28 procedure codes, upon further
review and consideration, we agree that
the status of the above list of procedure
codes, in addition to the two procedure
codes discussed earlier in this section
(00H032Z and 00H632Z) should be
maintained as O.R. procedures due to
the indications for which these
procedures may be performed and the
risks involved.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of 13 ICD–10–PCS
procedure codes listed in Table 6P.4b.
associated with this final rule (which is
available via the Internet on the CMS
Web site at: https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/
index.html) from O.R. procedures to
non-O.R. procedures, effective October
1, 2017. We also are finalizing
maintaining the designation of ICD–10–
PCS procedure codes 00H032Z
(Insertion of Monitoring Device into
Brain, Percutaneous Approach) and
00H632Z (Insertion of Monitoring
Device into Cerebral Ventricle,
Percutaneous Approach) and the list of
procedure codes shown in the table
above as O.R. procedures, effective
October 1, 2017.
(3) Percutaneous Removal of Drainage,
Infusion, Intraluminal or Monitoring
Device
One commenter identified 22 ICD–
10–PCS procedure codes that describe
procedures involving the percutaneous
removal of drainage, infusion,
intraluminal and monitoring devices
from central nervous system and other
vascular body parts that generally
would not require the resources of an
operating room and can be performed at
the bedside. We agreed with the
commenter. Therefore, in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19854), we proposed that the 22 ICD–
10–PCS procedure codes listed in Table
6P.4c. associated with the proposed rule
(which is available via the Internet on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) be designated as nonO.R. procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of 22
ICD–10–PCS procedure codes
ICD–10–PCS code
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00P6XMZ
00PEXMZ
01PYXMZ
02PAXMZ
.............
.............
.............
.............
(4) External Removal of Cardiac or
Neurostimulator Lead
One commenter identified four ICD–
10–PCS procedure codes that describe
procedures involving the external
removal of cardiac leads from the heart
and neurostimulator leads from central
nervous system body parts that
generally would not require the
resources of an operating room and can
be performed at the bedside. These four
ICD–10–PCS codes are shown in the
table below.
Code description
Removal
Removal
Removal
Removal
of
of
of
of
neurostimulator lead from cerebral ventricle, external approach.
neurostimulator lead from cranial nerve, external approach.
neurostimulator lead from peripheral nerve, external approach.
cardiac lead from heart, external approach.
We agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19854), we
proposed that the four ICD–10–PCS
procedure codes shown in the table
above be designated as non-O.R.
procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
four ICD–10–PCS procedure codes that
describe the external removal of cardiac
leads from the heart and
neurostimulator leads from central
nervous system body parts.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
VerDate Sep<11>2014
describing the percutaneous removal of
drainage, infusion, intraluminal and
monitoring devices from central nervous
system and other vascular body parts.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the 22 ICD–10–PCS
procedure codes listed in Table 6P.4c.
associated with the proposed rule and
this final rule (which is available via the
Internet on the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/ from O.R. procedures to
non-O.R. procedures, effective October
1, 2017.
23:27 Aug 11, 2017
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designation of the four ICD–10–PCS
procedure codes shown in the table
above from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
(5) Percutaneous Revision of Drainage,
Infusion, Intraluminal or Monitoring
Device
One commenter identified 28 ICD–
10–PCS procedure codes that describe
procedures involving the percutaneous
revision of drainage, infusion,
intraluminal and monitoring devices for
vascular and heart and great vessel body
parts that generally would not require
the resources of an operating room and
can be performed at the bedside. We
agreed with the commenter. Therefore,
in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19854), we
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proposed that the 28 ICD–10–PCS
procedure codes listed in Table 6P.4d.
associated with the proposed rule
(which is available via the Internet on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) be designated as nonO.R. procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of 28
ICD–10–PCS procedure codes that
describe the percutaneous revision of
drainage, infusion, intraluminal and
monitoring devices for vascular and
heart and great vessel body parts.
Response: We appreciate the
commenters’ support.
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After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation for the 28 ICD–10–PCS
procedure codes listed in Table 6P.4d.
associated with the proposed rule and
this final rule (which is available via the
Internet on the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) from O.R. procedures
to non-O.R. procedures, effective
October 1, 2017.
(6) Percutaneous Destruction
One commenter identified two ICD–
10–PCS procedure codes that describe
ICD–10–PCS code
085E3ZZ ..............
085F3ZZ ...............
Destruction of right retina, percutaneous approach.
Destruction of left retina, percutaneous approach.
(7) External/Diagnostic Drainage
One commenter identified 20 ICD–
10–PCS procedure codes that describe
procedures involving external drainage
for structures of the eye that generally
would not require the resources of an
operating room and can be performed at
the bedside. We agreed with the
commenter. Therefore, in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19854), we proposed that the 20 ICD–
10–PCS procedure codes listed in Table
6P.4e. associated with the proposed rule
(which is available via the Internet on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) be designated as nonO.R. procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of 20
ICD–10–PCS procedure codes that
describe external drainage for structures
of the eye.
Response: We appreciate the
commenters’ support.
ICD–10–PCS code
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..............
..............
.............
..............
Extirpation
Extirpation
Extirpation
Extirpation
of
of
of
of
matter
matter
matter
matter
from
from
from
from
(8) External Extirpation
One commenter identified four ICD–
10–PCS procedure codes that describe
procedures involving external
extirpation of matter from eye structures
that generally would not require the
resources of an operating room and can
be performed at the bedside. These four
ICD–10–PCS codes are shown in the
table below.
right eye, external approach.
left eye, external approach.
right conjunctiva, external approach.
left conjunctiva, external approach.
procedures involving external
extirpation of matter from eye
structures.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the four ICD–10–PCS
procedure codes shown in the table
above from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
ICD–10–PCS code
VerDate Sep<11>2014
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation for the 20 ICD–10–PCS
procedure codes listed in Table 6P.4e.
associated with the proposed rule and
this final rule (which is available via the
Internet on the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) from O.R. procedures
to non-O.R. procedures, effective
October 1, 2017.
Code description
We agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19854
through 19855), we proposed that the
four ICD–10–PCS procedure codes
shown in the table above be designated
as non-O.R. procedures. We invited
public comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
the four ICD–10–PCS procedure codes
shown in the table above that describe
08P0X1Z ..............
08P0XJZ ..............
08P1XJZ ..............
procedures involving the percutaneous
destruction of retina body parts that
generally would not require the
resources of an operating room and can
be performed at the bedside. These two
ICD–10–PCS codes are shown in the
table below.
Code description
We agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19854), we
proposed that the two ICD–10–PCS
procedure codes shown in the table
above be designated as non-O.R.
procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
two ICD–10–PCS procedure codes that
describe the percutaneous destruction of
retina body parts.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the two ICD–10–PCS
procedure codes shown in the table
above from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
08C0XZZ
08C1XZZ
08CSXZZ
08CTXZZ
38069
(9) External Removal of Radioactive
Element or Synthetic Substitute
One commenter identified three ICD–
10–PCS procedure codes that describe
procedures involving the external
removal of radioactive or synthetic
substitutes from the eye that generally
would not require the resources of an
operating room and can be performed at
the bedside. These three ICD–10–PCS
codes are shown in the table below.
Code description
Removal of radioactive element from right eye, external approach.
Removal of synthetic substitute from right eye, external approach.
Removal of synthetic substitute from left eye, external approach.
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We agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19855), we
proposed that the three ICD–10–PCS
procedure codes shown in the table
above be designated as non-O.R.
procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
the three ICD–10–PCS procedure codes
shown in the table above that describe
the external removal of radioactive or
synthetic substitutes from the eye.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the three ICD–10–PCS
procedure codes shown in the table
above from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
ICD–10–PCS code
09977ZX ...............
09978ZX ...............
09987ZX ...............
09988ZX ...............
099F7ZX ..............
099F8ZX ..............
099G7ZX ..............
099G8ZX ..............
Drainage
Drainage
Drainage
Drainage
Drainage
Drainage
Drainage
Drainage
of
of
of
of
of
of
of
of
right tympanic membrane, via natural or artificial opening, diagnostic.
right tympanic membrane, via natural or artificial opening endoscopic, diagnostic.
left tympanic membrane, via natural or artificial opening, diagnostic.
left tympanic membrane, via natural or artificial opening endoscopic, diagnostic.
right eustachian tube, via natural or artificial opening, diagnostic.
right eustachian tube, via natural or artificial opening endoscopic, diagnostic.
left eustachian tube, via natural or artificial opening, diagnostic.
left eustachian tube, via natural or artificial opening endoscopic, diagnostic.
shown in the table above that describe
drainage of ear structures.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the eight ICD–10–PCS
procedure codes shown in the table
above from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
ICD–10–PCS code
..............
..............
..............
..............
Release
Release
Release
Release
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One commenter identified four ICD–
10–PCS procedure codes that describe
procedures involving the external
release of ear structures that generally
would not require the resources of an
operating room and can be performed at
the bedside. These four ICD–10–PCS
codes are shown in the table below.
right external ear, external approach.
left external ear, external approach.
right external auditory canal, external approach.
left external auditory canal, external approach.
shown in the table above that describe
external release of ear structures.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the four ICD–10–PCS
procedure codes shown in the table
above from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
ICD–10–PCS code
(12) External Repair
One commenter identified three ICD–
10–PCS procedure codes that describe
procedures involving the external repair
of body parts that generally would not
require the resources of an operating
room and can be performed at the
bedside. These three ICD–10–PCS codes
are shown in the table below.
Code description
Repair nose, external approach.
Repair buccal mucosa, external approach.
Repair tongue, external approach.
We agreed with the commenter.
Therefore, in the FY 2019 IPPS/LTCH
PPS proposed rule (82 FR 19855), we
proposed that the three ICD–10–PCS
VerDate Sep<11>2014
(11) External Release
Code description
We agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19855), we
proposed that the four ICD–10–PCS
procedure codes shown in the table
above be designated as non-O.R.
procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
the four ICD–10–PCS procedure codes
09QKXZZ .............
0CQ4XZZ .............
0CQ7XZZ .............
One commenter identified eight ICD–
10–PCS procedure codes that describe
procedures involving endoscopic/
transorifice (via natural or artificial
opening) drainage of ear structures that
generally would not require the
resources of an operating room and can
be performed at the bedside. These eight
ICD–10–PCS codes are shown in the
table below.
Code description
We stated in the proposed rule that
we agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19855), we
proposed that the eight ICD–10–PCS
procedure codes shown in the table
above be designated as non-O.R.
procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
the eight ICD–10–PCS procedure codes
09N0XZZ
09N1XZZ
09N3XZZ
09N4XZZ
(10) Endoscopic/Transorifice Diagnostic
Drainage
23:27 Aug 11, 2017
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procedure codes shown in the table
above be designated as non-O.R.
procedures. We invited public
comments on our proposal.
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Comment: Commenters supported the
proposal to change the designation of
the three ICD–10–PCS procedure codes
shown in the table above that describe
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external repair of body parts of various
structures.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the three ICD–10–PCS
procedure codes shown in the table
above from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
(13) Endoscopic/Transorifice
Destruction
One commenter identified eight ICD–
10–PCS procedure codes that describe
ICD–10–PCS code
sradovich on DSK3GMQ082PROD with RULES2
0B538ZZ
0B548ZZ
0B558ZZ
0B568ZZ
0B578ZZ
0B588ZZ
0B598ZZ
0B5B8ZZ
..............
..............
..............
..............
..............
..............
..............
..............
Destruction
Destruction
Destruction
Destruction
Destruction
Destruction
Destruction
Destruction
of
of
of
of
of
of
of
of
right main bronchus, via natural or artificial opening endoscopic.
right upper lobe bronchus, via natural or artificial opening endoscopic.
right middle lobe bronchus, via natural or artificial opening endoscopic.
right lower lobe bronchus, via natural or artificial opening endoscopic.
left main bronchus, via natural or artificial opening endoscopic.
left upper lobe bronchus, via natural or artificial opening endoscopic.
lingula bronchus, via natural or artificial opening endoscopic.
left lower lobe bronchus, via natural or artificial opening endoscopic.
analysis to determine the impact of the
proposed change and noted that the
resource utilization associated with the
inpatient claims reporting these
procedures more closely aligns with
surgical MS–DRGs versus medical MS–
DRGs.
Response: We appreciate the
commenters’ support. In response to the
commenters who disagreed with
changing the designation of the eight
ICD–10–PCS procedure codes that
describe the endoscopic/transorifice
destruction of respiratory system body
parts, we appreciate the thorough
review and analysis conducted in
response to our solicitation for
comments on the proposal. Upon
further review and consideration, we
agree that these procedures warrant an
O.R. setting and assignment to surgical
MS–DRGs.
After consideration of the public
comments we received, we are not
finalizing our proposal to change the
designation of the eight ICD–10–PCS
procedure codes shown in the table
above from O.R. procedures to non-O.R.
procedures. The eight procedure codes
shown in the table above will maintain
their O.R. designation for FY 2018.
(14) Endoscopic/Transorifice Drainage
One commenter identified 40 ICD–
10–PCS procedure codes that describe
procedures involving endoscopic/
transorifice (via natural or artificial
opening) drainage of respiratory system
body parts that generally would not
require the resources of an operating
room and can be performed at the
bedside. We agreed with the
commenter. Therefore, in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19856), we proposed that the 40 ICD–
ICD–10–PCS code
VerDate Sep<11>2014
procedures involving the endoscopic/
transorifice destruction of respiratory
system body parts that generally would
not require the resources of an operating
room and can be performed at the
bedside. These eight ICD–10–PCS codes
are shown in the table below.
Code description
We stated in the proposed rule that
we agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19855
through 19856), we proposed that the
eight ICD–10–PCS procedure codes
shown in the table above be designated
as non-O.R. procedures. We invited
public comments on our proposal.
Comment: Some commenters agreed
with the proposal to change the
designation of the eight ICD–10–PCS
procedure codes that describe
procedures involving the endoscopic/
transorifice destruction of respiratory
system body parts from O.R. procedures
to non-O.R. procedures. However, other
commenters disagreed with the
proposal. These commenters believed
that these procedures do, in fact, require
the resources of an operating room and
stated that the suggestion that these
procedures can be performed at the
bedside is clinically inaccurate and
misrepresents the nature of these
procedures. According to the
commenters, the only instances in
which these procedures would be
performed at the bedside would be if the
patient was in the intensive care unit
and in emergent need of care.
Otherwise, the commenters indicated
that providing these services at the
patient’s bedside would not be
appropriate. Commenters also noted
that the patients who undergo the above
procedures typically have poor
respiratory function that requires
treatment within an O.R. setting for
clinical and safety purposes. In
addition, the commenters reported that
the administration of anesthesia during
these procedures is critically important.
The commenters conducted an in-depth
0BCC8ZZ .............
38071
10–PCS procedure codes listed in Table
6P.4f. associated with the proposed rule
(which is available via the Internet on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) be designated as nonO.R. procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
the 40 ICD–10–PCS procedure codes
that describe endoscopic/transorifice
(via natural or artificial opening)
drainage of respiratory system body
parts.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the 40 ICD–10–PCS
procedure codes listed in Table 6P.4f.
associated with the proposed rule and
this final rule (which is available via the
Internet on the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) from O.R. procedures
to non-O.R. procedures, effective
October 1, 2017.
(15) Endoscopic/Transorifice
Extirpation
One commenter identified nine ICD–
10–PCS procedure codes that describe
procedures involving endoscopic/
transorifice extirpation of matter from
respiratory system body parts that
generally would not require the
resources of an operating room and can
be performed at the bedside. These nine
ICD–10–PCS codes are shown in the
table below.
Code description
Extirpation of matter from right upper lung lobe, via natural or artificial opening endoscopic.
23:27 Aug 11, 2017
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Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
ICD–10–PCS code
0BCD8ZZ .............
0BCF8ZZ ..............
0BCG8ZZ .............
0BCH8ZZ .............
0BCJ8ZZ ..............
0BCK8ZZ .............
0BCL8ZZ ..............
0BCM8ZZ .............
Code description
Extirpation
Extirpation
Extirpation
Extirpation
Extirpation
Extirpation
Extirpation
Extirpation
of
of
of
of
of
of
of
of
matter
matter
matter
matter
matter
matter
matter
matter
from
from
from
from
from
from
from
from
We stated in the proposed rule that
we agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19856), we
proposed that the nine ICD–10–PCS
procedure codes shown in the table
above be designated as non-O.R.
procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
the nine ICD–10–PCS procedure codes
that describe endoscopic/transorifice
extirpation of matter from respiratory
system body parts. However, one
commenter disagreed with the proposal.
According to the commenter, the codes
describe endoscopic procedures
right middle lung lobe, via natural or artificial opening endoscopic.
right lower lung lobe, via natural or artificial opening endoscopic.
left upper lung lobe, via natural or artificial opening endoscopic.
lung lingula, via natural or artificial opening endoscopic.
left lower lung lobe, via natural or artificial opening endoscopic.
right lung, via natural or artificial opening endoscopic.
left lung, via natural or artificial opening endoscopic.
bilateral lungs, via natural or artificial opening endoscopic.
performed on the lung and are more
invasive in comparison to
endobronchial procedures and they
require specialized equipment. The
commenter also noted that time, skill,
and duration of sedation are increased
for endoscopic lung procedures versus
procedures performed on the bronchus
(endobronchial).
Response: We appreciate the
commenters’ support. In response to the
commenter who disagreed with our
proposal, upon further review and
consideration, we agree that these
procedure codes warrant an O.R. setting.
After consideration of the public
comments we received, we are not
finalizing our proposal to designate the
ICD–10–PCS code
sradovich on DSK3GMQ082PROD with RULES2
0BF37ZZ
0BF38ZZ
0BF47ZZ
0BF48ZZ
0BF57ZZ
0BF58ZZ
0BF67ZZ
0BF68ZZ
0BF77ZZ
0BF78ZZ
0BF87ZZ
0BF88ZZ
0BF97ZZ
0BF98ZZ
0BFB7ZZ
0BFB8ZZ
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
Fragmentation
Fragmentation
Fragmentation
Fragmentation
Fragmentation
Fragmentation
Fragmentation
Fragmentation
Fragmentation
Fragmentation
Fragmentation
Fragmentation
Fragmentation
Fragmentation
Fragmentation
Fragmentation
in
in
in
in
in
in
in
in
in
in
in
in
in
in
in
in
One commenter identified 16 ICD–
10–PCS procedure codes that describe
procedures involving endoscopic/
transorifice fragmentation of respiratory
system body parts that generally would
not require the resources of an operating
room and can be performed at the
bedside. These 16 ICD–10–PCS codes
are shown in the table below.
right main bronchus, via natural or artificial opening.
right main bronchus, via natural or artificial opening endoscopic.
right upper lobe bronchus, via natural or artificial opening.
right upper lobe bronchus, via natural or artificial opening endoscopic.
right middle lobe bronchus, via natural or artificial opening.
right middle lobe bronchus, via natural or artificial opening endoscopic.
right lower lobe bronchus, via natural or artificial opening.
right lower lobe bronchus, via natural or artificial opening endoscopic.
left main bronchus, via natural or artificial opening.
left main bronchus, via natural or artificial opening endoscopic.
left upper lobe bronchus, via natural or artificial opening.
left upper lobe bronchus, via natural or artificial opening endoscopic.
lingula bronchus, via natural or artificial opening.
lingula bronchus, via natural or artificial opening endoscopic.
left lower lobe bronchus, via natural or artificial opening.
left lower lobe bronchus, via natural or artificial opening endoscopic.
fragmentation of respiratory system
body parts.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the 16 ICD–10–PCS
procedure codes shown in the table
above from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
ICD–10–PCS code
VerDate Sep<11>2014
(16) Endoscopic/Transorifice
Fragmentation
Code description
We agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19856
through 19857), we proposed that the 16
ICD–10–PCS procedure codes shown in
the table above be designated as nonO.R. procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
the16 ICD–10–PCS procedure codes that
describe endoscopic/transorifice
0BH17DZ .............
0BH18DZ .............
nine ICD–10–PCS procedure codes
shown in the table above as non-O.R.
procedures. These procedure codes will
remain designated as O.R. procedures
for FY 2018.
(17) Endoscopic/Transorifice Insertion
of Intraluminal Device
One commenter identified two ICD–
10–PCS procedure codes that describe
procedures involving an endoscopic/
transorifice (via natural or artificial
opening) insertion of intraluminal
devices into respiratory system body
parts that generally would not require
the resources of an operating room and
can be performed at the bedside. These
two ICD–10–PCS codes are shown in the
table below.
Code description
Insertion of intraluminal device into trachea, via natural or artificial opening.
Insertion of intraluminal device into trachea, via natural or artificial opening endoscopic.
23:27 Aug 11, 2017
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We agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19857), we
proposed that the two ICD–10–PCS
procedure codes shown in the table
above be designated non-O.R.
procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
the two ICD–10–PCS procedure codes
that describe an endoscopic/transorifice
(via natural or artificial opening)
insertion of intraluminal devices into
respiratory system body parts.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the two ICD–10–PCS
procedure codes shown in the table
above from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
ICD–10–PCS code
0BPK71Z ..............
0BPK81Z ..............
sradovich on DSK3GMQ082PROD with RULES2
(18) Endoscopic/Transorifice Removal
of Radioactive Element
One commenter identified two ICD–
10–PCS procedure codes that describe
procedures involving the endoscopic/
transorifice removal of radioactive
elements from respiratory system body
parts that generally would not require
the resources of an operating room and
can be performed at the bedside. These
two ICD–10–PCS codes are shown in the
table below.
Code description
Removal of radioactive element from right lung, via natural or artificial opening.
Removal of radioactive element from right lung, via natural or artificial opening endoscopic.
We agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19857), we
proposed that the two ICD–10–PCS
procedure codes shown in the table
above be designated as non-O.R.
procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
the two ICD–10–PCS procedure codes
that describe procedures involving the
endoscopic/transorifice removal of
radioactive elements from respiratory
system body parts. However, one
commenter disagreed with the proposal
and asserted that endoscopic procedures
performed on the lung are more invasive
than endobronchial procedures.
Response: We appreciate the
commenters’ support. In response to the
commenter who disagreed with our
proposal, we recognize that endoscopic
procedures performed on the lung may
be considered more invasive than
endobronchial procedures. However,
according to the American Cancer
Society, in most cases, anesthesia is not
needed when the applicator and/or
radioactive implant is removed, as it is
usually done in the hospital room.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of ICD–10–PCS procedure
codes 0BPK71Z and 0BPK81Z from O.R.
procedures to non-O.R. procedures,
effective October 1, 2017.
(19) Endoscopic/Transorifice Revision
of Drainage, Infusion, Intraluminal or
Monitoring Device
One commenter identified 18 ICD–
10–PCS procedure codes that describe
procedures involving the revision of
drainage, infusion, intraluminal, or
monitoring devices from respiratory
system body parts that generally would
not require the resources of an operating
VerDate Sep<11>2014
38073
23:27 Aug 11, 2017
Jkt 241001
room and can be performed at the
bedside. We agreed with the
commenter. Therefore, in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19857), we proposed that the 18 ICD–
10–PCS procedure codes listed in Table
6P.4g. associated with the proposed rule
(which is available via the Internet on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) be designated as nonO.R. procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
the 18 ICD–10–PCS procedure codes
that describe procedures involving the
revision of drainage, infusion,
intraluminal, or monitoring devices
from respiratory system body parts.
However, one commenter disagreed
with the proposal and recommended
that CMS maintain an O.R. designation
of 12 of the 18 proposed codes. The
commenter stated that, although it is
uncertain how often a device within the
lung would be revised versus removed
and replaced, endoscopic procedures
performed on the lung are more invasive
than endobronchial procedures.
Response: We appreciate the
commenters’ support. In response to the
commenter who disagreed with 12 of
the 18 procedure codes in our proposal,
we still believe our proposal is
appropriate, given that there are a wide
range of procedures that may be
performed and are described as a
revision of a drainage, infusion,
intraluminal, or monitoring device in
the lung and generally do not require
the resources of an operating room.
After consideration of the public
comments we received, we are
finalizing our proposal to designate the
18 ICD–10–PCS procedure codes listed
in Table 6P.4g. associated with the
proposed rule and this final rule (which
PO 00000
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Fmt 4701
Sfmt 4700
is available via the Internet on the CMS
Web site at: https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/
index.html) as non-O.R. procedures,
effective October 1, 2017.
(20) Endoscopic/Transorifice Excision
One commenter identified one ICD–
10–PCS procedure code that describes
the procedure involving endoscopic/
transorifice (via natural or artificial
opening) excision of the digestive
system body parts that generally would
not require the resources of an operating
room and can be performed at the
bedside. This code is 0DBQ8ZZ
(Excision of anus, via natural or
artificial opening endoscopic). We
agreed with the commenter. Therefore,
in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19857), we
proposed that ICD–10–PCS procedure
code 0DBQ8ZZ be designated as a nonO.R. procedure. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
ICD–10–PCS procedure code 0DBQ8ZZ.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of ICD–10–PCS procedure
code 0DBQ8ZZ (Excision of anus, via
natural or artificial opening endoscopic)
from an O.R. procedure to a non-O.R.
procedure, effective October 1, 2017.
(21) Endoscopic/Transorifice Insertion
One commenter identified two ICD–
10–PCS procedure codes that describe
procedures involving the endoscopic/
transorifice (via natural or artificial
opening) insertion of intraluminal
device into the stomach that generally
would not require the resources of an
operating room and can be performed at
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Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
the bedside. These two ICD–10–PCS
codes are shown in the table below.
ICD–10–PCS
code
0DH67DZ .............
0DH68DZ .............
Code description
Insertion of intraluminal device into stomach, via natural or artificial opening.
Insertion of intraluminal device into stomach, via natural or artificial opening endoscopic.
We agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19857), we
proposed that the two ICD–10–PCS
procedure codes shown in the table
above be designated as non-O.R.
procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
the two ICD–10–PCS procedure codes
that describe the endoscopic/
transorifice (via natural or artificial
opening) insertion of intraluminal
device into the stomach.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the two ICD–10–PCS
procedure codes shown in the table
above from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
ICD–10–PCS
code
0DP07UZ
0DP08UZ
0DP67UZ
0DP68UZ
0DPD7UZ
0DPD8UZ
.............
.............
.............
.............
.............
.............
Removal
Removal
Removal
Removal
Removal
Removal
of
of
of
of
of
of
feeding
feeding
feeding
feeding
feeding
feeding
device
device
device
device
device
device
from
from
from
from
from
from
upper intestinal tract, via natural or artificial opening.
upper intestinal tract, via natural or artificial opening endoscopic.
stomach, via natural or artificial opening.
stomach, via natural or artificial opening endoscopic.
lower intestinal tract, via natural or artificial opening.
lower intestinal tract, via natural or artificial opening endoscopic.
that describe the endoscopic/
transorifice (via natural or artificial
opening) removal of feeding devices.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the six ICD–10–PCS
procedure codes shown in the table
above from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
ICD–10–PCS
code
sradovich on DSK3GMQ082PROD with RULES2
(23) External Reposition
One commenter identified two ICD–
10–PCS procedure codes that describe
procedures involving external
reposition of gastrointestinal body parts
that generally would not require the
resources of an operating room and can
be performed at the bedside. These two
ICD–10–PCS codes are shown in the
table below.
Code description
Reposition esophagus, external approach.
Reposition anus, external approach.
We agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19858), we
proposed that the two ICD–10–PCS
procedure codes shown in the table
above be designated as non-O.R.
procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
the two ICD–10–PCS procedure codes
VerDate Sep<11>2014
One commenter identified six ICD–
10–PCS procedure codes that describe
procedures involving endoscopic/
transorifice (via natural or artificial
opening) removal of feeding devices that
generally would not require the
resources of an operating room and can
be performed at the bedside. These six
ICD–10–PCS codes are shown in the
table below.
Code description
We agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19857
through 19858), we proposed that the
six ICD–10–PCS procedure codes shown
in the table above be designated as nonO.R. procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
the six ICD–10–PCS procedure codes
0DS5XZZ .............
0DSQXZZ .............
(22) Endoscopic/Transorifice Removal
23:27 Aug 11, 2017
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that describe the external reposition of
gastrointestinal body parts.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the two ICD–10–PCS
procedure codes shown in the table
above from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
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(24) Endoscopic/Transorifice Drainage
One commenter identified eight ICD–
10–PCS procedure codes that describe
procedures involving endoscopic/
transorifice (via natural or artificial
opening) drainage of hepatobiliary
system and pancreatic body parts that
generally would not require the
resources of an operating room and can
be performed at the bedside. These eight
ICD–10–PCS codes are shown in the
table below.
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ICD–10–PCS
code
0F9580Z ...............
0F958ZZ ...............
0F9680Z ...............
0F968ZZ ...............
0F9880Z ...............
0F988ZZ ...............
0F9D8ZZ ..............
0F9F8ZZ ..............
Code description
Drainage
Drainage
Drainage
Drainage
Drainage
Drainage
Drainage
Drainage
of
of
of
of
of
of
of
of
right hepatic duct with drainage device, via natural or artificial opening endoscopic.
right hepatic duct, via natural or artificial opening endoscopic.
left hepatic duct with drainage device, via natural or artificial opening endoscopic.
left hepatic duct, via natural or artificial opening endoscopic.
cystic duct with drainage device, via natural or artificial opening endoscopic.
cystic duct, via natural or artificial opening endoscopic.
pancreatic duct, via natural or artificial opening endoscopic.
accessory pancreatic duct, via natural or artificial opening endoscopic.
We agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19858), we
proposed that the eight ICD–10–PCS
procedure codes shown in the table
above be designated as non-O.R.
procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
the eight ICD–10–PCS procedure codes
that describe endoscopic/transorifice
(via natural or artificial opening)
drainage of hepatobiliary system and
pancreatic body parts.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the eight ICD–10–PCS
procedure codes shown in the table
above from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
ICD–10–PCS
code
0FFD8ZZ ..............
0FFF8ZZ ..............
sradovich on DSK3GMQ082PROD with RULES2
One commenter identified two ICD–
10–PCS procedure codes that describe
procedures involving endoscopic/
transorifice (via natural or artificial
opening) fragmentation of hepatobiliary
system and pancreatic body parts that
generally would not require the
resources of an operating room and can
be performed at the bedside. These two
ICD–10–PCS codes are shown in the
table below.
Fragmentation in pancreatic duct, via natural or artificial opening endoscopic.
Fragmentation in accessory pancreatic duct, via natural or artificial opening endoscopic.
(via natural or artificial opening)
fragmentation of hepatobiliary system
and pancreatic body parts.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the two ICD–10–PCS
procedure codes shown in the table
above from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
ICD–10–PCS
code
(26) Percutaneous Alteration
One commenter identified three ICD–
10–PCS procedure codes that describe
procedures involving percutaneous
alteration of the breast that generally
would not require the resources of an
operating room and can be performed at
the bedside. These three ICD–10–PCS
codes are shown in the table below.
Code description
Alteration of right breast with synthetic substitute, percutaneous approach.
Alteration of left breast with synthetic substitute, percutaneous approach.
Alteration of bilateral breast with synthetic substitute, percutaneous approach.
We agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19858
through 19859), we proposed that the
three ICD–10–PCS procedure codes
shown in the table above be designated
as non-O.R. procedures. We invited
public comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
the three ICD–10–PCS procedure codes
that describe percutaneous alteration of
the breast.
VerDate Sep<11>2014
(25) Endoscopic/Transorifice
Fragmentation
Code description
We agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19858), we
proposed that the two ICD–10–PCS
procedure codes shown in the table
above be designated as non-O.R.
procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
the two ICD–10–PCS procedure codes
that describe endoscopic/transorifice
0H0T3JZ ..............
0H0U3JZ ..............
0H0V3JZ ..............
38075
23:27 Aug 11, 2017
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Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the three ICD–10–PCS
procedure codes shown in the table
above from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
(27) External Division and Excision of
Skin
One commenter identified 41 ICD–
10–PCS procedure codes that describe
PO 00000
Frm 00087
Fmt 4701
Sfmt 4700
procedures involving external division
and excision of the skin for body parts
that generally would not require the
resources of an operating room and can
be performed at the bedside. We agreed
with the commenter. Therefore, in the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 19859), we proposed that the 41
ICD–10–PCS procedure codes listed in
Table 6P.4h. associated with the
proposed rule (which is available via
the Internet on the CMS Web site at:
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
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AcuteInpatientPPS/) be
designated as non-O.R. procedures. We
invited public comments on our
proposal.
Comment: Commenters supported the
proposal to change the designation of
the 41 ICD–10–PCS procedure codes
that describe external division and
excision of the skin for body parts.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the 41 ICD–10–PCS
procedure codes listed in Table 6P.4h.
associated with the proposed rule and
this final rule (which is available via the
Internet on the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) from O.R. procedures
ICD–10–PCS
code
0HBTXZZ .............
0HBUXZZ .............
0HBVXZZ .............
0HBWXZZ ............
0HBXXZZ .............
0HBYXZZ .............
Excision
Excision
Excision
Excision
Excision
Excision
of
of
of
of
of
of
sradovich on DSK3GMQ082PROD with RULES2
One commenter identified six ICD–
10–PCS procedure codes that describe
procedures involving external excision
of the breast that they believed would
generally not require the resources of an
operating room and can be performed at
the bedside. These six ICD–10–PCS
codes are shown in the table below.
right breast, external approach.
left breast, external approach.
bilateral breast, external approach.
right nipple, external approach.
left nipple, external approach.
supernumerary breast, external approach.
section of the ICD–10–PCS
classification. Therefore, according to
the commenter, by definition, a partial
mastectomy, which involves excision of
glandular/ductal tissue, cannot be
performed by an external approach
because glandular tissue cannot be
removed through direct action upon the
skin or mucous membrane.
Response: We appreciate the
commenters’ support. In response to the
commenter who noted the example of a
partial mastectomy that cannot be
performed by an external approach, we
agree that the example may not have
been an appropriate illustration of an
external approach according to the ICD–
10–PCS definitions. A more appropriate
example would be an excision of lesion
of breast for the external approach. As
the commenter pointed out, the breast
itself includes glandular and ductal
tissue, although it is assigned with skin
to Chapter 0H. Because the code title
description does not specifically
ICD–10–PCS
code
include the term ‘‘skin,’’ it can lead to
confusion. We believe this area in the
classification may benefit from further
review to determine if modifications are
warranted, in which case any proposals
would be presented at a future ICD–10
Coordination and Maintenance
Committee meeting.
After consideration of the public
comments we received, we are
finalizing our proposal to maintain the
six ICD–10–PCS procedure codes shown
in the table above as O.R. procedures for
FY 2018.
(29) Percutaneous Supplement
One commenter identified three ICD–
10–PCS procedure codes that describe
procedures involving percutaneous
supplement of the breast with synthetic
substitute that generally would not
require the resources of an operating
room and can be performed at the
bedside. These three ICD–10–PCS codes
are shown in the table below.
Code description
Supplement right breast with synthetic substitute, percutaneous approach.
Supplement left breast with synthetic substitute, percutaneous approach.
Supplement bilateral breast with synthetic substitute, percutaneous approach.
We agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19859), we
proposed that the three ICD–10–PCS
procedure codes shown in the table
above be designated as non-O.R.
procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
the three ICD–10–PCS procedure codes
VerDate Sep<11>2014
(28) External Excision of Breast
Code description
We disagreed with the commenter
because these procedure codes describe
various types of surgery performed on
the breast or nipple (for example, partial
mastectomy) that would typically
involve the use of general anesthesia.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19859), we
proposed that the six ICD–10–PCS
procedure codes shown in the table
above remain designated as O.R.
procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to maintain the current
designation of the six ICD–10–PCS
procedure codes that describe external
excision of the breast. However, one
commenter disagreed specifically with
the example of a partial mastectomy
utilizing an external approach. The
commenter stated that the breast itself
includes glandular and ductal tissue,
although it is assigned with skin to
Section 0H in the Medical and Surgical
0HUT3JZ ..............
0HUU3JZ .............
0HUV3JZ ..............
to non-O.R. procedures, effective
October 1, 2017.
23:27 Aug 11, 2017
Jkt 241001
that describe percutaneous supplement
of the breast with synthetic substitute.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the three ICD–10–PCS
procedure codes shown in the table
above from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
PO 00000
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Fmt 4701
Sfmt 4700
(30) Open Drainage
One commenter identified 25 ICD–
10–PCS procedure codes that describe
procedures involving open drainage of
subcutaneous tissue and fascia body
parts that generally would not require
the resources of an operating room and
can be performed at the bedside. The
list includes procedure codes for
drainage with or without placement of
a drainage device. We stated in the
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proposed rule that we agreed with the
commenter. Therefore, in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19859), we proposed that the 25 ICD–
10–PCS procedure codes listed in Table
6P.4i. associated with the proposed rule
(which is available via the Internet on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) be designated as nonO.R. procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
the 25 ICD–10–PCS procedure codes
that describe procedures involving open
drainage of subcutaneous tissue and
fascia body parts. However, one
commenter disagreed with changing the
designation for 22 of the 25 procedure
codes in the proposal from O.R. to nonO.R. This commenter agreed with the
proposal to change the designation for 3
of the 25 procedure codes because these
codes specifically describe the objective
of placing a drainage device. The
commenter noted that the other
procedures described by the 22
procedure codes are performed on
deeper subcutaneous tissue and fascia,
are more invasive, and are most often
performed in the O.R. setting under
general anesthesia. According to the
commenter, these codes are assigned
when the primary objective of the
procedure is to incise through the skin
into the subcutaneous tissue and/or
fascia in order to drain and clean out an
abscess or hematoma (fluid collection).
The commenter also noted that CMS
disagreed with the recommendation to
reclassify open extraction of
subcutaneous tissue and fascia to nonO.R. procedures as discussed with
regard to Table 6P.4k associated with
the FY 2018 IPPS/LTCH PPS proposed
rule and for the same reasons, the
commenter believed that open drainage
of subcutaneous tissue and fascia
should not be changed from an O.R.
procedure to a non-O.R. procedure.
ICD–10–PCS
code
0J9100Z ...............
0J9J00Z ...............
0J9K00Z ...............
Drainage of Face Subcutaneous Tissue and Fascia with Drainage Device, Open Approach.
Drainage of Right Hand Subcutaneous Tissue and Fascia with Drainage Device, Open Approach.
Drainage of Left Hand Subcutaneous Tissue and Fascia with Drainage Device, Open Approach.
for-Service-Payment/AcuteInpatient
PPS/) from O.R. procedures
to non-O.R. procedures. Rather, these
codes will maintain their O.R.
designation for FY 2018.
(31) Percutaneous Drainage
One commenter identified two ICD–
10–PCS procedure codes that describe
ICD–10–PCS
code
sradovich on DSK3GMQ082PROD with RULES2
procedures involving percutaneous
drainage of subcutaneous tissue and
fascia body parts that generally would
not require the resources of an operating
room and can be performed at the
bedside. These two ICD–10–PCS codes
are shown in the table below.
Code description
Drainage of right hand subcutaneous tissue and fascia, percutaneous approach.
Drainage of left hand subcutaneous tissue and fascia, percutaneous approach.
We agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19859), we
proposed that the two ICD–10–PCS
procedure codes shown in the table
above be designated as non-O.R.
procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
the two ICD–10–PCS procedure codes
that describe percutaneous drainage of
subcutaneous tissue and fascia body
parts.
Response: We appreciate the
commenters’ support.
VerDate Sep<11>2014
Response: We appreciate the
commenters’ support. In response to the
commenter who noted that the
procedures described by the 22
procedure codes are performed on
deeper subcutaneous tissue and fascia,
are more invasive, and are most often
performed in the O.R. setting under
general anesthesia, upon further review
and consideration, we agree that it is
appropriate to maintain the designation
of the procedure codes as O.R.
procedures.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the following three ICD–
10–PCS procedure codes that were
listed in Table 6P.4i. associated with the
proposed rule (which is available via
the Internet on the CMS Web site at:
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/) from
O.R. procedures to non-O.R. procedures,
effective October 1, 2017.
Code description
We are not finalizing our proposal to
change the designation for the
remaining 22 ICD–10–PCS procedure
codes that were listed in Table 6P.4i.
associated with the proposed rule
(which is available via the Internet on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Fee-
0J9J3ZZ ...............
0J9K3ZZ ...............
38077
23:27 Aug 11, 2017
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After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the two ICD–10–PCS
procedure codes shown in the table
above from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
(32) Percutaneous Extraction
One commenter identified 22 ICD–
10–PCS procedure codes that describe
procedures involving percutaneous
extraction of subcutaneous tissue and
fascia body parts that generally would
not require the resources of an operating
room and can be performed at the
bedside. We agreed with the
PO 00000
Frm 00089
Fmt 4701
Sfmt 4700
commenter. Therefore, in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19859 through 19860), we proposed that
the 22 ICD–10–PCS procedure codes
listed in Table 6P.4j. associated with the
proposed rule (which is available via
the Internet on the CMS Web site at:
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/) be
designated as non-O.R. procedures. We
invited public comments on our
proposal.
Comment: Commenters supported the
proposal to change the designation of
the 22 ICD–10–PCS procedure codes
that describe percutaneous extraction of
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Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
subcutaneous tissue and fascia body
parts.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the 22 ICD–10–PCS
procedure codes listed in Table 6P.4j.
associated with the proposed rule and
this final rule (which is available via the
Internet on the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) from O.R. procedures
to non-O.R. procedures, effective
October 1, 2017.
sradovich on DSK3GMQ082PROD with RULES2
(33) Open Extraction
One commenter identified 22 ICD–
10–PCS procedure codes that describe
procedures involving open extraction of
subcutaneous tissue and fascia body
parts that the commenter believed
would generally not require the
resources of an operating room and can
be performed at the bedside. We stated
in the proposed rule that we disagreed
with the commenter because these
codes describe procedures that utilize
an open approach and are being
performed on the skin and
subcutaneous tissue. Depending on the
medical reason for the open extraction,
the procedures may require an O.R.
setting. Therefore, in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19860),
we proposed that the 22 ICD–10–PCS
procedure codes listed in Table 6P.4k.
associated with the proposed rule
(which is available via the Internet on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) remain designated as
O.R. procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to maintain the designation of
the 22 ICD–10–PCS procedure codes
that describe open extraction of
subcutaneous tissue and fascia body
parts.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to maintain the
22 ICD–10–PCS procedure codes listed
in Table 6P.4k. associated with the
proposed rule and this final rule (which
is available via the Internet on the CMS
Web site at: https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/
index.html) as O.R. procedures for FY
2018.
VerDate Sep<11>2014
23:27 Aug 11, 2017
Jkt 241001
(34) Percutaneous and Open Repair
One commenter identified 44 ICD–
10–PCS procedure codes that describe
procedures involving percutaneous and
open repair of subcutaneous tissue and
fascia body parts that generally would
not require the resources of an operating
room and can be performed at the
bedside. We stated in the proposed rule
that we agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19860), we
proposed that the 44 ICD–10–PCS
procedure codes listed in Table 6P.4l.
associated with the proposed rule
(which is available via the Internet on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) be designated as nonO.R. procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of 44
ICD–10–PCS procedure codes that
describe percutaneous and open repair
of subcutaneous tissue and fascia body
parts from O.R. to non-O.R. However,
one commenter disagreed with changing
the designation of 22 of the 44
procedure codes. The commenter stated
that open repair of deeper subcutaneous
tissue and fascia is much more invasive
and often performed in the O.R. setting
under general anesthesia. The
commenter noted that patients who are
admitted to the inpatient setting
following trauma often have multiple
traumatic injuries whereby extensive
wound lacerations often require the O.R.
setting for complex repair and
debridement under anesthesia.
Response: We appreciate the
commenters’ support. In response to the
commenter who disagreed with the
proposal to change the designation of 22
of the 44 procedure codes, we agree that
open repair of deeper subcutaneous
tissue and fascia is much more invasive
and may be performed in the O.R.
setting under general anesthesia.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation for 22 procedure codes that
describe percutaneous repair of
subcutaneous tissue and fascia body
parts listed in Table 6P.4l. associated
with this final rule (which is available
via the Internet on the CMS Web site at:
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/) from
O.R. procedures to non-O.R. procedures,
effective October 1, 2017. We are not
finalizing our proposal to change the
designation for the other 22 procedure
codes that describe open repair of
PO 00000
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Fmt 4701
Sfmt 4700
subcutaneous tissue and fascia body
parts from O.R. procedures to non-O.R.
procedures. Rather, they will maintain
their O.R. designation for FY 2018.
(35) External Release
One commenter identified 28 ICD–
10–PCS procedure codes that describe
procedures involving external release of
bursa and ligament body parts that
generally would not require the
resources of an operating room and can
be performed at the bedside. We agreed
with the commenter. Therefore, in the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 19860), we proposed that the 28
ICD–10–PCS procedure codes listed in
Table 6P.4m. associated with the
proposed rule (which is available via
the Internet on the CMS Web site at:
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/) be
designated as non-O.R. procedures. We
invited public comments on our
proposal.
Comment: Commenters supported the
proposal to change the designation of
the 28 ICD–10–PCS procedure codes
that describe procedures involving
external release of bursa and ligament
body parts.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the 28 ICD–10–PCS
procedure codes listed in Table 6P.4m.
associated with the proposed rule and
this final rule (which is available via the
Internet on the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) from O.R. procedures
to non-O.R. procedures, effective
October 1, 2017.
(36) External Repair
One commenter identified 135 ICD–
10–PCS procedure codes that describe
procedures involving external repair of
various bones and joints. We stated in
the proposed rule that we believed that
these procedures generally would not be
performed in the operating room. In the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 19860), we proposed that the 135
ICD–10–PCS procedure codes listed in
Table 6P.4n. associated with the
proposed rule (which is available via
the Internet on the CMS Web site at:
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/) be
designated as non-O.R. procedures. We
invited public comments on our
proposal.
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Comment: Commenters supported the
proposal to change the designation of
the 135 ICD–10–PCS procedure codes
that describe external repair of various
bones and joints.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the 135 ICD–10–PCS
procedure codes listed in Table 6P.4n.
associated with the proposed rule and
this final rule (which is available via the
Internet on the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) from O.R. procedures
to non-O.R. procedures, effective
October 1, 2017.
ICD–10–PCS
code
0NS0XZZ .............
0NS1XZZ .............
0NS2XZZ .............
0NS3XZZ .............
0NS4XZZ .............
0NS5XZZ .............
0NS6XZZ .............
0NS7XZZ .............
0NS8XZZ .............
0PS3XZZ ..............
0PS4XZZ ..............
0QS0XZZ .............
0QS1XZZ .............
0QSSXZZ .............
Reposition
Reposition
Reposition
Reposition
Reposition
Reposition
Reposition
Reposition
Reposition
Reposition
Reposition
Reposition
Reposition
Reposition
sradovich on DSK3GMQ082PROD with RULES2
One commenter identified 14 ICD–
10–PCS procedure codes that describe
procedures involving external
reposition of various bones. These 14
ICD–10–PCS codes are shown in the
table below.
skull, external approach.
right frontal bone, external approach.
left frontal bone, external approach.
right parietal bone, external approach.
left parietal bone, external approach.
right temporal bone, external approach.
left temporal bone, external approach.
right occipital bone, external approach.
left occipital bone, external approach.
cervical vertebra, external approach.
thoracic vertebra, external approach.
lumbar vertebra, external approach.
sacrum, external approach.
coccyx, external approach.
finalizing our proposal to change the
designation of the 14 ICD–10–PCS
procedure codes shown in the table
above from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
We note that, effective October 1, 2017,
the code titles for procedure code
0NS1XZZ (Reposition right frontal bone,
external approach) and procedure code
0NS7XZZ (Reposition right occipital
bone, external approach) have been
revised as reflected in Table 6F.—
Revised Procedure Code Titles, and
procedure codes 0NS2XZZ (Reposition
left frontal bone, external approach) and
0NS8XZZ (Reposition left occipital
bone, external approach) have been
deleted as reflected in Table 6D.
ICD–10–PCS
code
—Invalid Procedure Codes associated
with this final rule (which is available
via the Internet on the CMS Web site at:
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/).
(38) Endoscopic/Transorifice Dilation
One commenter identified eight ICD–
10–PCS procedure codes that describe
procedures involving endoscopic/
transorifice (via natural or artificial
opening) dilation of urinary system
body parts that generally would not
require the resources of an operating
room and can be performed at the
bedside. These eight ICD–10–PCS codes
are shown in the table below.
Code description
Dilation
Dilation
Dilation
Dilation
Dilation
Dilation
Dilation
Dilation
of
of
of
of
of
of
of
of
right ureter, via natural or artificial opening.
right ureter, via natural or artificial opening endoscopic.
left ureter, via natural or artificial opening.
left ureter, via natural or artificial opening endoscopic.
bladder with intraluminal device, via natural or artificial opening.
bladder, via natural or artificial opening.
bladder with intraluminal device, via natural or artificial opening endoscopic.
bladder, via natural or artificial opening endoscopic.
We stated in the proposed rule that
we agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19860
through 19861), we proposed that the
eight ICD–10–PCS procedure codes
shown in the table above be designated
VerDate Sep<11>2014
(37) External Reposition
Code description
We stated in the proposed rule that
we believed that these procedures
generally would not be performed in the
operating room. Therefore, in the FY
2018 IPPS/LTCH PPS proposed rule (82
FR 19860), we proposed that the 14
ICD–10–PCS procedure codes shown in
the table above be designated as nonO.R. procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
the 14 ICD–10–PCS procedure codes
that describe procedures involving
external reposition of various bones.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
0T767ZZ ...............
0T768ZZ ...............
0T777ZZ ...............
0T778ZZ ...............
0T7B7DZ ..............
0T7B7ZZ ..............
0T7B8DZ ..............
0T7B8ZZ ..............
38079
23:27 Aug 11, 2017
Jkt 241001
as non-O.R. procedures. We invited
public comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
the eight ICD–10–PCS procedure codes
that describe procedures involving
endoscopic/transorifice (via natural or
PO 00000
Frm 00091
Fmt 4701
Sfmt 4700
artificial opening) dilation of urinary
system body parts. However, one
commenter disagreed with changing the
designation for four of the eight
procedure codes. These four codes are
shown in the table below:
E:\FR\FM\14AUR2.SGM
14AUR2
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ICD–10–PCS
code
0T768ZZ ...............
0T778ZZ ...............
0T7B8DZ ..............
0T7B8ZZ ..............
Code description
Dilation
Dilation
Dilation
Dilation
of
of
of
of
right ureter, via natural or artificial opening endoscopic.
left ureter, via natural or artificial opening endoscopic.
bladder with intraluminal device, via natural or artificial opening endoscopic.
bladder, via natural or artificial opening endoscopic.
According to the commenter, these
four endoscopic procedures typically
require the use of the operating room or
a dedicated suite with specialized
equipment and anesthesia.
Response: We appreciate the
commenters’ support. In response to the
commenter who disagreed with
changing the designation for four of the
eight procedure codes that are displayed
above, upon further review and
consideration, we agree that these four
procedures are appropriate to designate
as O.R. procedures for the reasons
provided by the commenter.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
ICD–10–PCS
code
0T767ZZ ...............
0T777ZZ ...............
0T7B7DZ ..............
0T7B7ZZ ..............
Code description
Dilation
Dilation
Dilation
Dilation
of
of
of
of
right ureter, via natural or artificial opening.
left ureter, via natural or artificial opening.
bladder with intraluminal device, via natural or artificial opening.
bladder, via natural or artificial opening.
We are not finalizing our proposal to
change the designation of four
procedure codes (0T768ZZ, 0T778ZZ,
0T7B8DZ, and 0T7B8ZZ) that describe
endoscopic dilation of urinary system
body parts from O.R. procedures to nonO.R. procedures. Rather, they will
maintain their O.R designation for FY
2018.
(39) Endoscopic/Transorifice Excision
One commenter identified three ICD–
10–PCS procedure codes that describe
procedures involving endoscopic/
transorifice (via natural or artificial
ICD–10–PCS
code
0TBD7ZZ ..............
0TBD8ZZ ..............
0TBDXZZ .............
Excision of urethra, via natural or artificial opening.
Excision of urethra, via natural or artificial opening endoscopic.
Excision of urethra, external approach.
three ICD–10–PCS procedure codes that
describe an endoscopic/transorifice (via
natural or artificial opening) excision of
urinary system body parts.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal for the three
ICD–10–PCS procedure codes shown in
the table above to maintain the O.R.
designation for FY 2018.
sradovich on DSK3GMQ082PROD with RULES2
ICD–10–PCS
code
(40) External/Transorifice Repair
One commenter identified three ICD–
10–PCS procedure codes that describe
procedures involving external and
transorifice (via natural or artificial
opening) repair of the vagina body part
that generally would not require the
resources of an operating room and can
be performed at the bedside. These three
ICD–10–PCS codes are shown in the
table below.
Code description
Repair vagina, via natural or artificial opening.
Repair vagina, external approach.
Repair vulva, external approach.
We agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19861), we
VerDate Sep<11>2014
opening) excision of urinary system
body parts that the commenter believed
would generally not require the
resources of an operating room and can
be performed at the bedside. These three
ICD–10–PCS codes are shown in the
table below.
Code description
We disagreed with the commenter
because, depending on the medical
reason for the excision, the procedures
may require an O.R. setting. Therefore,
in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19861), we
proposed that the three ICD–10–PCS
procedure codes shown in the table
above remain designated as O.R.
procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to maintain the designation for
0UQG7ZZ .............
0UQGXZZ ............
0UQMXZZ ............
designation for four ICD–10–PCS
procedure codes describing a
transorifice (via natural or artificial
opening) approach for dilation of
urinary system body parts from O.R.
procedures to non-O.R. procedures as
shown in the table below, effective
October 1, 2017.
23:27 Aug 11, 2017
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proposed that these three ICD–10–PCS
procedure codes shown in the table
above be designated as non-O.R.
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procedures. We invited public
comments on our proposal.
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Comment: Commenters supported the
proposal to change the designation for
three ICD–10–PCS procedure codes that
describe external and transorifice (via
natural or artificial opening) repair of
the vagina body part.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal for the three
ICD–10–PCS procedure codes shown in
the table above to change the
designation from O.R. procedures to
non-O.R. procedures, effective October
1, 2017.
(41) Percutaneous Transfusion
One commenter identified 20 ICD–
10–PCS procedure codes that describe
procedures involving percutaneous
transfusion of bone marrow and stem
cells that generally would not require
the resources of an operating room and
can be performed at the bedside. We
agreed with the commenter. Therefore,
in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19861), we
proposed that the 20 ICD–10–PCS
procedure codes listed in Table 6P.4o.
associated with the proposed rule
(which is available via the Internet on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) be designated as nonO.R. procedures. We invited public
comments on our proposal.
Comment: Numerous commenters
expressed concern with the proposal
that involved 20 ICD–10–PCS procedure
codes describing percutaneous
transfusion of bone marrow and stem
cells. The commenters agreed that,
clinically, the proposal to designate
these procedures as non-O.R. is
appropriate. However, the commenters
objected to the notion that these
procedures would be reassigned to
medical MS–DRGs with lower payment
rates as a result of the proposal. The
commenters urged CMS to maintain the
current Pre-MDC logic for patients
undergoing bone marrow transplants
and to maintain their respective MS–
DRG assignments to MS–DRG 014
(Allogeneic Bone Marrow Transplant);
MS–DRG 016 (Autologous Bone Marrow
Transplant with CC/MCC and MS–DRG
017 (Autologous Bone Marrow
Transplant without CC/MCC).
Response: We acknowledge the
concerns of the commenters. We agree
that it is important to maintain the
current Pre-MDC logic for these
procedures while also appropriately
designating them as non-O.R.
procedures.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation for the 20 ICD 10–PCS
procedure codes listed in Table 6P.4o.
associated with the proposed rule and
this final rule (which is available via the
Internet on the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) from O.R. procedures
to non-O.R. procedures, effective
October 1, 2017, and maintaining their
assignment to the Pre-MDC MS–DRGs
014, 016, and 017 for FY 2018.
(42) External/Percutaneous/Transorifice
Introduction
One commenter identified 51 ICD–
10–PCS procedure codes that describe
procedures involving external,
percutaneous and transorifice (via
natural or artificial opening)
introduction of substances that
generally would not require the
resources of an operating room and can
be performed at the bedside. We agreed
with the commenter. Therefore, in the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 19861), we proposed that the 51
sradovich on DSK3GMQ082PROD with RULES2
ICD–10–PCS
code
3E1N38X ..............
3E1N38Z ..............
3E1N78X ..............
3E1N78Z ..............
3E1N88X ..............
3E1N88Z ..............
4A0635Z ...............
4A063BZ ..............
4A0C35Z ..............
4A0C3BZ ..............
4A0C75Z ..............
4A0C7BZ ..............
4A0C85Z ..............
4A1635Z ...............
4A163BZ ..............
VerDate Sep<11>2014
ICD–10–PCS procedure codes listed in
Table 6P.4p. associated with the
proposed rule (which is available via
the Internet on the CMS Web site at:
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/) be
designated as non-O.R. procedures. We
invited public comments on our
proposal.
Comment: Commenters supported the
proposal to change the designation of
the 51 ICD–10–PCS procedure codes
that describe procedures involving
external, percutaneous and transorifice
(via natural or artificial opening)
introduction of substances.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the 51 ICD–10–PCS
procedure codes listed in Table 6P.4p.
associated with the proposed rule and
this final rule (which is available via the
Internet on the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) from O.R. procedures
to non-O.R. procedures, effective
October 1, 2017.
(43) Percutaneous/Diagnostic and
Endoscopic/Transorifice Irrigation,
Measurement and Monitoring
One commenter identified 15 ICD–
10–PCS procedure codes that describe
procedures involving percutaneous/
diagnostic and endoscopic/transorifice
(via natural or artificial opening)
irrigation, measurement and monitoring
of structures, pressures and flow that
generally would not require the
resources of an operating room and can
be performed at the bedside. These 15
ICD–10–PCS codes are shown in the
table below.
Code description
Irrigation of male reproductive using irrigating substance, percutaneous approach, diagnostic.
Irrigation of male reproductive using irrigating substance, percutaneous approach.
Irrigation of male reproductive using irrigating substance, via natural or artificial opening, diagnostic.
Irrigation of male reproductive using irrigating substance, via natural or artificial opening.
Irrigation of male reproductive using irrigating substance, via natural or artificial opening endoscopic, diagnostic.
Irrigation of male reproductive using irrigating substance, via natural or artificial opening endoscopic.
Measurement of lymphatic flow, percutaneous approach.
Measurement of lymphatic pressure, percutaneous approach.
Measurement of biliary flow, percutaneous approach.
Measurement of biliary pressure, percutaneous approach.
Measurement of biliary flow, via natural or artificial opening.
Measurement of biliary pressure, via natural or artificial opening.
Measurement of biliary flow, via natural or artificial opening endoscopic.
Monitoring of lymphatic flow, percutaneous approach.
Monitoring of lymphatic pressure, percutaneous approach.
23:27 Aug 11, 2017
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We agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19861
through 19862), we proposed that the 15
ICD–10–PCS procedure codes shown in
the table above be designated as nonO.R. procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
the 15 ICD–10–PCS procedure codes
that describe procedures involving
percutaneous/diagnostic and
endoscopic/transorifice (via natural or
artificial opening) irrigation,
measurement and monitoring of
structures, pressures and flow.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the 15 ICD–10–PCS
procedure codes shown in the table
above from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
ICD–10–PCS
code
BF030ZZ ..............
BF031ZZ ..............
BF03YZZ ..............
BF0C0ZZ ..............
BF0C1ZZ ..............
BF0CYZZ .............
(44) Imaging
One commenter identified six ICD–
10–PCS procedure codes that describe
procedures involving imaging with
contrast of hepatobiliary system body
parts that generally would not require
the resources of an operating room and
can be performed at the bedside. These
six ICD–10–PCS codes are shown in the
table below.
Code description
Plain
Plain
Plain
Plain
Plain
Plain
radiography
radiography
radiography
radiography
radiography
radiography
of
of
of
of
of
of
gallbladder and bile ducts using high osmolar contrast.
gallbladder and bile ducts using low osmolar contrast.
gallbladder and bile ducts using other contrast.
hepatobiliary system, all using high osmolar contrast.
hepatobiliary system, all using low osmolar contrast.
hepatobiliary system, all using other contrast.
We agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19862), we
proposed that the six ICD–10–PCS
procedure codes shown in the table
above be designated as non-O.R.
procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
the six ICD–10–PCS procedure codes
that describe imaging with contrast of
hepatobiliary system body parts.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the six ICD–10–PCS
procedure codes shown in the table
above from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
(45) Prosthetics
One commenter identified five ICD–
10–PCS procedure codes that describe
procedures involving the fitting and use
of prosthetics and assistive devices that
would not require the resources of an
operating room. These five ICD–10–PCS
codes are shown in the table below.
ICD–10–PCS
code
Code description
F0DZ8ZZ ..............
F0DZ9EZ ..............
F0DZ9FZ ..............
Prosthesis device fitting.
Assistive, adaptive, supportive or protective devices device fitting using orthosis.
Assistive, adaptive, supportive or protective devices device fitting using assistive, adaptive, supportive or protective equipment.
Assistive, adaptive, supportive or protective devices device fitting using prosthesis.
Assistive, adaptive, supportive or protective devices device fitting.
sradovich on DSK3GMQ082PROD with RULES2
F0DZ9UZ .............
F0DZ9ZZ ..............
We agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19862), we
proposed that the five ICD–10–PCS
procedure codes shown in the table
above be designated as non-O.R.
procedures. We invited public
comments on our proposal.
Comment: Commenters supported the
proposal to change the designation of
the five ICD–10–PCS procedure codes
that describe the fitting and use of
prosthetics and assistive devices.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of the five ICD–10–PCS
procedure codes shown in the table
above from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
VerDate Sep<11>2014
23:27 Aug 11, 2017
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b. Revision of Neurostimulator
Generator
We received a request to review three
ICD–10–PCS procedure codes that
describe procedures for revision of a
neurostimulator generator that are
currently designated as O.R. procedures
and assigned to MS–DRGs 252, 253 and
254 (Other Vascular Procedures with
MCC, with CC and without CC/MCC,
respectively). The three codes are
0JWT0MZ (Revision of stimulator
generator in trunk subcutaneous tissue
and fascia, open approach), 0JWT3MZ
(Revision of stimulator generator in
trunk subcutaneous tissue and fascia,
percutaneous approach), and 0JWTXMZ
(Revision of stimulator generator in
trunk subcutaneous tissue and fascia,
external approach).
PO 00000
Frm 00094
Fmt 4701
Sfmt 4700
The requester expressed concern with
the MS–DRG assignments and noted
that although these codes are used to
report revision of a carotid sinus
stimulator pulse generator and
appropriately assigned to MS–DRGs
252, 253 and 254 in MDC 5 (Diseases
and Disorders of the Circulatory
System), they also are very frequently
used for the revision of the more
common (for example, gastric,
intracranial, sacral and spinal)
neurostimulator generators that would
generally not require the resources of an
operating room.
The requestor also stated that the
indication for revision of a
neurostimulator generator is typically
due to a complication, which would be
reflected in a complication code such as
ICD–10–CM diagnosis code T85.734A
(Infection and inflammatory reaction
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due to implanted electronic
neurostimulator, generator, initial
encounter) or T85.890A (Other specified
complication of nervous system
prosthetic devices, implants and grafts,
initial encounter). Because both of these
diagnosis codes are assigned to MDC 1
(Diseases and Disorders of the Nervous
System), when either code is reported in
combination with one of the three
procedure codes that describe revision
of neurostimulator generator codes
(currently assigned to MDC 5 (Diseases
and Disorders of the Circulatory
System)), the resulting MS–DRG
assignment is to MS–DRGs 981, 982 and
983 (Extensive O.R. Procedure
Unrelated to Principal Diagnosis with
MCC, with CC and without CC/MCC,
respectively).
The requestor presented the following
three options for consideration.
• Reclassify the ICD–10–PCS
procedure codes from O.R. Procedures
to non-O.R. procedures that affect MS–
DRG assignment only in MDC 5. The
requestor stated that, under this option,
the procedure codes would continue to
appropriately group to MDC 5 when
representing cases involving carotid
sinus stimulators and the other types of
neurostimulator cases would
appropriately group to medical MS–
DRGs.
• Add the ICD–10–PCS procedure
codes to MDC 1, such as to MS–DRGs
040, 041 and 042 (Peripheral, Cranial
Nerve and Other Nervous System
Procedures with MCC, with CC or
Peripheral Neurostimulator and without
CC/MCC, respectively) under MDC 1.
The requestor stated that this option
would resolve the inconsistency
between a revision of a carotid sinus
stimulator generator being classified as
an O.R. procedure, while the other
comparable procedures involving a
revision of a regular neurostimulator
generator are not. The requestor also
stated that this option would preclude
cases being assigned to MS–DRGs 981
through 983.
• Stop classifying the ICD–10–PCS
procedure codes as O.R. procedures
entirely. The requestor stated that,
under this option, all cases would then
group to medical MS–DRGs, regardless
of the type of neurostimulator generator.
38083
As discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19862
through 19863), we analyzed claims
data for the three revision of
neurostimulator generator procedure
codes from the December 2016 update
of the FY 2016 MedPAR file and
identified cases under MDC 1 in MS–
DRGs 025, 026, and 027 (Craniotomy
and Endovascular Intracranial
Procedures with MCC, with CC and
without CC/MCC, respectively); MS–
DRGs 029 and 030 (Spinal Procedures
with CC or Neurostimulators and Spinal
Procedures without CC/MCC,
respectively); and MS–DRGs 041 and
042 (Peripheral, Cranial Nerve and
Other Nervous System Procedures with
CC or Peripheral Neurostimulator and
without CC/MCC, respectively). We also
identified cases in MS–DRGs 982 and
983 (Extensive O.R. Procedure
Unrelated to Principal Diagnosis with
CC and without CC/MCC, respectively).
Lastly, we identified cases under MDC
5 in MS–DRGs 252, 253 and 254 (Other
Vascular Procedures with MCC, with CC
and without CC/MCC, respectively). Our
findings are shown in the table below.
MS–DRGS FOR REVISION OF NEUROSTIMULATOR GENERATOR
Number of
cases
MS–DRG
sradovich on DSK3GMQ082PROD with RULES2
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
025—All cases ............................................................................................................
025—Cases with revision of neurostimulator generator .............................................
026—All cases ............................................................................................................
026—Cases with revision of neurostimulator generator .............................................
027—All cases ............................................................................................................
027—Cases with revision of neurostimulator generator .............................................
029—All cases ............................................................................................................
029—Cases with revision of neurostimulator generator .............................................
030—All cases ............................................................................................................
030—Cases with revision of neurostimulator generator .............................................
041—All cases ............................................................................................................
041—Cases with revision of neurostimulator generator .............................................
042—All cases ............................................................................................................
042—Cases with revision of neurostimulator generator .............................................
982—All cases ............................................................................................................
982—Cases with revision of neurostimulator generator .............................................
983—All cases ............................................................................................................
983—Cases with revision of neurostimulator generator .............................................
252—All cases ............................................................................................................
252—Cases with revision of neurostimulator generator .............................................
253—All cases ............................................................................................................
253—Cases with revision of neurostimulator generator .............................................
254—All cases ............................................................................................................
254—Cases with revision of neurostimulator generator .............................................
As shown in the table above, the
overall volume of cases reporting
revision of neurostimulator generator is
low, with a total of only 57 cases found
across all of the MS–DRGs reviewed.
The average length of stay for these
cases reporting revision of
neurostimulator generators is, in most
cases, consistent with the average length
of stay for all cases in the respective
VerDate Sep<11>2014
23:27 Aug 11, 2017
Jkt 241001
MS–DRG, with the majority having an
average length of stay below the average
length of stay of all cases in the
respective MS–DRG. Finally, the
average costs for cases reporting
revision of neurostimulator generator
reflect a wide range, with a low of
$4,537 in MS–DRG 026 to a high of
$73,716 in MS–DRG 025. It is clear that,
for MS–DRG 025 where the average
PO 00000
Frm 00095
Fmt 4701
Sfmt 4700
18,442
1
8,415
1
10,089
4
3,192
6
1,933
11
5,154
1
2,099
2
15,216
11
3,508
9
33,817
1
27,456
7
13,036
3
Average
length of stay
9.1
12.0
5.6
6.0
2.9
1.8
5.9
3.5
2.9
2.2
5.5
1.0
3.2
2.0
6.6
3.0
3.2
4.2
7.6
7.0
5.5
2.4
2.9
3.0
Average
costs
$29,984
73,716
21,557
4,537
17,320
13,906
23,145
32,799
14,901
18,294
16,633
14,145
13,725
28,587
17,341
15,336
11,627
19,951
23,384
18,740
18,519
19,078
13,253
11,981
costs of all cases were $29,984 and the
average costs of the one case reporting
revision of a neurostimulator generator
was $73,716, this is an atypical case. It
is also clear from the data that there
were other procedures reported on the
claims where a procedure code for a
revision of a neurostimulator generator
was assigned due to the various MS–
DRG assignments.
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38084
Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
We stated in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19862 and
19863) that after review of the claims
data and discussion with our clinical
advisors, we agreed with and supported
the requestor’s first option—to reclassify
the three ICD–10–PCS procedure codes
for revision of neurostimulator
generators from O.R. procedures to nonO.R. procedures that affect the
assignment for MS–DRGs 252, 253 and
254 to account for the subset of patients
undergoing revision of a carotid sinus
neurostimulator generator specifically.
In cases where one of the more common
(for example, gastric, intracranial, sacral
and spinal) neurostimulator generators
are undergoing revision, in the absence
of another O.R. procedure, these cases
would group to a medical MS–DRG. We
invited public comments on our
proposal.
Comment: Commenters supported the
proposal to reclassify the procedures
described by ICD–10–PCS procedure
codes 0JWT0MZ, 0JWT3MZ, and
0JWTXMZ from O.R. procedures to nonO.R. procedures that affect the
assignment for MS–DRGs 252, 253 and
254. One commenter agreed with
reclassifying procedures described by
ICD–10–PCS procedure codes 0JWT3MZ
and 0JWTXMZ from O.R. procedures to
non-O.R. procedures. However, this
commenter disagreed with reclassifying
the procedure described by procedure
code 0JWT0MZ and stated that the
procedure utilizes an open approach
and may require an O.R. setting. The
commenter suggested that the procedure
code should be retained as an O.R.
designation to group to surgical MS–
DRGs.
Response: We appreciate the
commenters’ support. In response to the
commenter who disagreed with
reclassifying the procedure described by
procedure code 0JWT0MZ from an O.R.
procedure to a non-O.R. procedure, we
note that, as discussed earlier, the three
ICD–10–PCS procedure codes would be
classified as non-O.R. procedures that
affect MS–DRGs 252, 253, and 254 for
revision of carotid sinus
neurostimulator generators. We also
noted that the volume of cases reporting
revision of neurostimulator generator is
low, with a total of only 57 cases found
across all of the MS–DRGs reviewed.
The initial requestor pointed out that
these three procedure codes are very
frequently used for the revision of the
more common (for example, gastric,
intracranial, sacral, and spinal)
neurostimulator generators that would
generally not require the resources of an
operating room. Therefore, we believe it
is appropriate to classify the three
procedure codes as non-O.R. procedures
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affecting MS–DRGs 252, 253, and 254
specifically.
After consideration of the public
comments we received, we are
finalizing our proposal to reclassify the
procedures described by ICD–10–PCS
procedure codes 0JWT0MZ (Revision of
stimulator generator in trunk
subcutaneous tissue and fascia, open
approach), 0JWT3MZ (Revision of
stimulator generator in trunk
subcutaneous tissue and fascia,
percutaneous approach), and 0JWTXMZ
(Revision of stimulator generator in
trunk subcutaneous tissue and fascia,
external approach) from O.R.
procedures to non-O.R. procedures that
affect the assignment for MS–DRGs 252,
253, and 254 to account for the subset
of patients undergoing revision of a
carotid sinus neurostimulator generator,
effective October 1, 2017.
c. External Repair of Hymen
We received a request to examine
ICD–10–PCS procedure code 0UQKXZZ
(Repair Hymen, External Approach).
This procedure code is currently
designated as an O.R. procedure in MS–
DRGs 746 and 747 (Vagina, Cervix and
Vulva Procedures with CC/MCC and
without CC/MCC, respectively) under
MDC 13. The requestor provided
examples and expressed concern that
procedure code 0UQKXZZ was assigned
to MS–DRG 987 (Non-Extensive O.R.
Procedures Unrelated to Principal
Diagnosis with MCC) when reported on
a maternal delivery claim. The requestor
noted that when a similar code was
reported with an external approach (for
example, procedure code 0UQMXZZ
(Repair vulva, external approach)), the
case was appropriately assigned to MS–
DRG 774 (Vaginal Delivery with
Complicating Diagnosis). The requestor
stated that the physician documentation
was simply more specific to the location
of the repair and this should not affect
assignment to one of the MS–DRGs for
vaginal delivery.
As we discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19863
through 19864), we reviewed claims
data involving the examples provided
by the requestor involving ICD–10–PCS
procedure code 0UQKXZZ (Repair
hymen, external approach). Our clinical
advisors agreed with the requestor that
reporting of this procedure code should
not affect assignment to one of the MS–
DRGs for vaginal delivery. We stated
that, as discussed in section II.F.15.a. of
the preamble of the proposed rule, we
were proposing to change the
designation for a number of procedure
codes from O.R. procedures to non-O.R.
procedures. Included in that proposal
were ICD–10–PCS procedure codes
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0UQGXZZ (Repair vagina, external
approach) and 0UQMXZZ (Repair
vulva, external approach). Consistent
with the change in designation for these
procedure codes, we also proposed to
designate ICD–10–PCS procedure code
0UQKXZZ (Repair hymen, external
approach) as a non-O.R. procedure. The
procedure by itself would generally not
require the resources of an operating
room. If the procedure is performed
following a vaginal delivery, it is the
vaginal delivery procedure code
10E0XZZ (Delivery of products of
conception) that determines the MS–
DRG assignment because this code is
designated as a non-O.R. procedure
affecting the MS–DRG.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19864), we
proposed to change the designation of
ICD–10–PCS procedure code 0UQKXZZ
(Repair hymen, external approach) to a
non-O.R. procedure. We stated that this
redesignation will enable more
appropriate MS–DRG assignment for
these cases by eliminating erroneous
assignment to MS–DRGs 987 through
989. We invited public comments on
our proposal.
Comment: Commenters supported the
proposal to change the designation of
ICD–10–PCS procedure code 0UQKXZZ
from an O.R. procedure to a non-O.R.
procedure.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
designation of ICD–10–PCS procedure
code 0UQKXZZ (Repair hymen, external
approach) from an O.R. procedure to a
non-O.R. procedure, effective October 1,
2017.
d. Non-O.R. Procedures in MDC 17
(Myeloproliferative Diseases and
Disorders, Poorly Differentiated
Neoplasms)
Under MDC 17 (Myeloproliferative
Diseases and Disorders, Poorly
Differentiated Neoplasms), there are 11
surgical MS–DRGs. Of these 11 surgical
MS–DRGs, there are 5 MS–DRGs
containing GROUPER logic that
includes ICD–10–PCS procedure codes
designated as O.R. procedures as well as
non-O.R. procedures that affect the MS–
DRG. These five MS–DRGs are MS–
DRGs 823, 824, and 825 (Lymphoma
and Non-Acute Leukemia with Other
O.R. Procedure with MCC, with CC and
without CC/MCC, respectively) and
MS–DRGs 829 and 830
(Myeloproliferative Disorders or Poorly
Differentiated Neoplasms with Other
O.R. Procedure with CC/MCC and
without CC/MCC, respectively). We
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refer the reader to the ICD–10 Version
34 MS–DRG Definitions Manual which
is available via the Internet on the CMS
Web site at: https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/FY2017IPPS-Final-Rule-Home-Page-Items/
FY2017-IPPS-Final-Rule-Data-Files.html
?DLPage=1&DLEntries=10&DLSort=0&
DLSortDir=ascending for the complete
list of ICD–10–PCS procedure codes
assigned to these five MS–DRGs under
MDC 17.
We reviewed the list of 244 ICD–10–
PCS non-O.R. procedure codes currently
assigned to these 5 MS–DRGs. Of these
244 procedure codes, we determined
that 55 of the procedure codes do not
warrant being designated as non-O.R.
procedures that affect these MS–DRGs
because they describe procedures that
would generally not require a greater
intensity of resources for facilities to
manage the cases included in the
definition (logic) of these MS–DRGs.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19864), we
proposed that the 55 ICD–10–PCS
procedure codes listed in Table 6P.3c.
associated with the proposed rule
(which is available via the Internet on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/) be removed from the
logic for MS–DRGs 823, 824, 825, 829,
and 830 as non-O.R. procedures
affecting the MS–DRG. We also
proposed to revise the titles for these
five MS–DRGs by deleting the reference
to ‘‘O.R.’’ in the title. Specifically, we
proposed to revise the titles for MS–
DRGs 823, 824, and 825 to ‘‘Lymphoma
and Non-Acute Leukemia with Other
Procedure with MCC, with CC and
without CC/MCC’’, respectively, and we
proposed to revise the titles for MS–
DRGs 829 and 830 to
‘‘Myeloproliferative Disorders or Poorly
Differentiated Neoplasms with Other
Procedure with CC/MCC and without
CC/MCC’’, respectively. We invited
public comments on our proposals.
Comment: Commenters supported the
proposal to remove the 55 ICD–10–PCS
procedure codes listed in Table 6P.3c.
associated with the proposed rule from
the logic for MS–DRGs 823, 824, 825,
829, and 830 as non-O.R. procedures
affecting the MS–DRG. Commenters also
supported the proposal to revise the
titles for MS–DRGs 823, 824, and 825,
as well as for MS–DRGs 829 and 830.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to remove the 55
ICD–10–PCS procedure codes listed in
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Table 6P.3c. associated with the
proposed rule and this final rule (which
is available via the Internet on the CMS
Web site at: https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/
index.html) from the logic for MS–DRGs
823, 824, 825, 829, and 830 as non-O.R.
procedures affecting the MS–DRG,
effective October 1, 2017. We also are
finalizing our proposal to revise the
titles for MS–DRGs 823, 824, and 825 to
‘‘Lymphoma and Non-Acute Leukemia
with Other Procedure with MCC, with
CC and without CC/MCC’’, respectively,
and to revise the titles for MS–DRGs 829
and 830 to ‘‘Myeloproliferative
Disorders or Poorly Differentiated
Neoplasms with Other Procedure with
CC/MCC and without CC/MCC’’,
respectively, effective October 1, 2017.
G. Recalibration of the FY 2018 MS–
DRG Relative Weights
1. Data Sources for Developing the
Relative Weights
In developing the FY 2018 system of
weights, in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19864), we
proposed to use two data sources:
Claims data and cost report data. As in
previous years, the claims data source is
the MedPAR file. This file is based on
fully coded diagnostic and procedure
data for all Medicare inpatient hospital
bills. The FY 2016 MedPAR data used
in this final rule include discharges
occurring on October 1, 2015, through
September 30, 2016, based on bills
received by CMS through March 31,
2017, from all hospitals subject to the
IPPS and short-term, acute care
hospitals in Maryland (which at that
time were under a waiver from the
IPPS). The FY 2016 MedPAR file used
in calculating the relative weights
includes data for approximately
9,647,256 Medicare discharges from
IPPS providers. Discharges for Medicare
beneficiaries enrolled in a Medicare
Advantage managed care plan are
excluded from this analysis. These
discharges are excluded when the
MedPAR ‘‘GHO Paid’’ indicator field on
the claim record is equal to ‘‘1’’ or when
the MedPAR DRG payment field, which
represents the total payment for the
claim, is equal to the MedPAR ‘‘Indirect
Medical Education (IME)’’ payment
field, indicating that the claim was an
‘‘IME only’’ claim submitted by a
teaching hospital on behalf of a
beneficiary enrolled in a Medicare
Advantage managed care plan. In
addition, the March 31, 2017 update of
the FY 2016 MedPAR file complies with
version 5010 of the X12 HIPAA
Transaction and Code Set Standards,
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and includes a variable called ‘‘claim
type.’’ Claim type ‘‘60’’ indicates that
the claim was an inpatient claim paid as
fee-for-service. Claim types ‘‘61,’’ ‘‘62,’’
‘‘63,’’ and ‘‘64’’ relate to encounter
claims, Medicare Advantage IME
claims, and HMO no-pay claims.
Therefore, the calculation of the relative
weights for FY 2018 also excludes
claims with claim type values not equal
to ‘‘60.’’ The data exclude CAHs,
including hospitals that subsequently
became CAHs after the period from
which the data were taken. We note that
the FY 2018 relative weights are based
on the ICD–10–CM diagnoses and ICD–
10–PCS procedure codes from the FY
2016 MedPAR claims data, grouped
through the ICD–10 version of the FY
2018 GROUPER (Version 35).
The second data source used in the
cost-based relative weighting
methodology is the Medicare cost report
data files from the HCRIS. Normally, we
use the HCRIS dataset that is 3 years
prior to the IPPS fiscal year.
Specifically, we are using cost report
data from the March 31, 2017 update of
the FY 2015 HCRIS for calculating the
final FY 2018 cost-based relative
weights.
2. Methodology for Calculation of the
Relative Weights
As we explain in section II.E.2. of the
preamble of this final rule, we are
calculating the FY 2018 relative weights
based on 19 CCRs, as we did for FY
2017. The methodology we used to
calculate the FY 2018 MS–DRG costbased relative weights based on claims
data in the FY 2016 MedPAR file and
data from the FY 2015 Medicare cost
reports is as follows:
• To the extent possible, all the
claims were regrouped using the FY
2018 MS–DRG classifications discussed
in sections II.B. and II.F. of the preamble
of this final rule.
• The transplant cases that were used
to establish the relative weights for heart
and heart-lung, liver and/or intestinal,
and lung transplants (MS–DRGs 001,
002, 005, 006, and 007, respectively)
were limited to those Medicareapproved transplant centers that have
cases in the FY 2016 MedPAR file.
(Medicare coverage for heart, heart-lung,
liver and/or intestinal, and lung
transplants is limited to those facilities
that have received approval from CMS
as transplant centers.)
• Organ acquisition costs for kidney,
heart, heart-lung, liver, lung, pancreas,
and intestinal (or multivisceral organs)
transplants continue to be paid on a
reasonable cost basis. Because these
acquisition costs are paid separately
from the prospective payment rate, it is
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necessary to subtract the acquisition
charges from the total charges on each
transplant bill that showed acquisition
charges before computing the average
cost for each MS–DRG and before
eliminating statistical outliers.
• Claims with total charges or total
lengths of stay less than or equal to zero
were deleted. Claims that had an
amount in the total charge field that
differed by more than $30.00 from the
sum of the routine day charges,
intensive care charges, pharmacy
charges, implantable devices charges,
supplies and equipment charges,
therapy services charges, operating
room charges, cardiology charges,
laboratory charges, radiology charges,
other service charges, labor and delivery
charges, inhalation therapy charges,
emergency room charges, blood and
blood products charges, anesthesia
charges, cardiac catheterization charges,
CT scan charges, and MRI charges were
also deleted.
• At least 92.2 percent of the
providers in the MedPAR file had
charges for 14 of the 19 cost centers. All
claims of providers that did not have
charges greater than zero for at least 14
of the 19 cost centers were deleted. In
other words, a provider must have no
more than five blank cost centers. If a
provider did not have charges greater
than zero in more than five cost centers,
the claims for the provider were deleted.
• Statistical outliers were eliminated
by removing all cases that were beyond
3.0 standard deviations from the
geometric mean of the log distribution
of both the total charges per case and
the total charges per day for each MS–
DRG.
• Effective October 1, 2008, because
hospital inpatient claims include a POA
indicator field for each diagnosis
present on the claim, only for purposes
of relative weight-setting, the POA
indicator field was reset to ‘‘Y’’ for
‘‘Yes’’ for all claims that otherwise have
an ‘‘N’’ (No) or a ‘‘U’’ (documentation
insufficient to determine if the
condition was present at the time of
inpatient admission) in the POA field.
Under current payment policy, the
presence of specific HAC codes, as
indicated by the POA field values, can
generate a lower payment for the claim.
Specifically, if the particular condition
is present on admission (that is, a ‘‘Y’’
indicator is associated with the
diagnosis on the claim), it is not a HAC,
and the hospital is paid for the higher
severity (and, therefore, the higher
weighted MS–DRG). If the particular
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condition is not present on admission
(that is, an ‘‘N’’ indicator is associated
with the diagnosis on the claim) and
there are no other complicating
conditions, the DRG GROUPER assigns
the claim to a lower severity (and,
therefore, the lower weighted MS–DRG)
as a penalty for allowing a Medicare
inpatient to contract a HAC. While the
POA reporting meets policy goals of
encouraging quality care and generates
program savings, it presents an issue for
the relative weight-setting process.
Because cases identified as HACs are
likely to be more complex than similar
cases that are not identified as HACs,
the charges associated with HAC cases
are likely to be higher as well.
Therefore, if the higher charges of these
HAC claims are grouped into lower
severity MS–DRGs prior to the relative
weight-setting process, the relative
weights of these particular MS–DRGs
would become artificially inflated,
potentially skewing the relative weights.
In addition, we want to protect the
integrity of the budget neutrality process
by ensuring that, in estimating
payments, no increase to the
standardized amount occurs as a result
of lower overall payments in a previous
year that stem from using weights and
case-mix that are based on lower
severity MS–DRG assignments. If this
would occur, the anticipated cost
savings from the HAC policy would be
lost.
To avoid these problems, we reset the
POA indicator field to ‘‘Y’’ only for
relative weight-setting purposes for all
claims that otherwise have an ‘‘N’’ or a
‘‘U’’ in the POA field. This resetting
‘‘forced’’ the more costly HAC claims
into the higher severity MS–DRGs as
appropriate, and the relative weights
calculated for each MS–DRG more
closely reflect the true costs of those
cases.
In addition, in the FY 2013 IPPS/
LTCH PPS final rule, for FY 2013 and
subsequent fiscal years, we finalized a
policy to treat hospitals that participate
in the Bundled Payments for Care
Improvement (BPCI) initiative the same
as prior fiscal years for the IPPS
payment modeling and ratesetting
process without regard to hospitals’
participation within these bundled
payment models (that is, as if hospitals
were not participating in those models
under the BPCI initiative). The BPCI
initiative, developed under the
authority of section 3021 of the
Affordable Care Act (codified at section
1115A of the Act), is comprised of four
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broadly defined models of care, which
link payments for multiple services
beneficiaries receive during an episode
of care. Under the BPCI initiative,
organizations enter into payment
arrangements that include financial and
performance accountability for episodes
of care. For FY 2018, as we proposed,
we are continuing to include all
applicable data from subsection (d)
hospitals participating in BPCI Models
1, 2, and 4 in our IPPS payment
modeling and ratesetting calculations.
We refer readers to the FY 2013 IPPS/
LTCH PPS final rule for a complete
discussion on our final policy for the
treatment of hospitals participating in
the BPCI initiative in our ratesetting
process. For additional information on
the BPCI initiative, we refer readers to
the CMS’ Center for Medicare and
Medicaid Innovation’s Web site at:
https://innovation.cms.gov/initiatives/
Bundled-Payments/ and to
section IV.H.4. of the preamble of the
FY 2013 IPPS/LTCH PPS final rule (77
FR 53341 through 53343).
The charges for each of the 19 cost
groups for each claim were standardized
to remove the effects of differences in
area wage levels, IME and DSH
payments, and for hospitals located in
Alaska and Hawaii, the applicable costof-living adjustment. Because hospital
charges include charges for both
operating and capital costs, we
standardized total charges to remove the
effects of differences in geographic
adjustment factors, cost-of-living
adjustments, and DSH payments under
the capital IPPS as well. Charges were
then summed by MS–DRG for each of
the 19 cost groups so that each MS–DRG
had 19 standardized charge totals.
Statistical outliers were then removed.
These charges were then adjusted to
cost by applying the national average
CCRs developed from the FY 2015 cost
report data.
The 19 cost centers that we used in
the relative weight calculation are
shown in the following table. The table
shows the lines on the cost report and
the corresponding revenue codes that
we used to create the 19 national cost
center CCRs. In the FY 2018 IPPS/LTCH
PPS proposed rule, we stated that if
stakeholders have comments about the
groupings in this table, we may consider
those comments as we finalize our
policy. However, we did not receive any
comments on the groupings in this
table, and therefore, we are finalizing
the groupings as proposed.
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HCRIS
(Worksheet
C, Part 1,
Column 6 &
7 and line
number)
Form CMS2552-10
Medicare
Charges from
HCRIS
(Worksheet D-3,
Column & line
number)
Form CMS2552-10
Fmt 4701
C 1 C7 97
Sfmt 4725
E:\FR\FM\14AUR2.SGM
Implantable
Devices
0275, 0276,
0278, 0624
Implantable
Devices
Charged to
Patients
C 1 C5 72
C 1 C6 72
D3 HOS C2 72
C 1 C7 72
II
14AUR2
Therapy
Services
Physical
Therapy
Charges
042X
Physical
Therapy
C 1 C5 66
C 1 C6 66
C 1 C7 66
D3 HOS C2 66
Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
23:27 Aug 11, 2017
Cost Center
Group Name
(19 total)
Revenue
Codes
contained in
MedPAR
Charge Field
Cost from
HCRIS
(Worksheet
C, Part 1,
Column 5
and line
number)
Form CMS2552-10
38091
ER14AU17.004
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38092
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Fmt 4701
MedPAR
Charge Field
Occupational
Therapy
Charges
Cost Report
Line
Description
043X
Occupational
Therapy
C 1 C5 67
Medicare
Charges from
HCRIS
(Worksheet D-3,
Column & line
number)
Form CMS2552-10
C 1 C6 67
D3 HOS C2 67
Sfmt 4725
C 1 C7 67
E:\FR\FM\14AUR2.SGM
Speech
Pathology
Charges
044X and
047X
Speech
Pathology
C 1 C5 68
C 1 C6 68
C 1 C7 68
14AUR2
II
Inhalation
Therapy
Inhalation
Therapy
Charges
041X and
046X
Respiratory
Therapy
C 1 C5 65
C 1 C6 65
C-1 C7- 65
-
ER14AU17.005
D3 HOS C2 68
D3 HOS C2 65
Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
23:27 Aug 11, 2017
Cost Center
Group Name
(19 total)
Revenue
Codes
contained in
MedPAR
Charge Field
Cost from
HCRIS
(Worksheet
C, Part 1,
Column 5
and line
number)
Form CMS2552-10
Charges
from
HCRIS
(Worksheet
C, Part 1,
Column 6 &
7 and line
number)
Form CMS2552-10
sradovich on DSK3GMQ082PROD with RULES2
VerDate Sep<11>2014
Cost Report
Line
Description
Operating
Room
Charges
036X
Operating
Room
C 1 C5 50
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Cost Center
Group Name
(19 total)
Fmt 4701
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Charges
from
HCRIS
(Worksheet
C, Part 1,
Column 6 &
7 and line
number)
Form CMS2552-10
Medicare
Charges from
HCRIS
(Worksheet D-3,
Column & line
number)
Form CMS2552-10
C 1 C6 50
D3 HOS C2 50
II
Operating
Room
E:\FR\FM\14AUR2.SGM
C 1 C7 50
071X
Recovery
Room
C 1 C5 51
C 1 C6 51
D3 HOS C2 51
C 1 C7 51
14AUR2
II
Labor &
Delivery
Operating
Room
Charges
072X
Delivery Room
and Labor
Room
C 1 C5 52
C 1 C6 52
D3 HOS C2 52
Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
23:27 Aug 11, 2017
MedPAR
Charge Field
Revenue
Codes
contained in
MedPAR
Charge Field
Cost from
HCRIS
(Worksheet
C, Part 1,
Column 5
and line
number)
Form CMS2552-10
38093
ER14AU17.006
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38094
VerDate Sep<11>2014
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MedPAR
Charge Field
Cost Report
Line
Description
Charges
from
HCRIS
(Worksheet
C, Part 1,
Column 6 &
7 and line
number)
Form CMS2552-10
Medicare
Charges from
HCRIS
(Worksheet D-3,
Column & line
number)
Form CMS2552-10
C 1 C7 52
Fmt 4701
II
Sfmt 4725
Anesthesia
Anesthesia
Charges
Anesthesiology
037X
C 1 C5 53
C 1 C6 53
D3 HOS C2 53
E:\FR\FM\14AUR2.SGM
C 1 C7 53
II
14AUR2
Cardiology
Cardiology
Charges
Electrocardiology
048X and
073X
C 1 C5 69
C 1 C6 69
D3 HOS C2 69
C 1 C7 69
Cardiac
Catheteri-
ER14AU17.007
0481
-
Cardiac
Catheterization
C-1 C5 - 59
-
C-1 C6- 59
-
D3 - HOS- C2- 59
Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
23:27 Aug 11, 2017
Cost Center
Group Name
(19 total)
Revenue
Codes
contained in
MedPAR
Charge Field
Cost from
HCRIS
(Worksheet
C, Part 1,
Column 5
and line
number)
Form CMS2552-10
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MedPAR
Charge Field
Cost Report
Line
Description
Charges
from
HCRIS
(Worksheet
C, Part 1,
Column 6 &
7 and line
number)
Form CMS2552-10
Medicare
Charges from
HCRIS
(Worksheet D-3,
Column & line
number)
Form CMS2552-10
Fmt 4701
Sfmt 4725
C 1 C7 59
E:\FR\FM\14AUR2.SGM
II
Laboratory
Laboratory
Charges
030X, 031X,
and 075X
Laboratory
C 1 C5 60
C 1 C6 60
D3 HOS C2 60
C 1 C7 60
14AUR2
PBP Clinic
Laboratory
Services
C 1 C5 61
C 1 C6 61
C 1 C7 61
D3 HOS C2 61
Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
23:27 Aug 11, 2017
Cost Center
Group Name
(19 total)
zation
Revenue
Codes
contained in
MedPAR
Charge Field
Cost from
HCRIS
(Worksheet
C, Part 1,
Column 5
and line
number)
Form CMS2552-10
38095
ER14AU17.008
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38096
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MedPAR
Charge Field
Fmt 4701
074X, 086X
Cost Report
Line
Description
ElectroEncephalograp
hy
Charges
from
HCRIS
(Worksheet
C, Part 1,
Column 6 &
7 and line
number)
Form CMS2552-10
Medicare
Charges from
HCRIS
(Worksheet D-3,
Column & line
number)
Form CMS2552-10
C 1 C5 70
C 1 C6 70
D3 HOS C2 70
Sfmt 4725
C 1 C7 70
E:\FR\FM\14AUR2.SGM
II
Radiology
Radiology
Charges
032X, 040X
RadiologyDiagnostic
C 1 C5 54
C 1 C6 54
D3 HOS C2 54
C 1 C7 54
14AUR2
RadiologyTherapeutic
C 1 C5 55
C 1 C6 55
D3 HOS C2 55
0343 and
344
ER14AU17.009
028x, 0331 ,
0332, 0333,
0335, 0339,
0342
Radioisotope
C 1 C5 56
C 1 C6 56
D3 HOS C2 56
Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
23:27 Aug 11, 2017
Cost Center
Group Name
(19 total)
Revenue
Codes
contained in
MedPAR
Charge Field
Cost from
HCRIS
(Worksheet
C, Part 1,
Column 5
and line
number)
Form CMS2552-10
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MedPAR
Charge Field
Cost Report
Line
Description
Charges
from
HCRIS
(Worksheet
C, Part 1,
Column 6 &
7 and line
number)
Form CMS2552-10
Medicare
Charges from
HCRIS
(Worksheet D-3,
Column & line
number)
Form CMS2552-10
C 1 C7 56
Fmt 4701
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Computed
Tomography
(CT) Scan
CT Scan
Charges
035X
Computed
Tomography
(CT) Scan
C 1 C5 57
C 1 C6 57
D3 HOS C2 57
E:\FR\FM\14AUR2.SGM
C 1 C7 57
Magnetic
Resonance
Imaging
(MRI)
MRI Charges
061X
Magnetic
Resonance
Imaging (MRI)
C 1 C5 58
C 1 C6 58
D3 HOS C2 58
14AUR2
C 1 C7 58
II
Emergency
Room
Emergency
Room
045x
Emergency
C 1 C5 91
C 1 C6 91
D3 HOS C2 91
Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
23:27 Aug 11, 2017
Cost Center
Group Name
(19 total)
Revenue
Codes
contained in
MedPAR
Charge Field
Cost from
HCRIS
(Worksheet
C, Part 1,
Column 5
and line
number)
Form CMS2552-10
38097
ER14AU17.010
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38098
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MedPAR
Charge Field
Charges
Cost Report
Line
Description
Charges
from
HCRIS
(Worksheet
C, Part 1,
Column 6 &
7 and line
number)
Form CMS2552-10
Medicare
Charges from
HCRIS
(Worksheet D-3,
Column & line
number)
Form CMS2552-10
Fmt 4701
Sfmt 4725
C 1 C7 91
II
E:\FR\FM\14AUR2.SGM
Blood and
Blood
Products
Whole Blood
Blood
Charges
& Packed Red
14AUR2
038x
Blood Cells
039x
Blood Storing,
Processing, &
Transfusing
C 1 C5 62
C 1 C6 62
C 1 C7 62
Blood
Storage I
Processing
C 1 C5 63
C 1 C6 63
C 1 C7 63
ER14AU17.011
D3 HOS C2 62
D3 HOS C2 63
Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
23:27 Aug 11, 2017
Cost Center
Group Name
(19 total)
Revenue
Codes
contained in
MedPAR
Charge Field
Cost from
HCRIS
(Worksheet
C, Part 1,
Column 5
and line
number)
Form CMS2552-10
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Charge Field
Fmt 4701
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E:\FR\FM\14AUR2.SGM
14AUR2
Cost Report
Line
Description
Charges
from
HCRIS
(Worksheet
C, Part 1,
Column 6 &
7 and line
number)
Form CMS2552-10
Medicare
Charges from
HCRIS
(Worksheet D-3,
Column & line
number)
Form CMS2552-10
Renal Dialysis
C 1 C5 74
C 1 C6 74
D3 HOS C2 74
II
Other
Services
Other Service
Charge
Renal
Dialysis
ESRD
Revenue
Setting
Charges
0002-0099,
022X, 023X,
024X,052X,
053X
055X-060X,
064X-070X,
076X-078X,
090X-095X
and 099X
0800X
080X and
082X-088X
C-1 C7- 74
-
Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
23:27 Aug 11, 2017
Cost Center
Group Name
(19 total)
Revenue
Codes
contained in
MedPAR
Charge Field
Cost from
HCRIS
(Worksheet
C, Part 1,
Column 5
and line
number)
Form CMS2552-10
38099
ER14AU17.012
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38100
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C 1 C5 94
C 1 C6 94
D3 HOS C2 94
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C 1 C7 94
E:\FR\FM\14AUR2.SGM
Outpatient
Service
Charges
049X
Lithotripsy
Charge
079X
ASC (Non
Distinct Part)
C 1 C5 75
C 1 C6 75
D3 HOS C2 75
C 1 C7 75
14AUR2
Other
Ancillary
C 1 C5 76
C 1 C6 76
D3 HOS C2 76
C 1 C7 76
Clinic Visit
Charges
ER14AU17.013
Cost Report
Line
Description
Medicare
Charges from
HCRIS
(Worksheet D-3,
Column & line
number)
Form CMS2552-10
Home Program
Dialysis
MedPAR
Charge Field
Charges
from
HCRIS
(Worksheet
C, Part 1,
Column 6 &
7 and line
number)
Form CMS2552-10
051X
Clinic
C 1 C5 90
C 1 C6 90
D3 HOS C2 90
Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
23:27 Aug 11, 2017
Cost Center
Group Name
(19 total)
Revenue
Codes
contained in
MedPAR
Charge Field
Cost from
HCRIS
(Worksheet
C, Part 1,
Column 5
and line
number)
Form CMS2552-10
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Charge Field
Cost Report
Line
Description
Charges
from
HCRIS
(Worksheet
C, Part 1,
Column 6 &
7 and line
number)
Form CMS2552-10
Medicare
Charges from
HCRIS
(Worksheet D-3,
Column & line
number)
Form CMS2552-10
Fmt 4701
C 1 C7 90
Sfmt 4725
Observation
beds
C-1 C5 - 92. C-1 C6- 92. D3 - HOS- C2- 92
01
01
.01
E:\FR\FM\14AUR2.SGM
C-1 C7- 92.
01
Professional
Fees Charges
096X, 097X,
and 098X
Other
Outpatient
Services
C 1 C5 93
C 1 C6 93
D3 HOS C2 93
14AUR2
C 1 C7 93
Ambulance
Charges
054X
Ambulance
C 1 C5 95
C 1 C6 95
C 1 C7 95
D3 HOS C2 95
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Cost Center
Group Name
(19 total)
Revenue
Codes
contained in
MedPAR
Charge Field
Cost from
HCRIS
(Worksheet
C, Part 1,
Column 5
and line
number)
Form CMS2552-10
38101
ER14AU17.014
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38102
C 1 C6 88
D3 HOS C2 88
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14AUR2
dividing the CCR for each department
by the total CCR for the hospital for the
purpose of trimming the data. We then
took the logs of the normalized cost
center CCRs and removed any cost
center CCRs where the log of the cost
center CCR was greater or less than the
mean log plus/minus 3 times the
standard deviation for the log of that
C 1 C7 89
D3 HOS C2 89
C 1 C6 89
C 1 C5 89
FQHC
E:\FR\FM\14AUR2.SGM
year (365 days). We included hospitals
located in Maryland because we include
their charges in our claims database. We
then created CCRs for each provider for
each cost center (see prior table for line
items used in the calculations) and
removed any CCRs that were greater
than 10 or less than 0.01. We
normalized the departmental CCRs by
Cost Center
Group Name
(19 total)
C 1 C7 88
Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
C 1 C5 88
3. Development of National Average
CCRs
Rural Health
Clinic
We developed the national average
CCRs as follows:
Using the FY 2015 cost report data,
we removed CAHs, Indian Health
Service hospitals, all-inclusive rate
hospitals, and cost reports that
represented time periods of less than 1
VerDate Sep<11>2014
ER14AU17.015
Cost Report
Line
Description
Medicare
Charges from
HCRIS
(Worksheet D-3,
Column & line
number)
Form CMS2552-10
Revenue
Codes
contained in
MedPAR
Charge Field
Cost from
HCRIS
(Worksheet
C, Part 1,
Column 5
and line
number)
Form CMS2552-10
Charges
from
HCRIS
(Worksheet
C, Part 1,
Column 6 &
7 and line
number)
Form CMS2552-10
Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
When we recalibrated the DRG
weights for previous years, we set a
threshold of 10 cases as the minimum
number of cases required to compute a
reasonable weight. In the FY 2018 IPPS/
LTCH PPS proposed rule, we proposed
to use that same case threshold in
recalibrating the MS–DRG relative
weights for FY 2018. Using data from
the March 2017 update of the FY 2016
MedPAR file, there are 7 MS–DRGs that
contain fewer than 10 cases. We note
that two MS–DRGs that were included
as low-volume MS–DRGs in the
proposed rule, MS–DRG 016
(Autologous Bone Marrow Transplant
with CC/MCC) and MS–DRG 017
(Autologous Bone Marrow Transplant
without CC/MCC), are no longer
included in this list because, as
discussed in section II.F.17.a. of the
preamble of this final rule, we are
maintaining the current Pre-MDC logic
for the procedures assigned to those
MS–DRGs in FY 2018. For FY 2018,
because we do not have sufficient
MedPAR data to set accurate and stable
cost relative weights for these lowvolume MS–DRGs, we proposed to
compute relative weights for the lowvolume MS–DRGs by adjusting their FY
2017 relative weights by the percentage
change in the average weight of the
cases in other MS–DRGs. The crosswalk
table based on data from the December
2016 update of the FY 2016 MedPAR
file was included in the proposed rule.
We invited public comments on our
proposals.
Comment: Some commenters
requested a transition period for
substantial reductions in relative
weights in order to facilitate payment
stability. Specifically, some commenters
asked CMS to establish a cap of 10
Group
CCR
percent for the degree to which a
Routine Days ........................
0.458 payment weight may decline in FY 2018
Intensive Days ......................
0.373 relative to FY 2017. Other commenters
Drugs ....................................
0.194 also suggested the possibility of a phaseSupplies & Equipment ..........
0.297 in or multi-year transition period in
Implantable Devices .............
0.332 cases of substantial fluctuation of
Therapy Services ..................
0.321
payment rates. Commenters suggested
Laboratory .............................
0.120
Operating Room ...................
0.191 that large decreases appear to result
Cardiology .............................
0.112 from the transition from ICD–9 coding
Cardiac Catheterization ........
0.117 to ICD–10 coding in the claims data
Radiology ..............................
0.153 used to establish the relative weights.
MRIs .....................................
0.079 These commenters also expressed
CT Scans ..............................
0.038 concern that the proposed weights for
Emergency Room .................
0.171 MS–DRGs with significant reductions in
Blood and Blood Products ....
0.322
Other Services ......................
0.365 relative weights would be too low to
Labor & Delivery ...................
0.412 cover the costs of caring for patients,
Inhalation Therapy ................
0.169 while other commenters expressed
Anesthesia ............................
0.089 concern about access to such services.
Commenters also indicated that the
Since FY 2009, the relative weights
reductions to MS–DRG relative weights
have been based on 100 percent cost
resulting from the transition from ICD–
weights based on our MS–DRG grouping 9 coding to ICD–10 coding are in
system.
contrast to the goal of ICD–10 to
sradovich on DSK3GMQ082PROD with RULES2
cost center CCR. Once the cost report
data were trimmed, we calculated a
Medicare-specific CCR. The Medicarespecific CCR was determined by taking
the Medicare charges for each line item
from Worksheet D–3 and deriving the
Medicare-specific costs by applying the
hospital-specific departmental CCRs to
the Medicare-specific charges for each
line item from Worksheet D–3. Once
each hospital’s Medicare-specific costs
were established, we summed the total
Medicare-specific costs and divided by
the sum of the total Medicare-specific
charges to produce national average,
charge-weighted CCRs.
After we multiplied the total charges
for each MS–DRG in each of the 19 cost
centers by the corresponding national
average CCR, we summed the 19 ‘‘costs’’
across each MS–DRG to produce a total
standardized cost for the MS–DRG. The
average standardized cost for each MS–
DRG was then computed as the total
standardized cost for the MS–DRG
divided by the transfer-adjusted case
count for the MS–DRG. The average cost
for each MS–DRG was then divided by
the national average standardized cost
per case to determine the relative
weight.
The FY 2018 cost-based relative
weights were then normalized by an
adjustment factor of 1.737382 so that the
average case weight after recalibration
was equal to the average case weight
before recalibration. The normalization
adjustment is intended to ensure that
recalibration by itself neither increases
nor decreases total payments under the
IPPS, as required by section
1886(d)(4)(C)(iii) of the Act.
The 19 national average CCRs for FY
2018 are as follows:
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38103
accurately replicate ICD–9 assignments
and avoid unintended payment
redistribution. One commenter asserted
that because IPPS is a prospective
payment system, the future claims data
should result in an upward adjustment
to these MS–DRGs for FY 2019. The
commenter believed that hospitals
should not be penalized as significantly
while the FY 2018 rates are in effect.
Response: In considering these public
comments, we examined the MS–DRGs
with proposed relative weights that
were significantly lower than the FY
2017 relative weights. While we do not
believe it is normally appropriate to
address relative weight fluctuations that
appear to be driven by changes in the
underlying data, in this particular
circumstance, we share the commenters’
concern that, for a limited number of
MS–DRGs, this may be more extensively
related to the implementation of ICD–10
coding and believe this issue requires
further analysis. In the interim, in
response to these comments, we are
adopting a temporary one-time measure
for FY 2018 for MS–DRGs where the
relative weight would have declined by
more than 20 percent from the FY 2017
relative weight. We believe this policy
is consistent with our general authority
to assign and update appropriate
weighting factors under sections
1886(d)(4)(B) and (C) of the Act.
Specifically, for these MS–DRGs, the
relative weight will be set at 80 percent
of the FY 2017 final relative weight, and
we will revisit this issue in the FY 2019
rulemaking when additional ICD–10
claims data become available. We
believe that 20 percent strikes an
appropriate balance between addressing
concerns that the relative weight
changes for some MS–DRGs may be
more extensively related to the
implementation of ICD–10 and the fact
that historically we occasionally have
had appropriate relative weight changes
of this magnitude. Further analysis and
data will enable us to better determine
the appropriateness of these changes,
given the unique circumstances of the
ICD–10 implementation.
After consideration of the public
comments we received, we are
finalizing our proposal, with the
modification for recalibrating the MS–
DRG relative weights for FY 2018 at 80
percent of the FY 2017 final relative
weights, for those MS–DRGs where the
relative weight would have declined by
more than 20 percent from the FY 2017
relative weight. The crosswalk table for
the low-volume MS–DRGs is shown
below.
E:\FR\FM\14AUR2.SGM
14AUR2
38104
Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
Low-volume
MS–DRG
MS–DRG title
789 ..............
791 ..............
Neonates, Died or Transferred to Another Acute Care
Facility.
Extreme Immaturity or Respiratory Distress Syndrome, Neonate.
Prematurity with Major Problems ..................................
792 ..............
Prematurity without Major Problems .............................
793 ..............
Full-Term Neonate with Major Problems ......................
794 ..............
Neonate with Other Significant Problems .....................
795 ..............
Normal Newborn ...........................................................
790 ..............
H. Add-On Payments for New Services
and Technologies for FY 2018
sradovich on DSK3GMQ082PROD with RULES2
1. Background
Sections 1886(d)(5)(K) and (L) of the
Act establish a process of identifying
and ensuring adequate payment for new
medical services and technologies
(sometimes collectively referred to in
this section as ‘‘new technologies’’)
under the IPPS. Section
1886(d)(5)(K)(vi) of the Act specifies
that a medical service or technology will
be considered new if it meets criteria
established by the Secretary after notice
and opportunity for public comment.
Section 1886(d)(5)(K)(ii)(I) of the Act
specifies that a new medical service or
technology may be considered for new
technology add-on payment if, based on
the estimated costs incurred with
respect to discharges involving such
service or technology, the DRG
prospective payment rate otherwise
applicable to such discharges under this
subsection is inadequate. We note that,
beginning with discharges occurring in
FY 2008, CMS transitioned from CMS–
DRGs to MS–DRGs.
The regulations at 42 CFR 412.87
implement these provisions and specify
three criteria for a new medical service
or technology to receive the additional
payment: (1) The medical service or
technology must be new; (2) the medical
service or technology must be costly
such that the DRG rate otherwise
applicable to discharges involving the
medical service or technology is
determined to be inadequate; and (3) the
service or technology must demonstrate
a substantial clinical improvement over
existing services or technologies. Below
we highlight some of the major statutory
and regulatory provisions relevant to the
new technology add-on payment
criteria, as well as other information.
For a complete discussion on the new
technology add-on payment criteria, we
refer readers to the FY 2012 IPPS/LTCH
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Crosswalk to MS–DRG
Final FY
weight
Final FY
weight
Final FY
weight
Final FY
weight
Final FY
weight
Final FY
weight
Final FY
weight
2017 relative weight (adjusted by
of the cases in other MS–DRGs).
2017 relative weight (adjusted by
of the cases in other MS–DRGs).
2017 relative weight (adjusted by
of the cases in other MS–DRGs).
2017 relative weight (adjusted by
of the cases in other MS–DRGs).
2017 relative weight (adjusted by
of the cases in other MS–DRGs).
2017 relative weight (adjusted by
of the cases in other MS–DRGs).
2017 relative weight (adjusted by
of the cases in other MS–DRGs).
PPS final rule (76 FR 51572 through
51574).
Under the first criterion, as reflected
in § 412.87(b)(2), a specific medical
service or technology will be considered
‘‘new’’ for purposes of new medical
service or technology add-on payments
until such time as Medicare data are
available to fully reflect the cost of the
technology in the MS–DRG weights
through recalibration. We note that we
do not consider a service or technology
to be new if it is substantially similar to
one or more existing technologies. That
is, even if a technology receives a new
FDA approval or clearance, it may not
necessarily be considered ‘‘new’’ for
purposes of new technology add-on
payments if it is ‘‘substantially similar’’
to a technology that was approved or
cleared by FDA and has been on the
market for more than 2 to 3 years. In the
FY 2010 IPPS/RY 2010 LTCH PPS final
rule (74 FR 43813 through 43814), we
established criteria for evaluating
whether a new technology is
substantially similar to an existing
technology, specifically: (1) Whether a
product uses the same or a similar
mechanism of action to achieve a
therapeutic outcome; (2) whether a
product is assigned to the same or a
different MS–DRG; and (3) whether the
new use of the technology involves the
treatment of the same or similar type of
disease and the same or similar patient
population. If a technology meets all
three of these criteria, it would be
considered substantially similar to an
existing technology and would not be
considered ‘‘new’’ for purposes of new
technology add-on payments. For a
detailed discussion of the criteria for
substantial similarity, we refer readers
to the FY 2006 IPPS final rule (70 FR
47351 through 47352), and the FY 2010
IPPS/LTCH PPS final rule (74 FR 43813
through 43814).
Under the second criterion,
§ 412.87(b)(3) further provides that, to
be eligible for the add-on payment for
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percent change in average
percent change in average
percent change in average
percent change in average
percent change in average
percent change in average
percent change in average
new medical services or technologies,
the MS–DRG prospective payment rate
otherwise applicable to discharges
involving the new medical service or
technology must be assessed for
adequacy. Under the cost criterion,
consistent with the formula specified in
section 1886(d)(5)(K)(ii)(I) of the Act, to
assess the adequacy of payment for a
new technology paid under the
applicable MS–DRG prospective
payment rate, we evaluate whether the
charges for cases involving the new
technology exceed certain threshold
amounts. Table 10 that was released
with the FY 2017 IPPS/LTCH PPS final
rule contains the final thresholds that
we used to evaluate applications for
new medical service and new
technology add-on payments for FY
2018. We refer readers to the CMS Web
site at: https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/FY2017-IPPS-FinalRule-Home-Page-Items/FY2017-IPPSFinal-Rule-Tables.html to download and
view Table 10.
In the September 7, 2001 final rule
that established the new technology
add-on payment regulations (66 FR
46917), we discussed the issue of
whether the Health Insurance
Portability and Accountability Act
(HIPAA) Privacy Rule at 45 CFR parts
160 and 164 applies to claims
information that providers submit with
applications for new medical service
and new technology add-on payments.
We refer readers to the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51573) for
complete information on this issue.
Under the third criterion,
§ 412.87(b)(1) of our existing regulations
provides that a new technology is an
appropriate candidate for an additional
payment when it represents an advance
that substantially improves, relative to
technologies previously available, the
diagnosis or treatment of Medicare
beneficiaries. For example, a new
technology represents a substantial
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clinical improvement when it reduces
mortality, decreases the number of
hospitalizations or physician visits, or
reduces recovery time compared to the
technologies previously available. (We
refer readers to the September 7, 2001
final rule for a more detailed discussion
of this criterion (66 FR 46902).)
The new medical service or
technology add-on payment policy
under the IPPS provides additional
payments for cases with relatively high
costs involving eligible new medical
services or technologies, while
preserving some of the incentives
inherent under an average-based
prospective payment system. The
payment mechanism is based on the
cost to hospitals for the new medical
service or technology. Under § 412.88, if
the costs of the discharge (determined
by applying cost-to-charge ratios (CCRs)
as described in § 412.84(h)) exceed the
full DRG payment (including payments
for IME and DSH, but excluding outlier
payments), Medicare will make an addon payment equal to the lesser of: (1) 50
percent of the estimated costs of the
new technology or medical service (if
the estimated costs for the case
including the new technology or
medical service exceed Medicare’s
payment); or (2) 50 percent of the
difference between the full DRG
payment and the hospital’s estimated
cost for the case. Unless the discharge
qualifies for an outlier payment, the
additional Medicare payment is limited
to the full MS–DRG payment plus 50
percent of the estimated costs of the
new technology or new medical service.
Section 503(d)(2) of Public Law 108–
173 provides that there shall be no
reduction or adjustment in aggregate
payments under the IPPS due to add-on
payments for new medical services and
technologies. Therefore, in accordance
with section 503(d)(2) of Public Law
108–173, add-on payments for new
medical services or technologies for FY
2005 and later years have not been
subjected to budget neutrality.
In the FY 2009 IPPS final rule (73 FR
48561 through 48563), we modified our
regulations at § 412.87 to codify our
longstanding practice of how CMS
evaluates the eligibility criteria for new
medical service or technology add-on
payment applications. That is, we first
determine whether a medical service or
technology meets the newness criterion,
and only if so, do we then make a
determination as to whether the
technology meets the cost threshold and
represents a substantial clinical
improvement over existing medical
services or technologies. We amended
§ 412.87(c) to specify that all applicants
for new technology add-on payments
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must have FDA approval or clearance
for their new medical service or
technology by July 1 of each year prior
to the beginning of the fiscal year that
the application is being considered.
The Council on Technology and
Innovation (CTI) at CMS oversees the
agency’s cross-cutting priority on
coordinating coverage, coding and
payment processes for Medicare with
respect to new technologies and
procedures, including new drug
therapies, as well as promoting the
exchange of information on new
technologies and medical services
between CMS and other entities. The
CTI, composed of senior CMS staff and
clinicians, was established under
section 942(a) of Public Law 108–173.
The Council is co-chaired by the
Director of the Center for Clinical
Standards and Quality (CCSQ) and the
Director of the Center for Medicare
(CM), who is also designated as the
CTI’s Executive Coordinator.
The specific processes for coverage,
coding, and payment are implemented
by CM, CCSQ, and the local Medicare
Administrative Contractors (MACs) (in
the case of local coverage and payment
decisions). The CTI supplements, rather
than replaces, these processes by
working to assure that all of these
activities reflect the agency-wide
priority to promote high-quality,
innovative care. At the same time, the
CTI also works to streamline, accelerate,
and improve coordination of these
processes to ensure that they remain up
to date as new issues arise. To achieve
its goals, the CTI works to streamline
and create a more transparent coding
and payment process, improve the
quality of medical decisions, and speed
patient access to effective new
treatments. It is also dedicated to
supporting better decisions by patients
and doctors in using Medicare-covered
services through the promotion of better
evidence development, which is critical
for improving the quality of care for
Medicare beneficiaries.
To improve the understanding of
CMS’ processes for coverage, coding,
and payment and how to access them,
the CTI has developed an ‘‘Innovator’s
Guide’’ to these processes. The intent is
to consolidate this information, much of
which is already available in a variety
of CMS documents and in various
places on the CMS Web site, in a userfriendly format. This guide was
published in 2010 and is available on
the CMS Web site at: https://
www.cms.gov/CouncilonTechInnov/
Downloads/InnovatorsGuide5_10_
10.pdf.
As we indicated in the FY 2009 IPPS
final rule (73 FR 48554), we invite any
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product developers or manufacturers of
new medical services or technologies to
contact the agency early in the process
of product development if they have
questions or concerns about the
evidence that would be needed later in
the development process for the
agency’s coverage decisions for
Medicare.
The CTI aims to provide useful
information on its activities and
initiatives to stakeholders, including
Medicare beneficiaries, advocates,
medical product manufacturers,
providers, and health policy experts.
Stakeholders with further questions
about Medicare’s coverage, coding, and
payment processes, or who want further
guidance about how they can navigate
these processes, can contact the CTI at
CTI@cms.hhs.gov.
We note that applicants for add-on
payments for new medical services or
technologies for FY 2019 must submit a
formal request, including a full
description of the clinical applications
of the medical service or technology and
the results of any clinical evaluations
demonstrating that the new medical
service or technology represents a
substantial clinical improvement, along
with a significant sample of data to
demonstrate that the medical service or
technology meets the high-cost
threshold. Complete application
information, along with final deadlines
for submitting a full application, will be
posted as it becomes available on the
CMS Web site at: https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/
newtech.html. To allow interested
parties to identify the new medical
services or technologies under review
before the publication of the proposed
rule for FY 2019, the CMS Web site also
will post the tracking forms completed
by each applicant.
2. Public Input Before Publication of a
Notice of Proposed Rulemaking on AddOn Payments
Section 1886(d)(5)(K)(viii) of the Act,
as amended by section 503(b)(2) of
Public Law 108–173, provides for a
mechanism for public input before
publication of a notice of proposed
rulemaking regarding whether a medical
service or technology represents a
substantial clinical improvement or
advancement. The process for
evaluating new medical service and
technology applications requires the
Secretary to—
• Provide, before publication of a
proposed rule, for public input
regarding whether a new service or
technology represents an advance in
medical technology that substantially
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improves the diagnosis or treatment of
Medicare beneficiaries;
• Make public and periodically
update a list of the services and
technologies for which applications for
add-on payments are pending;
• Accept comments,
recommendations, and data from the
public regarding whether a service or
technology represents a substantial
clinical improvement; and
• Provide, before publication of a
proposed rule, for a meeting at which
organizations representing hospitals,
physicians, manufacturers, and any
other interested party may present
comments, recommendations, and data
regarding whether a new medical
service or technology represents a
substantial clinical improvement to the
clinical staff of CMS.
In order to provide an opportunity for
public input regarding add-on payments
for new medical services and
technologies for FY 2018 prior to
publication of the FY 2018 IPPS/LTCH
PPS proposed rule, we published a
notice in the Federal Register on
November 9, 2016 (81 FR 78814), and
held a town hall meeting at the CMS
Headquarters Office in Baltimore, MD,
on February 14, 2017. In the
announcement notice for the meeting,
we stated that the opinions and
presentations provided during the
meeting would assist us in our
evaluations of applications by allowing
public discussion of the substantial
clinical improvement criterion for each
of the FY 2018 new medical service and
technology add-on payment
applications before the publication of
the FY 2018 IPPS/LTCH PPS proposed
rule.
Approximately 66 individuals
registered to attend the town hall
meeting in person, while additional
individuals listened over an open
telephone line. We also live-streamed
the town hall meeting and posted the
town hall on the CMS YouTube Web
page at: https://www.youtube.com/
watch?v=9niqfxXe4oA&t=217s. We
considered each applicant’s
presentation made at the town hall
meeting, as well as written comments
submitted on the applications that were
received by the due date of February 24,
2017, in our evaluation of the new
technology add-on payment
applications for FY 2018 in the FY 2018
IPPS/LTCH PPS proposed rule.
In response to the published notice
and the February 14, 2017 New
Technology Town Hall meeting, we
received written comments regarding
the applications for FY 2018 new
technology add-on payments. We note
that we do not summarize comments
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that are unrelated to the ‘‘substantial
clinical improvement’’ criterion. As
explained above and in the Federal
Register notice announcing the New
Technology Town Hall meeting (81
FR78814 through 78816), the purpose of
the meeting was specifically to discuss
the substantial clinical improvement
criterion in regard to pending new
technology add-on payment
applications for FY 2018. Therefore, we
did not summarize those written
comments in the proposed rule. As we
did in the proposed rule, we are
summarizing below a general comment
that we received prior to the issuance of
the proposed rule that did not relate to
a specific application for FY 2018 new
technology add-on payments. In
addition, as we did in section II.H.5. of
the preamble of the proposed rule, we
are summarizing comments regarding
individual applications, or, if
applicable, indicating that there were no
comments received in response to the
New Technology Town Hall meeting
notice, at the end of each discussion of
the individual applications.
Comment: One commenter
recommended that CMS: (1) Prohibit
local MACs from denying coverage and
add-on payments for new medical
services or technologies approved by the
Secretary; and (2) broaden the criteria
applied in making substantial clinical
improvement determinations to require,
in addition to existing criteria, that the
Secretary consider whether the new
technology or medical service meets one
or more of the following criteria: (a)
Results in a reduction of the length of
a hospital stay; (b) improves patient
quality of life; (c) creates long-term
clinical efficiencies in treatment; (d)
addresses patient-centered objectives as
defined by the Secretary; or (e) meets
such other criteria as the Secretary may
specify.
Response: We appreciate the
commenter’s comments and will
consider them in future rulemaking.
3. ICD–10–PCS Section ‘‘X’’ Codes for
Certain New Medical Services and
Technologies
As discussed in the FY 2016 IPPS/
LTCH final rule (80 FR 49434), the ICD–
10–PCS includes a new section
containing the new Section ‘‘X’’ codes,
which began being used with discharges
occurring on or after October 1, 2015.
Decisions regarding changes to ICD–10–
PCS Section ‘‘X’’ codes will be handled
in the same manner as the decisions for
all of the other ICD–10–PCS code
changes. That is, proposals to create,
delete, or revise Section ‘‘X’’ codes
under the ICD–10–PCS structure will be
referred to the ICD–10 Coordination and
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Maintenance Committee. In addition,
several of the new medical services and
technologies that have been, or may be,
approved for new technology add-on
payments may now, and in the future,
be assigned a Section ‘‘X’’ code within
the structure of the ICD–10–PCS. We
posted ICD–10–PCS Guidelines on the
CMS Web site at: https://www.cms.gov/
Medicare/Coding/ICD10/2016-ICD-10PCS-and-GEMs.html, including
guidelines for ICD–10–PCS Section ‘‘X’’
codes. We encourage providers to view
the material provided on ICD–10–PCS
Section ‘‘X’’ codes.
4. Revision of the Reference to an ICD–
9–CM Code in § 412.87(b)(2) of the
Regulations
As we discussed in the FY 2018 IPS/
LTCH PPS proposed rule (82 FR 19871),
the existing regulations under
§ 412.87(b)(2) state that a medical
service or technology may be considered
new within 2 or 3 years after the point
at which data begin to become available
reflecting the ICD–9–CM code assigned
to the new service or technology
(depending on when a new code is
assigned and data on the new service or
technology become available for DRG
recalibration). After CMS has
recalibrated the DRGs, based on
available data, to reflect the costs of an
otherwise new medical service or
technology, the medical service or
technology will no longer be considered
‘‘new’’ under the criterion of this
section.
As discussed in the FY 2016 IPPS/
LTCH PPS final rule (80 FR 49454),
HIPAA covered entities are required, as
of October 1, 2015, to use the ICD–10
coding system (ICD–10–PCS codes for
procedures and ICD–10–CM codes for
diagnoses), instead of the ICD–9–CM
coding system, to report diagnoses and
procedures for Medicare hospital
inpatient services provided to Medicare
beneficiaries as classified under the
MS–DRG system and paid for under the
IPPS. The language in § 412.87(b)(2)
only references an ‘‘ICD–9–CM code.’’
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19871), we
proposed to revise the regulations at
§ 412.87(b)(2) to replace the term ‘‘ICD–
9–CM code’’ with the term ‘‘inpatient
hospital code,’’ as defined in section
1886(d)(5)(K)(iii) of the Act. Section
1886(d)(5)(K)(iii) of the Act defines an
‘‘inpatient hospital code’’ as any code
that is used with respect to inpatient
hospital services for which payment
may be made under this subsection of
the Act and includes an alphanumeric
code issued under the International
Classification of Diseases, 9th Revision,
Clinical Modification (‘‘ICD–9–CM’’)
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and its subsequent revisions. We invited
public comments on our proposal.
We did not receive any public
comments on this proposal. Therefore,
we are finalizing our proposal to revise
the regulations at § 412.87(b)(2) to
replace the term ‘‘ICD–9–CM code’’ with
the term ‘‘inpatient hospital code’’, as
defined in section 1886(d)(5)(K)(iii) of
the Act.
5. FY 2018 Status of Technologies
Approved for FY 2017 Add-On
Payments
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a. CardioMEMSTM HF (Heart Failure)
Monitoring System
CardioMEMS, Inc. submitted an
application for new technology add-on
payments for FY 2015 for the
CardioMEMSTM HF (Heart Failure)
Monitoring System, which is an
implantable hemodynamic monitoring
system comprised of an implantable
sensor/monitor placed in the distal
pulmonary artery. Pulmonary artery
hemodynamic monitoring is used in the
management of heart failure. The
CardioMEMSTM HF Monitoring System
measures multiple pulmonary artery
pressure parameters for an ambulatory
patient to measure and transmit data via
a wireless sensor to a secure Web site.
The CardioMEMSTM HF Monitoring
System utilizes radiofrequency (RF)
energy to power the sensor and to
measure pulmonary artery (PA) pressure
and consists of three components: An
Implantable Sensor with Delivery
Catheter, an External Electronics Unit,
and a Pulmonary Artery Pressure
Database. The system provides the
physician with the patient’s PA pressure
waveform (including systolic, diastolic,
and mean pressures) as well as heart
rate. The sensor is permanently
implanted in the distal pulmonary
artery using transcatheter techniques in
the catheterization laboratory where it is
calibrated using a Swan-Ganz catheter.
PA pressures are transmitted by the
patient at home in a supine position on
a padded antenna, pushing one button
which records an 18-second continuous
waveform. The data also can be
recorded from the hospital, physician’s
office, or clinic.
The hemodynamic data, including a
detailed waveform, are transmitted to a
secure Web site that serves as the
Pulmonary Artery Pressure Database, so
that information regarding PA pressure
is available to the physician or nurse at
any time via the Internet. Interpretation
of trend data allows the clinician to
make adjustments to therapy and can be
used along with heart failure signs and
symptoms to adjust medications.
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The applicant received FDA approval
on May 28, 2014. After evaluation of the
newness, costs, and substantial clinical
improvement criteria for new
technology add-on payments for the
CardioMEMSTM HF Monitoring System
and consideration of the public
comments we received in response to
the FY 2015 IPPS/LTCH PPS proposed
rule, we approved the CardioMEMSTM
HF Monitoring System for new
technology add-on payments for FY
2015 (79 FR 49940). Cases involving the
CardioMEMSTM HF Monitoring System
that are eligible for new technology addon payments are identified by either
ICD–10–PCS procedure code 02HQ30Z
(Insertion of pressure sensor monitoring
device into right pulmonary artery,
percutaneous approach) or ICD–10–PCS
procedure code 02HR30Z (Insertion of
pressure sensor monitoring device into
left pulmonary artery, percutaneous
approach). With the new technology
add-on payment application, the
applicant stated that the total operating
cost of the CardioMEMSTM HF
Monitoring System is $17,750. Under
§ 412.88(a)(2), we limit new technology
add-on payments to the lesser of 50
percent of the average cost of the device
or 50 percent of the costs in excess of
the MS–DRG payment for the case. As
a result, the maximum new technology
add-on payment for a case involving the
CardioMEMSTM HF Monitoring System
is $8,875. We refer the reader to the FY
2015 IPPS/LTCH PPS final rule (79 FR
49937) for complete details on the
CardioMEMSTM HF Monitoring System.
Our policy is that a medical service or
technology may be considered new
within 2 or 3 years after the point at
which data begin to become available
reflecting the inpatient hospital code
assigned to the new service or
technology. Our practice has been to
begin and end new technology add-on
payments on the basis of a fiscal year,
and we have generally followed a
guideline that uses a 6-month window
before and after the start of the fiscal
year to determine whether to extend the
new technology add-on payment for an
additional fiscal year. In general, we
extend add-on payments for an
additional year only if the 3-year
anniversary date of the product’s entry
onto the U.S. market occurs in the latter
half of the fiscal year (70 FR 47362).
With regard to the newness criterion
for the CardioMEMSTM HF Monitoring
System, we considered the beginning of
the newness period to commence when
the CardioMEMSTM HF Monitoring
System was approved by the FDA on
May 28, 2014. Because the 3-year
anniversary date of the entry of the
CardioMEMSTM HF Monitoring System
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onto the U.S. market (May 28, 2017)
would occur prior to the beginning of
FY 2018, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19871–
19872), we proposed to discontinue new
technology add-on payments for this
technology for FY 2018. We invited
public comments on this proposal.
Comment: Commenters agreed with
our proposal to discontinue new
technology add-on payments for the
CardioMEMSTM HF Monitoring System.
Response: As we proposed, we are
discontinuing new technology add-on
payments for the CardioMEMSTM HF
Monitoring System for FY 2018. The 3year anniversary date of the product’s
entry onto the U.S. market occurred
prior to the beginning of FY 2018.
Therefore, the technology is not eligible
for new technology add-on payments for
FY 2018 because the technology will no
longer meet the ‘‘newness’’ criterion.
b. Defitelio® (Defibrotide)
Jazz Pharmaceuticals submitted an
application for new technology add-on
payments for FY 2017 for defibrotide
(Defitelio®), a treatment for patients
diagnosed with hepatic veno-occlusive
disease (VOD) with evidence of
multiorgan dysfunction. VOD, also
known as sinusoidal obstruction
syndrome (SOS), is a potentially lifethreatening complication of
hematopoietic stem cell transplantation
(HSCT), with an incidence rate of 8
percent to 15 percent. Diagnoses of VOD
range in severity from what has been
classically defined as a disease limited
to the liver (mild) and reversible, to a
severe syndrome associated with multiorgan dysfunction or failure and death.
Patients treated with HSCT who
develop VOD with multi-organ failure
face an immediate risk of death, with a
mortality rate of more than 80 percent
when only supportive care is used. The
applicant asserted that Defitelio®
improves the survival rate of patients
diagnosed with VOD with multi-organ
failure by 23 percent.
Defitelio® received Orphan Drug
Designation for the treatment of VOD in
2003 and for the prevention of VOD in
2007. It has been available to patients as
an investigational drug through an
expanded access program since 2007.
The applicant’s New Drug Application
(NDA) for Defitelio® received FDA
approval on March 30, 2016. The
applicant confirmed that Defitelio® was
not available on the U.S. market as of
the FDA NDA approval date of March
30, 2016. According to the applicant,
commercial packaging could not be
completed until the label for Defitelio®
was finalized with FDA approval, and
that commercial shipments of Defitelio®
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to hospitals and treatment centers began
on April 4, 2016. Therefore, we agreed
that, based on this information, the
newness period for Defitelio® begins on
April 4, 2016, the date of its first
commercial availability.
The applicant received unique ICD–
10–PCS procedure codes to describe the
use of Defitelio® that became effective
October 1, 2016. The approved
procedure codes are XW03392
(Introduction of defibrotide sodium
anticoagulant into peripheral vein,
percutaneous approach) and XW04392
(Introduction of defibrotide sodium
anticoagulant into central vein,
percutaneous approach).
After evaluation of the newness, costs,
and substantial clinical improvement
criteria for new technology add-on
payments for Defitelio® and
consideration of the public comments
we received in response to the FY 2017
IPPS/LTCH PPS proposed rule, we
approved Defitelio® for new technology
add-on payments for FY 2017 (81 FR
56906). With the new technology addon payment application, the applicant
estimated that the average Medicare
beneficiary would require a dosage of 25
mg/kg/day for a minimum of 21 days of
treatment. The recommended dose is
6.25 mg/kg given as a 2-hour
intravenous infusion every 6 hours.
Dosing should be based on a patient’s
baseline body weight, which is assumed
to be 70 kg for an average adult patient.
All vials contain 200 mg at a cost of
$825 per vial. Therefore, we determined
that cases involving the use of the
Defitelio® technology would incur an
average cost per case of $151,800 (70 kg
adult × 25 mg/kg/day × 21 days = 36,750
mg per patient/200 mg vial = 184 vials
per patient × $825 per vial = $151,800).
Under § 412.88(a)(2), we limit new
technology add-on payments to the
lesser of 50 percent of the average cost
of the technology or 50 percent of the
costs in excess of the MS–DRG payment
for the case. As a result, the maximum
new technology add-on payment
amount for a case involving the use of
Defitelio® is $75,900.
Because the 3-year anniversary date of
the entry of Defitelio® onto the U.S.
market will occur after FY 2018 (April
4, 2019), we proposed to continue new
technology add-on payments for this
technology for FY 2018. We proposed
that the maximum payment for a case
involving Defitelio® would remain at
$75,900 for FY 2018. In the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19872), we invited public comments on
our proposal to continue new
technology add-on payments for
Defitelio®.
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23:27 Aug 11, 2017
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Comment: One commenter agreed
with CMS’ proposal to continue new
technology add-on payments for
Defitelio®.
Response: We appreciate the
commenter’s support. We are finalizing
our proposal to continue new
technology add-on payments for
Defitelio® for FY 2018. The maximum
new technology add-on payment for a
case involving Defitelio® will remain at
$75,900 for FY 2018.
c. GORE® EXCLUDER® Iliac Branch
Endoprosthesis (Gore IBE Device)
W. L. Gore and Associates, Inc.
submitted an application for new
technology add-on payments for the
GORE® EXCLUDER® Iliac Branch
Endoprosthesis (GORE IBE device) for
FY 2017. The device consists of two
components: The Iliac Branch
Component (IBC) and the Internal Iliac
Component (IIC). The applicant
indicated that each endoprosthesis is
pre-mounted on a customized delivery
and deployment system allowing for
controlled endovascular delivery via
bilateral femoral access. According to
the applicant, the device is designed to
be used in conjunction with the GORE®
EXCLUDER® AAA Endoprosthesis for
the treatment of patients requiring
repair of common iliac or aortoiliac
aneurysms. When deployed, the GORE
IBE device excludes the common iliac
aneurysm from systemic blood flow,
while preserving blood flow in the
external and internal iliac arteries.
With regard to the newness criterion,
the applicant received pre-market FDA
approval of the GORE IBE device on
February 29, 2016. The applicant
submitted a request for an unique ICD–
10–PCS procedure code and was
granted approval for the following
procedure codes to describe the use of
this technology: 04VC0EZ (Restriction
of right common iliac artery with
branched or fenestrated intraluminal
device, one or two arteries, open
approach); 04VC0FZ (Restriction of
right common iliac artery with branched
or fenestrated intraluminal device, three
or more arteries, open approach);
04VC3EZ (Restriction of right common
iliac artery with branched or fenestrated
intraluminal device, one or two arteries,
percutaneous approach); 04VC3FZ
(Restriction of right common iliac artery
with branched or fenestrated
intraluminal device, three or more
arteries, percutaneous approach);
04VC4EZ (Restriction of right common
iliac artery with branched or fenestrated
intraluminal device, one or two arteries,
percutaneous approach); 04VC4FZ
(Restriction of right common iliac artery
with branched or fenestrated
PO 00000
Frm 00120
Fmt 4701
Sfmt 4700
intraluminal device, three or more
arteries, percutaneous endoscopic,
approach); 04VD0EZ (Restriction of left
common iliac artery with branched or
fenestrated intraluminal device, one or
two arteries, open approach); 04VD0FZ
(Restriction of left common iliac artery
with branched or fenestrated,
intraluminal device, three or more
arteries, open approach); 04VD3EZ
(Restriction of left common iliac artery
with branched or fenestrated
intraluminal device, one or two arteries,
percutaneous approach); 04VD3FZ
(Restriction of left common iliac artery
with branched or fenestrated
intraluminal device, three or more
arteries, percutaneous approach);
04VD4EZ (Restriction of left common
iliac artery with branched or fenestrated
intraluminal device, one or two arteries,
percutaneous endoscopic approach);
and 04VD4FZ (Restriction of left
common iliac artery with branched or
fenestrated intraluminal device, three or
more arteries, percutaneous endoscopic
approach). These new ICD–10–PCS
procedure codes became effective on
October 1, 2016. After evaluation of the
newness, costs, and substantial clinical
improvement criteria for new
technology add-on payments for the
GORE IBE device and consideration of
the public comments we received in
response to the FY 2017 IPPS/LTCH
PPS proposed rule, we approved the
GORE IBE device for new technology
add-on payments for FY 2017 (81 FR
56909). With the new technology addon payment application, the applicant
indicated that the total operating cost of
the GORE IBE device is $10,500. Under
§ 412.88(a)(2), we limit new technology
add-on payments to the lesser of 50
percent of the average cost of the device
or 50 percent of the costs in excess of
the MS–DRG payment for the case. As
a result, the maximum new technology
add-on payment for a case involving the
GORE IBE device is $5,250.
With regard to the newness criterion
for the GORE IBE device, we considered
the beginning of the newness period to
commence when the GORE IBE device
received FDA approval on February 29,
2016. Because the 3-year anniversary
date of the entry of the GORE IBE device
onto the U.S. market will occur after FY
2018 (February 28, 2019), in the FY
2018 IPPS/LTCH PPS proposed rule, we
proposed to continue new technology
add-on payments for this technology for
FY 2018. We proposed that the
maximum payment for a case involving
the GORE IBE device would remain at
$5,250 for FY 2018. We invited public
comments on our proposal to continue
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Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
new technology add-on payments for
the GORE IBE device.
Comment: Some commenters
supported CMS’ proposal to continue
new technology add-on payments for
the GORE IBE device.
Response: We appreciate the
commenters’ support. We are finalizing
our proposal to continue new
technology add-on payments for the
GORE IBE device for FY 2018. The
maximum new technology add-on
payment for a case involving the GORE
IBE device will remain at $5,250 for FY
2018.
sradovich on DSK3GMQ082PROD with RULES2
d. Praxbind® Idarucizumab
Boehringer Ingelheim
Pharmaceuticals, Inc. submitted an
application for new technology add-on
payments for FY 2017 for Praxbind®
Idarucizumab (Idarucizumab), a product
developed as an antidote to reverse the
effects of PRADAXAR (Dabigatran),
which is also manufactured by
Boehringer Ingelheim Pharmaceuticals,
Inc.
Dabigatran is an oral direct thrombin
inhibitor currently indicated: (1) To
reduce the risk of stroke and systemic
embolism in patients who have been
diagnosed with nonvalvular atrial
fibrillation (NVAF); (2) for the treatment
of deep venous thrombosis (DVT) and
pulmonary embolism (PE) in patients
who have been administered a
parenteral anticoagulant for 5 to 10
days; (3) to reduce the risk of recurrence
of DVT and PE in patients who have
been previously treated; and (4) for the
prophylaxis of DVT and PE in patients
who have undergone hip replacement
surgery. Currently, unlike the
anticoagulant Warfarin, there is no
specific way to reverse the anticoagulant
effect of Dabigatran in the event of a
major bleeding episode. Idarucizumab is
a humanized fragment antigen binding
(Fab) molecule, which specifically binds
to Dabigatran to deactivate the
anticoagulant effect, thereby allowing
thrombin to act in blood clot formation.
The applicant stated that Idarucizumab
represents a new pharmacologic
approach to neutralizing the specific
anticoagulant effect of Dabigatran in
emergency situations.
Idarucizumab was approved by the
FDA on October 16, 2015. Based on the
FDA indication for Idarucizumab, the
product can be used in the treatment of
patients who have been diagnosed with
NVAF and administered Dabigatran to
reverse life-threatening bleeding events,
or who require emergency surgery or
medical procedures and rapid reversal
of the anticoagulant effects of
Dabigatran is necessary and desired.
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23:27 Aug 11, 2017
Jkt 241001
The applicant received unique ICD–
10–PCS procedure codes that became
effective October 1, 2016, to describe the
use of this technology. The approved
procedure codes are XW03331
(Introduction of Idarucizumab,
Dabigatran reversal agent into
peripheral vein, percutaneous approach,
New Technology Group 1) and
XW04331 (Introduction of
Idarucizumab, Dabigatran reversal agent
into central vein, percutaneous
approach, New Technology Group 1).
After evaluation of the newness, costs,
and substantial clinical improvement
criteria for new technology add-on
payments for Idarucizumab and
consideration of the public comments
we received in response to the FY 2017
IPPS/LTCH PPS proposed rule, we
approved Idarucizumab for new
technology add-on payments for FY
2017 (81 FR 56897). With the new
technology add-on payment application,
the applicant indicated that the total
operating cost of Idarucizumab is
$3,500. Under § 412.88(a)(2), we limit
new technology add-on payments to the
lesser of 50 percent of the average cost
of the technology or 50 percent of the
costs in excess of the MS–DRG payment
for the case. As a result, the maximum
new technology add-on payment for a
case involving Idarucizumab is $1,750.
With regard to the newness criterion
for Idarucizumab, we considered the
beginning of the newness period to
commence when Idarucizumab was
approved by the FDA on October 16,
2015. Because the 3-year anniversary
date of the entry of Idarucizumab onto
the U.S. market will occur after FY 2018
(October 15, 2018), in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19873),
we proposed to continue new
technology add-on payments for this
technology for FY 2018. We proposed
that the maximum payment for a case
involving Idarucizumab would remain
at $1,750 for FY 2018. We invited public
comments on our proposal to continue
new technology add-on payments for
Idarucizumab.
Comment: Several commenters
supported CMS’ proposal to continue
new technology add-on payments for
Idarucizumab.
Response: We appreciate the
commenters’ support. We are finalizing
our proposal to continue new
technology add-on payments for
Idarucizumab for FY 2018. The
maximum new technology add-on
payment for a case involving
Idarucizumab will remain at $1,750 for
FY 2018.
PO 00000
Frm 00121
Fmt 4701
Sfmt 4700
38109
e. Lutonix® Drug Coated Balloon PTA
Catheter and In.PACTTM AdmiralTM
Paclitaxel Coated Percutaneous
Transluminal Angioplasty (PTA)
Balloon Catheter
Two manufacturers, CR Bard Inc. and
Medtronic, submitted applications for
new technology add-on payments for FY
2016 for LUTONIX® Drug-Coated
Balloon (DCB) Percutaneous
Transluminal Angioplasty (PTA)
Catheter (LUTONIX®) and IN.PACTTM
AdmiralTM Paclitaxel Coated
Percutaneous Transluminal Angioplasty
(PTA) Balloon Catheter (IN.PACTTM
AdmiralTM), respectively. Both of these
technologies are drug-coated balloon
angioplasty treatments for patients
diagnosed with peripheral artery disease
(PAD). Typical treatments for patients
with PAD include angioplasty, stenting,
atherectomy and vascular bypass
surgery. PAD most commonly occurs in
the femoropopliteal segment of the
peripheral arteries, is associated with
significant levels of morbidity and
impairment in quality of life, and
requires treatment to reduce symptoms
and prevent or treat ischemic events.1
Treatment options for symptomatic PAD
include noninvasive treatment such as
medication and life-style modification
(for example, exercise programs, diet,
and smoking cessation) and invasive
options, which include endovascular
treatment and surgical bypass. The 2013
American College of Cardiology and
American Heart Association (ACC/
AHA) guidelines for the management of
PAD recommend endovascular therapy
as the first-line treatment for
femoropopliteal artery lesions in
patients suffering from claudication
(Class I, Level A recommendation).2
According to both applicants,
LUTONIX® and IN.PACTTM AdmiralTM
are the first drug coated balloons that
can be used for treatment of patients
who are diagnosed with PAD. In the FY
2016 IPPS/LTCH PPS final rule, we
stated that because cases eligible for the
two devices would group to the same
MS–DRGs and we believe that these
devices are substantially similar to each
1 Tepe G, Zeller T, Albrecht T, Heller S,
Schwarzwalder U, Beregi JP, Claussen CD,
Oldenburg A, Scheller B, Speck U., Local delivery
of paclitaxel to inhibit restenosis during angioplasty
of the leg, N Engl J Med 2008, 358: 689–99.
2 Anderson JL, Halperin JL, Albert NM, Bozkurt
B, Brindis RG, Curtis LH, DeMets D, Guyton RA,
Hochman JS, Kovacs RJ, Ohman EM, Pressler SJ,
Sellke FW, Shen WK., Management of patients with
peripheral artery disease (compilation of 2005 and
2011 ACCF/AHA guideline recommendations): A
report of the American College of Cardiology
Foundation/American Heart Association Task Force
on Practice Guidelines, J Am Coll Cardiol 2013,
61:1555–70. Available at: https://dx.doi.org/10.1016/
j.jacc.2013.01.004.
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Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
other (that is, they are intended to treat
the same or similar disease in the same
or similar patient population and are
purposed to achieve the same
therapeutic outcome using the same or
similar mechanism of action), we
evaluated both technologies as one
application for new technology add-on
payments under the IPPS. The
applicants submitted separate cost and
clinical data, and we reviewed and
discussed each set of data separately.
However, we made one determination
regarding new technology add-on
payments that applied to both devices.
We believe that this is consistent with
our policy statements in the past
regarding substantial similarity.
Specifically, we have noted that
approval of new technology add-on
payments would extend to all
technologies that are substantially
similar (66 FR 46915), and we believe
that continuing our current practice of
extending a new technology add-on
payment without a further application
from the manufacturer of the competing
product or a specific finding on cost and
clinical improvement if we make a
finding of substantial similarity among
two products is the better policy
because we avoid—
• Creating manufacturer-specific
codes for substantially similar products;
• Requiring different manufacturers
of substantially similar products from
having to submit separate new
technology add-on payment
applications;
• Having to compare the merits of
competing technologies on the basis of
substantial clinical improvement; and
• Bestowing an advantage to the first
applicant representing a particular new
technology to receive approval (70 FR
47351).
CR Bard, Inc. received FDA approval
for LUTONIX® on October 9, 2014.
Commercial sales in the U.S. market
began on October 10, 2014. Medtronic
received FDA approval for IN.PACTTM
AdmiralTM on December 30, 2014.
Commercial sales in the U.S. market
began on January 29, 2015.
In accordance with our policy, we
stated in the FY 2016 IPPS\LTCH PPS
final rule (80 FR 49463) that we believe
it is appropriate to use the earliest
market availability date submitted as the
beginning of the newness period.
Accordingly, for both devices, we stated
that the beginning of the newness
period will be October 10, 2014.
After evaluation of the newness, costs,
and substantial clinical improvement
criteria for new technology add-on
payments for the LUTONIX® and
IN.PACTTM AdmiralTM technologies and
consideration of the public comments
we received in response to the FY 2016
IPPS/LTCH PPS proposed rule, we
approved the LUTONIX® and
IN.PACTTM AdmiralTM technologies for
new technology add-on payments for FY
2016 (80 FR 49469). Cases involving the
LUTONIX® and IN.PACTTM AdmiralTM
technologies that are eligible for new
technology add-on payments are
identified using one of the ICD–10–PCS
procedure codes in the following table:
ICD–10–PCS code
Code description
047K041 ...............
047K0D1 ..............
047K0Z1 ...............
047K341 ...............
047K3D1 ..............
047K3Z1 ...............
047K441 ...............
Dilation of right femoral artery with drug-eluting intraluminal device using drug-coated balloon, open approach.
Dilation of right femoral artery with intraluminal device using drug-coated balloon, open approach.
Dilation of right femoral artery using drug-coated balloon, open approach.
Dilation of right femoral artery with drug-eluting intraluminal device using drug-coated balloon, percutaneous approach.
Dilation of right femoral artery with intraluminal device using drug-coated balloon, percutaneous approach.
Dilation of right femoral artery using drug-coated balloon, percutaneous approach.
Dilation of right femoral artery with drug-eluting intraluminal device using drug-coated balloon, percutaneous endoscopic approach.
Dilation of right femoral artery with intraluminal device using drug-coated balloon, percutaneous endoscopic approach.
Dilation of right femoral artery using drug-coated balloon, percutaneous endoscopic approach.
Dilation of left femoral artery with drug-eluting intraluminal device using drug-coated balloon, open approach.
Dilation of left femoral artery with intraluminal device using drug-coated balloon, open approach.
Dilation of left femoral artery using drug-coated balloon, open approach.
Dilation of left femoral artery with drug-eluting intraluminal device using drug-coated balloon, percutaneous approach.
Dilation of left femoral artery with intraluminal device using drug-coated balloon, percutaneous approach.
Dilation of left femoral artery using drug-coated balloon, percutaneous approach.
Dilation of left femoral artery with drug-eluting intraluminal device using drug-coated balloon, percutaneous endoscopic approach.
Dilation of left femoral artery with intraluminal device using drug-coated balloon, percutaneous endoscopic approach.
Dilation of left femoral artery using drug-coated balloon, percutaneous endoscopic approach.
Dilation of right popliteal artery with drug-eluting intraluminal device using drug-coated balloon, open approach.
Dilation of right popliteal artery with intraluminal device using drug-coated balloon, open approach.
Dilation of right popliteal artery using drug-coated balloon, open approach.
Dilation of right popliteal artery with drug-eluting intraluminal device using drug-coated balloon, percutaneous approach.
Dilation of right popliteal artery with intraluminal device using drug-coated balloon, percutaneous approach.
Dilation of right popliteal artery using drug-coated balloon, percutaneous approach.
Dilation of right popliteal artery with drug-eluting intraluminal device using drug-coated balloon, percutaneous endoscopic
approach.
Dilation of right popliteal artery with intraluminal device using drug-coated balloon, percutaneous endoscopic approach.
Dilation of right popliteal artery using drug-coated balloon, percutaneous endoscopic approach.
Dilation of left popliteal artery with drug-eluting intraluminal device using drug-coated balloon, open approach.
Dilation of left popliteal artery with intraluminal device using drug-coated balloon, open approach.
Dilation of left popliteal artery using drug-coated balloon, open approach.
Dilation of left popliteal artery with drug-eluting intraluminal device using drug-coated balloon, percutaneous approach.
Dilation of left popliteal artery with intraluminal device using drug-coated balloon, percutaneous approach.
Dilation of left popliteal artery using drug-coated balloon, percutaneous approach.
Dilation of left popliteal artery with drug-eluting intraluminal device using drug-coated balloon, percutaneous endoscopic approach.
Dilation of left popliteal artery with intraluminal device using drug-coated balloon, percutaneous endoscopic approach.
Dilation of left popliteal artery using drug-coated balloon, percutaneous endoscopic approach.
047K4D1 ..............
047K4Z1 ...............
047L041 ...............
047L0D1 ...............
047L0Z1 ...............
047L341 ...............
047L3D1 ...............
047L3Z1 ...............
047L441 ...............
sradovich on DSK3GMQ082PROD with RULES2
047L4D1 ...............
047L4Z1 ...............
047M041 ..............
047M0D1 ..............
047M0Z1 ..............
047M341 ..............
047M3D1 ..............
047M3Z1 ..............
047M441 ..............
047M4D1 ..............
047M4Z1 ..............
047N041 ...............
047N0D1 ..............
047N0Z1 ..............
047N341 ...............
047N3D1 ..............
047N3Z1 ..............
047N441 ...............
047N4D1 ..............
047N4Z1 ..............
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As discussed in the FY 2016 IPPS/
LTCH PPS final rule (80 FR 49469), each
of the applicants submitted operating
costs for its DCB. The manufacturer of
the LUTONIX® stated that a mean of
1.37 drug-coated balloons was used
during the LEVANT 2 clinical trial. The
acquisition price for the hospital will be
$1,900 per drug-coated balloon, or
$2,603 per case (1.37 × $1,900). The
applicant projected that approximately
8,875 cases will involve use of the
LUTONIX® for FY 2016. The
manufacturer for the IN.PACTTM
AdmiralTM stated that a mean of 1.4
drug-coated balloons was used during
the IN.PACTTM AdmiralTM DCB arm.
The acquisition price for the hospital
will be $1,350 per drug-coated balloon,
or $1,890 per case (1.4 × $1,350). The
applicant projected that approximately
26,000 cases will involve use of the
IN.PACTTM AdmiralTM for FY 2016.
For FY 2016, we based the new
technology add-on payment for cases
involving these technologies on the
weighted average cost of the two DCBs
described by the ICD–10–PCS procedure
codes listed above (which are not
manufacturer specific). Because ICD–10
codes are not manufacturer specific, we
cannot set one new technology add-on
payment amount for IN.PACTTM
AdmiralTM and a different new
technology add-on payment amount for
LUTONIX®; both technologies will be
captured by using the same ICD–10–PCS
procedure code. As such, we stated that
we believe that the use of a weighted
average of the cost of the standard DCBs
based on the projected number of cases
involving each technology to determine
the maximum new technology add-on
payment would be most appropriate. To
compute the weighted cost average, we
summed the total number of projected
cases for each of the applicants, which
equaled 34,875 cases (26,000 plus
8,875). We then divided the number of
projected cases for each of the
applicants by the total number of cases,
which resulted in the following caseweighted percentages: 25 percent for the
LUTONIX® and 75 percent for the
IN.PACTTM AdmiralTM. We then
multiplied the cost per case for the
manufacturer specific DCB by the caseweighted percentage (0.25 * $2,603 =
$662.41 for LUTONIX® and 0.75 *
$1,890 = $1,409.03 for the IN.PACTTM
AdmiralTM). This resulted in a caseweighted average cost of $2,071.45 for
DCBs. Under § 412.88(a)(2), we limit
new technology add-on payments to the
lesser of 50 percent of the average cost
of the device or 50 percent of the costs
in excess of the MS–DRG payment for
the case. As a result, the maximum
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23:27 Aug 11, 2017
Jkt 241001
payment for a case involving the
LUTONIX® or IN.PACTTM AdmiralTM
DCBs is $1,035.72.
With regard to the newness criterion
for the LUTONIX® and IN.PACTTM
AdmiralTM technologies, we considered
the beginning of the newness period to
commence when LUTONIX® gained
entry onto the U.S. market on October
10, 2014. As discussed previously in
this section, in general, we extend new
technology add-on payments for an
additional year only if the 3-year
anniversary date of the product’s entry
onto the U.S. market occurs in the latter
half of the upcoming fiscal year.
Because the 3-year anniversary date of
the entry of LUTONIX® onto the U.S.
market (October 10, 2017) will occur in
the first half of FY 2018, in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19875), we proposed to discontinue new
technology add-on payments for both
the LUTONIX® and IN.PACTTM
AdmiralTM technologies for FY 2018.
We invited public comments on this
proposal.
Comment: Some commenters
supported CMS’ proposal to discontinue
new technology add-on payments for
both the LUTONIX® and IN.PACTTM
AdmiralTM technologies for FY 2018.
Response: We appreciate the
commenters’ support. As we proposed,
we are discontinuing new technology
add-on payments for both the
LUTONIX® and IN.PACTTM AdmiralTM
technologies for FY 2018. The 3-year
anniversary date of the product’s entry
onto the U.S. market occurs in the first
half of FY 2018. Therefore, the
technology is not eligible for new
technology add-on payments for FY
2018 because the technology will no
longer meet the ‘‘newness’’ criterion.
f. MAGEC® Spinal Bracing and
Distraction System (MAGEC® Spine)
Ellipse Technologies, Inc. submitted
an application for new technology addon payments for FY 2017 for the
MAGEC® Spine. According to the
applicant, the MAGEC® Spine has been
developed for use in the treatment of
children diagnosed with severe spinal
deformities, such as scoliosis. The
system can be used in the treatment of
skeletally immature patients less than
10 years of age who have been
diagnosed with severe progressive
spinal deformities associated with or at
risk of Thoracic Insufficiency Syndrome
(TIS).
The MAGEC® Spine consists of a
(spinal growth) rod that can be
lengthened through the use of magnets
that are controlled by an external remote
controller (ERC). The rod(s) can be
implanted into children as young as 2
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Fmt 4701
Sfmt 4700
38111
years of age. According to the applicant,
use of the MAGEC® Spine has proven to
be successfully used in the treatment of
patients diagnosed with scoliosis who
have not been responsive to other
treatments.
The MAGEC® Spine initially received
FDA clearance for use of the predicate
device, which used a Harrington Rod on
February 27, 2014. The applicant
verified that, due to manufacturing
delays, the MAGEC® Spine was not
available for implant until April 1, 2014.
Specifically, the complete MAGEC®
Spine system was produced and
available for shipment for the first
implant on April 1, 2014. Therefore, the
newness period for the MAGEC® Spine
began on April 1, 2014. Subsequent
FDA clearance was granted for use of
the modified device, which uses a
shorter 70 mm rod on September 18,
2014. After minor modification of the
product, the MAGEC® Spine received
FDA clearances on March 24, 2015, and
May 29, 2015, respectively.
After evaluation of the newness, costs,
and substantial clinical improvement
criteria for new technology add-on
payments for the MAGEC® Spine and
consideration of the public comments
we received in response to the FY 2017
IPPS/LTCH PPS proposed rule, we
approved the MAGEC® Spine for new
technology add-on payments for FY
2017 (81 FR 56891). Cases involving the
MAGEC® Spine that are eligible for new
technology add-on payments are
identified by ICD–10–PCS procedure
codes XNS0032 (Reposition of lumbar
vertebra using magnetically controlled
growth rod(s), open approach);
XNS0432 (Reposition of lumbar vertebra
using magnetically controlled growth
rod(s), percutaneous endoscopic
approach); XNS3032 (Reposition of
cervical vertebra using magnetically
controlled growth rod(s), open
approach); XNS3432 (Reposition of
cervical vertebra using magnetically
controlled growth rod(s), percutaneous
endoscopic approach); XNS4032
(Reposition of thoracic vertebra using
magnetically controlled growth rod(s),
open approach); and XNS4432
(Reposition of thoracic vertebra using
magnetically controlled growth rod(s).
With the new technology add-on
payment application, the applicant
stated that the total operating cost of the
MAGEC® Spine was $17,500 for a single
rod and $35,000 for a dual rod. It is
historical practice for CMS to make the
new technology add-on payment based
on the average cost of the technology
and not the maximum. For example, in
the FY 2013 IPPS/LTCH PPS final rule
(77 FR 53358), we approved new
technology add-on payments for
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DIFICIDTM based on the average dosage
of 6.2 days, rather than the maximum
10-day dosage. The applicant noted that
20 percent of cases use a single rod,
while 80 percent of cases use a dual rod.
As a result, the weighted average cost
for a single and dual MAGEC® Spine is
$31,500 (((0.2 * $17,500) + (0.8 *
$35,000))). Under § 412.88(a)(2), we
limit new technology add-on payments
to the lesser of 50 percent of the average
cost of the device or 50 percent of the
costs in excess of the MS–DRG payment
for the case. As a result, the maximum
new technology add-on payment for a
case involving the MAGEC® Spine is
$15,750. We refer the reader to the FY
2017 IPPS/LTCH PPS final rule (81 FR
56888) for complete details on the
MAGEC® Spine.
With regard to the newness criterion
for the MAGEC® Spine, we considered
the beginning of the newness period to
commence when the MAGEC® Spine
was produced and available for
shipment for the first implant on April
1, 2014. As discussed previously in this
section, in general, we extend new
technology add-on payments for an
additional year only if the 3-year
anniversary date of the product’s entry
onto the U.S. market occurs in the latter
half of the upcoming fiscal year.
Because the 3-year anniversary date of
the entry of the MAGEC® Spine onto the
U.S. market (April 1, 2017) would occur
prior to the beginning of FY 2018, in the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 19876), we proposed to
discontinue new technology add-on
payments for this technology for FY
2018. We invited public comments on
this proposal.
Comment: Some commenters
supported CMS’ proposal to discontinue
new technology add-on payments for
the MAGEC® Spine for FY 2018. Some
commenters supported the continuation
of the new technology add-on payments
for MAGEC® Spine for FY 2018. The
manufacturer also requested that CMS
extend new technology add-on
payments for MAGEC® Spine. The
manufacturer provided the following
reasons to extend the new technology
add-on payment:
• Based on internal data, there have
not been enough cases to provide the
stimulus that the new technology addon payments program intended.
• The patient population for which
the new technology add-on payment
applies is very small, estimated at less
than or equal to 10 percent of the total
annual cases.
• The new technology add-on
payment has been available for
approximately 9 months. Given the
small number of patients, providers
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have not had enough cases yet to utilize
the new technology add-on payments in
the way the program intended.
• Extension of the new technology
add-on payment for FY 2018 would
allow more patients to gain access to
MAGEC® rods. The manufacturer stated
that this has clinical benefits as noted in
the literature, but also ultimately helps
payers, including CMS. The
manufacturer stated that payer costs of
treatment are reduced over the course of
care when MAGEC® rods are used vs.
traditional growth rods.
• Extending the new technology addon payment for MAGEC® Spine has
minimal budgetary impact due again to
the small patient population.
The manufacturer cited the
importance of the new technology addon payments to MAGEC® Spine and
stated that extending the new
technology add-on payment would help
make the technology more accessible.
Response: We thank the commenters
for their comments. With regard to the
technology’s newness, the timeframe
that a new technology can be eligible to
receive new technology add-on
payments ends when data documenting
the use and cost of the procedures
become available. Section 412.87(b)(2)
states that, a medical service or
technology may be considered new
within 2 or 3 years after the point at
which data begin to become available
reflecting the ICD–9–CM code (or, as
finalized earlier in this section, the
inpatient hospital code) assigned to the
new service or technology (depending
on when a new code is assigned and
data on the new service or technology
become available for DRG recalibration).
Section 412.87(b)(2) also states, after
CMS has recalibrated the DRGs, based
on available data, to reflect the costs of
an otherwise new medical service or
technology, the medical service or
technology will no longer be considered
‘‘new’’ under the applicable criteria.
Therefore, as discussed in the FY 2005
IPPS final rule (69 FR 49003), if the
costs of the technology are included in
the charge data, and the MS–DRGs have
been recalibrated using that data, the
technology can no longer be considered
‘‘new’’ for the purposes of this
provision.
In addition, similar to our discussion
in the FY 2006 IPPS final rule (70 FR
47349), we do not believe that case
volume is a relevant consideration for
making the determination as to whether
a product is ‘‘new.’’ Consistent with the
statute and our implementing
regulations, a technology no longer
qualifies as ‘‘new’’ once it is more than
2 to 3 years old, irrespective of how
frequently it has been used in the
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Medicare population. Therefore, if a
product is more than 2 to 3 years old,
we consider its costs to be included in
the MS–DRG relative weights, whether
its use in the Medicare population has
been frequent or infrequent.
Therefore, based on all of the reasons
stated above, the MAGEC® Spine is no
longer considered ‘‘new’’ for purposes
of new technology add-on payments for
FY 2018. Therefore, we are finalizing
our proposal to discontinue making new
technology add-on payments for the
MAGEC® Spine for FY 2018.
g. VistogardTM (Uridine Triacetate)
BTG International Inc., submitted an
application for new technology add-on
payments for the VistogardTM for FY
2017. VistogardTM was developed as an
emergency treatment for Fluorouracil
toxicity.
Chemotherapeutic agent 5fluorouracil (5–FU) is used to treat
specific solid tumors. It acts upon
deoxyribonucleic acid (DNA) and
ribonucleic acid (RNA) in the body, as
uracil is a naturally occurring building
block for genetic material. Fluorouracil
is a fluorinated pyrimidine. As a
chemotherapy agent, Fluorouracil is
absorbed by cells and causes the cell to
metabolize into byproducts that are
toxic and used to destroy cancerous
cells. According to the applicant, the
byproducts fluorodoxyuridine
monophosphate (F–dUMP) and
floxuridine triphosphate (FUTP) are
believed to do the following: (1) Reduce
DNA synthesis; (2) lead to DNA
fragmentation; and (3) disrupt RNA
synthesis. Fluorouracil is used to treat a
variety of solid tumors such as
colorectal, head and neck, breast, and
ovarian cancer. With different tumor
treatments, different dosages, and
different dosing schedules, there is a
risk for toxicity in these patients.
Patients may suffer from fluorouracil
toxicity/death if 5–FU is delivered in
slight excess or at faster infusion rates
than prescribed. The cause of overdose
can happen for a variety of reasons
including: Pump malfunction, incorrect
pump programming or miscalculated
doses, and accidental or intentional
ingestion.
VistogardTM is an emergency
treatment for Fluorouracil toxicity and
is a prodrug of uridine. Once the drug
is metabolized into uridine, it competes
with the toxic byproduct FUTP in
binding to RNA, thereby reducing the
impact FUTP has on cell death.
The VistogardTM received FDA
approval on December 11, 2015. In the
FY 2017 IPPS/LTCH PPS final rule (81
FR 56910), we stated that we agreed
with the manufacturer that, due to the
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delay in availability, the date the
newness period begins for VistogardTM
is March 2, 2016, instead of December
11, 2015.
The applicant noted that the
VistogardTM is the first FDA-approved
antidote used to reverse fluorouracil
toxicity. The applicant received a
unique ICD–10–PCS procedure code
that became effective October 1, 2016, to
describe the use of this technology. The
approved procedure code is XW0DX82
(Introduction of Uridine Triacetate into
Mouth and Pharynx, External Approach,
New Technology Group 2).
After evaluation of the newness, costs,
and substantial clinical improvement
criteria for new technology add-on
payments for VistogardTM and
consideration of the public comments
we received in response to the FY 2017
IPPS/LTCH PPS proposed rule, we
approved VistogardTM for new
technology add-on payments for FY
2017 (81 FR 56912). With the new
technology add-on payment application,
the applicant stated that the total
operating cost of VistogardTM is $75,000.
Under § 412.88(a)(2), we limit new
technology add-on payments to the
lesser of 50 percent of the average cost
of the technology or 50 percent of the
costs in excess of the MS–DRG payment
for the case. As a result, the maximum
new technology add-on payment for a
case involving VistogardTM is $37,500.
As noted previously, with regard to
the newness criterion for the
VistogardTM, we considered the
beginning of the newness period to
commence on March 2, 2016. Because
the 3-year anniversary date of the entry
of the VistogardTM onto the U.S. market
(March 2, 2019) will occur after FY
2018, in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19876), we
proposed to continue new technology
add-on payments for this technology for
FY 2018. We proposed that the
maximum payment for a case involving
the VistogardTM would remain at
$37,500 for FY 2018. We invited public
comments on our proposal to continue
new technology add-on payments for
the VistogardTM.
Comment: The manufacturer
commented that, as of April 1, 2017,
pricing for VistogardTM has changed.
The manufacturer noted that the
wholesale acquisition cost (WAC) for
VistogardTM is now $80,260 for a 20dose pack (or $4,013.00 per each 10g
packet of oral granules). Given the
current price for VistogardTM, the
manufacturer requested that CMS revise
the maximum payment per case to
$40,130, or 50 percent of the revised
WAC.
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Response: According to the
manufacturer, as noted in the FY 2017
IPPS/LTCH PPS final rule (81 FR
56912), the WAC of VistogardTM was
$3,750.00 per each 10g packet of oral
granules. The recommended adult
dosing per the VistogardTM label is 10g
(one packet every 6 hours for a
minimum of 20 doses over 5 days). The
total cost was 20 packets × WAC of
$3,750.00 per packet, which equaled
$75,000 per patient.
Using the updated WAC provided by
the manufacturer, we performed an
additional cost analysis to determine if
Vistogard would meet the cost criterion.
We determined that the price increase
would increase the amount that the
inflated average standardized caseweighted charge per case exceeds the
average case-weighted threshold
amount. Therefore, VistogardTM would
still meet the cost criterion.
We are finalizing our proposal to
continue new technology add-on
payments for VistogardTM for FY 2018.
Using the revised pricing, the maximum
new technology add-on payment for a
case involving VistogardTM is $40,130
for FY 2018.
h. Blinatumomab (BLINCYTO®)
Amgen, Inc. submitted an application
for new technology add-on payments for
FY 2016 for Blinatumomab
(BLINCYTO®), a bi-specific T-cell
engager (BiTE) used for the treatment of
Philadelphia chromosome-negative
(Ph¥) relapsed or refractory (R/R) B-cell
precursor acute-lymphoblastic leukemia
(ALL), which is a rare aggressive cancer
of the blood and bone marrow.
Approximately 6,050 individuals are
diagnosed with Ph¥ R/R B-cell
precursor ALL in the United States each
year, and approximately 2,400
individuals, representing 30 percent of
all new cases, are adults. Ph¥ R/R Bcell precursor ALL occurs when there
are malignant transformations of B-cell
or T-cell progenitor cells, causing an
accumulation of lymphoblasts in the
blood, bone marrow, and occasionally
throughout the body. As a bi-specific Tcell engager, the BLINCYTO ®
technology attaches to a molecule on the
surface of the tumorous cell, as well as
to a molecule on the surface of normal
T-cells, bringing the two into closer
proximity and allowing the normal Tcell to destroy the tumorous cell.
Specifically, the BLINCYTO®
technology attaches to a cell identified
as CD19, which is present on all of the
cells of the malignant transformations
that cause Ph¥ R/R B-cell precursor
ALL and helps attract the cell into close
proximity of the T-cell CD3 with the
intent of getting close enough to allow
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the T-cell to inject toxins that destroy
the cancerous cell. According to the
applicant, the BLINCYTO® technology
is the first, and the only, bi-specific
CD19-directed CD3 T-cell engager
single-agent immunotherapy approved
by the FDA.
BLINCYTO® is administered as a
continuous IV infusion delivered at a
constant flow rate using an infusion
pump. A single cycle of treatment
consists of 28 days of continuous
infusion, and each treatment cycle is
followed by 2 weeks without treatment
prior to administering any further
treatments. A course of treatment would
consist of two phases. Phase 1 consists
of initial inductions or treatments
intended to achieve remission followed
by additional inductions and treatments
to maintain consolidation; or treatments
given after remission has been achieved
to prolong the duration. During Phase 1
of a single treatment course, up to two
cycles of BLINCYTO® are administered,
and up to three additional cycles are
administered during consolidation. The
recommended dosage of BLINCYTO®
administered during the first cycle of
treatment is 9 mcg per day for the first
7 days of treatment. The dosage is then
increased to 28 mcg per day for 3 weeks
until completion. During Phase 2 of the
treatment course, all subsequent doses
are administered as 28 mcg per day
throughout the entire duration of the 28day treatment period.
With regard to the newness criterion,
the BLINCYTO® technology received
FDA approval on December 3, 2014, for
the treatment of patients diagnosed with
Ph¥ R/R B-cell precursor ALL, and the
product gained entry onto the U.S.
market on December 17, 2014.
After evaluation of the newness, costs,
and substantial clinical improvement
criteria for new technology add-on
payments for BLINCYTO® and
consideration of the public comments
we received in response to the FY 2016
IPPS/LTCH PPS proposed rule, we
approved BLINCYTO® for new
technology add-on payments for FY
2016 (80 FR 49449). Cases involving
BLINCYTO® that are eligible for new
technology add-on payments are
identified using one of the following
ICD–10–PCS procedure codes:
XW03351 (Introduction of
Blinatumomab antineoplastic
immunotherapy into peripheral vein,
percutaneous approach, New
Technology Group 1), or XW04351
(Introduction of Blinatumomab
antineoplastic immunotherapy into
central vein, percutaneous approach,
New Technology Group 1).
As discussed in the FY 2016 IPPS/
LTCH PPS final rule (80 FR 49449), the
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applicant recommended that CMS
consider and use the cost of the full 28day inpatient treatment cycle as the
expected length of treatment when
determining the maximum new
technology add-on payment for cases
involving the BLINCYTO®, rather than
the average cost of lesser number of
days used as other variables. For the
reasons discussed, we disagreed with
the applicant and established the
maximum new technology add-on
payment amount for a case involving
the BLINCYTO® technology for FY 2016
using the weighted average of the cycle
1 and cycle 2 observed treatment length.
Specifically, in the Phase II trial, the
most recent data available, 92 patients
received cycle 1 treatment for an
average length of 21.2 days, and 52
patients received cycle 2 treatment for
an average length of 10.2 days. The
weighted average of cycle 1 and cycle 2
treatment length is 17 days. We noted
that a small number of patients also
received 3 to 5 treatment cycles.
However, based on the data provided,
these cases do not appear to be typical
at this point and we excluded them
from this calculation. We noted that, if
we included all treatment cycles in this
calculation, the weighted average
number of days of treatment is much
lower, 10 days. Using the clinical data
provided by the applicant, we stated
that we believe setting the maximum
new technology add-on payment
amount for a case involving the
BLINCYTO® technology for FY 2016
based on a 17-day length of treatment
cycle is representative of historical and
current practice. We also stated that, for
FY 2017, if new data on length of
treatment are available, we would
consider any such data in evaluating the
maximum new technology add-on
payment amount. However, we did not
receive any new data from the applicant
to evaluate for FY 2017.
In the application, the applicant
estimated that the average Medicare
beneficiary would require a dosage of
9mcg/day for the first 7 days under the
first treatment cycle, followed by a
dosage of 28mcg/day for the duration of
the treatment cycle, as well as all days
included in subsequent cycles. All vials
contain 35mcg at a cost of $3,178.57 per
vial. The applicant noted that all vials
are single-use. Therefore, we
determined that cases involving the use
of the BLINCYTO® technology would
incur an average cost per case of
$54,035.69 (1 vial/day × 17 days ×
$3,178.57/vial). Under § 412.88(a)(2), we
limit new technology add-on payments
to the lesser of 50 percent of the average
cost of the technology or 50 percent of
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the costs in excess of the MS–DRG
payment for the case. As a result, the
maximum new technology add-on
payment amount for a case involving
the use of the BLINCYTO® is
$27,017.85.
With regard to the newness criterion
for BLINCYTO®, we consider the
beginning of the newness period to
commence when the product gained
entry onto the U.S. market on December
17, 2014. As discussed previously in
this section, in general, we extend new
technology add-on payments for an
additional year only if the 3-year
anniversary date of the product’s entry
onto the U.S. market occurs in the latter
half of the upcoming fiscal year.
Because the 3-year anniversary date of
the entry of the BLINCYTO® onto the
U.S. market will occur in the first half
of FY 2018 (December 17, 2017), in the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 19877), we proposed to
discontinue new technology add-on
payments for this technology for FY
2018. We invited public comments on
this proposal.
Comment: Some commenters
supported CMS’ proposal to discontinue
new technology add-on payments for
BLINCYTO®. The applicant (the
manufacturer) disagreed with the
proposal to discontinue new technology
add-on payments for BLINCYTO®. The
manufacturer stated that CMS is
discontinuing the new technology addon payment in advance of the 3-year
statutory limit. The manufacturer
requested that CMS reconsider and
extend the new technology add-on
payments for FY 2018.
The manufacturer explained that the
continuation of new technology add-on
payments for BLINCYTO® in FY 2018 is
well within CMS’ statutory authority
and would permit CMS to bolster its
claims data for rate-setting to ensure
that it can meaningfully recalibrate the
MS–DRG weights to reflect the costs of
BLINCYTO® in accordance with the
policy objectives of the statute. The
manufacturer stated that section
1886(d)(5)(K) of the Act gives CMS
authority to grant new technology addon payments to new technologies to
‘‘provide for the collection of data with
respect to the costs of a new medical
service or technology [. . .] for a period
of not less than 2 years and not more
than 3 years beginning on the date on
which an inpatient hospital code is
issued with respect to the service or
technology.’’ The manufacturer also
stated that the regulation at 42 CFR
412.87(b)(2) is phrased similarly and
reads that ‘‘A medical service or
technology may be considered new
within 2 or 3 years after the point at
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which data begin to become available
reflecting the ICD–9–CM code assigned
to the new service or technology
(depending on when a new code is
assigned and data on the new service or
technology become available for DRG
recalibration). After CMS has
recalibrated the DRGs, based on
available data, to reflect the costs of an
otherwise new medical service or
technology, the medical service or
technology will no longer be considered
‘new’ under the criterion of this
section.’’
The manufacturer stated that
BLINCYTO® received FDA approval on
December 3, 2014, gained entry onto the
U.S. market on December 17, 2014, and
was issued an inpatient hospital code
(ICD–10–PCS code) on October 1, 2015.
Therefore, the manufacturer asserted
that, as of October 1, 2017, BLINCYTO®
will have received the new technology
add-on payment for the minimum
permitted duration of 2 years, and is
eligible, by statute and regulation, for an
additional year new technology add-on
payments.
The manufacturer also stated that
CMS explained in the FY 2017 IPPS/
LTCH PPS final rule (81 FR 56877) that
‘‘a specific medical service or
technology will be considered ‘new’ for
purposes of new technology add-on
payments until such time as Medicare
data are available to fully reflect the cost
of the technology in the MS–DRG
weights through recalibration’’ and that
only once the MS–DRGs have been
recalibrated to reflect the costs of a new
medical technology should new
technology add-on payments cease. The
manufacturer believed that the above
quoted regulation likewise links the
termination of new technology add-on
payments to having data to incorporate
the item into the calibration of the
inpatient payment groupings. The
manufacturer also cited the FY 2011
IPPS final rule (75 FR 50138) and stated
that CMS has acknowledged in previous
rulemaking that, in some cases, there
may be valid reasons to extend new
technology add-on payment status,
including, for example, when ‘‘there
may be few to no Medicare data
available for the new service or
technology following FDA approval’’ to
achieve the objective of appropriately
recalibrating MS–DRG weights. The
manufacturer believed that if
insufficient data are collected on the
technology to ‘‘fully reflect the cost of
the technology’’ in the MS–DRG
weights, there would be a valid reason
to continue the new technology add-on
payment.
The manufacturer stated that claims
of BLINCYTO® in the FY 2016
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MedPAR, which is used for FY 2018
MS–DRG recalibration, are insufficient
in number and do not fully reflect the
cost of BLINCYTO® in the MS–DRG
recalibration. The applicant stated that,
in the FY 2016 MedPAR claims, there
were a total of 145 BLINCYTO® claims
eligible for the new technology add-on
payment, 111 of which were distributed
across 6 MS–DRGs that the technology
most frequently mapped to. The
manufacturer noted that this claims
volume represents less than 1 percent of
the over 10,000 patient discharge claims
for these 6 MS–DRGs. As a result of this
low claims volume, both objectively and
relative to the frequency of the relevant
MS–DRGs on patient discharge claims,
the manufacturer believed it is very
unlikely that the fundamental objective
of the new technology add-on payment
to provide time to collect sufficient data
to recalibrate MS–DRG weights to ‘‘fully
reflect the cost of the technology’’ can be
achieved by discontinuing the new
technology add-on payment status for
BLINCYTO®.
The manufacturer stated that it
recognizes that CMS has a general
practice (not set forth in its regulations)
for technologies that have had new
technology add-on payments for 2 fiscal
years to only provide an additional year
of new technology add-on payment if
the 3-year anniversary of the product’s
FDA approval is during the second half
of the fiscal year unless CMS receives
evidence of a documented delay in
making the product available on the
market. The manufacturer believed that
this general practice should not be
followed here because of the paucity of
data on BLINCYTO®. The manufacturer
noted that CMS does not apply the
general practice when there is a delay in
market availability, ostensibly because
that delay has an impact on the
availability of data for use in inpatient
hospital payment rate setting. The
manufacturer asserted that when there
is a paucity of data from the first of the
2 years of the new technology add-on
payment, CMS should continue making
new technology add-on payments for a
third year to ensure that when it
incorporates the item into the inpatient
payment system, it has enough data to
do so.
Further, the manufacturer noted that
BLINCYTO® demonstrated significant
improvements in overall survival,
complete remission, and event-free
survival in comparison to standard of
care chemotherapy in adult patients
with Ph¥R/R B-cell precursor ALL. The
manufacturer stated that extending new
technology add-on payments for
BLINCYTO® would continue to support
access to this novel therapy.
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Response: We thank the commenters
for their comments. With regard to the
technology’s newness, as discussed in
the FY 2005 IPPS final rule (69 FR
49003), the timeframe that a new
technology can be eligible to receive
new technology add-on payments
begins when data become available. As
the manufacturer noted in its comments,
§ 412.87(b)(2) clearly states that a
medical service or technology may be
considered new within 2 or 3 years after
the point at which data begin to become
available reflecting the ICD–9–CM code
(or, as finalized earlier in this section,
the inpatient hospital code) assigned to
the new service or technology
(depending on when a new code is
assigned and data on the new service or
technology become available for DRG
recalibration). Section 412.87(b)(2) also
specifies that after CMS has recalibrated
the DRGs, based on available data, to
reflect the costs of an otherwise new
medical service or technology, the
medical service or technology will no
longer be considered ‘‘new’’ under the
criterion of the section. The period of
newness does not necessarily start with
the approval date for the medical
service or technology, and does not
necessarily start with the issuance of a
distinct code. Instead, it begins with
availability of the product on the U.S.
market, which is when data become
available. As the manufacturer noted,
we considered the newness period for
BLINCYTO® to commence when the
product gained entry onto the U.S.
market on December 17, 2014. We have
consistently applied this standard, and
believe that it is most consistent with
the purpose of new technology add-on
payments.
While CMS may consider a
documented delay in a technology’s
availability on the U.S. market in
determining when the newness period
begins, its policy for determining
whether to extend new technology addon payments for a third year generally
applies regardless of the claims volume
for the technology after the start of the
newness period. Similar to our
discussion earlier and in the FY 2006
IPPS final rule (70 FR 47349), we do not
believe that case volume is a relevant
consideration for making the
determination as to whether a product
is ‘‘new.’’ Consistent with the statute, a
technology no longer qualifies as ‘‘new’’
once it is more than 2 to 3 years old,
irrespective of how frequently it has
been used in the Medicare population.
Similarly, this same determination is
applicable no matter how many MS–
DRGs the technology is spread across.
Therefore, if a product is more than 2
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to 3 years old, we consider its costs to
be included in the MS–DRG relative
weights whether its use in the Medicare
population has been frequent or
infrequent.
Based on the reasons stated above,
BLINCYTO® is no longer considered
‘‘new’’ for purposes of new technology
add-on payments for FY 2018. We are
finalizing our proposal to discontinue
making new technology add-on
payments for BLINCYTO® for FY 2018.
6. FY 2018 Applications for New
Technology Add-On Payments
We received nine applications for
new technology add-on payments for FY
2018. Three applicants withdrew their
applications prior to the issuance of the
FY 2018 IPPS/LTCH PPS proposed rule.
Two applicants, Kite Pharma and IsoRay
Medical, Inc., in conjunction with
GammaTile LLC, withdrew their
applications for KTE–C19 (axicabtagene
ciloleucel) and GammaTileTM,
respectively, prior to the issuance of this
FY 2018 IPPS/LTCH PPS final rule.
In addition, in accordance with the
regulations under § 412.87(c), applicants
for new technology add-on payments
must have FDA approval or clearance by
July 1 of each year prior to the
beginning of the fiscal year that the
application is being considered. One
applicant, Celator Pharmaceuticals, Inc.
for VYXEOSTM, did not receive FDA
approval for its technology by July 1,
2017. Therefore, VYXEOSTM is not
eligible for consideration for new
technology add-on payments for FY
2018. We are not including in this final
rule the descriptions and discussions of
this application which was included in
the FY 2018 IPPS/LTCH PPS proposed
rule. We note that we did receive public
comments on this application. However,
because VYXEOSTM is ineligible for new
technology add-on payments for FY
2018 because it did not receive FDA
approval by July 1, 2017, we are not
summarizing nor responding to public
comments regarding the new technology
criteria for this application in this final
rule. We note that the applicant did
request that we make an exception to
the July 1 deadline if it were to receive
FDA approval prior to the beginning of
FY 2018. However, we did not propose
any changes to the regulations at
§ 412.87(c), and we believe the request
is out of scope for this final rule.
A discussion of the three remaining
applications is presented below.
a. Bezlotoxumab (ZINPLAVATM)
Merck & Co., Inc. submitted an
application for new technology add-on
payments for ZINPLAVATM for FY 2018.
ZINPLAVATM is indicated to reduce
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recurrence of Clostridium difficile
infection (CDI) in adult patients who are
receiving antibacterial drug treatment
for a diagnosis of CDI who are at high
risk for CDI recurrence. ZINPLAVATM is
not indicated for the treatment of the
presenting episode of CDI and is not an
antibacterial drug.
Clostridium difficile (C-diff) is a
disease-causing anaerobic, spore
forming bacteria that can affect the
gastrointestinal (GI) tract. Some people
carry the C-diff bacterium in their
intestines, but never develop symptoms
of an infection. The difference between
asymptomatic colonization and
pathogenicity is caused primarily by the
production of an enterotoxin (Toxin A)
and/or a cytotoxin (Toxin B). The
presence of either or both toxins can
lead to symptomatic CDI, which is
defined as the acute onset of diarrhea
with a documented infection with
toxigenic C-diff, or the presence of
either toxin A or B. The GI tract
contains millions of bacteria, commonly
referred to as ‘‘normal flora’’ or ‘‘good
bacteria,’’ which play a role in
protecting the body from infection.
Antibiotics can kill these good bacteria
and allow the C-diff bacteria to multiply
and release toxins that damage the cells
lining the intestinal wall, resulting in a
CDI. CDI is a leading cause of hospitalassociated gastrointestinal illnesses.
Persons at increased risk for CDI include
people who are treated with current or
recent antibiotic use, people who have
encountered current or recent
hospitalization, people who are older
than 65 years, immunocompromised
patients, and people who have recently
had a diagnosis of CDI. CDI symptoms
include, but are not limited to, diarrhea,
abdominal pain, and fever. CDI
symptoms range in severity from mild
(abdominal discomfort, loose stools) to
severe (profuse, watery diarrhea, severe
pain, and high fevers). Severe CDI can
be life-threatening and, in rare cases,
can cause bowel rupture, sepsis and
organ failure. CDI is responsible for
14,000 deaths per year in the United
States.
C-diff produces two virulent, proinflammatory toxins, Toxin A and Toxin
B, which target host colonocytes (that is,
large intestine endothelial cells) by
binding to endothelial cell surface
receptors via combined repetitive
oligopeptide (CROP) domains. These
toxins cause the release of inflammatory
cytokines leading to intestinal fluid
secretion and intestinal inflammation.
The applicant asserted that
ZINPLAVATM targets Toxin B sites
within the CROP domain rather than the
C-diff organism itself. According to the
applicant, by targeting C-diff Toxin B,
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ZINPLAVATM neutralizes Toxin B,
prevents large intestine endothelial cell
inflammation, symptoms associated
with CDI, and reduces the recurrence of
CDI. ZINPLAVATM binds to sites within
the CROP domain, which prevents
Toxin B from binding to the host cell,
thereby preventing the inflammation
and symptoms associated with CDI.
ZINPLAVATM is used concomitantly
with standard of care (SOC) antibiotics.
Typical treatment of CDI includes
antibiotic therapy using vancomycin,
metronidazole, fidaxomicin, or other
antibiotics. Alternative therapies
include fecal microbiota transplant
(FMT) and the use of probiotics.
The primary goal of CDI treatment is
resolving the infection. Antibacterial
drug treatment remains the cornerstone
of treatment of CDI. However, this
treatment option alone may not be
adequate for patients diagnosed with
recurrent CDI. A major concern with
respect to a CDI is that even when
treatment with an antibacterial drug of
a primary infection is successful,
generally, 25 percent to 30 percent of
patients experience a recurrence of the
infection within days or weeks of the
presenting episode’s symptom
resolution. The risk of recurrence
increases to 65 percent with subsequent
CDI episodes. Disease recurrence results
from continued disruption of the
intestinal microbiota by SOC CDI
antibiotics (or use of other antibiotics
used to treat non-gastrointestinal
conditions), combined with persistence
of resistant C-diff spores (relapse) or
acquisition of new spores from the
environment (reinfection).
Antibacterial drug use may inhibit the
intestinal microbiota from reestablishing
itself, allowing C-diff spores potentially
to germinate and colonize the intestines
when the antibacterial drug is
discontinued. If regrowth of C-diff
overtakes the reestablishment of the
intestinal microbiota, then spore
germination and toxin production from
vegetative C-diff may restart the cycle of
CDI and the need for subsequent
treatment. These challenges highlight
the need for nonantibiotic therapies.
ZINPLAVATM targets Toxin B rather
than the C-diff bacteria itself. According
to the applicant, unlike antibacterial
drugs, ZINPLAVATM is a human
monoclonal antibody and does not
affect the microbiota. According to the
applicant, ZINPLAVATM neutralizes Cdiff Toxin B and reduces recurrence of
CDI. ZINPLAVATM is given
concomitantly during the course of SOC
antibacterial treatment of a CDI.
With respect to the newness criterion,
ZINPLAVATM received FDA approval
on October 21, 2016, for reduction of
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recurrence of CDI in patients receiving
antibacterial drug treatment for CDI and
who are at high risk of CDI recurrence.
ZINPLAVATM became commercially
available on February 10, 2017.
Therefore, the newness period for
ZINPLAVATM began on February 10,
2017.
The applicant submitted a request for
a unique ICD–10–PCS procedure code
and was granted approval for the
following procedure codes: XW033A3
(Introduction of bezlotoxumab
monoclonal antibody, into peripheral
vein, percutaneous approach, New
Technology Group 3) and XW043A3
(Introduction of bezlotoxumab
monoclonal antibody, into central vein,
percutaneous approach, New
Technology Group 3).
As discussed above, if a technology
meets all three of the substantial
similarity criteria, it would be
considered substantially similar to an
existing technology and would not be
considered ‘‘new’’ for purposes of new
technology add-on payments.
With regard to the first criterion,
whether a product uses the same or a
similar mechanism of action to achieve
a therapeutic outcome, according to the
applicant, ZINPLAVATM is a human
monoclonal antibody with an
innovative mechanism of action. The
applicant asserted that ZINPLAVATM is
a novel treatment, with a unique
mechanism of action relative to SOC
CDI antibiotics that target C-diff. The
applicant explained that ZINPLAVATM
is the first human monoclonal antibody
that targets and neutralizes C. diff Toxin
B because the technology specifically
binds to and neutralizes C-diff Toxin B
(which is an exotoxin that contributes to
intestinal tissue damage and immune
system effects that underlie the
symptoms of CDI) and inhibits binding
of the toxin to mammalian cells. The
applicant further asserted that the
administration of ZINPLAVATM, in
addition to standard of care antibacterial
drug treatment, reduces CDI recurrence
by providing passive immunity against
Toxin B resulting from persistent or
newly acquired C-diff spores. According
to the applicant, ZINPLAVATM is the
only FDA-approved treatment indicated
for reducing CDI recurrence as
adjunctive therapy in adult patients
who are receiving antibacterial drug
treatment for CDI and who are at high
risk for CDI recurrence.
With respect to the second criterion,
whether a product is assigned to the
same or a different MS–DRG, the
applicant maintained that patients who
may be eligible to receive treatment
using ZINPLAVATM could be in an
acute-care hospital setting for a wide
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variety of reasons and may develop a
secondary CDI as a hospital-acquired
infection and, therefore, cases
representing patients that may be
eligible for treatment using the
technology can map to a wide range of
MS–DRGs. ZINPLAVATM is indicated
for patients receiving SOC treatment for
CDI and who are at a high risk for CDI
recurrence. In order to identify the range
of MS–DRGs for which cases
representing patients that may be
eligible for treatment using
ZINPLAVATM may map to, the
applicant identified all MS–DRGs
containing cases that represent patients
presenting with CDI as a primary or
secondary diagnosis. The applicant used
FY 2015 MedPAR data to map the
identified cases to 543 MS–DRGs, with
12 MS–DRGs accounting for
approximately 40 percent of all cases.
The applicant segmented these cases
based on age because patients 65 years
and older are at higher risk for CDI
recurrence. Based on the FY 2015
MedPAR data, MS–DRG distribution
was found to be similar, irrespective of
CDI status (primary or secondary), for
patients over 65 years of age and those
under 65 years of age. The top 7 MS–
DRGs across both age groups account for
nearly 54 percent (over 65 years of age)
and 49 percent (under 65 years of age).
The applicant further segmented these
cases to determine if status of CDI as a
primary or secondary diagnosis
influenced MS–DRG mapping.
Regardless of age, when CDI is the
primary diagnosis, approximately 98
percent of patient cases map to the same
3 MS–DRGs: MS–DRG 371 (Major
Gastrointestinal Disorders and
Peritoneal Infections with MCC); MS–
DRG 372 (Major Gastrointestinal
Disorders and Peritoneal Infections with
CC); and MS–DRG 373 (Major
Gastrointestinal Disorders and
Peritoneal Infections without CC/MCC),
respectively. Potential cases
representing patients who may be
eligible for treatment with
ZINPLAVATM would be assigned to the
same MS–DRGs as cases representing
patients who receive SOC treatment for
a diagnosis of CDI.
With respect to the third criterion,
whether the new use of the technology
involves the treatment of the same or
similar type of disease and the same or
similar patient population, according to
the applicant, ZINPLAVATM is
administered concomitantly or as
adjunctive therapy with SOC
antibacterial treatment for recurrent
CDI. The applicant stated that
ZINPLAVATM is indicated to reduce
recurrence of CDI in adult patients at
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high risk of CDI recurrence who are
receiving antibacterial drug treatment
for CDI. According to the applicant, the
addition of ZINPLAVATM to SOC
antibacterial drug treatment reduces CDI
recurrence by providing passive
immunity against Toxin B resulting
from persistent or newly acquired C-diff
spores. ZINPLAVATM is used to reduce
recurrence of the same or similar type
of disease (CDI) and to treat a similar
patient population receiving SOC
therapy for the treatment of recurrent
CDI.
We stated in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19879) that,
based on the applicant’s statements
presented above, because ZINPLAVATM
has a unique mechanism of action, we
did not believe that the technology is
substantially similar to existing
technologies and, therefore, meets the
newness criterion. We invited public
comments on whether ZINPLAVATM
meets the newness criterion.
Comment: The applicant submitted
comments in agreement with CMS’
belief that ZINPLAVATM meets the
newness criterion for new technology
add-on payments. The applicant
reiterated that ZINPLAVATM is the only
FDA approved treatment indicated for
reducing CDI recurrence as adjunctive
therapy in adult patients who are
receiving antibacterial drug treatment
for CDI and who are at risk for CDI
recurrence. The applicant agreed that
ZINPLAVATM is not substantially
similar to existing technologies and,
therefore, meets the newness criterion.
Response: We appreciate the
comments submitted by the applicant
on whether ZINPLAVATM meets the
newness criterion. After review of the
information provided by the applicant
and consideration of its comments, we
believe that ZINPLAVATM meets the
newness criterion and we consider the
technology to be ‘‘new’’ as of February
10, 2017, when the technology became
commercially available.
With regard to the cost criterion, the
applicant conducted the following
analysis to demonstrate that the
technology meets the cost criterion. In
order to identify the range of MS–DRGs
that cases representing potential
patients who may be eligible for
treatment using ZINPLAVATM may map
to, the applicant identified all MS–DRGs
for patients diagnosed with CDI as a
primary or secondary diagnosis.
Specifically, the applicant searched the
FY 2015 MedPAR file for claims that
included target patients over 65 years of
age and identified cases reporting
diagnoses of CDI by ICD–9–CM
diagnosis code 008.45 (Intestinal
infection due to Clostridium difficile) as
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a primary or secondary diagnosis. This
resulted in 139,135 cases across 543
MS–DRGs, with approximately 40
percent of all cases mapping to the
following 12 MS–DRGs: MS–DRG 177
(Respiratory Infections and
Inflammations with MCC); MS–DRG 193
(Simple Pneumonia and Pleurisy with
MCC); MS–DRG 291(Heart Failure and
Shock with MCC); MS–DRGs 371, 372,
and 373 (Major Gastrointestinal
Disorders and Peritoneal Infections with
MCC, with CC, and without CC/MCC,
respectively); MS–DRGs 682 and 683
(Renal Failure with MCC and with CC,
respectively); MS–DRG 853 (Infectious
and Parasitic Diseases with O.R.
Procedure with MCC); MS–DRGs 870,
871, and 872 (Septicemia or Severe
Sepsis with Mechanical Ventilation >96
Hours, with MCC, and without MCC,
respectively).
Using the 139,135 identified cases,
the average unstandardized caseweighted charge per case was $80,677.
The applicant then standardized the
charges. The applicant did not remove
charges for the current treatment
because, as discussed above,
ZINPLAVATM will be used
concomitantly with SOC antibacterial
treatments for the treatment of CDI as an
additive, or adjunctive treatment option,
to reduce the recurrence of CDI
infection. The applicant then applied
the 2-year inflation factor of 1.098446
from the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57286) to inflate the charges
from FY 2015 to FY 2017. The applicant
noted that the anticipated price for
ZINPLAVATM has yet to be determined;
therefore, no charges for ZINPLAVATM
were added in the analysis. Based on
the FY 2017 IPPS/LTCH PPS Table 10
thresholds, the average case-weighted
threshold amount was $56,871. The
inflated average case-weighted
standardized charge per case was
$78,929. Because the inflated average
case-weighted standardized charge per
case exceeds the average case-weighted
threshold amount, the applicant
maintained that the technology meets
the cost criterion. The applicant noted
that the inflated average case-weighted
standardized charge per case exceeds
the average case-weighted threshold
amount without the average per patient
cost of the technology. As such, the
applicant anticipated that the inclusion
of the cost of ZINPLAVATM, at any price
point, will further increase charges
above the average case-weighted
threshold amount. In the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19879),
we invited public comments on whether
ZINPLAVATM meets the cost criterion.
Comment: The applicant submitted
comments reiterating its cost analysis
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results. Specifically, the applicant stated
that as indicated in the FY 2015
MedPAR data analysis summarized
above, the average case-weighted
standardized charge per case exceeded
the average case-weighted threshold
amount. As noted in the proposed rule,
at the time the applicant submitted its
application, the applicant indicated that
the price of ZINPLAVATM had not yet
been determined. However, because the
inflated average case-weighted
standardized charge per case exceeded
the average case-weighted threshold
amount without the average per-patient
cost of the technology, the applicant
contended that the inclusion of the cost
of ZINPLAVA , at any price point,
would further increase charges above
the average case-weighted threshold
amount.
The applicant noted, in supplemental
information submitted to CMS, the
wholesale acquisition cost (WAC) of
ZINPLAVATM (which is supplied as a
1000 mg/40 mL (25 mg/mL) solution in
a single-dose vial) is $3,800 per vial.
The recommended dosage of
ZINPLAVATM is a single 10 mg/kg dose
administered as an IV infusion based on
patient body weight. Because each vial
contains 1,000 mg of ZINPLAVATM, a
single vial provides the complete
recommended dose for a single patient
who weighs 100 kg or less.
As noted in the applicant’s
supplemental submission, to estimate
the anticipated average charge
submitted by hospitals for
ZINPLAVATM, the applicant assumed
that hospitals will mark up the cost for
ZINPLAVATM by 200 percent. A 200
percent mark-up of the $3,800 WAC
results in a total charge of $7,600 for
ZINPLAVATM. The applicant added the
anticipated charge for ZINPLAVATM of
$7,600 to the previously determined
inflated average case-weighted
standardized charge per case of $78,929.
This resulted in a revised inflated
average case-weighted standardized
charge per case of $86,529, which still
exceeds the average case-weighted
threshold amount of $56,871.
Response: After consideration of the
comments we received, we agree that
ZINPLAVATM meets the cost criterion.
With respect to the substantial
clinical improvement criterion, the
applicant asserted that the addition of
ZINPLAVATM to SOC antibacterial drug
treatment reduces CDI recurrence
because it provides passive immunity
against Toxin B resulting from
persistent or newly acquired C-diff
spores.
The applicant conducted two Phase
III studies, MODIFY I and MODIFY II.
The primary endpoint of the studies was
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recurrent CDI within 12 weeks after
completion of treatment with
ZINPLAVATM. The first study design
initially included actoxumab, an
antitoxin A monoclonal antibody
treatment arm that was later
discontinued due to a high failure rate
and increase in mortality compared to
other treatment arms.3 Clinical data on
ZINPLAVATM is provided exclusively
from the FDA briefing document
available on the FDA Web site at: https://
www.fda.gov/AdvisoryCommittees/
CommitteesMeetingMaterials/Drugs/
Anti-InfectiveDrugsAdvisoryCommittee.
Information is also provided in the
package insert by the manufacturer,
Merck & Company, Inc. The FDA
briefing provided data on the safety and
efficacy of ZINPLAVATM. The FDA
considered sustained clinical responses
defined as clinical cure of the initial CDI
episode and the absence of CDI
recurrence as an appropriate endpoint
to assess the efficacy of ZINPLAVATM in
the prevention of CDI recurrences.
In MODIFY I trial, the clinical cure
rate of the presenting CDI episode was
lower in the ZINPLAVATM arm as
compared to the placebo arm, whereas
in MODIFY II trial the clinical cure rate
was lower in the placebo arm as
compared to the ZINPLAVATM arm.
Additional analyses showed that, by 3
weeks post study drug infusion, the
clinical cure rates of the presenting CDI
episode were similar between treatment
arms.
In MODIFY I, the rate of sustained
clinical response was numerically in
favor of ZINPLAVATM (60.1 percent) in
comparison to placebo (55.2 percent)
with an adjusted difference and 95
percent CI of 4.8 percent (¥2.1 percent;
11.7 percent). In MODIFY II, the
proportion of subjects with sustained
clinical response in the ZINPLAVATM
arm (66.8 percent) was also higher than
in the placebo arm (52.1 percent) with
an adjusted difference of 14.6 percent
and 95 percent CI (7.8 percent; 21.4
percent). The treatment did not
significantly decrease mortality.
Recurrence rates, including CDI-related
hospital readmission rates, reportedly
were between 10 and 25 percent. No
clinically meaningful differences in the
exposure of bezlotoxumab were found
between patients 65 years of age and
older and patients under 65 years of age.
In the Phase III trials, the safety
profile of ZINPLAVATM was similar
overall to that of placebo. However,
heart failure was reported more
commonly in the two Phase III clinical
3 Wilcox MH et al. Bezlotoxumab for Prevention
of Recurrent Clostridium difficile Infection. N Engl
J Med. 2017 Jan 26;376(4):305–317.
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trials of ZINPLAVATM-treated patients
compared to placebo-treated patients.
These adverse reactions occurred
primarily in patients with underlying
congestive heart failure (CHF). In
patients with a history of CHF, 12.7
percent (15/118) of ZINPLAVATMtreated patients and 4.8 percent (5/104)
of placebo-treated patients had the
serious adverse reaction of heart failure
during the 12-week study period. In
addition, in patients with a history of
CHF, there were more deaths in
ZINPLAVATM-treated patients (19.5
percent (23/118)) than in placebotreated patients (12.5 percent (13/104))
during the 12-week study period. We
stated in the proposed rule that we were
concerned regarding the safety of
ZINPLAVATM in patients diagnosed
with CHF. In regards to safety, data from
the MODIFY I and MODIFY II studies
suggest few adverse events associated
with ZINPLAVATM, with no significant
differences in the number of serious
adverse events, deaths or
discontinuations of study drug that
occurred between the ZINPLAVATM and
the placebo groups. However, both the
ZINPLAVATM and the ZINPLAVATM
plus actoxumab treatment groups
experienced more episodes of cardiac
failure (defined as acute or chronic
cardiac failure) then compared to the
placebo group (2.2 percent versus 1
percent). We stated in the proposed rule
that we were unsure if the cardiac
failure reported in the studies may be
the result of a higher number of baseline
patients with heart failure in the
treatment arms or the result of an
adverse effect to ZINPLAVATM.
Therefore, we stated that we were
concerned with regard to the adverse
event of cardiac failure of
ZINPLAVATM.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19880), we invited
public comments on whether
ZINPLAVATM meets the substantial
clinical improvement criterion. We
noted that we did not receive any
written public comments in response to
the New Technology Town Hall meeting
notice regarding the application of
ZINPLAVATM for new technology addon payments.
Comment: The applicant submitted
comments regarding the substantial
clinical improvement criterion. The
applicant reiterated that the addition of
ZINPLAVATM to standard of care
antibacterial drug treatment reduces the
risk of CDI recurrence in adult patients
who are at high risk for CDI recurrence
because it provides passive immunity
against Toxin B resulting from
persistent or newly acquired C. difficile
spores. The applicant noted CMS’
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concern, as described in the proposed
rule, regarding the reported adverse
event of cardiac failure with
ZINPLAVATM. The applicant provided
additional information concerning
serious adverse events (SAEs) observed
in the Phase III trials, and also included
a series of analyses performed in the 41
subjects with an SAE of cardiac failure,
as well as a discussion of analyses
performed in a subset of patients with
a baseline history of CHF.
The applicant noted that SAEs were
collected for the full 12-week follow-up
period in the both Phase III trials (P001
+ P002). Amongst the 2344 Phase III
trial subjects, 29.8 percent of subjects
experienced an SAE during the 12-week
follow-up period. According to the
applicant, the proportion of subjects
with a SAE was lower in the active
treatment groups compared with
placebo (bezlotoxumab, 29.4 percent;
actoxumab + bezlotoxumab, 27.3
percent; and placebo, 32.7 percent). The
most frequently reported SAEs across all
treatment groups were CDI (4.7 percent),
pneumonia (2.0 percent), sepsis (1.8
percent), cardiac failure (1.7 percent),
diarrhea (1.6 percent), and urinary tract
infection (1.5 percent). A higher
percentage of subjects in the active
treatment groups reported SAEs of
cardiac failure compared with placebo
(bezlotoxumab, 2.2 percent; actoxumab
+ bezlotoxumab, 2.2 percent; and
placebo, 0.9 percent), whereas a higher
percentage of subjects reported SAEs of
CDI, pneumonia, and sepsis in the
placebo group compared with the
bezlotoxumab and actoxumab +
bezlotoxumab groups. The incidence for
other frequently reported SAEs was
similar across groups. SAEs generally
reflected the underlying comorbidities
and advanced age of the subjects
enrolled.
The applicant also further
characterized the observed numerical
imbalance of subjects experiencing
cardiac failure SAEs in bezlotoxumabcontaining versus placebo treatment
groups, by performing a series of
analyses in the 41 subjects with an SAE
of cardiac failure. The applicant noted
the baseline characteristics of the 41
subjects who experienced an SAE of
cardiac failure. As compared with the
All patients as treated (APaT)
population for the integrated Phase III
trials (P001 + P002) dataset, the 41
subjects were older, almost all were
inpatients at the time of enrollment, had
a higher incidence of comorbid
conditions (as evidenced by Charlson
Comorbidity Index and Horn’s Index),
and a higher incidence of severe CDI.
Across the treatment groups, nearly 90
percent had a medical history of
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including at least one cardiac condition
and approximately 70 percent had a
history of cardiac failure and/or
cardiomyopathy. Therefore, the
applicant believed that any assessment
of the safety profile of this morbidly ill
patient population must be interpreted
with caution.
The applicant provided an analysis of
the safety profile of the 41 subjects with
cardiac failure SAEs with respect to
timing to cardiac failure SAE and death.
In the placebo group, 5 of 7 subjects
experienced an SAE of cardiac failure
before Week 4, while in the
bezlotoxumab and actoxumab +
bezlotoxumab groups, the majority of
such events occurred after Week 4.
None of the cardiac failure SAEs was
deemed drug related by the investigator.
Among subjects with a cardiac failure
SAE, a higher proportion of subjects in
the placebo group than in the
bezlotoxumab group died before Week
4. The applicant noted that the events
were often associated with concurrent
conditions such as infection and/or
worsening CDI that are known to
exacerbate CHF, thereby further
supporting the assessments that these
events were not drug related. Overall,
according to the applicant, these
findings do not support a clear
association between cardiac failure and
bezlotoxumab, especially recognizing
the severe baseline morbidity of the
subjects and the lack of a temporal
association of the event and any
associated death.
The applicant reiterated that heart
failure is listed in the warnings and
precautions section of the prescribing
information for ZINPLAVATM to
describe the higher incidence of heart
failure reported in the two Phase III
trials in subjects who received
ZINPLAVATM compared with those who
received placebo, primarily in patients
with underlying CHF. The warnings and
precautions section of the ZINPLAVATM
label states, in part, that in patients with
a history of CHF, ZINPLAVATM ‘‘should
be reserved for use when the benefit
outweighs the risk.’’ Although the
overall safety profile of ZINPLAVATM
was found to be acceptable, the FDA
considered that this information was
clinically relevant. Furthermore, the
applicant stated that ZINPLAVATM has
also recently been authorized for use by
the European Medicines Agency (EMA)
and that there is no heart failure
warning in the EU prescribing
information.
Response: We appreciate the
additional information and analysis
provided by the applicant in response to
our concerns regarding the adverse
event of cardiac failure. We are satisfied
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38119
that the warnings and precautions
section of the drug’s label clearly state
that ‘‘ZINPLAVATM should be reserved
for use when the benefit outweighs the
risk’’ for patients with a history of
congestive heart failure (CHF). We agree
that ZINPLAVATM represents a
substantial clinical improvement over
existing technologies because, based on
the studies provided by the applicant, it
reduces CDI recurrence by providing
passive immunity against Toxin B
resulting from persistent or newly
acquired C-diff spores. After
consideration of the public comments
we received, we have determined that
ZINPLAVATM meets all of the criteria
for approval of new technology add-on
payments. Therefore, we are approving
new technology add-on payments for
ZINPLAVATM for FY 2018. Cases
involving ZINPLAVATM that are eligible
for new technology add-on payments
will be identified by ICD–10–PCS
procedure codes XW033A3 and
XW043A3.
In its application, the applicant
estimated that the average Medicare
beneficiary would require a dosage of 10
mg/kg administered as an IV infusion
over 60 minutes as a single dose.
According to the applicant, the WAC for
one dose is $3,800. Under 42 CFR
412.88(a)(2), we limit new technology
add-on payments to the lesser of 50
percent of the average cost of the
technology or 50 percent of the costs in
excess of the MS–DRG payment for the
case. As a result, the maximum new
technology add-on payment amount for
a case involving the use of
ZINPLAVATM is $1,900 for FY 2018. In
keeping with the current ZINPLAVATM
label, CMS expects ZINPLAVATM will
be prescribed for adult patients who are
receiving antibacterial drug treatment
for a diagnosis of CDI who are at high
risk for CDI recurrence, and after
consideration of its current warnings
and precautions section which indicates
for patients with a history of CHF,
ZINPLAVATM should be reserved for
use when the benefit outweighs the risk.
b. EDWARDS INTUITY EliteTM Valve
System (INTUITY) and LivaNova
Perceval Valve (Perceval)
Two manufacturers, Edwards
Lifesciences and LivaNova, submitted
applications for new technology add-on
payments for FY 2018 for the INTUITY
EliteTM Valve System (INTUITY) and
the Perceval Valve (Perceval),
respectively. Both of these technologies
are prosthetic aortic valves inserted
using surgical aortic valve replacement
(AVR). We note that, while Edwards
Lifesciences submitted an application
for new technology add-on payments for
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FY 2017 for the INTUITY valve, FDA
approval was not received by July 1,
2016, and, therefore, the device was not
eligible for consideration for new
technology add-on payments for FY
2017.
Aortic valvular disease is relatively
common, primarily manifested by aortic
stenosis. Most aortic stenosis is due to
calcification of the valve, either on a
normal tri-leaflet valve or on a
congenitally bicuspid valve. The
resistance to outflow of blood is
progressive over time, and as the size of
the aortic orifice narrows, the heart
must generate increasingly elevated
pressures to maintain blood flow.
Symptoms such as angina, heart failure,
and syncope eventually develop, and
portend a very serious prognosis. There
is no effective medical therapy for aortic
stenosis, so the diseased valve must be
replaced or, less commonly, repaired.
The INTUITY valve incorporates the
expansion feature of a catheter
implanted valve, but is designed to be
placed during cardiac surgery. The
manufacturer explained that the
INTUITY valve requires fewer stitches
to hold the device in place because of
the balloon expanded design and,
therefore, can be inserted more quickly
than a standard valve, and also
facilitates minimally invasive cardiac
surgery; that is, use of a smaller incision
to allow faster recovery. The
manufacturer of the INTUITY valve
indicated that the device is comprised
of: (1) A bovine pericardial aortic
bioprosthetic valve; (2) a balloon
expandable stainless steel frame; and (3)
a textured sealing cloth. The
manufacturer of the Perceval valve
indicated that the Perceval valve device
is comprised of: (1) Sizers used to
determine the correct size of the
prosthesis; (2) a dual holder used for
positioning and deployment (available
in two models, one for sternal
approaches and one for MIS); (3) a
‘‘smart clip’’ to assist during assembly of
the valve on the dual holder to prevent
release during positioning; (4) a dual
collapser used to evenly reduce the
diameter of the prosthesis allowing it to
mount onto the holder prior to
implantation; (5) a dual collapser base
used to allow proper positioning; and
(6) a postdilation catheter used for in
situ dilation of the prosthesis after
implantation (available in two models,
one for sternal approaches and one for
MIS). According to both applicants, the
INTUITY valve and the Perceval valve
are the first sutureless, rapid
deployment aortic valves that can be
used for the treatment of patients who
are candidates for surgical AVR. The
applicants indicated that the two new
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device innovations facilitate MIS
approaches through: (1) The device
rapid deployment mechanisms; and (2)
the design of the prosthetic valve that
allows for markedly fewer to no sutures
to securely fasten the prosthetic valve to
the aortic orifice. The applicants
explained that both of these aspects of
their devices are credited with the
reduction of operating time.
As noted, according to both
applicants, the INTUITY valve and the
Perceval valve are the first sutureless,
rapid deployment aortic valves that can
be used for the treatment of patients
who are candidates for surgical AVR.
Because potential cases representing
patients who are eligible for treatment
using the INTUITY and the Perceval
aortic valve devices would group to the
same MS–DRGs, and we believe that
these devices are intended to treat the
same or similar disease in the same or
similar patient population, and are
purposed to achieve the same
therapeutic outcome using the same or
similar mechanism of action, we believe
these two devices are substantially
similar to each other and that it is
appropriate to evaluate both
technologies as one application for new
technology add-on payments under the
IPPS.
With respect to the newness criterion,
the INTUITY valve received FDA
approval on August 12, 2016, and was
commercially available on the U.S.
market on August 19, 2016. The
Perceval valve received FDA approval
on January 8, 2016, and was
commercially available on the U.S.
market on February 29, 2016. We
believe that, in accordance with our
policy, it is appropriate to use the
earliest market availability date
submitted as the beginning of the
newness period. Therefore, we stated in
the proposed rule that based on our
policy, with regard to both devices, if
the technologies are approved for new
technology add-on payments, we
believe that the beginning of the
newness period would be February 29,
2016. In addition, both applicants
indicated that ICD–10–PCS code
X2RF032 (Replacement of Aortic Valve
using Zooplastic Tissue, Rapid
Deployment Technique, Open
Approach, New Technology Group 2)
would identify procedures involving the
use of the devices when surgically
implanted.
We previously stated that, because we
believe these two devices are
substantially similar to each other, we
believe it is appropriate to evaluate both
technologies as one application for new
technology add-on payment under the
IPPS. The applicants submitted separate
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cost and clinical data, and we reviewed
and discuss each set of data separately.
However, we stated in the proposed rule
that we intend to make one
determination regarding new technology
add-on payments that will apply to both
devices. We believe that this is
consistent with our policy statements in
the past regarding substantial similarity.
Specifically, we have noted that
approval of new technology add-on
payments would extend to all
technologies that are substantially
similar (66 FR 46915), and we believe
that continuing our current practice of
extending new technology add-on
payments without a further application
from the manufacturer of the competing
product, or a specific finding on cost
and clinical improvement if we make a
finding of substantial similarity among
two products is the better policy
because we avoid—
• Creating manufacturer-specific
codes for substantially similar products;
• Requiring different manufacturers
of substantially similar products to
submit separate new technology
applications;
• Having to compare the merits of
competing technologies on the basis of
substantial clinical improvement; and
• Bestowing an advantage to the first
applicant representing a particular new
technology to receive approval (70 FR
47351).
We explained in the proposed rule
that if these substantially similar
technologies were submitted for review
in different (and subsequent) years,
rather than the same year, we would
evaluate and make a determination on
the first application and apply that same
determination to the second application.
However, because the technologies have
been submitted for review in the same
year, we believe that it is appropriate to
consider both sets of cost data and
clinical data in making a determination
and we do not believe that it is possible
to choose one set of data over another
set of data in an objective manner.
As stated above, we believe that the
INTUITY valve and the Perceval valve
are substantially similar to each other
for purposes of analyzing these two
applications as one application. As we
stated in the proposed rule, we also
need to determine whether the INTUITY
valve and the Perceval valve are
substantially similar to existing
technologies prior to their approval by
the FDA and their release on the market.
As discussed earlier, if a technology
meets all three of the substantial
similarity criteria, it would be
considered substantially similar to an
existing technology and would not be
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considered ‘‘new’’ for purposes of new
technology add-on payments.
With respect to the first criterion,
whether a product uses the same or a
similar mechanism of action to achieve
a therapeutic outcome, the applicant for
the INTUITY valve asserted that its
unique design, which utilizes features
that were not previously included in
conventional aortic valves, constitutes a
new mechanism of action. The
deployment mechanism allows for rapid
deployment. The expandable frame can
reshape the native valve’s orifice,
creating a larger and more efficiently
shaped effective orifice area. In
addition, the expandable skirt allows for
structural differentiation upon fixation
of the valve requiring 3 permanent,
guiding sutures rather than the 12 to 18
permanent sutures used to fasten
standard prosthetic aortic valves. The
applicant for the Perceval valve
described the Perceval valve’s
mechanism of action as including: (a)
No permanent sutures; (b) a dedicated
delivery system that increases the
surgeon’s visibility; (c) an enabler of
minimally invasive approach; (d) a
complexity reduction and
reproducibility of the procedure; and (e)
a unique device assembly and delivery
systems.
With respect to the second and third
criteria, whether a product is assigned
to the same or a different MS–DRG and
whether the new use of the technology
involves the treatment of the same or
similar type of disease and the same or
similar patient population, the applicant
for the INTUITY valve indicated that the
technology is used in the treatment of
the same patient population and
potential cases representing patients
that may be eligible for treatment using
the INTUITY valve would be assigned to
the same MS–DRGs as cases involving
the use of other prosthetic aortic valves
(that is, MS–DRGs 216 (Cardiac Valve &
Other Major Cardiothoracic Procedures
with Cardiac Catheterization with
MCC), 217 (Cardiac Valve & Other Major
Cardiothoracic Procedures with Cardiac
Catheterization with CC), 218 (Cardiac
Valve & Other Major Cardiothoracic
Procedures with Cardiac Catheterization
without CC/MCC), 219 (Cardiac Valve &
Other Major Cardiothoracic Procedures
without Cardiac Catheterization with
MCC), 220 (Cardiac Valve & Other Major
Cardiothoracic Procedures without
Cardiac Catheterization with CC), and
221 (Cardiac Valve & Other Major
Cardiothoracic Procedures without
Cardiac Catheterization without CC/
MCC).
The applicant for the Perceval valve
also indicated that the Perceval valve
device is used in the treatment of the
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same patient population and potential
cases representing patients that may be
eligible for treatment using the
technology would be assigned to the
same MS–DRGs (MS–DRGs 216 through
221) as cases involving the use of other
prosthetic aortic valves.
We stated in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19881) that
after considering the materials included
with both applications, we remained
concerned as to whether the mechanism
of action described by the applicants
represents an improvement to an
existing surgical technique and
technology or a new technology. While
the INTUITY and Perceval valves
address some of the challenges posed by
implantation of existing valves,
including improving the visibility of the
orifice and the physiological function of
the valves, we stated that we did not
believe that their mechanisms of action
are fundamentally different from that of
other aortic valves. As one of the
applicants stated in its application, the
goal of the prosthetic aortic valve is to
mimic the native valve that it has
replaced via the incorporation of three
leaflets that open and close in response
to pressure gradients developed during
the cardiac cycle. We stated that we
believe that the INTUITY and Perceval
valves are the same or similar to other
prosthetic aortic valves used to treat the
same or similar diagnoses.
In the proposed rule, we invited
public comments on whether the
mechanism of action of the sutureless,
rapid deployment of the INTUITY and
Perceval valves differs from the
mechanism of action of standard AVR
valves and whether the technologies
meet the newness criterion.
Comment: The applicant for the
INTUITY valve, as well as several
physicians that have performed
surgeries implanting the INTUITY,
stated that the mechanism of action
differs from that of standard aortic
valves because of the expeditious
implantation, rapid deployment, and
improved hemodynamics. The applicant
also emphasized innovative aspects
about the INTUITY that were described
in its application, such as the flexible
delivery system, the ability to reshape
the native valve’s orifice, and the
balloon expandable stented frame and
subannular skirt. The applicant
emphasized that minimally invasive
aortic valve replacement has not been
widely adopted because of greater
technical challenge and longer crossclamp times, but that the INTUITY
facilitates minimally invasive surgery by
addressing both of these challenges.
One commenter, who also
manufactures heart valves, indicated
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38121
that it shared CMS’ concern about
whether the mechanism of action
constitutes a new technology. This
commenter indicated that prosthetic
aortic valves fall into two categories:
Traditional, open surgical and
minimally invasive, and that differences
in design of the valves are intended to
address challenges in surgical valve
replacement, including surgical
technique, reduction in complications,
improvement in hemodynamics, or
resistance to calcification. The
commenter stated that all prosthetic
aortic valves are substantially similar to
each other. The commenter described
the steps involved in placing surgical
valves, and indicated that the
applicants’ devices introduce a new
technique for securing a surgically
implanted bioprosthetic heart valve to
the annulus and surrounding structures,
but that the mechanism of action is
unchanged. The commenter also noted
that rapid deployment surgical aortic
valves were introduced into clinical
practice in 1963.
Response: We thank the commenters
for the details and input on whether
INTUITY and Perceval meet the
newness criterion. While we appreciate
the additional information provided by
the commenter that did not believe
these valves represented a new
technology, we believe that based on
comments from the manufacturer and
physicians who have used the INTUITY
device, the mechanism of action for the
INTUITY and Perceval is different from
other aortic valves. Specifically, as the
manufacturer and other physicians
emphasized in their comments, the
technical features of the valve provide
the ability to improve clinical function
beyond the opening and closing of the
valve leaflets and allow it to perform
more efficiently than a standard valve.
Thus, as these commenters noted, a
prosthetic aortic valve inserted using
surgical AVR with its insertion process
improves the physiologic function of the
outflow track of the new valve. After
further review of the information
provided by the applicant and
consideration of the public comments
we received, we believe that INTUITY
and Perceval meet the newness
criterion. Therefore, we consider the
technology to be ‘‘new’’ as of February
29, 2016, when the Perceval valve
became commercially available.
As we stated above, each applicant
submitted separate analyses regarding
the cost criterion for each of their
devices, and both applicants maintained
that their device meets the cost
criterion. We summarize each analysis
below.
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With regard to the cost criterion, the
INTUITY valve’s applicant researched
the FY 2015 MedPAR claims data file to
identify cases representing patients who
may be potential recipients of treatment
using the INTUITY valve. The applicant
identified claims that reported an ICD–
9–CM diagnosis code of 424.1 (Aortic
valve disorder), in combination with an
ICD–9–CM procedure code of 35.21
(Replacement of aortic valve with
tissue) or 35.22 (Open and other
ICD–9–CM code
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36.10
36.11
36.12
36.13
36.14
36.15
36.16
36.17
....................
....................
....................
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....................
....................
....................
....................
Code description
Aortocoronary bypass for heart revascularization, not otherwise specified
(Aorto)coronary bypass of one coronary artery.
(Aorto)coronary bypass of two coronary arteries.
(Aorto)coronary bypass of three coronary arteries.
(Aorto)coronary bypass of four or more coronary arteries.
Single internal mammary-coronary artery bypass.
Double internal mammary-coronary artery bypass.
Abdominal-coronary artery bypass.
The applicant identified a total of
25,173 cases that mapped to MS–DRGs
216 through 221. Of these cases, the
applicant identified 10,251 CABG cases
and 14,922 non-CABG cases. According
to the applicant, patients that undergo a
procedure without need of a
concomitant CABG are more likely to
receive treatment with the INTUITY
valve than patients in need of a
concomitant CABG. Therefore, the
applicant weighted the non-CABG cases
at 90 percent of total cases and the
CABG cases at 10 percent of total cases
under each of the six MS–DRGs. The
final case count is a weighted average of
14,455 cases.
The applicant calculated an average
unstandardized charge per case of
$192,506 for all cases. The applicant
then removed 100 percent of the charges
for pacemakers, investigational devices,
and other implants that would not be
required for patients receiving treatment
using the INTUITY valve. The applicant
standardized the charges and then
applied an inflation factor of 1.098446,
which is the 2-year inflation factor in
the FY 2017 IPPS/LTCH PPS final rule
(81 FR 57286), to update the charges
from FY 2015 to FY 2017. The applicant
calculated the average expected charge
for the INTUITY valve based on the
current list price of the device.
Although the applicant submitted data
related to the cost of the INTUITY valve,
the applicant noted that the cost of the
device is proprietary information. To
add charges for the device, the applicant
assumed a hospital mark-up of
approximately 300 percent, based on the
current average CCR for implantable
devices (0.331) as reported in the FY
2017 IPPS/LTCH PPS final rule (81 FR
56876). Based on the FY 2017 IPPS/
LTCH PPS Table 10 thresholds, the
average case-weighted threshold amount
was $170,321. The applicant computed
an inflated average case-weighted
standardized charge per case of
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replacement of aortic valve). The
applicant also identified cases with or
without a coronary artery bypass graft
(CABG) using the ICD–9–CM procedure
codes in the table below.
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$194,291, which is $23,970 above the
average case-weighted threshold
amount. Because the inflated average
case-weighted standardized charge per
case exceeds the average case-weighted
threshold amount, the applicant
maintained that the technology meets
the cost criterion.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19882), we
thanked the applicant for the analysis
above. However, we indicated that we
would like more information from the
applicant regarding how it decided
upon which cases to include in the
sensitivity analysis, as well as further
details about how and on what basis the
applicant weighted CABG and nonCABG cases. We invited public
comments on whether the INTUITY
valve meets the cost criterion. We
summarize the public comment we
received from the applicant regarding its
cost analysis later in this section.
With regard to the cost criterion in
reference to the Perceval valve, the
applicant conducted the following
analysis. The applicant examined FY
2015 MedPAR claims data that included
cases reporting an ICD–9 procedure
code of 35.21 or 35.22, in combination
with diagnosis code: 424.1. Noting that
MS–DRGs 216 through 221 contained 97
percent of these cases, the applicant
limited its analysis to these 6 MS–DRGs.
The applicant identified 25,193 cases
across these MS–DRGs, resulting in an
average case-weighted unstandardized
charge per case of $173,477. The
applicant then standardized charges
using FY 2015 standardization factors
and applied an inflation factor of
1.089846 from the FY 2017 IPPS/LTCH
PPS proposed rule (81 FR 25271). The
applicant indicated that the technology
meets the cost criterion by applying the
inflation factor from the proposed rule
and, therefore, would meet the cost
criterion by applying the higher
inflation factor from the final rule.
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Included in the average case-weighted
standardized charge per case were
charges for the current valve prosthesis.
Therefore, the applicant removed all
charges associated with revenue center
0278, and calculated the adjusted
average case-weighted standardized
charge per case by subtracting these
charges from the standardized charge
per case. The applicant then added the
charge for the new technology by taking
the anticipated hospital cost of the new
technology and dividing it by the
national average implantable devices
CCR of 0.331. The applicant then added
the charge for the new technology to the
inflated average case-weighted
standardized charges per case to arrive
at the final inflated average caseweighted standardized charge per case,
which was then case-weighted based on
the distribution of cases within the six
MS–DRGs. This resulted in an inflated
average case-weighted standardized
charge per case of $206,109. Using the
FY 2017 IPPS Table 10 thresholds, the
average case-weighted threshold amount
was $173,477. Because the inflated
average case-weighted standardized
charge per case exceeds the average
case-weighted threshold amount, the
applicant maintained that the
technology meets the cost criterion. In
the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 19882), we invited public
comments on whether the Perceval
technology meets the cost criterion. We
did not receive any public comments
concerning the costs for the Perceval
technology.
Comment: The applicant for the
INTUITY valve stated that it based its
initial sensitivity analysis on 14,455
cases that reflected the weighted mix of
CABG and non-CABG cases, as the
findings in European trials indicated
that INTUITY was predominantly
performed on patients who did not have
a concomitant CABG during their
inpatient stay. The applicant stated that
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because the INTUITY is intended for
use in all surgical aortic valve
replacement procedures, regardless of
whether the patient also receives CABG,
it reran the cost threshold analysis
including all 25,173 target cases in the
FY 2015 MedPAR with an ICD–9–CM
diagnosis code of 424.1 (Aortic valve
disorder), in combination with an ICD–
9–CM procedure code of 35.21
(Replacement of aortic valve with
tissue) or 35.22 (Open and other
replacement of aortic valve) that
mapped to MS–DRGs 216 through 221.
The applicant presented a summary
table, which indicated that the case
weighted threshold was $173,463, the
final inflated case weighted
standardized charge per case was
$206,329, and the difference is $32,866.
Response: We appreciate the
applicant’s submission of this
additional information. Based on review
of the sensitivity analysis included in
the original application and subsequent
analysis included in the INTUITY
applicant’s public comment, as well as
the cost analyses set forth in both
applicants’ original applications as set
forth above, we have determined that
both the INTUITY and the Perceval
valve meet the cost criterion.
With regard to substantial clinical
improvement for the INTUITY valve,
the applicant asserted that several
aspects of the valve system represent a
substantial clinical improvement over
existing technologies. The applicant
believed that the flexible deployment
arm allows improved surgical access
and visualization, making the surgery
less challenging for the surgeon,
improving the likelihood that the
surgeon can use a minimally invasive
approach. According to the applicant,
the assembly of the device only allows
the correct valve size to be fitted, which
ensures that the valve does not slip or
migrate, which prevents paravalvular
leaks and patient prosthetic mismatch.
The applicant indicated that the device
improves clinical outcomes for patients
undergoing minimally invasive AVR
and full-sternotomy AVR. The applicant
stated that the rapid deployment
technology enables reduced operative
time, specifically cross-clamp time,
thereby reducing the period of
myocardial ischemia. In addition, the
applicant indicated that the device
offers a reduction in operative time for
full-sternotomy AVR. The applicant
noted that clinical results document
significant patient outcome and
utilization improvements, including
improved patient satisfaction, faster
return to normal activity, decreased
post-operative pain, reduced mortality
and decreased complications, including
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need for reoperation due to bleeding,
reduced recovery time, reduced length
of stay (both ICU and overall), more
access to minimally invasive surgery,
and improved hemodynamics.
The INTUITY valve has been tested
clinically in several trials. In the
TRITON trial (Kocher et al., 2013 4), 287
patients diagnosed with aortic stenosis
underwent surgery in 1 of 6 European
centers. The first 149 patients received
the first generation Model 8300A valve,
and the next 138 patients received the
second generation Model 8300AB. The
average age of the patients was 75.7
years. Early, 30-day mortality was 1.7
percent (5/287), the post-op valve
gradient was low, and 75 percent of the
patients improved functionally. A total
of 4 valves were explanted in the final
30 days due to bleeding, and 3 were
explanted later for paravalvular leak,
endocarditis, and aortic root aneurysms.
Follow-up extended to 3 years (mean
1.8 years).
Implantation of the INTUITY valve
using minimally invasive surgery was
compared with conventional aortic
valve replacement via full sternotomy in
the CADENCE–MIS randomized trial
(Borger et al., 2015 5) of 100 patients
treated in 1 of 5 centers in Germany.
The authors found no significant
difference in 30-day mortality, the need
for pacemaker implantation, significant
paravalvular regurgitation, and quality
of life scores at 3 months. Aortic crossclamp time was significantly reduced
from 54.0 to 41.3 minutes (p < 0.0001),
and cardiopulmonary bypass time was
reduced from 74.4 to 68.8 minutes (p =
0.21). Early clinical outcomes were
similar: No significant differences in
mortality, reoperation, or other clinical
outcomes. The aortic valve gradient was
significantly lower in the MIS group: 8.5
versus 10.3 mmHg.
The TRANSFORM trial (Barnhart et
al. 2017 6) was a single-arm, nonrandomized, multicenter trial, in which
839 patients underwent rapid
deployment AVR surgery. The average
4 Kocher AA, Laufer G, Haverich A, et al. Oneyear outcomes of the surgical treatment of aortic
stenosis with a next generation surgical aortic valve
(TRITON) trial: A prospective multicenter study of
rapid-deployment aortic valve replacement with the
EDWARDS INTUITY valve system. J Thorac
Cardiovasc Surg 2013;145:110–116.
5 Borger MA, Moustafine V, Conradi L, et al. A
randomized multicenter trial of minimally invasive
rapid deployment versus conventional full
sternotomy aortic valve replacement. Ann Thorac
Surg 2015; 99:17–25.
6 Barnhart, G.A. et al. (2017). TRANSFORM
(Multicenter Experience with Rapid Deployment
Edwards INTUITY Valve System for Aortic Valve
Replacement) US clinical trial: Performance of a
rapid deployment aortic valve. The Journal of
Thoracic and Cardiovascular Surgery, 153, 241–
251.
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38123
age of the patients was 73.5 years. The
mean cross-clamp time and
cardiopulmonary bypass times for full
sternotomy were 49.3 ± 26.9 min and
69.2 ± 34.7 min, respectively, and for
MIS, 63.1 ± 25.4 min and 84.6 ± 33.5
min, respectively. The authors
compared these times to STS database
comparators: For full sternotomy, 76.3
minutes and 104.2 minutes,
respectively, and for MIS, 82.9 minutes
and 111.4 minutes, respectively. All
cause early mortality was 0.8 percent,
mean EOA at 1 year was 1.7 cm2; mean
gradient, 10.3 mmHg; and moderate and
severe PVL, 1.2 percent and 0.4 percent,
respectively. The authors indicated that
the INTUITY valve ‘‘. . . may lead to a
relative reduction in aortic cross-clamp
time and cardiopulmonary bypass time’’
and ‘‘may confer benefits to patients,
such as decreased mortality and
morbidity.’’ The authors noted the
possibility of potential bias resulting
from the level of experience of the study
surgeons relative to typical cardiac
surgeons. In addition, long-term followup is not available, and study
comparators from the Society of
Thoracic Surgeons (STS) database were
not matched.
In the FY 2017 IPPS/LTCH PPS
proposed rule (81 FR 25057), after
reviewing the studies provided by the
applicant with its application for FY
2017, we expressed some specific
concerns. We indicated that we were
concerned that the INTUITY valve does
not have sufficient advantages over
alternative surgically implanted valves
to constitute a substantial clinical
improvement. We noted that, while
some of the studies included with the
application demonstrate reduced aortic
cross-clamp time, conventional aortic
valve replacement was used in the
comparison group. Therefore, it is
unclear whether the reduced aortic
cross-clamp time is associated with the
use of the INTUITY valve or as a result
of the MIS surgery in general.
In response to these concerns, the
INTUITY valve’s applicant stated that
the INTUITY valve is associated with
significant clinical benefits outside of
the benefits achieved by use of an MIS
approach. The applicant referenced the
sub-study of the TRANSFORM trial,
which compared the MISAVR with the
INTUITY valve to MISAVR with a
conventional valve, stating that the
results indicated reduced cross-clamp
time and other benefits that are not
simply a function of the MIS approach.
The applicant also referenced trials that
indicated that the INTUITY valve had
excellent hemodynamic performance
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(Haverich et al.,7 Borger et al.,8 Barnhart
et al.,9) one of which found a significant
improvement in functional status
(Haverich et al.).
After considering the studies
provided by the INTUITY valve
applicant, in the proposed rule, we
stated that we were concerned about the
possibility of potential bias resulting
from the level of experience of the study
surgeons relative to typical cardiac
surgeons, as well as the lack of longterm follow-up in these studies.
Comment: The applicant stated that
there are three key points to support the
improved clinical performance of the
INTUITY. First, there is a sufficient
body of evidence across multiple
clinical studies demonstrating improved
clinical and hemodynamic performance
versus traditionally implanted surgical
valves. Second, these improvements are
not simply a result of a minimally
invasive surgical approach. Third,
collectively, these points validate the
premise that the technical features of
the INTUITY are the primary
contributor of the improved clinical
outcomes, and that non-INTUITY
procedures done with a minimally
invasive surgical approach generally
have longer cross-clamp and operative
times. Physicians that have implanted
the INTUITY valve also indicated that
the INTUITY valve reduces
cardiopulmonary bypass time and crossclamp time, both of which have been
shown to reduce complications.
The applicant also stated that its
studies included surgeons with varied
degrees of experience, and that over 62
physicians participated in the US
INTUITY trials, which reduces the
impact of surgeon bias and allows for
greater generalizability of results. The
applicant stated that while no study is
free of bias, the INTUITY has been
shown to have consistent results in both
clinical trials and the real-world setting.
The applicant further supplemented its
application with recently published 5year follow-up data (Laufer et al.,
7 Haverich, A, et al. (2014), Three-year
hemodynamic performance, left ventricular mass
regression, and prosthetic-patient mismatch after
rapid deployment aortic valve replacement in 287
patients. J Thorac Cardiovasc Surg, 148(6), 2854–60.
8 Borger MA, Moustafine V, Concadi L, et al. A
randomized multicenter trial of minimally invasive
rapid deployment versus conventional full
sternotomy aortic valve replacement. Ann Thorac
Surg 2015; 99:17–25.
9 Barnhart, G.A. et al. (2017). TRANSFORM
(Multicenter Experience with Rapid Deployment
Edwards INTUITY Valve System for Aortic Valve
Replacement) US clinical trial: Performance of a
rapid deployment aortic valve. The Journal of
Thoracic and Cardiovascular Surgery, 153, 241–
251.
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2017),10 which found sustained
benefits, including effective orifice area
(EOA) improvements, low pressure
gradients, and reductions in left
ventricular mass, as well as excellent
survival rates.
A manufacturer that also
manufactures heart valves stated that
the studies cited by the INTUITY
applicant have potential bias resulting
from the level of experience of the study
surgeons relative to typical cardiac
surgeons, as well as a lack of long-term
follow-up. This commenter noted that,
in the CADENCE–MIS trial, key
outcome measures did not differ
statistically significantly at 3 months
between the randomized arms of the
study, but that the rate of pacemaker
implants was higher in the INTUITY
group. This commenter noted that while
transaortic valve gradients are reported
as significantly lower, the study
population was small, and that the
comparator devices are not all
representative of best in class gradients.
This commenter also pointed to the high
rate of pacemaker implants in the
TRANSFORM trial, and mentioned a
recent manuscript that reported that
early pacemaker implantation after
aortic valve replacement was associated
with an increased risk of death.11
Response: While we appreciate the
concerns raised by one commenter
regarding the studies that examined the
INTUITY valve, we believe the
manufacturer addresses our concerns.
With regard to substantial clinical
improvement for the Perceval valve, the
applicant submitted several studies
examining the Perceval valve. The
following discussion summarizes some
of these studies.
Pollari and colleagues 12 (2014)
utilized a propensity score analysis to
examine 82 matched pairs as part of a
larger trial that included 566 patients
treated with bioprosthetic aortic valve
replacement, 166 of which received
treatment using the Perceval sutureless
valve and 400 of which received
treatment using a stented valve. Aortic
cross-clamp, cardiopulmonary bypass,
and operation times were significantly
shorter in the group that received
treatment using the Perceval sutureless
valve. The Perceval sutureless group
also had shorter ICU stays, hospital
10 Laufer, G et al. (2017). Long-term outcomes of
a rapid deployment aortic valve: Data up to 5 years.
European Journal of Cardiothorac Surgery, 2017
Apr 26.
11 Greason et al. (2017). Long-Term Mortality
Effect of Early Pacemaker Implantation after
Surgical Aortic Valve Replacement. The Society of
Thoracic Surgeons.
12 Pollari, F. (2014), Better short-term outcome by
using sutureless valves: A propensity-matched
score analysis, Ann Thorac Surg, 98; 611–6.
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Sfmt 4700
stays, and intubation times, and lower
incidence of postoperative atrial
fibrillation and respiratory
insufficiency. The authors noted that,
despite the promising preliminary
results, longer follow-up is warranted
before drawing definite conclusions.
In a nonrandomized trial of 100
patients in a German hospital,
Santarpino and colleagues 13 (2013)
found that procedures completed using
the Perceval valve were associated with
significantly shorter cross-clamp and
cardiopulmonary bypass times (40 ±
13.8 and 69 ± 19.1 versus 66 ± 20.4 and
105 ± 34.8) relative to conventional
stented bioprosthetic valves, as well as
less frequent use of blood transfusions,
shorter ICU stays and shorter use of
intubation. In contrast, Gilmanov and
colleagues 14 (2013) found that a MIS
approach resulted in improved
outcomes, albeit longer aortic crossclamp times. A meta-analysis by Hurley
and colleagues 15 (2015) found reduced
cross-clamp and cardiopulmonary
bypass times, but found a significantly
higher permanent pacemaker rate with
the use of Perceval sutureless valves.
A study conducted by Dalen and
colleagues 16 (2015) used propensity
score matching to examine early postoperative outcomes and 2-year survival
between 171 pairs of patients who
underwent ministernotomy using the
Perceval device or a full sternotomy
with stented prosthesis. There were no
differences in 30-day mortality or 2-year
survival between the groups. The aortic
cross-clamp time and cardiopulmonary
bypass time were shorter, and there
were fewer blood transfusions in the
group that received treatment using the
Perceval device. However, this group
was also at higher risk for post-operative
permanent pacemaker implantation.
We stated in the proposed rule that,
after reviewing the publications
submitted by the applicant, we are
concerned that the lack of
randomization and blinded investigators
may have influenced the outcomes in
many of the studies provided. For
example, in the discussion following
13 Santarpino, G. et al. (2013), The Perceval S
aortic valve has the potential of shortening surgical
time: Does it also result in improved outcome?, Ann
Thorac Surg, 96, 77–81.
14 Gilmanov, D. (2013), Minimally invasive and
conventional aortic valve replacement: a propensity
score analysis, Ann Thorac Surg, 96, 837–843.
15 Hurley et al., ‘‘A Meta-Analysis Examining
Differences in Short-Term Outcomes Between
Sutureless and Conventional Aortic Valve
Prostheses,’’ Innovations 2015; 10:375–382.
16 Dalean, M. (2015), Aortic valve replacement
´
through full sternotomy with a stented
bioprosthesis versus minimally invasive sternotomy
with a sutureless bioprosthesis, Eur J Cardiothorac
Surg 2015; doi:10.1093/ejcts/ezv014.
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Santarpino et al.’s 2013 study, one of
the participants suggested that medical
decision-making regarding ventilation
times, ICU times, and blood transfusions
may be affected by the knowledge of
investigators as to which valve the
patient received treatment using. Also,
as indicated above with respect to the
INTUITY valve, the experience of the
surgeons in these studies may be
confounding factors that may have
influenced the length of surgical
procedures and/or surgical outcomes.
Comment: One manufacturer that
produces heart valves stated that the
evidence for the Perceval device suffers
from lack of randomization and blinding
of investigators. This commenter cited a
brief by the Health Technology
Assessment Information Services of
ECRI summarizing the most recent
evidence about the LivaNova Perceval
valve. The brief cited a range of values
for clinical outcomes, suggesting the
importance in variation in technique.
This commenter also compiled a table of
gradients for aortic heart valves,
including those of the applicants, and
stated that the gradients are comparable
to conventional surgical devices but are
not best-in-class.
Response: While we acknowledge the
concerns raised by one commenter
regarding the Perceval valve, we
recognize that studies in general may
have some limitations. We also note that
the studies submitted by the
manufacturer indicate that the Perceval
valve is associated with fewer blood
transfusions and significantly shorter
aortic cross-clamp, cardiopulmonary
bypass, and operation times. The
Perceval sutureless group also had
shorter ICU stays, hospital stays, and
intubation times, and lower incidence of
postoperative atrial fibrillation and
respiratory insufficiency.
In the proposed rule, we invited
public comments on whether rapid
deployment valves, specifically the
INTUITY and Perceval valves, meet the
substantial clinical improvement
criterion. We noted that we did not
receive any written public comments
regarding the INTUITY and Perceval
valves in response to the New
Technology Town Hall meeting notice.
We agree with the manufacturers that
the INTUITY and Perceval valves
represent a substantial clinical
improvement for the following reasons:
The rapid deployment technology
enables reduced operative time for
minimally invasive AVR and fullsternotomy AVR. Additionally, the
device improves cross-clamp time,
thereby reducing the period of
myocardial ischemia. The improved
patient outcomes were also reflected in
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improved patient satisfaction, faster
return to normal activity, decreased
postoperative pain, reduced mortality
and decreased complications, including
need for reoperation due to bleeding,
reduced recovery time, reduced length
of stay (both ICU and overall), and
improved hemodynamics. In addition,
the newly published 5-year data further
support the substantial clinical
improvement of this technology.
For the reasons described above and
after consideration of the public
comments we received, we have
determined that the INTUITY and
Perceval valve meet all of the criteria for
approval of new technology add-on
payments for FY 2018. Each of the
applicants submitted cost information
for its valve. The manufacturer of the
INTUITY valve stated that the cost of
the valve is $12,500. The applicant
projected that 1,750 cases will involve
the use of INTUITY in FY 2018. The
manufacturer of the Perceval valve
stated that the cost of the valve is
$11,500. The applicant projected that
679 cases will involve the use of the
Perceval valve in FY 2018.
New technology add-on payments for
cases involving these technologies will
be based on the weighted average cost
of the two valves described by the ICD–
10–PCS procedure code X2RF032
(Replacement of Aortic Valve using
Zooplastic Tissue, Rapid Deployment
Technique, Open Approach, New
Technology Group 2). Because ICD–10
codes are not manufacturer specific, we
cannot set one new technology add-on
payment amount for INTUITY and a
different new technology add-on
payment amount for the Perceval valve;
both technologies will be captured by
using the same ICD–10–PCS procedure
code. As such, we believe that the use
of a weighted average of the cost of the
standard valves based on the projected
number of cases involving each
technology to determine the maximum
new technology add-on payment would
be most appropriate. To compute the
weighted cost average, we summed the
total number of projected cases for each
of the applicants, which equaled 2,429
cases (1,750 plus 679). We then divided
the number of projected cases for each
of the applicants by the total number of
cases, which resulted in the following
case-weighted percentages: 72 percent
for the INTUITY and 28 percent for the
Perceval valve. We then multiplied the
cost per case for the manufacturer
specific valve by the case-weighted
percentage (0.72 * $12,500 = $9,005.76
for INTUITY and 0.28 * $11,500 =
$3,214.70 for the Perceval valve). This
resulted in a case-weighted average cost
of $12,220.46 for the valves. Under
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38125
§ 412.88(a)(2), we limit new technology
add-on payments to the lesser of 50
percent of the average cost of the device
or 50 percent of the costs in excess of
the MS–DRG payment for the case. As
a result, the maximum new technology
add-on payment for a case involving the
INTUITY or Perceval valves is $6,110.23
for FY 2018.
c. Ustekinumab (Stelara®)
Janssen Biotech submitted an
application for new technology add-on
payments for the Stelara® induction
therapy for FY 2018. Stelara® received
FDA approval as an intravenous (IV)
infusion treatment of Crohn’s disease
(CD) on September 23, 2016, which
added a new indication for the use of
Stelara® and route of administration for
this monoclonal antibody. IV infusion of
Stelara® is indicated for the treatment of
adult patients (18 years and older)
diagnosed with moderately to severely
active CD who have: (1) Failed or were
intolerant to treatment using
immunomodulators or corticosteroids,
but never failed a tumor necrosis factor
(TNF) blocker; or (2) failed or were
intolerant to treatment using one or
more TNF blockers. Stelara® for IV
infusion has only one purpose,
induction therapy. Stelara® must be
administered intravenously by a health
care professional in either an inpatient
hospital setting or an outpatient hospital
setting.
Stelara® for IV infusion is packaged in
single 130mg vials. Induction therapy
consists of a single IV infusion dose
using the following weight-based dosing
regimen: patients weighing less than (<)
55kg are administered 260mg of
Stelara® (2 vials); patients weighing
more than (>) 55kg, but less than (<)
85kg are administered 390mg of
Stelara® (3 vials); and patients weighing
more than (>) 85kg are administered
520mg of Stelara® (4 vials). An average
dose of Stelara® administered through
IV infusion is 390mg (3 vials).
Maintenance doses of Stelara® are
administered at 90mg, subcutaneously,
at 8-week intervals and may occur in the
outpatient hospital setting.
CD is an inflammatory bowel disease
of unknown etiology, characterized by
transmural inflammation of the
gastrointestinal (GI) tract. Symptoms of
CD may include fatigue, prolonged
diarrhea with or without bleeding,
abdominal pain, weight loss and fever.
CD can affect any part of the GI tract
including the mouth, esophagus,
stomach, small intestine, and large
intestine.
Conventional pharmacologic
treatments of CD include antibiotics,
mesalamines, corticosteroids,
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immunomodulators, tumor necrosis
alpha (TNFa) inhibitors, and antiintegrin agents. Surgery may be
necessary for some patients diagnosed
with CD in which conventional
therapies have failed. The applicant
asserted that use of Stelara® offers an
alternative to conventional
pharmacologic treatments, and has been
shown to be successful in the treatment
of patients who have failed treatment
using the conventional agents currently
being used for a diagnosis of CD,
including TNFa inhibitors.
Although the precise cause of CD is
unknown, the environment, genetics,
and the patient’s immune system are
thought to play a role in this form of
inflammatory bowel disease (IBD).
Conventional pharmacologic therapy is
directed against many different
inflammatory mediators that produce
inflammation and ultimately lead to
gastrointestinal damage. The applicant
asserted that it is of paramount
importance to have a variety of
pharmacologic agents that can address
the proper inflammatory mediator for a
particular patient. The applicant also
asserted that, while the currently
available anti-inflammatory agents used
in the treatment of a diagnosis of CD are
excellent medications, these agents do
not successfully treat all patients
diagnosed with CD, nor do they reliably
sustain disease remission once a
response has been achieved. The
applicant believed that the use of
Stelara® offers an alternative to
currently available treatment options.
With regard to the newness criterion,
Stelara® is not a newly formulated drug.
Stelara®, administered subcutaneously,
received FDA approval in 2009
(September 25, 2009) for the treatment
of moderate to severe plaque psoriasis
in adults. Its IV use for the treatment of
patients diagnosed with CD was
approved by the FDA in 2016
(September 23, 2016). With regard to the
new use of an existing technology, in
the September 1, 2001 final rule (66 FR
46915), we stated that if the new use of
an existing technology was for treating
patients not expected to be assigned to
the same MS–DRG as the patients
receiving the existing technology, it may
be considered for approval, but it must
also meet the cost and substantial
clinical improvement criteria in order to
qualify for the new technology add-on
payment. We do not believe that
potential cases representing patients
that may be eligible for treatment with
the new use of the Stelara® for IV
treatment of a diagnosis of CD would be
assigned to the same MS–DRGs as cases
treated using the prior indications.
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As discussed above, if a technology
meets all three of the substantial
similarity criteria, it would be
considered substantially similar to an
existing technology and would not be
considered ‘‘new’’ for purposes of new
technology add-on payments.
With regard to the first criterion,
whether a product uses the same or a
similar mechanism of action to achieve
a therapeutic outcome, we stated in the
proposed rule that we were concerned
that Stelara®’s mechanism of action
does not appear to differ from the
mechanism of action of other
monoclonal antibodies, which also
target unique gastrointestinal-selective
cytokines. The applicant believed that
the Stelara® uses a different mechanism
of action than other medications
currently available for the treatment of
patients diagnosed with CD. However,
we stated that we believe that the
mechanism of action for the new use of
the Stelara® may be similar to the
mechanism of action of other cytokineselective monoclonal antibodies that
disrupt cytokine mediated signals
crucial to the inflammatory process in
patients diagnosed with CD.
The applicant stated that the Stelara®
is a human IgG1 monoclonal antibody
that binds with specificity to the p40
protein subunit, which is common to
both the interleukin-12 (IL–12) and
interleukin (IL–23) cytokines. IL–12 and
IL–23 are naturally occurring cytokines
that are involved in inflammatory and
immune responses, such as natural
killer cell activation and CD4+ T-cell
differentiation and activation. In in vitro
models, the Stelara® was shown to
disrupt IL–12 and IL–23 mediated
signaling and cytokine cascades by
blocking the interaction of these
cytokines with a shared cell-surface
receptor chain, IL–12Rb1. The cytokines
IL–12 and IL–23 have been implicated
as important contributors to chronic
inflammation. According to the
applicant, IV induction therapy quickly
achieves optimal blood levels of
Stelara® so that blockade of IL–12 and
IL–23 is most effective. This level of
blockade is not achieved with
subcutaneous administration.
The applicant further stated that other
available CD anti-inflammatory or
immune modulator therapies do not
target the IL–12/IL–23p40 substrate.
Rather, these therapies may target other
integrin pairs such as the alpha4- beta7
integrins. Therefore, the applicant
believed that the Stelara® drug is not
substantially similar to any other
approved drug for the treatment of
moderately to severely active CD. As
previously noted, the applicant asserted
that, while the currently available
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Sfmt 4700
agents are excellent medications, these
agents do not successfully treat all
patients diagnosed with CD, nor do
these agents reliably sustain remission
once a clinical response has been
achieved. According to the applicant,
the new use of the Stelara® offers an
alternative to currently available
treatment options, and has been shown
to be successful in the treatment of
patients who have failed treatment with
the conventional agents currently being
used for a diagnosis of CD, including
TNF blockers. In the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19885),
we stated that we are concerned that the
Stelara®’s mechanism of action is
similar to that of other immune system
suppressors used in the treatment of
patients diagnosed with moderately to
severely active CD because other
cytokine-selective monoclonal
antibodies also disrupt cytokine
mediated signals crucial to the
inflammatory process in patients
diagnosed with CD.
With respect to the second criterion,
whether a product is assigned to the
same or a different MS–DRG, the
applicant maintained that MS–DRGs
386, 387, and 385 (Inflammatory Bowel
Disease with CC, without CC/MCC, and
with MCC, respectively) and MS–DRGs
330, 329 and 331 (Major Small and
Large Bowel Procedures with CC,
without CC/MCC, and with MCC,
respectively) are used to identify cases
representing patients who may
potentially be eligible for treatment
using the Stelara®. The applicant
researched claims data from the FY
2015 MedPAR file and found 10,344
cases. About 85 percent of potentially
eligible cases mapped to MS–DRGs for
inflammatory bowel disease and most of
the remainder of cases mapped to MS–
DRGs for bowel surgery. In the proposed
rule, we stated that we believe that
potential cases involving Stelara®
induction therapy may be assigned to
the same MS–DRGs as cases
representing patients who have been
treated using currently available
treatment options.
With respect to the third criterion,
whether the new use of the technology
involves the treatment of the same or
similar type of disease and the same or
similar patient population, according to
the applicant, currently available
pharmacologic treatments include
antibiotics, mesalamines,
corticosteroids, immunomodulators,
tumor necrosis alfa (TNFa) inhibitors
and anti-integrins. The applicant stated
that the new use of the Stelara® for IV
infusion is indicated for the treatment of
adults (18 years and older) diagnosed
with moderately to severely active CD
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who have: (1) Failed or were intolerant
to treatment with immunomodulators or
corticosteroids, but never failed
treatment using a TNF blocker; or (2)
failed or were intolerant to treatment
with one or more TNF blockers. The
applicant asserted that Stelara® for
induction therapy is not substantially
similar to other treatment options
because it does not involve the
treatment of the same or similar type of
patient population. Patients who are
eligible for treatment using the Stelara®
induction therapy have failed other CD
treatment modalities. The applicant
believed that the subset of primary and
secondary nonresponder patients to
TNF inhibitor treatments is a patient
population unresponsive to, or
ineligible for, currently available
treatments for diagnoses of moderate to
severe CD. Based on the indications for
the use of Stelara®, there is a class of
patients who failed, or were intolerant
to, treatment using immunomodulators
or corticosteroids, but never failed
treatment using a TNF blocker. The
applicant indicated that, for those
patients who never failed treatment
with a TNF blocker, this class of
patients can be recognized as two
separate patient populations: One
population of patients who have never
received treatment using a TNF blocker,
or the other population of patients who
have received and responded to
treatment using a TNF blocker. In the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 19885), we stated that we believe
that, if the new use of the Stelara® has
the same mechanism of action as other
immune system suppressors such as
TNF blockers, the patient population
that did not receive treatment using a
TNF blocker may not be a new patient
population because those patients may
be able to receive treatment using, and
would successfully respond to treatment
using, a TNF blocker. Moreover, if the
mechanism of action is the same as
other immune system suppressors, we
stated that we believe that the new use
of the Stelara® may be targeted at a new
patient population in some
circumstances and instances, but we are
concerned that it may not be targeted at
a new patient population in all
circumstances and instances.
In the proposed rule, we invited
public comments on whether the
Stelara® meets the newness criterion.
Comment: Several commenters stated
that Stelara® has a different mechanism
of action than other immune system
suppressors. The applicant also
submitted comments acknowledging
that CMS accurately noted that other
monoclonal antibodies targeting unique
gastrointestinal-selective cytokines are
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currently marketed for the treatment of
CD. The applicant noted that a critical
differentiator is that Stelara® targets the
IL–12 and IL–23 regulatory cytokines
while other monoclonal antibodies used
to treat Crohn’s disease are either TNF
inhibitors or anti-integrin monoclonal
antibodies. The applicant stated that, as
a result, Stelara® has a different
mechanism of action for reducing the
inflammatory response in CD than other
monoclonal antibodies used to treat the
disease. Furthermore, the applicant
stated that while many patients respond
to TNF inhibition, 20 to 25 percent of
them will not respond, regardless of the
TNF inhibitor employed or the dose
provided. By targeting the IL–12 and IL–
23 regulatory cytokines that may be
responsible for the inflammation
producing the patient’s symptoms, the
applicant stated that Stelara® has a
different mechanism of action designed
to treat patients that failed other Crohn’s
disease treatments. The applicant
believed that this distinction makes
Stelara® new and different for treating
some patients with Crohn’s disease. The
applicant provided comments reflecting
that clinicians have learned that
different patients with Crohn’s disease
require different types of cytokine
inhibition to target the inflammatory
process in each particular patient. The
applicant believed that this is an
example of personalized medicine—
choosing the right biologic for the right
patient at the right time. Therefore,
according to the applicant, Stelara®’s
mechanism of action provides a
treatment option for patients with CD
where others have been unsuccessful.
Response: We appreciate the
comments we received from the
applicant on whether or not Stelara®
meets the newness criterion.
After consideration of the public
comments we received, we believe that
Stelara® has a unique mechanism of
action because it is unique from other
immune system suppressors in that it
targets the IL–12 and IL–23 regulatory
cytokines. Therefore, Stelara® meets the
newness criterion for new technology
add-on payments.
With regard to the cost criterion, the
applicant conducted the following
analysis to demonstrate that Stelara®
meets the cost criterion. The applicant
searched claims from the FY 2015
MedPAR file for cases with a principal
ICD–9–CM diagnosis of 555.x (Regional
Enteritis), which are cases of a diagnosis
of Crohn’s Disease that may be eligible
for treatment using Stelara®.
The applicant identified 10,344 cases
that mapped to 35 MS–DRGs.
Approximately 85 percent of cases
mapped to the following Inflammatory
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Bowel MS–DRGs: MS–DRGs 385
(Inflammatory Bowel Disease with
MCC), 386 (Inflammatory Bowel Disease
with CC), and 387 (Inflammatory Bowel
Disease without CC/MCC). Similarly, 11
percent of the cases mapped to the
following MS–DRGs for bowel surgery:
MS–DRGs 329 (Major Small and Large
Bowel Procedures with MCC), 330
(Major Small and Large Bowel
Procedures with CC), and 331 (Major
Small and Large Bowel Procedures
without CC/MCC). The remaining cases
(4 percent) represented all other
digestive system disorders.
Using the 10,344 identified cases, the
average unstandardized case-weighted
charge per case was $39,935. The
applicant then standardized the charges.
The applicant did not remove charges
for the current treatment because as
discussed above Stelara® is indicated
for use in patients who fail other
treatments. The applicant then applied
the 2-year inflation factor of 1.098446
from the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57286) to inflate the charges
from FY 2015 to FY 2017. The applicant
then added charges for the Stelara®
technology. Specifically, the applicant
assumed that hospitals would mark up
Stelara® IV to the same extent that they
currently mark-up Stelara® SC (J3357,
ustekinumab, 1 mg). The applicant used
the actual hospital mark-up based on
charges in the CY 2017 OPPS/ASC
proposed rule file (OPPS claims
incurred and paid in CY 2015). Based
on the FY 2017 IPPS/LTCH PPS Table
10 thresholds, the average caseweighted threshold amount was
$55,023. The inflated average caseweighted standardized charge per case
was $69,826. Because the inflated
average case-weighted standardized
charge per case exceeds the average
case-weighted threshold amount, the
applicant maintained that the
technology meets the cost criterion. In
the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 19886), we invited public
comments on whether Stelara® meets
the cost criterion.
Comment: The applicant submitted
public comments reiterating its cost
analysis results. According to the
applicant, the inflated average caseweighted standardized charge per case
exceeds the average case-weighted
threshold amount. The applicant
maintained that the technology meets
the cost criterion.
Response: After consideration of the
public comments we received, we agree
that Stelara® meets the cost criterion.
With regard to the third criterion,
whether a technology represents a
substantial clinical improvement over
existing technologies, according to the
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applicant, the new use of the Stelara®
has been shown to produce clinical
response and remission in patients
diagnosed with moderate to severe CD
who have failed treatment using
conventional therapies, including
antibiotics, mesalamine, corticosteroids,
immunomodulators, and TNFa
inhibitors. Stelara® has been
commercially available on the U.S.
market for the treatment of patients
diagnosed with psoriasis (PsO) since
2009 and the treatment of patients
diagnosed with psoriatic arthritis (PsA)
since 2013, and the applicant has
maintained a safety registry, which
enrolled over 12,000 patients since
2007. According to the applicant, the
drug has been extremely well-tolerated,
and the safety profile in patients
diagnosed with CD has been consistent
with that experienced in cases
representing patients diagnosed with
PsO and PsA.
The applicant presented the results of
three pivotal trials involving over 1,300
patients diagnosed with moderate to
severe CD. All three trials utilized a
multicenter, double-blind, placebo
controlled study design. There were two
single-dose IV induction trials, which
included patients who had failed
treatment using one or more TNFa
inhibitors (UNITI–1) (N = 741), and
patients who had failed treatment using
corticosteroids and/or
immunomodulators (UNITI–2) (N =
628). Responders to the single IV
induction dose were then eligible to be
enrolled in a maintenance trial (IM–
UNITI) (N = 397), which began 8 weeks
after administration of the single IV
induction dose. IM–UNITI patients were
given subcutaneous Stelara® and were
treated for 44 weeks. Over half of the
patients treated with 90 mg of Stelara®
every 12 weeks were able to achieve
remission; a highly significant response
compared to placebo, according to the
applicant. The results of these trials
have been published by the New
England Journal of Medicine and the
applicant provided the published
studies.17 The published study
supported the applicant’s assertion that
Stelara® single IV dose induces
response and remission in patients
diagnosed with moderately to severely
active CD that is refractory to either TNF
antagonists or conventional therapy. Of
the patients in the IM–UNITI trial
receiving subcutaneous Stelara® at 8
weeks or 12 weeks, 53.1 percent and 48
percent, respectively, were in remission
17 Feagan, W.J., et al. (2016) Ustekinumab as
Induction and Maintenance Therapy for Crohn’
Disease. The New England Journal of Medicine.
2016 Nov 17; 3745(20):1946–60.
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at week 44 as compared with 35.9
percent of those patients receiving
treatment using placebo.
The applicant submitted published
results of a multicenter, double-blind,
placebo controlled Phase III study of
Stelara®.18 In the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19886), we
indicated that we were concerned that
the study did not effectively establish
the need for Stelara® induction therapy.
Also, the median age of patients in the
study was 37 years, and we stated that
we were concerned that the study did
not include a significant amount of
older patients.
We also indicated that we were
concerned that we do not have enough
information to determine that the new
use of the Stelara® is a substantial
clinical improvement over existing
technologies for the treatment of
moderate to severe CD. We noted that
the UNITI–1, UNITI–2, and IMUNITI
trials were completed to evaluate
efficacy and safety of Stelara®, not
superiority of Stelara® to current
conventional therapy. Our concerns
were based on a lack of head-to-head
trials comparing IV induction and
maintenance Stelara® therapy with
conventional therapy in patients
diagnosed with moderate to severe CD
that are also primary and secondary
nonresponders to treatment using TNF
alpha inhibitor 19 therapy. We
recognized the subset of primary and
secondary nonresponder patients to
TNF inhibitor treatments as a patient
population unresponsive to, or
ineligible for, currently available
treatments for diagnoses of moderate to
severe CD. However, we stated that we
believe that this primary and secondary
TNF alpha inhibitor non-responder
patient population represents patients
that experience a gap in treatment for
diagnoses of moderate to severe CD.
Specifically, we recognized the
nonresponder patient population as
described by Simon et al.20 as those
patients who are TNF inhibitor
immunogenicity failures,
pharmacokinetic failures, and/or
pharmacodynamics failures. We also
noted the supplement data in Feagan et
al.’s publication 21 summarized the
primary and secondary nonresponders
in UNITI–1. However, we stated that we
18 Ibid.
19 Ibid.
20 Simon E.G., et al., (2016) Ustekinumab for the
treatment of Crohn’s disease: can it find its niche?
Therapeutic Advances in Gastroenterology. 2016
Jan; 9(1):26–36.
21 Feagan, W.J., et al. (2016) Ustekinumab as
Induction and Maintenance Therapy for Crohn’
Disease. The New England Journal of Medicine.
2016 Nov 17; 3745(20):1946–60.
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were not clear how the inclusion of the
TNF alpha inhibitor intolerant patients
with primary and secondary TNF alpha
inhibitor failure patients impacts the
final comparison of the placebo and
treatment arms. In addition, we noted
that, in the UNITI–1, UNITI–2, and
IMUNITI studies, all treatment arms
were allowed to continue conventional
treatments for diagnoses of CD
throughout the study. We stated that we
were concerned that it is difficult to
determine whether the new use of the
Stelara® represents a substantial clinical
improvement over existing technologies
with the concomitant use of other
conventional CD medications
throughout the duration of the UNITI–
1, UNITI–2, and IMUNITI studies.
Also, as mentioned earlier, based on
the indications for the use of the
Stelara®, there is a class of patients who
failed, or were intolerant to, treatment
with immunomodulators or
corticosteroids, but never failed
treatment using a TNF blocker.
According to the applicant, for those
patients who never failed treatment
using a TNF blocker, this patient
population can be recognized as two
separate patient populations: One
patient population representing patients
who never received treatment using a
TNF blocker; or the other patient
population representing patients who
received and responded to treatment
using a TNF blocker. In the patient
population that did not receive
treatment using a TNF blocker, we
stated that we were unsure if the new
use of the Stelara® represents a
substantial clinical improvement
because it is possible that some patients
will have a positive response to
treatment using a TNF blocker and will
not respond successfully to treatment
using Stelara®, or some patients may
have a positive response to both
treatment using a TNF blocker and
using Stelara®, or some patients may not
respond to treatment using a TNF
blocker, but will have a positive
response to treatment using Stelara®.
In the proposed rule, we invited
public comments on whether the
Stelara® meets the substantial clinical
improvement criterion. We noted that
we did not receive any written public
comments in response to the New
Technology Town Hall meeting notice
regarding the application of Stelara® for
new technology add-on payments.
Comment: The applicant submitted
public comments addressing CMS’
concerns. The applicant stated that the
first dose of any therapy may be
considered induction therapy. The
applicant reiterated the results of its
early trials which demonstrated that
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intravenous induction therapy was
superior to subcutaneous administration
and that higher intravenous doses
appeared to be more efficacious than
lower subcutaneous doses. The
applicant noted that IBD experts are
generally in agreement that higher doses
of biologics are required at the outset to
induce remission, while lower and less
frequent doses may be adequate to
maintain remission in a maintenance
setting.
The applicant also submitted
comments addressing CMS’ concerns
with regards to the lack of head-to-head
clinical trials comparing IV induction
and maintenance Stelara® therapy with
conventional therapy in patients
diagnosed with moderate to severe CD
that are also primary and secondary
nonresponders to treatment using TNF
alpha inhibitor therapy. The applicant
stated that the UNITI trials were, in fact,
head-to-head trials—the placebo group
was receiving active treatment and was
not truly a placebo group. Those
patients continued the conventional
therapies they were taking prior to study
entry. The applicant noted that the
UNITI induction trials covered the
breadth of CD patients and that the
UNITI–2 population had failed either
corticosteroids and/or
immunomodulators—these drugs are
both recognized as standard
conventional therapy for CD according
to the applicant. The UNITI–1
population had failed at least one TNF
inhibitor; in fact, approximately 50
percent had failed greater than one. This
patient population, according to the
applicant, is considered to be the most
difficult group to treat in that they had,
in most cases, already failed not only
non-biologic therapy with
corticosteroids and/or
immunomodulators, but TNF inhibitors
as well. The applicant summarized that
the trials should be considered head-tohead comparing Stelara® to
conventional therapies.
Response: We appreciate the
comments submitted by the applicant in
response to our concerns. After
consideration of the public comments
we received, which clarify the placebo
group as having received conventional
therapies and, therefore, the clinical
trials did compare Stelara® to existing
therapies, we believe Stelara® meets the
substantial clinical improvement
criterion because, according to the
studies provided by the applicant,
Stelara® produced a clinical response
and remission in patients with moderate
to severe Crohn’s Disease who have
failed conventional therapies, including
antibiotics, mesalamines,
corticosteroids, immunomodulators,
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and TNFa inhibitors as outlined in their
label. Specifically, Stelara® targets
cytokines IL–12 and IL–23 which are
responsible for inflammation in CD,
offering a treatment option, otherwise
not available, for a specific patient
population. Stelara® provides a
treatment option for this difficult-totreat patient population.
We have determined that Stelara®
meets all of the criteria for approval of
new technology add-on payments.
Therefore, we are approving new
technology add-on payments for
Stelara® for FY 2018. We expect that
Stelara® will be administered for the
treatment of adult patients (18 years and
older) diagnosed with moderately to
severely active CD who have: (1) Failed
or were intolerant to treatment using
immunomodulators or corticosteroids,
but never failed a tumor necrosis factor
(TNF) blocker; or (2) failed or were
intolerant to treatment using one or
more TNF blockers. Cases involving
Stelara® that are eligible for new
technology add-on payments will be
identified by ICD–10–PCS procedure
code XW033F3 (Introduction of other
New Technology therapeutic substance
into peripheral vein, percutaneous
approach, New Technology Group 3). In
its application, the applicant estimated
that the average dose of Stelara®
administered through IV infusion is 390
mg which would require 3 vials of
Stelara IV at a hospital acquisition cost
of $1,600 per vial (for a total of $4,800).
Under 42 CFR 412.88(a)(2), we limit
new technology add-on payments to the
lesser of 50 percent of the average cost
of the technology or 50 percent of the
costs in excess of the MS–DRG payment
for the case. As a result, the maximum
new technology add-on payment
amount for a case involving the use of
STELARATM is $2,400 for FY 2018.
III. Changes to the Hospital Wage Index
for Acute Care Hospitals
A. Background
1. Legislative Authority
Section 1886(d)(3)(E) of the Act
requires that, as part of the methodology
for determining prospective payments to
hospitals, the Secretary adjust the
standardized amounts for area
differences in hospital wage levels by a
factor (established by the Secretary)
reflecting the relative hospital wage
level in the geographic area of the
hospital compared to the national
average hospital wage level. We
currently define hospital labor market
areas based on the delineations of
statistical areas established by the Office
of Management and Budget (OMB). A
discussion of the FY 2018 hospital wage
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38129
index based on the statistical areas
appears under section III.A.2. of the
preamble of this final rule.
Section 1886(d)(3)(E) of the Act
requires the Secretary to update the
wage index annually and to base the
update on a survey of wages and wagerelated costs of short-term, acute care
hospitals. (CMS collects these data on
the Medicare cost report, CMS Form
2552–10, Worksheet S–3, Parts II, III,
and IV. The OMB control number for
approved collection of this information
is 0938–0050.) This provision also
requires that any updates or adjustments
to the wage index be made in a manner
that ensures that aggregate payments to
hospitals are not affected by the change
in the wage index. The adjustment for
FY 2018 is discussed in section II.B. of
the Addendum to this final rule.
As discussed in section III.I. of the
preamble of this final rule, we also take
into account the geographic
reclassification of hospitals in
accordance with sections 1886(d)(8)(B)
and 1886(d)(10) of the Act when
calculating IPPS payment amounts.
Under section 1886(d)(8)(D) of the Act,
the Secretary is required to adjust the
standardized amounts so as to ensure
that aggregate payments under the IPPS
after implementation of the provisions
of sections 1886(d)(8)(B), 1886(d)(8)(C),
and 1886(d)(10) of the Act are equal to
the aggregate prospective payments that
would have been made absent these
provisions. The budget neutrality
adjustment for FY 2018 is discussed in
section II.A.4.b. of the Addendum to
this final rule.
Section 1886(d)(3)(E) of the Act also
provides for the collection of data every
3 years on the occupational mix of
employees for short-term, acute care
hospitals participating in the Medicare
program, in order to construct an
occupational mix adjustment to the
wage index. A discussion of the
occupational mix adjustment that we
are applying to the FY 2018 wage index
appears under sections III.E.3. and F. of
the preamble of this final rule.
2. Core-Based Statistical Areas (CBSAs)
for the FY 2018 Hospital Wage Index
The wage index is calculated and
assigned to hospitals on the basis of the
labor market area in which the hospital
is located. Under section 1886(d)(3)(E)
of the Act, beginning with FY 2005, we
delineate hospital labor market areas
based on OMB-established Core-Based
Statistical Areas (CBSAs). The current
statistical areas (which were
implemented beginning with FY 2015)
are based on revised OMB delineations
issued on February 28, 2013, in OMB
Bulletin No. 13–01. OMB Bulletin No.
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13–01 established revised delineations
for Metropolitan Statistical Areas,
Micropolitan Statistical Areas, and
Combined Statistical Areas in the
United States and Puerto Rico based on
the 2010 Census, and provided guidance
on the use of the delineations of these
statistical areas using standards
published on June 28, 2010 in the
Federal Register (75 FR 37246 through
37252). We refer readers to the FY 2015
IPPS/LTCH PPS final rule (79 FR 49951
through 49963) for a full discussion of
our implementation of the OMB labor
market area delineations beginning with
the FY 2015 wage index.
Generally, OMB issues major
revisions to statistical areas every 10
years, based on the results of the
decennial census. However, OMB
occasionally issues minor updates and
revisions to statistical areas in the years
between the decennial censuses through
OMB Bulletins. On July 15, 2015, OMB
issued OMB Bulletin No. 15–01, which
provides updates to and supersedes
OMB Bulletin No. 13–01 that was issued
on February 28, 2013. The attachment to
OMB Bulletin No. 15–01 provides
detailed information on the update to
statistical areas since February 28, 2013.
The updates provided in OMB Bulletin
No. 15–01 are based on the application
of the 2010 Standards for Delineating
Metropolitan and Micropolitan
Statistical Areas to Census Bureau
population estimates for July 1, 2012
and July 1, 2013. In the FY 2017 IPPS/
LTCH PPS final rule (81 FR 56913), we
adopted the updates set forth in OMB
Bulletin No. 15–01 effective October 1,
2016, beginning with the FY 2017 wage
index. For a complete discussion of the
adoption of the updates set forth in
OMB Bulletin No. 15–01, we refer
readers to the FY 2017 IPPS/LTCH PPS
final rule.
For FY 2018, we are continuing to use
the OMB delineations that we adopted
beginning with FY 2015 to calculate the
area wage indexes, with updates as
reflected in OMB Bulletin No. 15–01
specified in the FY 2017 IPPS/LTCH
PPS final rule.
3. Codes for Constituent Counties in
CBSAs
CBSAs are made up of one or more
constituent counties. Each CBSA and
constituent county has its own unique
identifying codes. There are two
different lists of codes associated with
counties: Social Security
Administration (SSA) codes and Federal
Information Processing Standard (FIPS)
codes. Historically, CMS has listed and
used SSA and FIPS county codes to
identify and crosswalk counties to
CBSA codes for purposes of the hospital
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wage index. We have learned that SSA
county codes are no longer being
maintained and updated. However, the
FIPS codes continue to be maintained
by the U.S. Census Bureau. The Census
Bureau’s most current statistical area
information is derived from ongoing
census data received since 2010; the
most recent data are from 2015. For the
purposes of crosswalking counties to
CBSAs, in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19898 through
19899), we proposed to discontinue the
use of SSA county codes and begin
using only the FIPS county codes.
The Census Bureau maintains a
complete list of changes to counties or
county equivalent entities on the Web
site at: https://www.census.gov/geo/
reference/county-changes.html. In our
proposed transition to using only FIPS
codes for counties for the hospital wage
index, we proposed to update the FIPS
codes used for crosswalking counties to
CBSAs for the hospital wage index to
incorporate changes to the counties or
county equivalent entities included in
the Census Bureau’s most recent list.
Based on information included in the
Census Bureau’s Web site, since 2010,
the Census Bureau has made the
following updates to the FIPS codes for
counties or county equivalent entities:
• Petersburg Borough, AK (FIPS State
County Code 02–195), CBSA 02, was
created from part of former Petersburg
Census Area (02–195) and part of
Hoonah-Angoon Census Area (02–105).
The CBSA code remains 02.
• The name of La Salle Parish, LA
(FIPS State County Code 22–059), CBSA
14, is now LaSalle Parish, LA (FIPS
State County Code 22–059). The CBSA
code remains as 14.
• The name of Shannon County, SD
(FIPS State County Code 46–113), CBSA
43, is now Oglala Lakota County, SD
(FIPS State County Code 46–102). The
CBSA code remains as 43.
We believe that it is important to use
the latest counties or county equivalent
entities in order to properly crosswalk
hospitals from a county to a CBSA for
purposes of the hospital wage index
used under the IPPS. In addition, we
believe that using the latest FIPS codes
will allow us to maintain a more
accurate and up-to-date payment system
that reflects the reality of population
shifts and labor market conditions.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19898
through 19899), we proposed to
implement these FIPS code updates,
effective October 1, 2017, beginning
with the FY 2018 wage indexes. We
proposed to use these update changes to
calculate area wage indexes in a manner
that is generally consistent with the
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CBSA-based methodologies finalized in
the FY 2005 IPPS final rule and the FY
2015 IPPS/LTCH PPS final rule. We
note that while the county update
changes listed earlier changed the
county names, the CBSAs to which
these counties map did not change from
the prior counties. Therefore, there is no
impact or change to hospitals in these
counties; they continue to be considered
rural for the hospital wage index under
these changes. We invited public
comments on our proposals.
We did not receive any public
comments on our proposals. Therefore,
for the reasons discussed earlier, we are
finalizing our proposal, without
modification, to discontinue the use of
the SSA county codes and begin using
only the FIPS county codes for purposes
of crosswalking counties to CBSAs. In
addition, we are finalizing our proposal,
without modification, to implement the
latest FIPS code updates, as discussed
earlier, effective October 1, 2017,
beginning with the FY 2018 wage
indexes. As we proposed, we will use
these update changes to calculate the
wage indexes in a manner that is
generally consistent with the CBSAbased methodologies finalized in the FY
2005 IPPS final rule and the FY 2015
IPPS/LTCH PPS final rule. For FY 2018,
Tables 2 and 3 associated with this final
rule and the County to CBSA Crosswalk
File and Urban CBSAs and Constituent
Counties for Acute Care Hospitals File
posted on the CMS Web site reflect
these county changes.
B. Worksheet S–3 Wage Data for the FY
2018 Wage Index
The FY 2018 wage index values are
based on the data collected from the
Medicare cost reports submitted by
hospitals for cost reporting periods
beginning in FY 2014 (the FY 2017 wage
indexes were based on data from cost
reporting periods beginning during FY
2013).
1. Included Categories of Costs
The FY 2018 wage index includes all
of the following categories of data
associated with costs paid under the
IPPS (as well as outpatient costs):
• Salaries and hours from short-term,
acute care hospitals (including paid
lunch hours and hours associated with
military leave and jury duty);
• Home office costs and hours;
• Certain contract labor costs and
hours, which include direct patient
care, certain top management,
pharmacy, laboratory, and nonteaching
physician Part A services, and certain
contract indirect patient care services
(as discussed in the FY 2008 final rule
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with comment period (72 FR 47315
through 47317)); and
• Wage-related costs, including
pension costs (based on policies
adopted in the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51586 through 51590))
and other deferred compensation costs.
2. Excluded Categories of Costs
Consistent with the wage index
methodology for FY 2017, the wage
index for FY 2018 also excludes the
direct and overhead salaries and hours
for services not subject to IPPS payment,
such as skilled nursing facility (SNF)
services, home health services, costs
related to GME (teaching physicians and
residents) and certified registered nurse
anesthetists (CRNAs), and other
subprovider components that are not
paid under the IPPS. The FY 2018 wage
index also excludes the salaries, hours,
and wage-related costs of hospital-based
rural health clinics (RHCs), and
Federally qualified health centers
(FQHCs) because Medicare pays for
these costs outside of the IPPS (68 FR
45395). In addition, salaries, hours, and
wage-related costs of CAHs are excluded
from the wage index for the reasons
explained in the FY 2004 IPPS final rule
(68 FR 45397 through 45398).
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3. Use of Wage Index Data by Suppliers
and Providers Other Than Acute Care
Hospitals Under the IPPS
Data collected for the IPPS wage
index also are currently used to
calculate wage indexes applicable to
suppliers and other providers, such as
SNFs, home health agencies (HHAs),
ambulatory surgical centers (ASCs), and
hospices. In addition, they are used for
prospective payments to IRFs, IPFs, and
LTCHs, and for hospital outpatient
services. We note that, in the IPPS rules,
we do not address comments pertaining
to the wage indexes of any supplier or
provider except IPPS providers and
LTCHs. Such comments should be made
in response to separate proposed rules
for those suppliers and providers.
C. Verification of Worksheet S–3 Wage
Data
The wage data for the FY 2018 wage
index were obtained from Worksheet S–
3, Parts II and III of the Medicare cost
report (Form CMS–2552–10) for cost
reporting periods beginning on or after
October 1, 2013, and before October 1,
2014. For wage index purposes, we refer
to cost reports during this period as the
‘‘FY 2014 cost report,’’ the ‘‘FY 2014
wage data,’’ or the ‘‘FY 2014 data.’’
Instructions for completing the wage
index sections of Worksheet S–3 are
included in the Provider
Reimbursement Manual (PRM), Part 2
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(Pub.15–2), Chapter 40, Sections 4005.2
through 4005.4. The data file used to
construct the FY 2018 wage index
includes FY 2014 data submitted to us
as of June 14, 2017. As in past years, we
performed an extensive review of the
wage data, mostly through the use of
edits designed to identify aberrant data.
We asked our MACs to revise or verify
data elements that result in specific edit
failures. For the proposed FY 2018 wage
index, we identified and excluded 51
providers with aberrant data that should
not be included in the wage index,
although we stated in the FY 2018 IPPS/
LTCH PPS proposed rule that if data
elements for some of these providers are
corrected, we intend to include data
from those providers in the final FY
2018 wage index (82 FR 19899). We
note that of the 51 hospitals that we
excluded from the proposed wage
index, some hospitals had data that we
did not expect to change or improve (for
example, among the reasons these
providers were excluded are: They are
low Medicare utilization providers; they
closed and failed edits for
reasonableness; or they have extremely
high or low average hourly wages that
are atypical for their CBSAs). We also
adjusted certain aberrant data and
included these data in the proposed
wage index. For example, in situations
where a hospital did not have
documentable salaries, wages, and
hours for housekeeping and dietary
services, we imputed estimates, in
accordance with policies established in
the FY 2015 IPPS/LTCH PPS final rule
(79 FR 49965 through 49967). We
instructed MACs to complete their data
verification of questionable data
elements and to transmit any changes to
the wage data no later than March 24,
2017. In addition, as a result of the April
and May appeals processes, and posting
of the April 28, 2017 PUF, we have
made additional revisions to the FY
2018 wage data, as described further
below. The revised data are reflected in
this FY 2018 IPPS/LTCH PPS final rule.
In constructing the proposed FY 2018
wage index, we included the wage data
for facilities that were IPPS hospitals in
FY 2014, inclusive of those facilities
that have since terminated their
participation in the program as
hospitals, as long as those data did not
fail any of our edits for reasonableness.
We believed that including the wage
data for these hospitals is, in general,
appropriate to reflect the economic
conditions in the various labor market
areas during the relevant past period
and to ensure that the current wage
index represents the labor market area’s
current wages as compared to the
national average of wages. However, we
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excluded the wage data for CAHs as
discussed in the FY 2004 IPPS final rule
(68 FR 45397 through 45398). For the
proposed rule, we removed 7 hospitals
that converted to CAH status on or after
January 22, 2016, the cut-off date for
CAH exclusion from the FY 2017 wage
index, and through and including
January 23, 2017, the cut-off date for
CAH exclusion from the FY 2018 wage
index. After excluding CAHs and
hospitals with aberrant data, we
calculated the proposed wage index
using the Worksheet S–3, Parts II and III
wage data of 3,325 hospitals.
Since the development of the FY 2018
proposed wage index, as a result of
further review by the MACs and the
April and May appeals processes, we
received improved data for 15 hospitals
and are including the wage data of these
15 hospitals in the final wage index.
However, during our review of the wage
data in preparation of the April 28, 2017
PUF, we identified and deleted the data
of 2 additional hospitals whose data we
determined to be aberrant (unusually
low average hourly wages) relative to
their CBSAs, and there was insufficient
documentation provided to explain
their wage data. Finally, we learned that
in the proposed wage index, we
inadvertently deleted the data of one
hospital when we should have deleted
the data of a different hospital. We have
corrected this error, although because
we were including one hospital while
deleting another, there was no effect on
the number of hospitals in the wage
index. With regard to CAHs, we have
since learned of 2 additional hospitals
that converted to CAH status on or after
January 22, 2016, the cut-off date for
CAH exclusion from the FY 2017 wage
index, and through and including
January 23, 2017, the cut-off date for
CAH exclusion from the FY 2018 wage
index. Accordingly, we have removed 9
hospitals that converted to CAH status
from the FY 2018 wage index. The final
FY 2018 wage index is based on the
wage index of 3,336 hospitals (3,325 +
15¥2¥1 + 1¥2 = 3,336).
For the final FY 2018 wage index, we
allotted the wages and hours data for a
multicampus hospital among the
different labor market areas where its
campuses are located in the same
manner that we allotted such hospitals’
data in the FY 2017 wage index (81 FR
56915). Table 2, which contains the
final FY 2018 wage index associated
with this final rule (available via the
Internet on the CMS Web site), includes
separate wage data for the campuses of
9 multicampus hospitals.
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D. Method for Computing the FY 2018
Unadjusted Wage Index
MIDPOINT OF COST REPORTING
PERIOD
1. Methodology for FY 2018
The method used to compute the FY
2018 wage index without an
occupational mix adjustment follows
the same methodology that we used to
compute the wage indexes without an
occupational mix adjustment since FY
2012 (76 FR 51591 through 51593).
Comment: One commenter requested
that CMS consider developing a process
for determining a wage index that
would reward hospitals that invest in
the workforce and raise the wages of the
lowest paid workers, rather than relying
primarily on the average hourly wages
of the labor market area as a whole.
Response: Section 1886(d)(3)(E) of the
Act requires the Secretary to adjust for
area differences in hospital wage levels
by a factor reflecting the relative
hospital wage level in the geographic
area of the hospital compared to the
national average hospital wage level.
The statute does not direct the Secretary
to develop a wage index that rewards
hospitals for workforce investment or
other labor initiatives.
Comment: One commenter requested
that CMS establish a floor wage index
for providers in Puerto Rico that is not
lower than the ratio of Puerto Rico
nonhealth care wages to U.S. nonhealth
care wages, using data from the
Occupational Employment Statistics
(OES) of the U.S. Bureau of Labor
Statistics (BLS).
Response: We appreciate this
comment. However, we consider it to be
outside the scope of the FY 2018 IPPS/
LTCH PPS proposed rule. Therefore, we
are not responding to this comment at
this time.
As discussed in the FY 2012 IPPS/
LTCH PPS final rule, in ‘‘Step 5,’’ for
each hospital, we adjust the total
salaries plus wage-related costs to a
common period to determine total
adjusted salaries plus wage-related
costs. To make the wage adjustment, we
estimate the percentage change in the
employment cost index (ECI) for
compensation for each 30-day
increment from October 14, 2013,
through April 15, 2015, for private
industry hospital workers from the BLS’
Compensation and Working Conditions.
We have consistently used the ECI as
the data source for our wages and
salaries and other price proxies in the
IPPS market basket, and we did not
propose any changes to the usage of the
ECI for FY 2018. The factors used to
adjust the hospital’s data were based on
the midpoint of the cost reporting
period, as indicated in the following
table.
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After
10/14/2013
11/14/2013
12/14/2013
01/14/2014
02/14/2014
03/14/2014
04/14/2014
05/14/2014
06/14/2014
07/14/2014
08/14/2014
09/14/2014
10/14/2014
11/14/2014
12/14/2014
01/14/2015
02/14/2015
03/14/2015
Adjustment
factor
Before
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
11/15/2013
12/15/2013
01/15/2014
02/15/2014
03/15/2014
04/15/2014
05/15/2014
06/15/2014
07/15/2014
08/15/2014
09/15/2014
10/15/2014
11/15/2014
12/15/2014
01/15/2015
02/15/2015
03/15/2015
04/15/2015
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
1.02310
1.02155
1.02004
1.01866
1.01740
1.01615
1.01482
1.01339
1.01193
1.01048
1.00905
1.00761
1.00614
1.00463
1.00309
1.00155
1.00000
0.99845
For example, the midpoint of a cost
reporting period beginning January 1,
2014, and ending December 31, 2014, is
June 30, 2014. An adjustment factor of
1.01193 would be applied to the wages
of a hospital with such a cost reporting
period. Using the data as previously
described, the FY 2018 national average
hourly wage (unadjusted for
occupational mix) is $42.1027.
Previously, we also would provide a
Puerto Rico overall average hourly
wage. As discussed in the FY 2017
IPPS/LTCH PPS final rule (81 FR
56915), prior to January 1, 2016, Puerto
Rico hospitals were paid based on 75
percent of the national standardized
amount and 25 percent of the Puerto
Rico-specific standardized amount. As a
result, we calculated a Puerto Ricospecific wage index that was applied to
the labor share of the Puerto Ricospecific standardized amount. Section
601 of the Consolidated Appropriations
Act, 2016 (Pub. L. 114–113) amended
section 1886(d)(9)(E) of the Act to
specify that the payment calculation
with respect to operating costs of
inpatient hospital services of a
subsection (d) Puerto Rico hospital for
inpatient hospital discharges on or after
January 1, 2016, shall use 100 percent
of the national standardized amount. As
we stated in the FY 2017 IPPS/LTCH
PPS final rule (81 FR 56915 through
56916), because Puerto Rico hospitals
are no longer paid with a Puerto Ricospecific standardized amount as of
January 1, 2016, under section
1886(d)(9)(E) of the Act, as amended by
section 601 of the Consolidated
Appropriations Act, 2016, there is no
longer a need to calculate a Puerto Ricospecific average hourly wage and wage
index. Hospitals in Puerto Rico are now
paid 100 percent of the national
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standardized amount and, therefore, are
subject to the national average hourly
wage (unadjusted for occupational mix)
(which is $42.1027 for this FY 2018
final rule) and the national wage index,
which is applied to the national labor
share of the national standardized
amount. Therefore, for FY 2018, we did
not propose a Puerto Rico-specific
overall average hourly wage or wage
index.
2. Clarification of Other Wage Related
Costs in the Wage Index
Section 1886(d)(3)(E) of the Act
requires the Secretary to update the
wage index based on a survey of
hospitals’ costs that are attributable to
wages and wage-related costs. In the
September 1, 1994 IPPS final rule (59
FR 45356), we developed a list of ‘‘core’’
wage-related costs that hospitals may
report on Worksheet S–3, Part II of the
Medicare hospital cost report in order to
include those costs in the wage index.
Core wage-related costs include
categories of retirement cost, plan
administrative costs, health and
insurance costs, taxes, and other
specified costs such as tuition
reimbursement. In addition to these
categories of core wage-related costs, we
allow hospitals to report wage-related
costs other than those on the core list if
the other wage-related costs meet
certain criteria. The criteria for
including other wage-related costs in
the wage index are discussed in the
September 1, 1994 IPPS final rule (59
FR 45357) and also are listed in the
Provider Reimbursement Manual (PRM),
Part II, Chapter 40, Sections 4005.2
through 4005.4, Line 18 of the Medicare
cost report (Form CMS–2552–10, OMB
control number 0938–0050).
Specifically, ‘‘other’’ wage-related costs
are allowable for the wage index if the
cost for employees whose services are
paid under the IPPS exceeds 1 percent
of the total adjusted salaries net of
excluded area salaries, is a fringe benefit
as defined by the IRS and has been
reported to the IRS (as income to the
employees or contractors), is not being
furnished for the convenience of the
provider, and is not listed on Worksheet
S–3, Part IV.
We note that other wage-related costs
are not to include benefits already
included in Line 1 salaries on
Worksheet S–3, Part II (refer to the cost
report instructions for Worksheet S–3,
Part II, Line 18, which state, ‘‘ ‘Other’
wage-related costs do not include wagerelated costs reported on line 1 of this
worksheet.’’). We also note that the 1percent test is conducted by dividing
each individual category of the other
wage-related cost (that is, the
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numerator) by the sum of the following
lines on the Medicare hospital cost
report (Form CMS–2552–10): Worksheet
S–3, Part II, Lines 11, 12, 13, and 14,
Column 4, and Worksheet S–3, Part III,
Line 3, Column 4 (that is, the
denominator). The other wage-related
costs associated with contract labor and
home office/related organization
personnel are included in the numerator
because these other wage-related costs
are allowed in the wage index (in
addition to other wage-related costs for
direct employees), assuming the
requirements for inclusion in the wage
index are met. For example, if a hospital
is trying to include a parking garage as
an other-wage related cost that is
reported on the W–2 or 1099 form,
when running the 1-percent test,
include in the numerator all the parking
garage other wage-related cost for direct
salary employees, contracted
employees, and home office employees
and divide by the sum of Worksheet S–
3, Part II, Lines 11, 12, 13, and 14,
Column 4, and Worksheet S–3, Part III,
Line 3, Column 4. For the category of
parking other wage-related costs, the 1percent test would be run only one time,
inclusive of other wage-related costs for
employee salaries, contracted
employees, and home office employees.
We intend to clarify the hospital cost
report instructions to reflect that
contract labor and home office/related
organization salaries should be added to
the subtotal of salaries on Worksheet S–
3, Part III, Line 3, Column 4 (Line 3 is
the difference of net salaries minus
excluded area salaries) for purposes of
performing the 1-percent test. If a
hospital has more than one other wagerelated cost, the 1-percent test must be
conducted separately for each other
wage-related cost (for example, parking
and cafeteria separately; do not sum all
the different types of other wage-related
costs together and then run the 1percent test). If the 1-percent test is met
for a particular type of other wagerelated costs, and the other criteria
listed earlier are met as well, the other
wage-related cost may be reported on
Worksheet S–3, Part II, Line 18 of the
hospital cost report.
We originally allowed for the
inclusion of wage-related costs other
than those on the core list because we
were concerned that individual
hospitals might incur unusually large
wage-related costs that are not reflected
on the core list but that may represent
a significant wage-related cost.
However, as we discussed in the FY
2018 IPPS/LTCH PPS proposed rule (82
FR 19900 through 19902), we are
reconsidering allowing other wage-
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related costs to be included in the wage
index because recent internal reviews of
the FY 2018 wage data show that only
a small minority of hospitals are
reporting other wage-related costs that
meet the 1-percent test described earlier.
In the calculation of the proposed FY
2018 wage index, for each hospital
reporting other wage-related costs on
Line 18 of Worksheet S–3, we
performed the 1-percent test. We then
made internal edits removing other
wage-related costs on Line 18 where
hospitals reported data that failed to
meet the mathematical requirement that
other wage-related costs must exceed 1
percent of total adjusted salaries net of
excluded area salaries. After this review,
only approximately 80 hospitals of
approximately 3,320 hospitals had other
wage-related costs on Line 18 meeting
the 1-percent test. We believe that such
a limited number of hospitals nationally
reporting and meeting the 1-percent test
may indicate that other wage-related
costs might not constitute an
appropriate part of a relative measure of
wage costs in a particular labor market
area, a longstanding tenet of the wage
index. In other words, while other wagerelated costs may represent costs that
may have an impact on an individual
hospital’s average hourly wage, we do
not believe that costs reported by only
a very small minority of hospitals
accurately reflect the economic
conditions of the labor market areas in
which those hospitals are located.
Therefore, it is possible that inclusion of
other wage-related costs in the wage
index in such a limited manner may
distort the average hourly wage of a
particular labor market area so that its
wage index does not accurately
represent that labor market area’s
current wages relative to national wages.
Furthermore, the open-ended nature
of the types of other wage-related costs
that may be included on Line 18 of
Worksheet S–3, in contrast to the
concrete list of core wage-related costs,
may hinder consistent and proper
reporting of fringe benefits. Our internal
review indicates widely divergent types
of costs that hospitals are reporting as
other wage-related costs on Line 18. We
are concerned that inconsistent
reporting of other wage-related costs on
Line 18 further compromises the
accuracy of the wage index as a
representation of the relative average
hourly wage for each labor market area.
Our intent in creating a core list of
wage-related costs in the September 1,
1994 IPPS final rule was to promote
consistent reporting of fringe benefits,
and we are increasingly concerned that
inconsistent reporting of wage-related
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38133
costs on Line 18 of Worksheet S–3
undermines this effort. Specifically, we
expressed in the September 1, 1994
IPPS final rule that, since we began
including fringe benefits in the wage
index, we have been concerned with the
inconsistent reporting of fringe benefits,
whether because of a lack of provider
proficiency in identifying fringe benefit
costs or varying interpretations across
fiscal intermediaries of the definition for
fringe benefits in PRM–I, Section 2144.1
(59 FR 45356).
We believe that the limited and
inconsistent use of Line 18 of Worksheet
S–3 for reporting wage-related costs
other than the core list might indicate
that including other wage-related costs
in the wage index compromises the
accuracy of the wage index as a relative
measure of wages in a given labor
market area. Therefore, in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19901), we sought public comments on
whether we should, in future
rulemaking, propose to only include the
wage-related costs on the core list in the
calculation of the wage index and not to
include any other wage-related costs in
the calculation of the wage index.
Meanwhile, in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19901
through 19902), we clarified that, under
our current policy, an other wagerelated cost (which we define as the
value of a benefit) must be a fringe
benefit as described by the IRS (refer to
IRS Publication 15–B) and must be
reported to the IRS on employees’ or
contractors’ W–2 or 1099 forms as
taxable income in order to be
considered an other wage-related cost
on Line 18 of Worksheet S–3 and for the
wage index. That is, other wage-related
costs that are not reported to the IRS on
employees’ or contractors’ W–2 or 1099
forms as taxable income, even if not
required to be reported to the IRS
according to IRS requirements, will not
be included in the wage index. This is
consistent with current cost report
instructions for Line 18 of Worksheet S–
3, Part II of the Medicare cost report,
Form 2552–10, which state that, to be
considered an allowable other wagerelated cost, the cost ‘‘has been reported
to the IRS.’’ We will apply this policy
to the process for calculating the wage
index for FY 2019, including the FY
2019 desk reviews beginning in
September 2017.
As we stated in the FY 2018 proposed
rule, we believe this clarification is
necessary because some hospitals have
incorrectly interpreted prior manual and
existing preamble language to mean that
a cost could be considered an other
wage-related cost if the provider’s
reporting (or not reporting) of the cost
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was in accordance with IRS
requirements, rather than if the cost was
actually reported on an employee’s or
contractor’s W–2 or 1099 form as
taxable income. We believe that such an
interpretation of our policy would
require an analysis of whether the
reporting or not reporting of the cost to
the IRS was done properly in
accordance with IRS regulations and
guidance in order to allow the cost as an
other wage-related cost. We believe that
the determinations regarding the proper
or improper reporting of certain other
wage-related costs to the IRS for the
purpose of inclusion in the Medicare
wage index are impractical for CMS and
the MACs because we do not have the
expertise and fluency in IRS regulations
and tax law sufficient to perform such
technical reviews of hospital wagerelated costs. In contrast, our current
policy of including an amount as an
other wage-related cost for wage index
purposes only if the amount was
actually reported to the IRS on
employees’ or contractors’ W–2 or 1099
forms as taxable income is a
straightforward policy that we believe
provides clarity to all involved parties.
The brightline test of allowing an other
wage-related cost to be included in the
wage index only if it has been reported
on an employee’s or contractor’s W–2 or
1099 form as taxable income helps
ensure consistent treatment of other
wage-related costs for all hospitals.
Considering the variety of types of costs
that may be included on Line 18 of
Worksheet S–3 of the cost report for
other wage-related costs (assuming the
1-percent test is met and other criteria
are met), we believe that a
straightforward policy that is simple for
hospitals and CMS to apply is
particularly important.
In addition, we believe the policy we
are clarifying that an other wage-related
cost can be included in the wage index
only if it was reported to the IRS as
taxable income on the employee’s or
contractor’s W–2 or 1099, is consistent
with CMS’ longstanding position that a
fringe benefit is not furnished for the
convenience of the employer or
otherwise excludable from income as a
fringe benefit (such as a working
condition fringe) and that inappropriate
types of costs may not be included in
the wage index. In response to a
comment when we finalized the criteria
for other wage-related costs in the
September 1, 1994 IPPS final rule (59
FR 45359), we stated that ‘‘items such
as the unrecovered cost of employee
meals, tuition reimbursement, and auto
allowances will only be allowed as a
wage-related cost for purposes of the
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wage index if properly reported to the
IRS on an employee’s W–2 form as a
fringe benefit.’’ (We note that the
September 1, 1994 IPPS final rule does
not mention the 1099 form for
contractors, as contract labor was not
allowed at that time in the wage index.
Consistent with our treatment of costs
for contract labor similar to that of
employees for the wage index, we are
clarifying that the requirement that a
cost be reported to the IRS to be allowed
as a wage-related cost for the wage
index also applies to contract labor,
which must be reported on the
contractor’s 1099 to be allowed as a
wage-related cost for the wage index.)
We believe that requiring other wagerelated costs to be reported on
employees’ or contractors’ W–2 or 1099
forms to be allowable for Line 18 of
Worksheet S–3 of the Medicare cost
report is consistent with the
requirement that the cost is not being
furnished for the convenience of the
employer. A cost reported on an
employee’s or contractor’s W–2 or 1099
form as taxable income is clearly a
wage-related cost that is provided solely
for the benefit of the employee. We
believe that the requirement that other
wage-related costs be a benefit to the
employee also guarantees that
administrative costs such as overhead
and capitalized costs are excluded from
other wage-related costs in the wage
index.
Therefore, for the reasons discussed
above, as we discussed in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19901 through 19902), we are clarifying
that a cost must be a fringe benefit as
described by the IRS and must be
reported to the IRS on employees’ or
contractors’ W–2 or 1099 forms as
taxable income in order to be
considered an other wage-related cost
on Line 18 of Worksheet S–3 and for the
wage index. In addition, as discussed
earlier, in the proposed rule, we
requested public comments on whether
we should consider in future
rulemaking removing other wage-related
costs from the wage index.
Because some hospitals have
incorrectly interpreted prior manual and
existing preamble language, as stated
earlier, in the proposed rule we restated
the criteria from the September 1, 1994
IPPS final rule (59 FR 45357) for
allowing other wage-related costs for the
wage index, with clarifications. The
criteria follow below, and as stated in
the proposed rule, we intend to update
the manual with these clarifications:
Other Wage-Related Costs. A hospital
may be able to report a wage-related cost
(defined as the value of the benefit) that
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does not appear on the core list if it
meets all of the following criteria:
• The wage-related cost is provided at
a significant financial cost to the
employer. To meet this test, the
individual wage-related cost must be
greater than 1 percent of total salaries
after the direct excluded salaries are
removed (the sum of Worksheet S–3,
Part II, Lines 11, 12, 13, 14, column 4,
and Worksheet S–3, Part III, Line 3,
Column 4).
• The wage-related cost is a fringe
benefit as described by the IRS and is
reported to the IRS on an employee’s or
contractor’s W–2 or 1099 form as
taxable income.
• The wage-related cost is not
furnished for the convenience of the
provider or otherwise excludable from
income as a fringe benefit (such as a
working condition fringe).
We note that those wage-related costs
reported as salaries on Line 1 (for
example, loan forgiveness and sick pay
accruals) should not be included as
other wage-related costs on Line 18.
Comment: One commenter fully
supported CMS proposing in future
rulemaking to only include the wagerelated costs on the core list in the
calculation of the wage index and not to
include any other wage-related costs in
the calculation of the wage index. The
commenter reiterated CMS’ observation
that only a small minority of hospitals
benefit from the reporting of other wagerelated costs, emphasizing that the
inclusion of other wage-related costs in
the wage index in such a limited
manner distorts the average hourly wage
of a particular labor market area so that
its wage index does not accurately
represent that labor market area’s
current wages relative to national wages.
Several commenters did not oppose
CMS proposing in future rulemaking to
only include wage-related costs on the
core list but requested that CMS first
consider convening stakeholders for
additional input prior to the removal of
the item. Similarly, one commenter
requested that CMS be as transparent as
possible and provide complete
information on the impact on the wage
index for all areas of the country in
future rulemaking if CMS proposes to
exclude other wage-related costs from
the wage index calculation.
Response: We appreciate the
commenter’s support for our proposing
in future rulemaking to consider only
including the wage-related costs on the
core list in the calculation of the wage
index and not to include any other
wage-related costs in the calculation of
the wage index. In response to the
commenters who requested that CMS
first consider convening stakeholders
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for additional input prior to the removal
of other wage-related costs (on Line 18
of Worksheet S–3) from the wage index,
we are reassuring the commenters that
we would engage in notice-andcomment rulemaking in order to solicit
stakeholder input before removing Line
18 of Worksheet S–3 from the wage
index calculation. Similarly, we
endeavor to be as transparent as
possible and, if appropriate, may
consider providing information on the
impact on the wage index for all areas
of the country in future rulemaking if
we propose to exclude other wagerelated costs from the wage index
calculation.
Comment: Two commenters
applauded CMS’ goals of achieving a
more equitable and accurate wage
index, but suggested that CMS address
the inadequacies in the current
reporting requirements for noncore
other wage-related costs rather than
consider eliminating Line 18 of
Worksheet S–3 of the Medicare cost
report from the wage index. These
commenters asserted that all hospitals
have noncore benefits. However, the
commenters added, the limited
guidance and ‘‘significant threshold
limitations’’ in the current instructions
prevent hospitals from capturing these
noncore benefits. Furthermore, the
commenters maintained that benefits
are rapidly evolving into more
nontraditional structures and, therefore,
a mechanism to capture these evolving
benefits is necessary for CMS to ensure
an equitable survey. The commenters
submitted several suggestions to ensure
open and transparent reporting of other
wage-related costs and to remove the
onus from CMS and the MAC to make
determinations regarding the
acceptability of other wage-related costs.
The commenters believed that clear and
consistent reporting guidelines create an
equitable playing field for all providers
and stated that addressing the
inadequacies in the current reporting
requirements for Line 18 is prudent.
However, the commenters suggested an
approach different than CMS’
clarifications of current policy to more
accurately identify and capture other
wage-related costs.
Response: We appreciate the feedback
from commenters in favor of our
improving the current reporting
requirements for noncore other wagerelated costs rather than considering
eliminating Line 18 of Worksheet S–3
from the wage index calculation. We are
not eliminating Line 18 from the wage
index calculation at this time. Rather, in
line with the commenters’
recommendation, we are clarifying the
requirements for Line 18 in this final
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rule to facilitate consistent and accurate
reporting of other wage-related costs for
the wage index. We share the
commenters’ interests in reporting
guidelines that are clear, consistent, and
equitable. The commenters’ specific
suggestions and our responses follow
below:
Comment: Commenters suggested that
CMS, with input from providers, define
a specific list of noncore benefits
commonly shared by a large number of
providers for inclusion in the wage
index, such as employee parking and
transit costs, uniform costs, and meal
allowances. The commenters suggested
that CMS approach the identification of
noncore benefits with the same
specificity as it does with core benefits
in order to ensure an equitable wage
index, more easily address tax issues,
and allow more direct application of the
employer convenience test.
Response: We appreciate the
commenters’ suggestion and agree that
defined lists of allowable costs are
generally helpful to support consistent
and equitable reporting. In fact, our
intent in creating a core list of wagerelated costs in the September 1, 1994
IPPS final rule was to promote ‘‘more
equitable and consistent reporting of
wage-related costs for all hospitals’’ (59
FR 45356). When developing the list of
core wage-related costs, we stated that
one or more of the following criteria
must be met to be considered a core
wage-related cost: The wage-related cost
is provided at a significant financial cost
to the employer; the wage-related cost is
of a type and nature that would
generally be offered as a fringe benefit
by most employers; the perceived value
of this wage-related cost is of such
importance that it would influence an
individual’s employment decisions; and
the wage-related cost is a mandatory
requirement under Federal or State law
(for example FICA, Federal and State
unemployment, among others) (59 FR
45356).
If there are noncore benefits that are
of a type and nature that would
generally be offered as a fringe benefit
by most employers, as the commenters
suggested, we believe that perhaps these
costs should be added to the core list
rather than defined separately as a list
of other wage-related costs. In future
rulemaking, we may consider this
suggestion in the form of seeking
hospitals’ input on expanding the core
list of wage-related costs to include
common wage-related costs (such as
parking) that are currently considered
other wage-related costs.
Comment: Commenters suggested that
the taxable or nontaxable nature of the
benefit should not be a determinant for
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38135
inclusion as a noncore benefit. In the
commenters’ opinion, CMS made too
broad a connection between taxable
reporting and the employer convenience
test; specifically, many employee
benefits are not taxable due to dollar
threshold exclusions and public policy
considerations by Congress and the IRS.
Furthermore, the commenters pointed
out that evolving tax law could cause
volatility in the wage index because
what is considered a taxable benefit one
year may not be taxable in the next year.
Rather, the commenters suggested
that, in order for other wage-related
costs to be included in the wage index,
CMS require other wage-related costs to
be reported to the IRS on the W–2,
regardless of whether the benefit is
taxable or not (the W–2 allows for
reporting of both taxable and nontaxable
benefits), and that CMS could then
include other wage-related costs in the
wage index as long as those costs,
whether taxable or nontaxable, are
reported on the W–2. The commenters
maintained that it should not be the
responsibility of CMS or the MACs to
prove that the benefit has been handled
appropriately for tax purposes, and this
requirement to include all taxable and
nontaxable costs on the W–2 in order to
have those costs included in the wage
index would ensure that the benefit has
been handled correctly for tax purposes.
Response: In the proposed rule (82 FR
19902), we stated that requiring other
wage-related costs to be reported on
employees’ or contractors’ W–2 or 1099
forms to be allowable for Line 18 is
consistent with the requirement that the
cost is not being furnished for the
convenience of the employer because,
typically, a cost that is for the
convenience of the employer is not
taxable as income to the employee. This
is not to say that all costs that are a
benefit to the employee are taxable.
Indeed, in our clarification of the
criteria for allowing a cost as an other
wage-related costs on Line 18 in the
wage index, we specifically stated that
‘‘The wage-related cost is not furnished
for the convenience of the provider or
otherwise excludable from income as a
fringe benefit (such as a working
condition fringe)’’ (emphasis added).
That is, we recognize that being
furnished for the convenience of the
provider is only one of many reasons
that a cost may be excludable from
income as a fringe benefit.
While we understand that many
employee benefits are not taxable due to
dollar threshold exclusions and public
policy considerations by Congress and
the IRS, and thereby excluded from Line
18, we continue to believe that a
brightline test is necessary for consistent
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treatment of other wage-related costs for
all hospitals. Taken with the
commenter’s suggestion that CMS allow
taxable and nontaxable other wagerelated costs (assuming other criteria are
met) as long as the costs are reported on
W–2s or 1099s, we understand that the
commenter is suggesting a different
brightline test: That the cost be listed on
the W–2, regardless of whether the cost
is taxable or tax-exempt. We continue to
believe that our clarification in the
proposed rule is a more straightforward
policy than the commenter’s suggestion
for two reasons. First, not all employers
report nontaxable costs on an
employee’s W–2, nor are they required
to do so. Therefore, to allow nontaxable
costs so long as those costs are on an
employee’s W–2 would create an
uneven playing field with inconsistent
treatment of nontaxable costs. Second, a
taxable benefit is typically incomerelated and a benefit to the employee.
While we understand that there may be
benefits to the employee that are taxexempt due to a variety of public policy
considerations, we believe that costs
should be taxable in order to be
incorporated as part of the wage index
because the wage index is a relative
measure of salaries and wages.
Furthermore, we agree with the
commenters’ assertion that it should not
be the responsibility of CMS or the
MACs to prove that the benefit has been
handled appropriately for tax purposes.
Indeed, it is for that reason that we
clarified our current policy of allowing
an amount as an other wage-related cost
for wage index purposes only if the
amount was actually reported to the IRS
on employees’ or contractors’ W–2 or
1099 forms as taxable income. We stated
in the proposed rule (82 FR 19901
through 19902) that other wage-related
costs that are not reported to the IRS on
employees’ or contractors’ W–2 or 1099
forms as taxable income, even if not
required to be reported to the IRS
according to IRS requirements, will not
be included in the wage index. We
explained that determinations regarding
the proper or improper reporting of
certain other wage-related costs to the
IRS for the purpose of inclusion in the
Medicare wage index are impractical for
CMS and the MACs because we do not
have the expertise and fluency in IRS
regulations and tax law sufficient to
perform such technical reviews of
hospital wage-related costs.
Comment: Commenters suggested that
CMS change the 1-percent test to a test
in aggregate for the items on their
recommended noncore list. For benefits
not specifically listed by CMS as
noncore, the commenters suggested that
CMS continue using the current
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methodology, which requires each
individual benefit to meet the 1-percent
test.
Response: We appreciate the
commenters’ suggestion. However, as
we stated earlier, if there are noncore
benefits that are of a type and nature
that would generally be offered as a
fringe benefit by most employers, we
believe that perhaps these costs should
be added to the core list rather than
defined separately as a list of other
wage-related costs. In future
rulemaking, we may consider this
suggestion in the form of seeking
hospitals’ input on expanding the core
list of wage-related costs to include
common wage-related costs (such as
parking) that are currently considered
other wage-related costs.
We continue to believe that it is
appropriate for the 1-percent test to be
performed on individual, rather than
aggregate, other wage-related costs. In
response to a public comment, in the
September 1, 1994 IPPS final rule (59
FR 45358), we stated that ‘‘[t]he
provision to include wage-related costs
other than those reflected on the core
list is intended to recognize only those
limited circumstances where a hospital
incurs any additional wage-related cost
items that truly represent a significant
financial burden to the hospital, but that
also meet the current definition of a
fringe benefit cost. We believe the 1percent threshold is an appropriate
measure of significance, and that the
exclusion of any cost representing less
than 1 percent of total salaries would
not significantly affect the hospital’s
overall average hourly wage. We
consider the 1-percent test critical in
ensuring that providers only include
other wage-related costs that contribute
significantly to their wage costs and that
are not accounted for in the core list.’’
We continue to believe that the 1percent test performed on individual
costs ensures that the wage-related cost
is provided at a significant financial cost
to the employer.
Furthermore, we believe that allowing
the 1-percent test to be performed on
aggregate other wage-related costs (even
on a limited list of other wage-related
costs, as the commenter suggests) would
lead to inequitable treatment of other
wage-related costs. Hospitals with an
other wage-related cost comprising an
identical percentage of total adjusted
salaries net of excluded area salaries
could be treated differently, depending
on the presence or absence of additional
other wage-related costs to collectively
‘‘pass’’ the 1-percent test. For example,
parking costs totaling .08 percent of
total salaries for one hospital could be
allowed (assuming the other criteria
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were met) if the hospital also has
additional noncore wage-related costs
that combine to exceed 1 percent, while
another hospital with parking costs
totaling the identical .08 percentage of
total salaries could have those costs
disallowed in absence of additional
noncore wage-related costs to add to the
parking costs to exceed 1 percent of
salaries.
We appreciate all of the comments
submitted on this issue. We will take
these comments into consideration in
determining whether to propose in
future rulemaking to remove other
wage-related costs from the wage index
calculation. Meanwhile, as discussed
earlier and in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19900
through 19902), we are again clarifying
that a cost must be a fringe benefit as
described by the IRS and must be
reported to the IRS on employees’ or
contractors’ W–2 or 1099 forms as
taxable income in order to be
considered an other wage-related cost
on Line 18 of Worksheet S–3 and for the
wage index.
E. Occupational Mix Adjustment to the
FY 2018 Wage Index
As stated earlier, section 1886(d)(3)(E)
of the Act provides for the collection of
data every 3 years on the occupational
mix of employees for each short-term,
acute care hospital participating in the
Medicare program, in order to construct
an occupational mix adjustment to the
wage index, for application beginning
October 1, 2004 (the FY 2005 wage
index). The purpose of the occupational
mix adjustment is to control for the
effect of hospitals’ employment choices
on the wage index. For example,
hospitals may choose to employ
different combinations of registered
nurses, licensed practical nurses,
nursing aides, and medical assistants for
the purpose of providing nursing care to
their patients. The varying labor costs
associated with these choices reflect
hospital management decisions rather
than geographic differences in the costs
of labor.
1. Use of 2013 Occupational Mix Survey
for the FY 2018 Wage Index
Section 304(c) of the Consolidated
Appropriations Act, 2001 (Pub. L. 106–
554) amended section 1886(d)(3)(E) of
the Act to require CMS to collect data
every 3 years on the occupational mix
of employees for each short-term, acute
care hospital participating in the
Medicare program. We collected data in
2013 to compute the occupational mix
adjustment for the FY 2016, FY 2017,
and FY 2018 wage indexes. A new
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measurement of occupational mix is
required for FY 2019.
The 2013 survey included the same
data elements and definitions as the
previous 2010 survey and provided for
the collection of hospital-specific wages
and hours data for nursing employees
for calendar year 2013 (that is, payroll
periods ending between January 1, 2013
and December 31, 2013). We published
the 2013 survey in the Federal Register
on February 28, 2013 (78 FR 13679
through 13680). This survey was
approved by OMB on May 14, 2013, and
is available on the CMS Web site at:
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/Wage-Index-FilesItems/Medicare-Wage-IndexOccupational-Mix-Survey2013.html.
The 2013 Occupational Mix Survey
Hospital Reporting Form CMS–10079
for the Wage Index Beginning FY 2016
(in Excel format) is available on the
CMS Web site at: https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/WageIndex-Files-Items/Medicare-WageIndex-Occupational-MixSurvey2013.html. Hospitals were
required to submit their completed 2013
surveys to their MACs by July 1, 2014.
The preliminary, unaudited 2013 survey
data were posted on the CMS Web site
on July 11, 2014. As with the Worksheet
S–3, Parts II and III cost report wage
data, we asked our MACs to revise or
verify data elements in hospitals’
occupational mix surveys that result in
certain edit failures.
2. Use of the 2016 Medicare Wage Index
Occupational Mix Survey for the FY
2019 Wage Index
As stated earlier, a new measurement
of occupational mix is required for FY
2019. The FY 2019 occupational mix
adjustment will be based on a new
calendar year (CY) 2016 survey. The CY
2016 survey (CMS Form CMS–10079)
received OMB approval on September
27, 2016. The final CY 2016
Occupational Mix Survey Hospital
Reporting Form is available on the CMS
Web site at: https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/WageIndex-Files-Items/2016-OccupationalMix-Survey-Hospital-Reporting-FormCMS-10079-for-the-Wage-IndexBeginning-FY-2019.html. Hospitals were
required to submit their completed 2016
surveys to their MACs by July 3, 2017.
The preliminary, unaudited CY 2016
survey data were posted on the CMS
Web site on July 12, 2017. As with the
Worksheet S–3, Parts II and III cost
report wage data, as part of the FY 2019
desk review process, the MACs will
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revise or verify data elements in
hospitals’ occupational mix surveys that
result in certain edit failures.
3. Calculation of the Occupational Mix
Adjustment for FY 2018
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19903), for FY
2018, we proposed to calculate the
occupational mix adjustment factor
using the same methodology that we
have used since the FY 2012 wage index
(76 FR 51582 through 51586) and to
apply the occupational mix adjustment
to 100 percent of the FY 2018 wage
index. Because the statute requires that
the Secretary measure the earnings and
paid hours of employment by
occupational category not less than once
every 3 years, all hospitals that are
subject to payments under the IPPS, or
any hospital that would be subject to the
IPPS if not granted a waiver, must
complete the occupational mix survey,
unless the hospital has no associated
cost report wage data that are included
in the FY 2018 wage index. For the
proposed FY 2018 wage index, we used
the Worksheet S–3, Parts II and III wage
data of 3,325 hospitals, and we used the
occupational mix surveys of 3,128
hospitals for which we also have
Worksheet S–3 wage data, which
represented a ‘‘response’’ rate of 94
percent (3,128/3,325). For the proposed
FY 2018 wage index, we applied proxy
data for noncompliant hospitals, new
hospitals, or hospitals that submitted
erroneous or aberrant data in the same
manner that we applied proxy data for
such hospitals in the FY 2012 wage
index occupational mix adjustment (76
FR 51586).
Comment: One commenter stated that
all hospitals should be obligated to
submit the occupational mix survey
because failure to complete the survey
jeopardizes the accuracy of the wage
index. The commenter suggested that a
penalty be instituted for nonsubmitters.
This commenter also requested that,
pending CMS’ analysis of the
Commuting Based Wage Index and
given the Institute of Medicine’s study
on geographic variation in hospital wage
costs, CMS eliminate the occupational
mix survey and the significant reporting
burden it creates.
Response: We appreciate the
commenter’s concern about the
accuracy of the wage index. We have
continually requested that all hospitals
complete and submit the occupational
mix surveys. We did not establish a
penalty for hospitals that did not submit
the 2013 surveys. However, we are
continuing to consider for future
rulemaking various options for ensuring
full compliance with future
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38137
occupational mix surveys. Regarding the
commenter’s request that CMS eliminate
the occupational mix survey, this survey
is necessary to meet the provisions of
section 1886(d)(3)(E) of the Act, which
requires us to measure the earnings and
paid hours of employment by
occupational category.
After consideration of the public
comments we received, for FY 2018, we
are adopting as final our proposal to
calculate the occupational mix
adjustment factor using the same
methodology that we have used since
the FY 2012 wage index. For the final
FY 2018 wage index, we are using the
Worksheet S–3, Parts II and III wage
data of 3,336 hospitals, and we are using
the occupational mix surveys of 3,138
hospitals for which we also have
Worksheet S–3 wage data, which
represents a ‘‘response rate’’ of 94
percent (3,138/3,336). We note that, in
the proposed rule (82 FR 19903), we
stated that we used the occupational
mix survey of 3,128 hospitals. The
reason for the increase in the number of
hospitals from 3,128 to 3,138 is that 10
hospitals that had been deleted from the
proposed rule wage index and that are
now included in the final rule wage
index had acceptable occupational mix
surveys to use for the final rule.
Therefore, we have included the
occupational mix surveys of these 10
additional hospitals to calculate the
wage index for this final rule. For the
final FY 2018 wage index, we applied
proxy data for noncompliant hospitals,
new hospitals, or hospitals that
submitted erroneous or aberrant data in
the same manner that we applied proxy
data for such hospitals in the FY 2012
wage index occupational mix
adjustment (76 FR 51586). As a result of
applying this methodology, the FY 2018
occupational mix adjusted national
average hourly wage is $42.0564.
F. Analysis and Implementation of the
Occupational Mix Adjustment and the
FY 2018 Occupational Mix Adjusted
Wage Index
As discussed in section III.E. of the
preamble of this final rule, for FY 2018,
we are applying the occupational mix
adjustment to 100 percent of the FY
2018 wage index. We calculated the
occupational mix adjustment using data
from the 2013 occupational mix survey
data, using the methodology described
in the FY 2012 IPPS/LTCH PPS final
rule (76 FR 51582 through 51586). Using
the occupational mix survey data and
applying the occupational mix
adjustment to 100 percent of the FY
2018 wage index results in a national
average hourly wage of $42.0564.
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The FY 2018 national average hourly
wages for each occupational mix
nursing subcategory as calculated in
Step 2 of the occupational mix
calculation are as follows:
Average
hourly wage
National RN ..........................
National LPN and Surgical
Technician .........................
National Nurse Aide, Orderly,
and Attendant ....................
National Medical Assistant ...
National Nurse Category ......
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Occupational mix nursing
subcategory
$38.86637039
22.73227683
15.95002569
17.96799473
32.856948
The national average hourly wage for
the entire nurse category as computed in
Step 5 of the occupational mix
calculation is $32.856948. Hospitals
with a nurse category average hourly
wage (as calculated in Step 4) of greater
than the national nurse category average
hourly wage receive an occupational
mix adjustment factor (as calculated in
Step 6) of less than 1.0. Hospitals with
a nurse category average hourly wage (as
calculated in Step 4) of less than the
national nurse category average hourly
wage receive an occupational mix
adjustment factor (as calculated in Step
6) of greater than 1.0.
Based on the 2013 occupational mix
survey data, we determined (in Step 7
of the occupational mix calculation) that
the national percentage of hospital
employees in the nurse category is 42.6
percent, and the national percentage of
hospital employees in the all other
occupations category is 57.4 percent. At
the CBSA level, the percentage of
hospital employees in the nurse
category ranged from a low of 25.7
percent in one CBSA to a high of 73.5
percent in another CBSA.
We compared the FY 2018
occupational mix adjusted wage indexes
for each CBSA to the unadjusted wage
indexes for each CBSA. As a result of
applying the occupational mix
adjustment to the wage data, the final
wage index values for 222 (54.4 percent)
urban areas and 23 (48.9 percent) rural
areas will increase. The final wage
index values for 110 (27.0 percent)
urban areas will increase by greater than
or equal to 1 percent but less than 5
percent, and the final wage index values
for 6 (1.5 percent) urban areas will
increase by 5 percent or more. The final
wage index values for 10 (21.3 percent)
rural areas will increase by greater than
or equal to 1 percent but less than 5
percent, and no rural areas’ final wage
index values will increase by 5 percent
or more. However, the final wage index
values for 184 (45.1 percent) urban areas
and 24 (51.1 percent) rural areas will
decrease. The final wage index values
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for 85 (20.8 percent) urban areas will
decrease by greater than or equal to 1
percent but less than 5 percent, and no
urban areas’ final wage index value will
decrease by 5 percent or more. The final
wage index values of 8 (17.0 percent)
rural areas will decrease by greater than
or equal to 1 percent and less than 5
percent, and no rural areas’ final wage
index values will decrease by 5 percent
or more. The largest final positive
impacts will be 17.4 percent for an
urban area and 2.9 percent for a rural
area. The largest final negative impacts
will be 4.9 percent for an urban area and
2.4 percent for a rural area. Two urban
areas’ final wage index, but no rural area
wage indexes, will remain unchanged
by application of the occupational mix
adjustment. These results indicate that a
larger percentage of urban areas (54.4
percent) will benefit from the
occupational mix adjustment than will
rural areas (48.9 percent).
G. Application of the Rural, Imputed,
and Frontier Floors
1. Rural Floor
Section 4410(a) of Public Law 105–33
provides that, for discharges on or after
October 1, 1997, the area wage index
applicable to any hospital that is located
in an urban area of a State may not be
less than the area wage index applicable
to hospitals located in rural areas in that
State. This provision is referred to as the
‘‘rural floor.’’ Section 3141 of Public
Law 111–148 also requires that a
national budget neutrality adjustment be
applied in implementing the rural floor.
Based on the FY 2018 wage index
associated with this final rule (which is
available via the Internet on the CMS
Web site), we estimate that 366
hospitals will receive an increase in
their FY 2018 wage index due to the
application of the rural floor.
2. Expiration of the Imputed Floor
Policy
In the FY 2005 IPPS final rule (69 FR
49109 through 49111), we adopted the
‘‘imputed floor’’ policy as a temporary
3-year regulatory measure to address
concerns from hospitals in all-urban
States that have argued that they are
disadvantaged by the absence of rural
hospitals to set a wage index floor for
those States. Since its initial
implementation, we have extended the
imputed floor policy seven times, the
last of which was adopted in the FY
2017 IPPS/LTCH PPS final rule and is
set to expire on September 30, 2017.
(We refer readers to further discussions
of the imputed floor in the FY 2014, FY
2015, FY 2016, and FY 2017 IPPS/LTCH
PPS final rules (78 FR 50589 through
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50590, 79 FR 49969 through 49970, 80
FR 49497 through 49498, and 81 FR
56921 through 56922, respectively) and
to the regulations at 42 CFR
412.64(h)(4).) Currently, there are three
all-urban States—Delaware, New Jersey,
and Rhode Island—with a range of wage
indexes assigned to hospitals in these
States, including through
reclassification or redesignation. (We
refer readers to discussions of
geographic reclassifications and
redesignations in section III.I. of the
preamble of this final rule.) In
computing the imputed floor for an allurban State under the original
methodology, which was established
beginning in FY 2005, we calculated the
ratio of the lowest-to-highest CBSA
wage index for each all-urban State as
well as the average of the ratios of
lowest-to-highest CBSA wage indexes of
those all-urban States. We then
compared the State’s own ratio to the
average ratio for all-urban States and
whichever is higher is multiplied by the
highest CBSA wage index value in the
State—the product of which established
the imputed floor for the State. As of FY
2012, there were only two all-urban
States—New Jersey and Rhode Island—
and only New Jersey benefitted under
this methodology. Under the previous
OMB labor market area delineations,
Rhode Island had only one CBSA
(Providence-New Bedford-Fall River,
RI–MA) and New Jersey had 10 CBSAs.
Therefore, under the original
methodology, Rhode Island’s own ratio
equaled 1.0, and its imputed floor was
equal to its original CBSA wage index
value. However, because the average
ratio of New Jersey and Rhode Island
was higher than New Jersey’s own ratio,
this methodology provided a benefit for
New Jersey, but not for Rhode Island.
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53368 through 53369), we
retained the imputed floor calculated
under the original methodology as
discussed above, and established an
alternative methodology for computing
the imputed floor wage index to address
the concern that the original imputed
floor methodology guaranteed a benefit
for one all-urban State with multiple
wage indexes (New Jersey) but could not
benefit the other all-urban State (Rhode
Island). The alternative methodology for
calculating the imputed floor was
established using data from the
application of the rural floor policy for
FY 2013. Under the alternative
methodology, we first determined the
average percentage difference between
the post-reclassified, pre-floor area wage
index and the post-reclassified, rural
floor wage index (without rural floor
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budget neutrality applied) for all CBSAs
receiving the rural floor. (Table 4D
associated with the FY 2013 IPPS/LTCH
PPS final rule (which is available via the
Internet on the CMS Web site) included
the CBSAs receiving a State’s rural floor
wage index.) The lowest postreclassified wage index assigned to a
hospital in an all-urban State having a
range of such values then is increased
by this factor, the result of which
establishes the State’s alternative
imputed floor. We amended
§ 412.64(h)(4) of the regulations to add
new paragraphs to incorporate the
finalized alternative methodology, and
to make reference and date changes. In
summary, for the FY 2013 wage index,
we did not make any changes to the
original imputed floor methodology at
§ 412.64(h)(4) and, therefore, made no
changes to the New Jersey imputed floor
computation for FY 2013. Instead, for
FY 2013, we adopted a second,
alternative methodology for use in cases
where an all-urban State has a range of
wage indexes assigned to its hospitals,
but the State cannot benefit under the
original methodology.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50589 through 50590), we
extended the imputed floor policy (both
the original methodology and the
alternative methodology) for 1
additional year, through September 30,
2014, while we continued to explore
potential wage index reforms.
In the FY 2015 IPPS/LTCH PPS final
rule (79 FR 49969 through 49970), for
FY 2015, we adopted a policy to extend
the imputed floor policy (both the
original methodology and alternative
methodology) for another year, through
September 30, 2015, as we continued to
explore potential wage index reforms. In
that final rule, we revised the
regulations at § 412.64(h)(4) and
(h)(4)(vi) to reflect the 1-year extension
of the imputed floor. As discussed in
section III.B. of the preamble of that FY
2015 final rule, we adopted the new
OMB labor market area delineations
beginning in FY 2015. Under the new
OMB delineations, Delaware became an
all-urban State, along with New Jersey
and Rhode Island. Under the new OMB
delineations, Delaware has three CBSAs,
New Jersey has seven CBSAs, and
Rhode Island continues to have only
one CBSA (Providence-Warwick, RI–
MA). We refer readers to a detailed
discussion of our adoption of the new
OMB labor market area delineations in
section III.B. of the preamble of the FY
2015 IPPS/LTCH PPS final rule.
Therefore, under the adopted new OMB
delineations discussed in section III.B.
of the preamble of the FY 2015 IPPS/
LTCH PPS final rule, Delaware became
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an all-urban State and was subject to an
imputed floor as well for FY 2015.
In the FY 2016 IPPS/LTCH PPS final
rule (80 FR 49497 through 49498), for
FY 2016, we extended the imputed floor
policy (under both the original
methodology and the alternative
methodology) for 1 additional year,
through September 30, 2016. In that
final rule, we revised the regulations at
§ 412.64(h)(4) and (h)(4)(vi) to reflect
this additional 1-year extension.
Similarly, in the FY 2017 IPPS/LTCH
PPS final rule (81 FR 56921 through
56922), for FY 2017, we extended the
imputed floor policy (under both the
original methodology and the
alternative methodology) for 1
additional year, through September 30,
2017. In that final rule, we revised the
regulations at § 412.64(h)(4) and
(h)(4)(vi) to reflect this additional 1-year
extension.
The imputed floor is set to expire
effective October 1, 2017, and in the FY
2018 IPPS/LTCH PPS proposed rule (82
FR 19905), we did not propose to extend
the imputed floor policy. In the FY 2005
IPPS final rule (69 FR 49110), we
adopted the imputed floor policy for allurban States under the authority of
section 1886(d)(3)(E) of the Act, which
gives the Secretary broad authority to
adjust the proportion (as estimated by
the Secretary from time to time) of
hospitals’ costs which are attributable to
wages and wage-related costs of the
DRG prospective payment rates for area
differences in hospital wage levels by a
factor (established by the Secretary).
However, we have expressed
reservations about establishment of an
imputed floor, considering that the
imputed rural floor methodology creates
a disadvantage in the application of the
wage index to hospitals in States with
rural hospitals but no urban hospitals
receiving the rural floor (72 FR 24786
and 72 FR 47322). As we discussed in
the FY 2008 IPPS final rule (72 FR
47322), the application of the rural and
imputed floors requires transfer of
payments from hospitals in States with
rural hospitals but where the rural floor
is not applied to hospitals in States
where the rural or imputed floor is
applied. For this reason, in the FY 2018
IPPS/LTCH PPS proposed rule, we
proposed not to apply an imputed floor
to wage index calculations and
payments for hospitals in all-urban
States for FY 2018 and subsequent
years. That is, we proposed that
hospitals in New Jersey, Delaware, and
Rhode Island (and in any other all-urban
State) would receive a wage index that
is calculated without applying an
imputed floor for FY 2018 and
subsequent years. Therefore, under our
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38139
proposal, only States containing both
rural areas and hospitals located in such
areas (including any hospital
reclassified as rural under the
provisions of § 412.103 of the
regulations) would benefit from the
rural floor, in accordance with section
4410 of Public Law 105–33. In addition,
we proposed to no longer include the
imputed floor as a factor in the national
budget neutrality adjustment. Therefore,
the proposed wage index and impact
tables associated with the FY 2018
IPPS/LTCH PPS proposed rule (which
are available via the Internet on the
CMS Web site) did not reflect the
imputed floor policy, and there was no
proposed national budget neutrality
adjustment for the imputed floor for FY
2018. We invited public comments on
our proposal not to extend the imputed
floor for FY 2018 and subsequent years.
We are presenting below summaries
of the public comments we received and
our responses.
Comment: Several commenters
supported CMS’ proposal to allow the
imputed floor policy to expire. One
commenter stated that the imputed floor
policy only benefited two States at the
expense of other States due to national
budget neutrality. Another commenter
stated the imputed floor policy should
only apply when required by statute.
Response: We appreciate the positions
of commenters that support the proposal
not to extend the imputed floor. In the
FY 2005 IPPS final rule (69 FR 49110),
we adopted the imputed floor policy for
all-urban States under the authority of
section 1886(d)(3)(E) of the Act, which
gives the Secretary broad authority to
adjust the proportion (as estimated by
the Secretary from time to time) of
hospitals’ costs which are attributable to
wages and wage-related costs, of the
DRG prospective payment rates for area
differences in hospital wage levels by a
factor (established by the Secretary).
Therefore, we believe that we have the
discretion to adopt a policy that would
adjust wage indexes in the stated
manner. We adopted the imputed floor
policy to address concerns from
hospitals in all-urban States and
subsequently extended it through
notice-and-comment rulemaking. While
we understand the commenters’
concerns that the application of the
imputed floors requires transfer of
payments from hospitals in States with
rural hospitals but where the rural floor
is not applied to hospitals in States
where the rural or imputed floor is
applied, we also received many
comments expressing concern about
discontinuing the imputed floor (as
further discussed below). As explained
further below, we have decided to
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temporarily extend the imputed floor for
1 year while we continue to consider
the comments we received and assess
whether to continue or discontinue the
imputed floor policy for the long term.
Comment: Several commenters
disagreed with the proposal to allow the
imputed floor to expire, and stated that
CMS should maintain the status quo
and continue to extend the imputed
floor in 1-year increments until the
entirety of Medicare wage index reform
is complete. The commenters stated
that, by eliminating the imputed floor
wage index, CMS is alleviating only a
fraction of the combined payment
transfer from the application of the rural
and imputed floors. The commenters
pointed out that, combined, hospitals in
the three all-urban States (New Jersey,
Rhode Island, and Delaware) accounted
for less than 10 percent of the 397
hospitals nationally that received either
the rural or imputed floor last year. The
commenters conveyed that CMS
indicated in the FY 2014 and FY 2015
IPPS/LTCH PPS final rules, both of
which extended the imputed floor for an
additional year, that CMS would
continue to explore potential wage
index reform, and that, as of the FY
2018 IPPS/LTCH PPS proposed rule,
such reform has not occurred.
Multiple commenters indicated that
eliminating the imputed floor would
create the same uneven playing field
that existed prior to 2005, in response
to which CMS initially established the
policy. The commenters stated that the
anomaly originally cited by CMS (that
is, that hospitals in all-urban States with
predominant labor market areas do not
have any type of protection, or ‘‘floor,’’
from declines in their wage index)
would exist again if the imputed floor
policy were discontinued.
One commenter indicated that the
imputed floor is an equitable measure
established by CMS which provides
relief to hospitals in all-urban States.
The commenter stated that this
longstanding policy has reduced
volatility and increased the equitability
of the wage index system. The
commenter believed that CMS should
not remove the imputed floor from allurban States. Regarding CMS’ concern
with the payment impact of the existing
imputed floor policy on States with
rural hospitals that do not have urban
hospitals that benefit from a rural floor,
the commenter believed this should be
reviewed as part of a comprehensive
Medicare wage index reform. The
commenter suggested that CMS consider
all recommended changes to the
imputed floor as part of wage index
reform, and that the public have a
chance to provide input to CMS prior to
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finalizing any decisions regarding
elimination of the imputed rural floor.
The commenter further suggested that if
there is a decision made to eliminate the
imputed rural floor, the decision should
include a 2-year notification period to
allow impacted hospitals appropriate
planning time. The commenter stated
that CMS has extended such advance
notice, including changes concerning
the wage index, for this purpose in the
past.
Several commenters stated they
would like to make the imputed floor
wage index provision permanent in the
FY 2018 IPPS/LTCH PPS final rule. The
commenters pointed out that CMS has
upheld the imputed floor for the past 12
years as a valuable method of
maintaining equitable wage index
protections for all-urban States,
consistent with those that exist for
States with rural areas. The commenters
referenced CMS’ explanation from the
FY 2005 IPPS final rule (69 FR 49110)
for adopting the imputed floor, such as:
‘‘because there is no ‘floor’ to protect
those hospitals not located in the
predominant labor market area from
facing continued declines in their wage
index, it becomes increasingly difficult
for those hospitals to continue to
compete for labor.’’ The commenters
stated it is imperative that the imputed
floor policy be made permanent to
ensure that its State’s hospitals are not
artificially disadvantaged simply
because of geography and population.
In addition, the commenters stated
that there are many Medicare payment
programs that redirect scarce Medicare
funding to a class of unique hospitals.
Not all States have hospitals that benefit
from these programs. For example, the
commenters stated that CMS makes
payments to CAHs at a rate of 101
percent of their cost. The commenters
noted that some States do not have any
hospitals that qualify as a CAH and do
not benefit from this program. The
commenters further stated that while
CAHs are paid outside the IPPS
program, the dollars continue to come
from a finite Medicare trust fund. The
commenters believed that this
represents a transfer of payments from
hospitals in States without any CAHs,
such as all-urban States, into States with
CAHs, similar to the transfer of
payments CMS cites as its rationale to
discontinue the imputed floor. The
commenters indicated that there is
precedent for CMS to restore, in the
final rule, policies or provisions that
were scheduled for elimination or
discontinuation in the proposed rule.
The commenters pointed out that, in the
FY 2012 IPPS/LTCH PPS proposed rule,
CMS stated that the imputed floor
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would expire on September 30, 2011.
However, in the final rule, CMS
announced that the imputed floor
provision was extended for 2 additional
years, through FY 2013 (September 30,
2013).
One commenter supported the
alternative methodology for calculating
the imputed rural floor in Rhode Island.
According to the commenter, the
methodology has been used since FY
2013 and has been key for the State’s
hospitals and maintaining access to care
for residents of Rhode Island. The
commenter stated that the alternative
methodology for calculating the
imputed floor appropriately addresses a
hospital wage index reclassification
system that does not reflect Rhode
Island’s characteristics. The commenter
further expressed that the alternative
methodology for calculating the
imputed rural floor protects its hospitals
from falling to some of the lowest
reimbursement rates in the country, at
the same time while competing with
some of the most highly reimbursed
urban hospitals. The commenter
referenced FY 2013, where a majority of
hospitals in Rhode Island reported
operating losses and a cumulative
operating margin of negative 2.0
percent. The commenter pointed out
that since implementing the alternative
methodology for calculating the
imputed floor, there has been
improvement in the overall fiscal
condition of Rhode Island’s health care
system. According to the commenter,
the alternative methodology provided
nearly $29 million to hospitals in Rhode
Island last year. The commenter was
concerned that any discontinuation of
this policy would be devastating for a
State still facing challenging economic
conditions.
Response: While the commenters
raised concerns that, if the imputed
floor were discontinued, hospitals in
all-urban States would again be
disadvantaged by the absence of rural
hospitals to set a wage index floor for
those States, as well as concerns about
the fiscal impacts of discontinuing the
rural floor, we also have expressed
concerns about continuing the imputed
floor policy. As we discussed in the FY
2008 IPPS/LTCH PPS final rule (72 FR
47322), the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51593), and the FY
2018 IPPS/LTCH PPS proposed rule (82
FR 19905), the application of the rural
and imputed floors requires transfer of
payments from hospitals in States with
rural hospitals but where the rural floor
is not applied to hospitals in States
where the rural or imputed floor is
applied. While the three all-urban States
may count for a fraction of all States that
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received the rural and imputed floor last
year, the imputed rural floor
methodology still creates a disadvantage
in the application of the wage index to
hospitals in States with rural hospitals
but no urban hospitals receiving the
rural floor. As discussed below, given
the many comments we received both in
support of and against our proposal to
discontinue the imputed floor, we
believe it would be appropriate to
temporarily extend the imputed floor for
an additional year, while we continue to
consider these comments and further
assess the effects of this policy and
whether to continue or discontinue the
policy for the long term.
In response to the comment
suggesting that we maintain the status
quo and continue to extend the imputed
floor until wage index reform is
complete, we note that section 3137(b)
of the Affordable Care Act required the
Secretary to submit to Congress a report
that includes a plan to reform the
Medicare wage index applied under the
IPPS. We submitted the report to
Congress on April 11, 2012, and have
posted the report and other information
regarding wage index reform on the
CMS Web site at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/WageIndex-Reform.html. While in past years
we have stated that we continue to
explore wage index reforms while
extending the imputed floor in
increments (for example, 78 FR 50589
through 50590 and 79 FR 49969 through
49970), we note that it has already been
many years since our Report to Congress
was issued with no new legislation from
Congress to comprehensively reform the
wage index. Therefore, we do not agree
with the commenter that the imputed
floor should continue until such time as
comprehensive wage index reform may
be implemented.
In addition, we note that the imputed
floor was originally authorized for only
3 years. In the FY 2005 IPPS final rule
(69 FR 49110), we indicated that during
the 3 years that the policy is in effect,
we would determine whether to make
additional changes to the policy or
eliminate it. Given that we had
indicated in the FY 2005 IPPS final rule
that the provision was set to expire after
3 years, and that we have temporarily
extended the provision in increments
for several subsequent years due to the
reasons discussed earlier, we believe
that hospitals in all-urban States should
not rely on the policy to continue
permanently or until wage index reform
is implemented. Furthermore, because
the policy has been temporarily
extended in increments for several
years, we believe that hospitals have
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had ample notice that the policy could
ultimately expire, and thus should not
rely on a notification period as
requested by the commenter. However,
we would provide the public a chance
to provide input to CMS through the
rulemaking process prior to finalizing
any decisions regarding elimination of
the imputed rural floor.
Finally, regarding the comparison
made by commenters between the CAH
payment methodology and the imputed
floor methodology with respect to the
transfer of payments, we disagree with
this comparison. Because there is no
national budget neutrality requirement
relating to CAH payments (as there is
with the imputed floor methodology),
there is no transfer of payments from
hospitals in States without any CAHs to
hospitals in States with CAHs, similar to
that which exists as a result of the
application of the imputed floor. Under
sections 1814(l) and 1834(g) of the Act,
payments made to CAHs for inpatient
and outpatient services are generally
based on 101 percent of the reasonable
costs of the CAH in providing such
services. Reasonable cost is defined in
section 1861(v)(1)(A) of the Act and
determined in accordance with the
regulations under 42 CFR part 413.
Comment: One commenter stated that,
in more recent years, the rural floor
wage index adjustment has been a cause
for concern nationally because urban
hospitals in certain States have had
their wage indexes set equal to the
highest wage index of any rural hospital
in their respective State. As a result, the
commenter pointed out, hospitals in
such States draw Medicare money away
from hospitals in other States. The
commenter reemphasized its previous
recommendations, which were also
included in the MedPAC’s 2007 Report
to Congress, that Congress repeal the
existing hospital wage index. The
commenter appeared to be requesting
support for legislation which would
include: Removing the more than 900
individual hospital reclassifications,
and other exceptions that occur each
year, which are either stipulated in law
or implemented through regulation, and
also giving the Secretary authority to
establish a new wage index system,
using compensation data from all
employees, together with hospital
industry-specific occupational weights,
and adjusting at the county level to
smooth large differences between
counties; and a transition period to
mitigate large changes in wage index
values. The commenter indicated that
the system it proposed is similar to
recommendations made by the Institute
of Medicine and that its sets of
recommendations would eliminate the
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38141
need for the system of geographic
reclassification and exceptions that is
currently in place.
Response: We thank the commenter
for its comments and its
recommendations regarding
modifications to the hospital wage
index. However, we note that we do not
have authority to repeal or revise the
existing wage index statutory
provisions, including the rural floor
statutory provisions at section 4410(b)
of the BBA and section 3141 of the
Affordable Care Act.
Comment: One commenter opposed
the continued application of the
nationwide rural floor budget neutrality
adjustment as described in the proposed
rule. The commenter recognized that the
impetus for the policy is a Federal
statute, not regulation. The commenter
discussed section 3141 of the Affordable
Care Act which established a policy of
national budget neutrality for the
application of the rural and imputed
floors to the Medicare wage index. The
commenter conveyed that, coupled with
the orchestrated conversion of a single
facility in Massachusetts—Nantucket
Cottage Hospital—from a CAH to an
IPPS hospital, section 3141 of the
Affordable Care Act allows hospitals to
unfairly manipulate the Medicare
payment system and reward hospitals in
Massachusetts and a few other States at
the expense of most other hospitals
across the nation. The commenter stated
that the adverse consequences of
nationwide rural floor budget neutrality
have been recognized and commented
upon by CMS, MedPAC, and many
others over the past several years. Until
this policy is corrected, the commenter
stated that the Medicare wage index
system cannot possibly accomplish its
objective of ensuring that payments for
the wage component of labor accurately
reflect actual wage costs.
Other commenters stated ‘‘that the
current application of the rural floor is
broken’’ and referenced how a single
hospital can shift such a large amount
of payments and have it paid for by
many other States in the nation. The
commenters explained that section 4410
of the BBA established a rural floor. The
commenters noted that, by careful
selection of specific hospitals
converting from CAHs to hospitals paid
under the IPPS, States could game the
system and exploit this provision,
shifting millions of dollars into that
State. These commenters stated that the
most notable example of such gaming is
a hospital located on Nantucket Island
off the coast of Massachusetts. This
single hospital sets the wage index for
all hospitals in Massachusetts. The
commenters stated that, according to
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rural floor impact statements provided
by CMS in the annual IPPS final rule
from FY 2012 through FY 2017, this one
hospital will bring a projected $1.3
billion into the commonwealth of
Massachusetts. The commenter pointed
out that the inequity of this provision
recently was highlighted in a March
2017 Office of Inspector General (OIG)
report showing how a single hospital
overreported dollars and underreported
hours, driving up the average hourly
wage. According to the commenter, the
OIG estimated that this error resulted in
more than $133 million in Medicare
overpayments to be paid to
Massachusetts hospitals. The
commenters ‘‘urged CMS to establish a
national wage index ceiling (for
example, 1.33) that can be used to
increase the national wage index floor to
a reasonable level (for example, .874)’’.
In addition, the commenters opposed
the application of a nationwide rural
floor budget neutrality adjustment and
requested that CMS overturn section
3141 of the Affordable Care Act and
restore integrity to the hospital wage
index system.
Response: We thank the commenters
for their comments and suggestions.
Because there is no national wage index
floor, we are not clear what the
commenter meant with respect to its
request to establish a national wage
index ceiling that can be used to
increase the national wage index floor to
a reasonable level. Therefore, we are
unable to respond to this suggestion
made by the commenter. As we stated
earlier, section 4410 of the BBA requires
the application of the rural floor and
section 3141 of the Affordable Care Act
requires a uniform, national budget
neutrality adjustment for the rural floor.
We do not have authority to repeal or
revise these laws.
Comment: One commenter suggested
that CMS use its authority to establish
a temporary wage index floor for Puerto
Rico in the interest of preventing a
decrease in Medicare payments due to
Puerto Rico’s lower than national
average wages.
Response: We appreciate the
suggestions provided by the commenter
regarding a temporary wage index floor
for Puerto Rico. However, this comment
is outside the scope of the proposed
rule.
We appreciate the positions of
commenters that both supported and
opposed the proposal to allow the
imputed floor policy to expire. After
consideration of public comments we
received, we believe extending the
imputed floor policy for 1 more year
through FY 2018 is appropriate while
we continue to consider the many
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comments we received and whether to
continue or discontinue the imputed
floor for the long term. Therefore, we are
extending the imputed floor policy
under both the original methodology
and the alternative methodology for an
additional year, through September 30,
2018, and will address this issue again
in our FY 2019 rulemaking. We also are
revising the regulations at
§§ 412.64(h)(4) and (h)(4)(vi) to reflect
the 1-year extension of the imputed
floor, through September 30, 2018.
The wage index and impact tables
associated with this FY 2018 IPPS/
LTCH PPS final rule (which are
available on the Internet via the CMS
Web site) reflect the continued
application of the imputed floor policy
at § 412.64(h)(4) and a national budget
neutrality adjustment for the imputed
floor for FY 2018. There are 17 hospitals
in New Jersey that will receive an
increase in their FY 2018 wage index
due to the continued application of the
imputed floor policy under the original
methodology, and 10 hospitals in Rhode
Island and 6 hospitals in Delaware that
will benefit under the alternative
methodology.
3. State Frontier Floor for FY 2018
Section 10324 of Public Law 111–148
requires that hospitals in frontier States
cannot be assigned a wage index of less
than 1.0000. (We refer readers to the
regulations at 42 CFR 412.64(m) and to
a discussion of the implementation of
this provision in the FY 2011 IPPS/
LTCH PPS final rule (75 FR 50160
through 50161).) In the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19905),
we did not propose any changes to the
frontier floor policy for FY 2018. We
stated in the proposed rule that 52
hospitals would receive the frontier
floor value of 1.0000 for their FY 2018
wage index. These hospitals are located
in Montana, Nevada, North Dakota,
South Dakota, and Wyoming.
We did not receive any public
comments on the application of the
State frontier floor for 2018. In this final
rule, 49 hospitals will receive the
frontier floor value of 1.0000 for their
FY 2018 wage index. These hospitals
are located in Montana, Nevada, North
Dakota, South Dakota, and Wyoming.
The areas affected by the final rural
and frontier floor policies for the FY
2018 wage index are identified in Table
2 associated with this final rule, which
is available via the Internet on the CMS
Web site.
H. FY 2018 Wage Index Tables
In the FY 2016 IPPS/LTCH PPS final
rule (80 FR 49498 and 49807 through
49808), we finalized a proposal to
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streamline and consolidate the wage
index tables associated with the IPPS
proposed and final rules for FY 2016
and subsequent fiscal years. Prior to FY
2016, the wage index tables had
consisted of 12 tables (Tables 2, 3A, 3B,
4A, 4B, 4C, 4D, 4E, 4F, 4J, 9A, and 9C)
that were made available via the
Internet on the CMS Web site. Effective
beginning FY 2016, with the exception
of Table 4E, we streamlined and
consolidated 11 tables (Tables 2, 3A, 3B,
4A, 4B, 4C, 4D, 4F, 4J, 9A, and 9C) into
2 tables (Tables 2 and 3). We refer
readers to section VI. of the Addendum
to this final rule for a discussion of the
final wage index tables for FY 2018.
I. Revisions to the Wage Index Based on
Hospital Redesignations and
Reclassifications
1. General Policies and Effects of
Reclassification and Redesignation
Under section 1886(d)(10) of the Act,
the Medicare Geographic Classification
Review Board (MGCRB) considers
applications by hospitals for geographic
reclassification for purposes of payment
under the IPPS. Hospitals must apply to
the MGCRB to reclassify not later than
13 months prior to the start of the fiscal
year for which reclassification is sought
(usually by September 1). Generally,
hospitals must be proximate to the labor
market area to which they are seeking
reclassification and must demonstrate
characteristics similar to hospitals
located in that area. The MGCRB issues
its decisions by the end of February for
reclassifications that become effective
for the following fiscal year (beginning
October 1). The regulations applicable
to reclassifications by the MGCRB are
located in 42 CFR 412.230 through
412.280. (We refer readers to a
discussion in the FY 2002 IPPS final
rule (66 FR 39874 and 39875) regarding
how the MGCRB defines mileage for
purposes of the proximity
requirements.) The general policies for
reclassifications and redesignations and
the policies for the effects of hospitals’
reclassifications and redesignations on
the wage index are discussed in the FY
2012 IPPS/LTCH PPS final rule for the
FY 2012 final wage index (76 FR 51595
and 51596). In addition, in the FY 2012
IPPS/LTCH PPS final rule, we discussed
the effects on the wage index of urban
hospitals reclassifying to rural areas
under 42 CFR 412.103. Hospitals that
are geographically located in States
without any rural areas are ineligible to
apply for rural reclassification in
accordance with the provisions of 42
CFR 412.103.
On April 21, 2016, we published an
interim final rule with comment period
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(IFC) in the Federal Register (81 FR
23428 through 23438) that included
provisions amending our regulations to
allow hospitals nationwide to have
simultaneous § 412.103 and MGCRB
reclassifications. For reclassifications
effective beginning FY 2018, a hospital
may acquire rural status under § 412.103
and subsequently apply for a
reclassification under the MGCRB using
distance and average hourly wage
criteria designated for rural hospitals. In
addition, we provided that a hospital
that has an active MGCRB
reclassification and is then approved for
redesignation under § 412.103 will not
lose its MGCRB reclassification; such a
hospital receives a reclassified urban
wage index during the years of its active
MGCRB reclassification and is still
considered rural under section 1886(d)
of the Act and for other purposes.
We discussed that when there is both
a § 412.103 redesignation and an
MGCRB reclassification, the MGCRB
reclassification controls for wage index
calculation and payment purposes. We
exclude hospitals with § 412.103
redesignations from the calculation of
the reclassified rural wage index if they
also have an active MGCRB
reclassification to another area. That is,
if an application for urban
reclassification through the MGCRB is
approved, and is not withdrawn or
terminated by the hospital within the
established timelines, we consider the
hospital’s geographic CBSA and the
urban CBSA to which the hospital is
reclassified under the MGCRB for the
wage index calculation. We refer readers
to the April 21, 2016 IFC (81 FR 23428
through 23438) and the FY 2017 IPPS/
LTCH PPS final rule (81 FR 56922
through 56930) for a full discussion of
the effect of simultaneous
reclassifications under both the
§ 412.103 and the MGCRB processes on
wage index calculations.
2. MGCRB Reclassification and
Redesignation Issues for FY 2018
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a. FY 2018 Reclassification
Requirements and Approvals
As previously stated, under section
1886(d)(10) of the Act, the MGCRB
considers applications by hospitals for
geographic reclassification for purposes
of payment under the IPPS. The specific
procedures and rules that apply to the
geographic reclassification process are
outlined in regulations under 42 CFR
412.230 through 412.280.
At the time this final rule was
constructed, the MGCRB had completed
its review of FY 2018 reclassification
requests. Based on such reviews, there
are 374 hospitals approved for wage
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index reclassifications by the MGCRB
starting in FY 2018. Because MGCRB
wage index reclassifications are
effective for 3 years, for FY 2018,
hospitals reclassified beginning in FY
2016 or FY 2017 are eligible to continue
to be reclassified to a particular labor
market area based on such prior
reclassifications for the remainder of
their 3-year period. There were 245
hospitals approved for wage index
reclassifications in FY 2016 that will
continue for FY 2018, and 246 hospitals
approved for wage index
reclassifications in FY 2017 that will
continue for FY 2018. Of all the
hospitals approved for reclassification
for FY 2016, FY 2017, and FY 2018,
based upon the review at the time of
this final rule, 865 hospitals are in a
MGCRB reclassification status for FY
2018.
Under the regulations at 42 CFR
412.273, hospitals that have been
reclassified by the MGCRB are
permitted to withdraw their
applications if the request for
withdrawal is received by the MGCRB
within 45 days of the publication of
CMS’ annual notice of proposed
rulemaking concerning changes to the
inpatient hospital prospective payment
system and proposed payment rates for
the fiscal year for which the application
has been filed. (We note that in section
III.I.4. of the preamble of this final rule,
we did not finalize our proposal to
revise the above described regulation
text to specify that written notice to the
MGCRB must be provided within 45
days from the date of public display of
the proposed rule at the Office of the
Federal Register.) For information about
withdrawing, terminating, or canceling
a previous withdrawal or termination of
a 3-year reclassification for wage index
purposes, we refer readers to § 412.273,
as well as the FY 2002 IPPS final rule
(66 FR 39887 through 39888) and the FY
2003 IPPS final rule (67 FR 50065
through 50066). Additional discussion
on withdrawals and terminations, and
clarifications regarding reinstating
reclassifications and ‘‘fallback’’
reclassifications were included in the
FY 2008 IPPS final rule (72 FR 47333).
Changes to the wage index that result
from withdrawals of requests for
reclassification, terminations, wage
index corrections, appeals, and the
Administrator’s review process for FY
2018 are incorporated into the wage
index values published in this FY 2018
IPPS/LTCH PPS final rule. These
changes affect not only the wage index
value for specific geographic areas, but
also the wage index value that
redesignated/reclassified hospitals
receive; that is, whether they receive the
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wage index that includes the data for
both the hospitals already in the area
and the redesignated/reclassified
hospitals. Further, the wage index value
for the area from which the hospitals are
redesignated/reclassified may be
affected.
Comment: MedPAC and other
commenters stated that the increasing
number of wage index reclassifications,
along with other wage index exceptions,
raises questions regarding whether the
current wage index is equitably
adjusting payments for local input costs
of providing patient care. One
commenter stated that the increasing
number of hospitals that reclassify is a
‘‘clear indication of the broken system’’
that needs to be replaced; another
commenter requested general wage
index reform. MedPAC reiterated that
recommendations included in the
Commission’s 2007 Report to Congress
and similar recommendations made by
the Institute of Medicine would
eliminate the need for the system of
geographic reclassification and
exceptions that is currently in place.
Specifically, MedPAC recommended
that the Congress repeal the existing
hospital wage index, remove the more
than 900 individual hospital
reclassifications and other exceptions
that occur each year, and give the
Secretary the authority to establish a
new wage index system.
Response: We understand the
commenters’ concerns regarding the
high volume of MGCRB
reclassifications. We appreciate
MedPAC’s recommendation to repeal
the current wage index statute.
However, repealing the wage index
statute would require legislative action
by Congress. Specifically, section
1886(d)(3)(E) of the Act requires that, as
part of the methodology for determining
prospective payments to hospitals, the
Secretary must adjust the standardized
amounts for area differences in hospital
wage levels by a factor (established by
the Secretary) reflecting the relative
hospital wage level in the geographic
area of the hospital compared to the
national average hospital wage level. We
also appreciate the other commenters’
requests for wage index reform. We will
take the requests into consideration and
may address this issue again in future
rulemaking.
Applications for FY 2019
reclassifications are due to the MGCRB
by September 1, 2017 (the first working
day of September 2017). We note that
this is also the deadline for canceling a
previous wage index reclassification,
withdrawal, or termination under 42
CFR 412.273(d). Applications and other
information about MGCRB
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reclassifications may be obtained,
beginning in mid-July 2017, via the
Internet on the CMS Web site at: https://
www.cms.gov/Regulations-andGuidance/Review-Boards/MGCRB/
index.html, or by calling the MGCRB at
(410) 786–1174. The mailing address of
the MGCRB is: 2520 Lord Baltimore
Drive, Suite L, Baltimore, MD 21244–
2670.
Under previous regulations at 42 CFR
412.256(a)(1), applications for
reclassification were required to be
mailed or delivered to the MGCRB, with
a copy to CMS, and were not allowed
to be submitted through the facsimile
(FAX) process or by other electronic
means. Because we believed this
previous policy was outdated and
overly restrictive and to promote ease of
application for FY 2018 and subsequent
years, in the FY 2017 IPPS/LTCH PPS
final rule (81 FR 56928), we revised this
policy to require applications and
supporting documentation to be
submitted via the method prescribed in
instructions by the MGCRB, with an
electronic copy to CMS. We revised
§ 412.256(a)(1) to specify that an
application must be submitted to the
MGCRB according to the method
prescribed by the MGCRB, with an
electronic copy of the application sent
to CMS. We specified that CMS copies
should be sent via email to wageindex@
cms.hhs.gov.
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 56928), we reiterated that
MGCRB application requirements will
be published separately from the
rulemaking process, and paper
applications will likely still be required.
The MGCRB makes all initial
determinations for geographic
reclassification requests, but CMS
requests copies of all applications to
assist in verifying a reclassification
status during the wage index
development process. We stated that we
believed that requiring electronic
versions would better aid CMS in this
process, and would reduce the overall
burden upon hospitals.
We did not receive any public
comments on the requirements for
applications for FY 2019
reclassifications.
b. Extension of PRA Information
Collection Requirement Approval for
MGCRB Applications
As stated earlier, under section
1886(d)(10) of the Act, the MGCRB
considers applications by hospitals for
geographic reclassification for purposes
of payment under the IPPS. The specific
procedures and rules that apply to the
geographic reclassification process are
outlined in the regulations under 42
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CFR 412.230 through 412.280. The
information collection requirements for
the MGCRB procedures and criteria and
supporting regulations in 42 CFR
412.256 subject to the Paperwork
Reduction Act provisions were
approved under OMB Control Number
0938–0573 and expired on February 28,
2017. As discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19906
and 19907), an extension of the
collection was required in time for
applications due to the MGCRB by
September 1, 2017 for FY 2019
reclassifications. A request for an
extension of the information collection
requirements for the MGCRB procedures
and criteria and supporting regulations
received approval by OMB on June 30,
2017, and can be accessed at: https://
www.reginfo.gov/public/do/
PRAViewICR?ref_nbr=201612-0938-023.
c. Deadline for Submittal of
Documentation of Sole Community
Hospital (SCH) and Rural Referral
Center (RRC) Classification Status to the
MGCRB
The regulations at 42 CFR
412.230(a)(3), consistent with section
1886(d)(10)(D)(i)(III) of the Act, set
special rules for sole community
hospitals (SCHs) and rural referral
centers (RRCs) that are reclassifying
under the MGCRB. Specifically, a
hospital that is an RRC or an SCH, or
both, does not have to demonstrate a
close proximity to the area to which it
seeks redesignation. If a hospital that is
an RRC or an SCH, or both, qualifies for
urban redesignation, it is redesignated
to the urban area that is closest to the
hospital. If the hospital is closer to
another rural area than to any urban
area, it may seek redesignation to either
the closest rural or the closest urban
area.
In addition, section 1886(d)(10)(D)(iii)
of the Act, as implemented in the
regulations at § 412.230(d)(3)(i),
provides an exception to certain wage
comparison criteria for RRCs and former
RRCs reclassifying under the MGCRB.
Under § 412.230(d)(3)(i), if a hospital
was ever an RRC, it does not have to
demonstrate that it meets the average
hourly wage criterion at
§ 412.230(d)(1)(iii), which would
require that the hospital’s average
hourly wage be at least 106 percent for
rural hospitals and at least 108 percent
for urban hospitals of the average hourly
wage of all other hospitals in the area in
which the hospital is located. Rather, as
codified at § 412.230(d)(3)(ii), consistent
with our authority under section
1886(d)(10)(D)(i) of the Act, if a hospital
was ever an RRC, it is required to meet
only the criterion for rural hospitals at
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§ 412.230(d)(1)(iv), which requires that
the hospital’s average hourly wage is
equal to at least 82 percent of the
average hourly wage of hospitals in the
area to which it seeks redesignation.
The regulations at § 412.96 set forth the
criteria that a hospital must meet in
order to qualify as an RRC.
For a hospital to use the special rules
at § 412.230(a)(3) for SCHs and RRCs,
the existing regulation at § 412.230(a)(3)
requires that the hospital be an active
SCH or an RRC as of the date of the
MGCRB’s review. In addition, for a
hospital to use the RRC exceptions at
§ 412.230(d)(3), a hospital must either
be an RRC at the time of the MGCRB’s
review or have previously been
classified as an RRC in the past. In other
words, under the existing regulations, if
a hospital is approved by CMS as an
SCH or an RRC but the approval is not
yet effective at the time of the MGCRB’s
review, the hospital’s status as an SCH
or an RRC would not be considered in
the MGCRB’s decision, unless the
hospital was a former RRC, in which
case it would be able to use the RRC
exceptions at § 412.230(d)(3).
The MGCRB currently accepts
supporting documentation of SCH and
RRC classification (including, but not
limited to, the CMS approval letter) up
until the date of MGCRB’s review,
which varies annually. A hospital may
apply at any time for classification as an
SCH, and the classification is effective
30 days after the date of CMS’ written
notification of approval, in accordance
with § 412.92. Considering that the
MGCRB usually meets in early
February, hospitals typically seek to
obtain SCH approval letters no later
than early January (30 days prior to the
date of MGCRB review) for the SCH
status to be effective as of the date of the
MGCRB’s review. However, consistent
with section 1886(d)(5)(C)(i) of the Act,
a hospital must submit its application
for RRC status during the quarter before
the first quarter of the hospital’s cost
reporting period, to be effective at the
beginning of the next cost reporting
period. The existing regulation at
§ 412.230(a)(3), combined with the
statutory timeframe for RRC
classification, require that a hospital’s
cost reporting period as an RRC begin
on or before the date of the MGCRB’s
review in order to be considered an RRC
by the MGCRB for purposes of the
special rules under § 412.230(a)(3).
Similarly, in order to use the RRC
exceptions under § 412.230(d)(3), a
hospital’s RRC status must be effective
on the date of the MGCRB’s review, or
(unlike § 412.230(a)(3)) the hospital
must have had RRC status in the past.
For example, a hospital with a cost
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reporting period beginning in March
would obtain RRC approval, in
accordance with the statutory
timeframe, during the December
through February quarter (potentially
before the MGCRB’s decision), but
would not be considered an RRC by the
MGCRB because the approval would not
be effective until the next cost reporting
period begins in March, after the
MGCRB’s decision (unless, for purposes
of § 412.230(d)(3), the hospital had
previously been classified as an RRC in
the past).
As discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19907
through 19908), the current practice of
accepting documentation of SCH and
RRC approvals up until the date of
MGCRB review does not ensure
adequate time for the MGCRB to include
SCH and RRC approvals in its review.
We noted in the proposed rule that
many hospitals now obtain SCH or RRC
status based on a § 412.103
reclassification in order to reclassify
using the special rules and exceptions
under the MGCRB following the April
21, 2016 IFC (81 FR 23428), which
revised the regulations to allow
hospitals nationwide to reclassify based
on acquired rural status. We stated in
the proposed rule that we believe the
additional volume of SCH and RRC
approvals submitted to the MGCRB
increases the need for an earlier
deadline for documentation of SCH and
RRC classifications to be submitted to
the MGCRB for purposes of the special
rules at § 412.230(a)(3) and the
exception for RRCs at § 412.230(d)(3). In
addition, because the date of the
MGCRB’s review varies annually, we
stated in the proposed rule that we
believe hospitals would benefit from the
certainty of a set date by which
documentation of RRC or SCH status
must be submitted in order to have that
status considered by the MGCRB under
§ 412.230(a)(3) and § 412.230(d)(3).
Therefore, to ensure sufficient time
for the MGCRB to include SCH and RRC
status approvals in its review and
increase clarity for hospitals, while
allowing as much time and flexibility as
possible for hospitals applying for RRC
status to be considered RRCs by the
MGCRB, in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19907 through
19908), we proposed to revise the
regulations at § 412.230(a)(3) and
§ 412.230(d)(3). We proposed to revise
the regulations at § 412.230(a)(3) in two
ways. First, we proposed to establish a
deadline of the first business day after
January 1 for hospitals to submit to the
MGCRB documentation of SCH or RRC
status approval (the CMS approval
letter) in order to take advantage of the
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special rules under § 412.230(a)(3) when
reclassifying under the MGCRB. We
stated that we believe that this date of
the first business day after January 1
would provide sufficient time for the
MGCRB to consider documentation of
SCH or RRC status approval in its
review, without negatively affecting
hospitals seeking to obtain SCH or RRC
status, as explained below. Second, we
proposed to revise § 412.230(a)(3) to
require hospitals to submit
documentation of SCH or RRC status
approval (the CMS approval letter) by
the deadline above, rather than to have
SCH or RRC classification that is
effective as of the date of MGCRB
review, in order to use the special rules
for SCHs and RRCs under
§ 412.230(a)(3). Likewise, we proposed
to revise the regulations at
§ 412.230(d)(3) so that a hospital
qualifies for these RRC exceptions if it
was ever approved as a RRC. In other
words, the exceptions at § 412.230(d)(3)
would continue to apply to hospitals
that were ever classified as RRCs, but
consistent with our authority under
section 1886(d)(10)(D)(i) of the Act to
publish guidelines to be utilized by the
MGCRB, we proposed to also extend
these exceptions to hospitals that were
ever approved as RRCs. Similar to
§ 412.230(a)(3), we also proposed to
establish a deadline of the first business
day after January 1 for hospitals to
submit documentation of RRC status
approval (the CMS approval letter) in
order to take advantage of the exception
under § 412.230(d)(3) when
reclassifying under the MGCRB. We
stated in the proposed rule that these
proposed revisions would more
appropriately allow the MGCRB to
prepare for its review and would allow
hospitals obtaining SCH or RRC status
approval as late as the first business day
after January 1 to have these
classifications considered by the
MGCRB under § 412.230(a)(3) and
(d)(3), irrespective of the effective date
of these classifications. We stated that
these proposals would not substantially
affect hospitals seeking SCH
classification for purposes of
reclassifying under the MGCRB because
a hospital must obtain SCH status
approval by early January under the
existing regulation in order to have that
classification effective 30 days later by
the time the Board usually meets in
early February. For hospitals seeking
RRC classification for purposes of
reclassifying under the MGCRB,
however, the proposed deadline of no
later than the first business day after
January 1, in concert with our proposal
to accept documentation of approval
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38145
(the CMS approval letter) instead of
requiring the hospital to be an active
RRC at the time of the MGCRB review
in order to take advantage of the special
rules and exceptions under
§ 412.230(a)(3) and (d)(3), is beneficial.
We stated that the proposed revisions to
the regulations at § 412.230(a)(3) and
(d)(3) would accommodate more
hospitals with various cost reporting
year ends by allowing hospitals with
cost reporting periods beginning soon
after the MGCRB’s decision to have RRC
status approvals included in the
MGCRB’s review. Under the proposals,
the MGCRB would consider an RRC
status approval obtained as late as the
first business day after January 1 instead
of requiring the RRC classification to be
effective by the time the Board meets,
which has been in February in past
years. For example, under our proposal,
a hospital with a cost reporting period
beginning as late as March, which could
apply for RRC status approval in
accordance with the statutory timeframe
starting in December, would be
considered an RRC by the MGCRB if it
submits documentation of approval of
RRC status no later than the first
business day after January 1, even
though the approval would not be
effective until after the MGCRB’s
decision.
For the reasons discussed earlier,
consistent with our authority under
section 1886(d)(10)(D)(i) of the Act to
publish guidelines to be utilized by the
MGCRB, we proposed to revise the
regulations at § 412.230(a)(3) to specify
that, to be redesignated under the
special rules in that paragraph, the
hospital must submit documentation of
the approval of SCH or RRC status to the
MGCRB no later than the first business
day after January 1. In addition, we
proposed conforming revisions to
paragraphs (a)(3)(i) and (ii) of § 412.230
to reflect that these paragraphs apply to
hospitals with SCH and RRC approval
as specified above (and not only
effective status). Specifically, we
proposed to revise § 412.230(a)(3)(i) to
specify that a hospital that is approved
as an RRC or SCH, or both, does not
have to demonstrate a close proximity to
the area to which it seeks redesignation;
and to revise § 412.230(a)(3)(ii) to
specify that this paragraph applies if a
hospital that is approved as an RRC or
SCH, or both, qualifies for urban
redesignation. We note that we
proposed additional revisions to
§ 412.230(a)(3)(ii) as discussed in
section III.I.2.d. of the preamble of the
proposed rule and this final rule.
In addition, for the reasons discussed
above, consistent with our authority
under section 1886(d)(10)(D)(i) of the
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Act to publish guidelines to be utilized
by the MGCRB, we proposed to revise
the regulations at § 412.230(d)(3).
Specifically, we proposed to add
introductory language to § 412.230(d)(3)
to specify that for the exceptions in this
paragraph to apply, the hospital must
submit documentation of the approval
of RRC status (current or past) to the
MGCRB no later than the first business
day after January 1. In addition, we
proposed to revise § 412.230(d)(3)(i) to
specify that if a hospital was ever
approved as an RRC, it does not have to
demonstrate that it meets the average
hourly wage criterion set forth in
§ 412.230(d)(1)(iii); and to revise
§ 412.230(d)(3)(ii) to specify that if a
hospital was ever approved as an RRC,
it is required to meet only the criterion
that applies to rural hospitals under
§ 412.230(d)(1)(iv), regardless of its
actual location in an urban or rural area.
We invited public comments on these
proposals.
Comment: One commenter did not
disagree with the establishment of a
deadline for submitting documentation
of SCH and RRC status to the MGCRB
because the commenter believed that
the proposed deadline will provide
clarity to hospitals, the MGCRB, and
CMS in this process and will ensure
adequate time for the MGCRB to include
SCH and RRC approvals in its review.
However, the commenter urged CMS to
also establish a deadline of 30 days from
receipt of request for SCH or RRC status
for CMS to respond. The commenter
pointed out that while the regulations
specify effective dates for SCH and RRC
status, the regulations do not set a
timeframe by which CMS must rule on
an SCH or RRC request. Therefore, the
commenter stated, a hospital may face
uncertainty that CMS will respond to its
request for SCH or RRC status by the
first business day in January, in time to
submit to the MGCRB. According to the
commenter, absent a defined timeframe
within which CMS must respond to
hospitals’ requests for SCH and RRC
status, hospitals face a disadvantage in
complying with the deadline of the first
business day in January for submitting
documentation of SCH and RRC status
to the MGCRB.
Response: We appreciate the
commenter’s support for our effort to
provide clarity to all parties. The
commenter is correct that the
regulations do not set a timeframe by
which CMS must rule on an SCH or
RRC request. However, under section
1886(d)(5)(C)(i) of the Act, CMS must
make a final determination on a request
for RRC status within 60 days after the
date the request was submitted. We
agree with the commenter that,
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depending on the timeframe within
which SCH and RRC status approvals
are issued, hospitals may face a
disadvantage in complying with the
proposed deadline to submit SCH and
RRC documentation to the MGCRB.
Thus, we believe that further
consideration is needed regarding the
appropriate timeframe for such
approvals to avoid the disadvantage
cited by the commenter. Accordingly,
for FY 2018, we are not finalizing the
proposed deadline of the first business
day after January 1 for hospitals to
submit documentation of SCH and RRC
status to the MGCRB. We may revisit the
deadline for submitting documentation
to the MGCRB in future rulemaking to
give us the opportunity to further
consider the timeframe for CMS to
respond to applications for SCH and
RRC status.
However, we believe that the proposal
to require that a hospital must be
approved for SCH or RRC status, rather
than have active RRC or SCH status, in
order to use the special rules for SCHs
and RRCs and exceptions for RRCs
under §§ 412.230(a)(3) and (d)(3),
remains beneficial for hospitals. While
we are still concerned with providing
the MGCRB sufficient time to include
SCH and RRC status approval in its
review, we believe finalizing our
proposal to require that a hospital be
approved for SCH or RRC status, rather
than have active RRC or SCH status, in
order to use the special rules for SCHs
and RRCs and exceptions for RRCs
under §§ 412.230(a)(3) and (d)(3) is
appropriate because it provides
flexibility and accommodates more
hospitals. Therefore, as discussed
further below, we are finalizing our
proposed changes to the regulations to
specify that a hospital must be approved
as an SCH or RRC at the date of the
MGCRB’s review, irrespective of
effective date of SCH or RRC status.
While documentation of SCH and RRC
status approval may include the CMS
approval letter, we are clarifying that
other documents could also serve this
purpose as determined by the MGCRB,
and that documentation in addition to
the CMS approval letter may be
required. Questions about acceptable
supporting documentation should be
directed to the MGCRB at 410–786–
1174.
After consideration of the public
comment we received, for the reasons
discussed earlier, we are not finalizing
our proposed revisions to the
regulations at §§ 412.230(a)(3) and (d)(3)
to establish a deadline of the first
business day after January 1 for
hospitals to submit documentation of
SCH and RRC status approval to the
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MGCRB. However, consistent with our
authority under section
1886(d)(10)(D)(i) to publish guidelines
to be used by the MGCRB, for the
reasons discussed earlier and in the FY
2018 IPPS/LTCH PPS proposed rule, we
are finalizing our proposal that a
hospital must be approved for SCH or
RRC status, rather than have active SCH
or RRC status in order to use the special
rules for SCHs and RRCs and exceptions
for RRCs under §§ 412.230(a)(3) and
(d)(3). Specifically, we are revising the
regulation at § 412.230(a)(3) to specify
that, to be redesignated under the
special rules in this paragraph, a
hospital must be approved as an SCH or
RRC as of the date of the MGCRB’s
review. In addition, we are finalizing,
without modification, our proposed
revisions to paragraphs (a)(3)(i) and (ii)
of § 412.230 to reflect that these
paragraphs apply to hospitals with SCH
and RRC approval (and not only
effective status). Specifically, we are
revising § 412.230(a)(3)(i) to specify that
a hospital that is approved as an RRC or
SCH, or both, does not have to
demonstrate a close proximity to the
area to which it seeks redesignation; and
revising § 412.230(a)(3)(ii) to specify
that this paragraph applies if a hospital
that is approved as an RRC or SCH, or
both, qualifies for urban redesignation.
(We note that we are making additional
revisions to § 412.230(a)(3)(ii) as
discussed in section III.I.2.d. of the
preamble of this final rule).
In addition, for the reasons discussed
earlier, while we are not finalizing our
proposed introductory language at
§ 412.230(d)(3), we are finalizing our
proposed revisions to paragraphs
(d)(3)(i) and (ii) of § 412.230, without
modification, to reflect that these
paragraphs apply to hospitals with RRC
approval (and not only effective status).
Specifically, we are revising
§ 412.230(d)(3)(i) to specify that if a
hospital was ever approved as an RRC,
it does not have to demonstrate that it
meets the average hourly wage criterion
set forth in § 412.230(d)(1)(iii); and
revising § 412.230(d)(3)(ii) to specify
that if a hospital was ever approved as
an RRC, it is required to meet only the
criterion that applies to rural hospitals
under § 412.230(d)(1)(iv), regardless of
its actual location in an urban or rural
area.
d. Clarification of Special Rules for
SCHs and RRCs Reclassifying to
Geographic Home Area
Following issuance of the April 21,
2016 IFC (81 FR 23428), hospitals may
simultaneously be redesignated as rural
under § 412.103 and reclassified under
the MGCRB. An urban hospital seeking
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benefits of rural status, such as rural
payments for disproportionate share
hospitals (DSH) and eligibility for the
340B Drug Pricing Program
administered by HRSA, without the
associated rural wage index may be
redesignated as rural under § 412.103 (if
it meets the applicable requirements)
and also reclassify under the MGCRB to
an urban area (again, if it meets the
applicable requirements). As discussed
earlier and in the FY 2017 IPPS/LTCH
PPS final rule (81 FR 56922 through
56927), a hospital with simultaneous
§ 412.103 redesignation and MGCRB
reclassification receives the wage index
of the CBSA to which it is reclassified
under the MGCRB while still
maintaining § 412.103 reclassified rural
status for other purposes.
Hospitals that are redesignated under
§ 412.103 may seek MGCRB
reclassification to their geographic home
area. Such hospitals automatically meet
the criteria for proximity, but must still
demonstrate that they meet the wage
comparison requirements using the
criteria for rural hospitals at
§ 412.230(d). Specifically, a hospital
with a § 412.103 redesignation seeking
reclassification under the MGCRB must
demonstrate that its average hourly
wage is at least 106 percent of the
average hourly wage of all other
hospitals in the area in which the
hospital is located in accordance with
§ 412.230(d)(1)(iii), and the hospital’s
average hourly wage is equal to at least
82 percent of the average hourly wage
of hospitals in the area to which it seeks
redesignation, in accordance with
§ 412.230(d)(1)(iv). In this case, both the
area in which the hospital is located and
the area to which it seeks redesignation
are the geographic home area. If a
hospital with a § 412.103 rural
redesignation also has SCH or RRC
status based on its acquired rural status,
the hospital may use the exception at
§ 412.230(d)(3) for RRCs seeking
reclassification under the MGCRB and
the special reclassification rules at
§ 412.230(a)(3) for SCHs and RRCs.
Specifically, under § 412.230(d)(3)(ii),
an RRC or former RRC must only
demonstrate that its average hourly
wage is equal to at least 82 percent of
the average hourly wage of hospitals in
the area to which it seeks redesignation.
In other words, a hospital with RRC
status based on a § 412.103 rural
redesignation that is seeking additional
reclassification under the MGCRB to its
geographic home area must only
demonstrate that its average hourly
wage is equal to at least 82 percent of
the average hourly wage of hospitals in
its geographic home area. The proximity
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requirement is waived under
§ 412.230(a)(3) for SCHs and RRCs, and
SCHs and RRCs are redesignated to the
urban area that is closest to the hospital
(or if the hospital is closer to another
rural area than to any urban area, it may
seek redesignation to either the closest
rural area or the closest urban area).
As discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19908
through 19909), the existing regulation
at § 412.230(a)(3)(ii) states that if an
SCH or RRC qualifies for urban
redesignation, it is redesignated to the
urban area that is closest to the hospital.
As currently worded, we believe it is
unclear how this provision would apply
to a hospital with a § 412.103 rural
redesignation and SCH or RRC status. If
the urban area that is closest to the
hospital is interpreted to mean the
hospital’s geographic home area, a
hospital with a § 412.103 rural
redesignation and SCH or RRC status
would not be able to reclassify to any
closest area outside of the hospital’s
geographic home area, but would only
be allowed to reclassify to the
geographic home area. Alternatively, if
the urban area that is closest to the
hospital is interpreted to mean the
closest urban area to the hospital’s
geographic home area, the hospital
would seem to be precluded from
reclassifying under the MGCRB to its
geographic home area. In other words,
under the existing language of this
regulation, the urban area that is closest
to the hospital can either be interpreted
to mean the hospital’s geographic home
area, or the closest area outside of the
hospital’s geographic home area.
In the FY 2018 IPS/LTCH PPS
proposed rule (82 FR 19909), we stated
that we believe it would be appropriate
to revise § 412.230(a)(3)(ii) to clarify that
it allows for redesignation to either the
hospital’s geographic home area or to
the closest area outside of the hospital’s
geographic home area. Prior to the April
21, 2016 interim final rule with
comment period (IFC) (81 FR 23428), it
was not possible for a hospital with
§ 412.103 rural redesignation to seek
reclassification to its geographic home
area or to the closest area outside its
geographic home area under the MGCRB
because dual reclassification under
§ 412.103 and under the MGCRB was
not permitted. However, the IFC
allowed dual § 412.103 and MGCRB
reclassifications, so a hospital may now
reclassify to a rural area under § 412.103
and then reclassify back to its
geographic home area or another area
under the MGCRB for wage index
purposes (if it meets all criteria). Thus,
depending on the circumstances, a
hospital may seek to reclassify to either
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38147
its geographic home area or the closest
area outside of its geographic home area.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19909), we
proposed to revise the regulations at
§ 412.230(a)(3)(ii) to clarify that a
hospital with a § 412.103 rural
redesignation and SCH or RRC approval
may reclassify under the MGCRB to its
geographic home area or to the closest
area outside of its geographic home area.
Specifically, we proposed to revise
§ 412.230(a)(3)(ii) to state that if a
hospital that is approved as an RRC or
an SCH, or both, qualifies for urban
redesignation, it is redesignated to the
urban area that is closest to the hospital
or to the hospital’s geographic home
area. If the hospital is closer to another
rural area than to any urban area, it may
seek redesignation to either the closest
rural or the closest urban area.
Comment: Two commenters
supported the clarification in the
proposed rule and stated that it provides
clarity with respect to SCHs and RRCs
with § 412.103 rural redesignation
applying for MGCRB reclassification
based on special access rules. In
addition, the commenters stated that the
proposed regulatory revision is
consistent with the regulations, past
administrative decisions, and CMS’
policy of allowing a hospital with
§ 412.103 rural redesignation to
reclassify under the MGCRB.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, for the reasons
discussed earlier and in the FY 2018
IPPS/LTCH PPS proposed rule, we are
finalizing, without modification, our
proposed revision of § 412.230(a)(3)(ii)
to clarify that a hospital with a
§ 412.103 rural redesignation and SCH
or RRC approval may reclassify under
the MGCRB to its geographic home area
or to the closest area outside of its
geographic home area.
3. Redesignations Under Section
1886(d)(8)(B) of the Act
In the FY 2012 IPPS/LTCH PPS final
rule (76 FR 51599 through 51600), we
adopted the policy that, beginning with
FY 2012, an eligible hospital that waives
its Lugar status in order to receive the
out-migration adjustment has effectively
waived its deemed urban status and,
thus, is rural for all purposes under the
IPPS effective for the fiscal year in
which the hospital receives the outmigration adjustment. In addition, we
adopted a minor procedural change that
would allow a Lugar hospital that
qualifies for and accepts the outmigration adjustment (through written
notification to CMS within 45 days from
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the publication of the proposed rule) to
waive its urban status for the full 3-year
period for which its out-migration
adjustment is effective. (We note that, in
section III.I.4. of the preamble of this
final rule, we finalized a policy revision
to require a Lugar hospital that qualifies
for and accepts the out-migration
adjustment, or that no longer wishes to
accept the out-migration adjustment and
instead elects to return to its deemed
urban status, to notify CMS within 45
days from the date of public display of
the proposed rule at the Office of the
Federal Register.) By doing so, such a
Lugar hospital would no longer be
required during the second and third
years of eligibility for the out-migration
adjustment to advise us annually that it
prefers to continue being treated as rural
and receive the out-migration
adjustment. In the FY 2017 IPPS/LTCH
PPS final rule (81 FR 56930), we again
clarified that such a request to waive
Lugar status, received within 45 days of
the publication of the proposed rule, is
valid for the full 3-year period for which
the hospital’s out-migration adjustment
is effective. We further clarified that if
a hospital wishes to reinstate its urban
status for any fiscal year within this 3year period, it must send a request to
CMS within 45 days of publication of
the proposed rule for that particular
fiscal year. We indicated that such
reinstatement requests may be sent
electronically to wageindex@
cms.hhs.gov. We wish to further clarify
that both requests to waive and to
reinstate ‘‘Lugar’’ status may be sent to
this mailbox. To ensure proper
accounting, we request hospitals to
include their CCN, and either ‘‘waive
Lugar’’ or ‘‘reinstate Lugar’’, in the
subject line of these requests. As noted
earlier, and discussed further in section
III.I.4. of this final rule, we are finalizing
our proposal to revise these notification
timeframes, effective October 1, 2017, to
45 days from the date of public display
of the annual proposed rule.
We did not receive any public
comments on this subject area in the
proposed rule.
4. Changes to the 45-Day Notification
Rules
Certain Medicare regulations specify
that hospitals have 45 days from the
publication of the annual proposed rule
for the hospital inpatient prospective
payment system to inform CMS or the
MGCRB of certain requested
reclassification/redesignation and outmigration adjustment changes relating
to the development of the hospital wage
index. Specifically, 42 CFR
412.64(i)(3)(iii), which provides for
adjusting the wage index to account for
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commuting patterns of hospital workers,
and 42 CFR 412.211(f)(3)(iii), which
provides for the same adjustment for
hospitals in Puerto Rico, state that a
hospital may waive the application of
this wage index adjustment by notifying
CMS in writing within 45 days after the
publication of the annual notice of
proposed rulemaking for the hospital
inpatient prospective payment system.
The regulations at § 412.273(c)
concerning withdrawing an MGCRB
application, terminating an approved 3year reclassification, or canceling a
previous withdrawal or termination,
also state (specifically § 412.273(c)(1)(ii)
and (2)) that a request for withdrawal or
termination must be received by the
MGCRB within 45 days of publication of
CMS’ annual notice of proposed
rulemaking concerning changes to the
inpatient hospital prospective payment
system and proposed payment rates.
Similarly, the policy outlined in the FY
2012 IPPS/LTCH PPS final rule (76 FR
51599 through 51600) allows a Lugar
hospital that qualifies for and accepts
the out-migration adjustment, or that no
longer wishes to accept the outmigration adjustment and instead elects
to return to its deemed urban status to
notify CMS within 45 days from the
publication of the proposed rule.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19910), we
proposed to revise the above described
regulation text and policies as follows to
specify that written notification to CMS
or the MGCRB (as applicable) must be
provided within 45 days from the date
of public display of the annual proposed
rule for the hospital inpatient
prospective payment system at the
Office of the Federal Register. We stated
that we believe that the public has
access to the necessary information from
the date of public display of the
proposed rule at the Office of the
Federal Register and on its Web site in
order to make the decisions at issue.
Specifically, we proposed to revise the
regulations at § 412.64(i)(3)(iii) and
§ 412.211(f)(3)(iii) to provide that a
hospital may waive the application of
the wage index adjustment by notifying
CMS within 45 days of the date of
public display of the annual notice of
proposed rulemaking for the hospital
inpatient prospective payment system at
the Office of the Federal Register. In
addition, we proposed to revise the
regulations at § 412.273(c)(1)(ii) and
(c)(2) to provide that a request for
withdrawal or termination of an MGCRB
reclassification must be received by the
MGCRB within 45 days of the date of
public display at the Office of the
Federal Register of the annual notice of
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proposed rulemaking concerning
changes to the inpatient hospital
prospective payment system and
proposed payment rates for the fiscal
year for which the application has been
filed (in the case of a withdrawal under
§ 412.273(c)(1)(ii)), or for the fiscal year
for which the termination is to apply
(under § 412.273(c)(2)). We also
proposed to revise our policy outlined
in the FY 2012 IPPS/LTCH PPS final
rule (76 FR 51599 through 51600) (as
described above) to require a Lugar
hospital that qualifies for and accepts
the out-migration adjustment, or that no
longer wishes to accept the outmigration adjustment and instead elects
to return to its deemed urban status to
notify CMS within 45 days from the
date of public display of the IPPS
proposed rule at the Office of the
Federal Register. We invited public
comments on these proposals.
We did not receive any public
comments on the proposed revisions to
§ 412.64(i)(3)(iii) or § 412.211(f)(3)(iii)
with regard to the time period for
hospitals to notify CMS of decisions
about the out-migration adjustment, or
with regard to the proposed revision to
the policy outlined in the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51599
through 51600) concerning the time
period for notifications by Lugar
hospitals regarding acceptance or
nonacceptance of the out-migration
adjustment. However, we did receive
public comments on our proposed
revisions to § 412.273(c)(1)(ii) and (c)(2)
regarding the time period to request
withdrawal or termination of an MGCRB
reclassification. These comments are
summarized below.
Comment: Several commenters
disagreed with the proposal to change
the 45-day notification requirement for
MGCRB withdrawals and terminations.
They stated that 45 days from the date
of public display at the Office of the
Federal Register would not give
hospitals adequate time to review the
applicable data. The commenters
pointed out that the proposal would
decrease the time period for providers to
act by approximately 14 days, which
they claimed would ‘‘unnecessarily
disadvantage’’ hospitals in making the
most beneficial reclassification
determinations for their wage index. In
addition, a few commenters presented
scenarios whereby the proposal may
require hospitals to submit withdrawal
or termination requests to the MGCRB
prior to the Administrator’s decisions
on MGCRB appeals. The commenters
recommended that CMS maintain its
existing policy of 45 days after the
proposed rule is issued in the Federal
Register for hospitals to request
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withdrawal and termination of MGCRB
reclassifications. One commenter
suggested that CMS also allow for an
extension of the current deadline to
ensure providers have at least 15 days
from the issuance of a CMS
Administrator decision to make
withdrawal and termination requests.
Response: While the commenters are
correct that requiring hospitals to
submit withdrawal or termination
requests to the MGCRB within 45 days
from the date of public display, rather
than the date the proposed rule is issued
in the Federal Register, reduces the
time for hospitals to make such
determinations, we do not agree that
hospitals generally would have
inadequate time to review the
applicable data. As discussed in the
proposed rule (82 FR 19910), we believe
that the public has access to the
necessary information from the date of
public display of the proposed rule at
the Office of the Federal Register and on
its Web site in order to make the
decisions at issue under our proposals.
However, while we believe that
hospitals generally would have
adequate time to make reclassification
determinations under the proposal, we
acknowledge that hospitals may be
disadvantaged if the Administrator’s
decision on a hospital’s appeal of an
MGCRB decision has not been issued
prior to the proposed deadline for
submitting withdrawal or termination
requests to the MGCRB. Specifically, the
regulations at §§ 412.278(a) and (b)(1)
provide that a hospital may request the
Administrator to review the MGCRB
decision, and that such request must be
received by the Administrator within 15
days after the date the MGCRB issues its
decision. Under § 412.278(f)(2)(i), the
Administrator issues a decision not later
than 90 days following receipt of the
party’s request for review (except that
the Administrator may, it his or her
discretion, for good cause shown, toll
such 90 days). Considering the usual
dates of the MGCRB’s decisions
(generally early February) and of the
public display of the IPPS proposed
rule, the maximum amount of time for
an Administrator’s decision to be issued
may potentially extend beyond the
proposed deadline of 45 days from the
date of public display. Therefore, in
order to further consider whether our
proposed revisions to § 412.273(c) may
require hospitals to submit withdrawal
or termination requests to the MGCRB
before the Administrator’s decision on
an appeal is issued, we are not
finalizing at this time our proposed
change to the 45-day notification rule at
§ 412.273(c)(1)(ii) and (c)(2) for
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requesting withdrawals and
terminations of MGCRB
reclassifications. However, after
consideration of these comments, we are
revising our regulations at
§§ 412.273(c)(1)(ii) and (c)(2) to ensure
that our current policy under those
regulations is clear. Specifically, we are
revising §§ 412.273(c)(1)(ii) and (c)(2) to
clarify that, under these regulations, a
hospital’s request to withdraw or
terminate an MGCRB reclassification
must be received by the MGCRB within
45 days of the date the annual notice of
proposed rulemaking is issued in the
Federal Register. We believe that these
revisions will provide for greater
clarification regarding how these
provisions are applied. We note that we
are not providing for an extension of the
current deadline as one commenter
suggested to allow providers to have at
least 15 days from the issuance of a
CMS Administrator decision to
withdraw or terminate an MGCRB
reclassification because we do not
believe that an extension is necessary
under the current deadline under
§§ 412.273(c)(1)(ii) and (c)(2). Under the
current deadline, a hospital can plan its
withdrawal or termination decisions for
both potential alternatives of the
Administrator’s decision on its appeal,
and then act immediately within the
current 45-day timeframe as soon as the
Administrator’s decision either to affirm
or reverse the MGCRB’s decision is
issued.
Comment: One commenter stated that
CMS’ policy that hospitals must request
to withdraw or terminate MGCRB
reclassifications within 45 days of the
proposed rule is problematic because a
hospital could terminate a
reclassification based on information in
the proposed rule and, with the
publication of the final rule, discover
that its original reclassified status was
more desirable. The commenter stated
that hospitals cannot make informed
decisions concerning their
reclassification status based on values in
a proposed rule that are likely to change
and, therefore, recommended that CMS
revise its existing policy to permit
hospitals to withdraw or terminate their
reclassification status within 45 days
after the publication of the final rule.
Response: We maintain that
information provided in the proposed
rule constitutes the best available data
to assist hospitals in making
reclassification decisions. In addition,
section 1886(d)(8)(D) of the Act requires
the Secretary to adjust the standardized
amounts to ensure that aggregate
payments under the IPPS after
implementation of the provisions of
certain sections of the Act, including
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section 1886(d)(10) of the Act for
geographic reclassifications by the
MGCRB, are equal to the aggregate
prospective payments that would have
been made absent these provisions. If
hospitals were to withdraw or terminate
reclassification statuses after the final
rule, as the commenter suggested CMS
permit, any resulting changes in the
wage index would not have been taken
into account when calculating the IPPS
standardized amounts in the final rule
in accordance with the statutory budget
neutrality requirement. Therefore, the
values published in the final rule
represent the final wage index values
reflective of reclassification decisions.
While we are not finalizing, for the
reasons discussed earlier, the proposed
changes to § 412.273(c)(1)(ii) and (c)(2)
concerning the time period for
requesting withdrawals and
terminations of MGCRB
reclassifications, we are finalizing,
without modification, our proposed
changes to § 412.64(i)(3)(iii) and
§ 412.211(f)(3)(iii) regarding the 45-day
requirement for notifying CMS of
decisions to waive application of the
out-migration adjustment, and our
proposed change to the policy outlined
in the FY 2012 IPPS/LTCH PPS final
rule (76 FR 51599 through 51600)
concerning the time period for
notifications by Lugar hospitals
regarding acceptance or nonacceptance
of the out-migration adjustment. Unlike
MGCRB decisions under § 412.278, outmigration adjustment and Lugar status
decisions are not subject to
Administrator’s review. Therefore,
hospitals deciding to waive the outmigration adjustment under
§ 412.64(i)(3)(iii) or § 412.211(f)(3)(iii) or
Lugar hospitals deciding to accept or
decline the out-migration adjustment
would not experience the same
potential disadvantage from
implementation of the proposed
revisions to the 45-day notification
rules. For decisions regarding the outmigration adjustment and Lugar status,
we continue to believe that the public
has access to the necessary information
from the date of public display of the
proposed rule at the Office of the
Federal Register and on its Web site in
order to make decisions. Therefore, we
believe that it is appropriate to finalize
without modification our proposed
changes to § 412.64(i)(3)(iii) and
§ 412.211(f)(3)(iii) and our proposed
change to the policy outlined in the FY
2012 IPPS/LTCH PPS final rule (76 FR
51599 through 51600) as discussed
earlier.
In addition, as a courtesy, we will
post on the CMS Web site at https://
www.cms.gov/Medicare/Medicare-Fee-
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for-Service-Payment/AcuteInpatient
PPS/wageindex.html the calendar
closing dates of the 45-day notification
deadlines for waiving the out-migration
adjustment, for Lugar hospitals to notify
CMS regarding acceptance or
nonacceptance of the out-migration
adjustment, and for requesting
withdrawal or termination of an MGCRB
reclassification. We note that the
MGCRB is independent of CMS and that
the deadline for withdrawals and
terminations of MGCRB reclassifications
posted on CMS’ Web site will be posted
as a courtesy only. The MGCRB makes
the final decision regarding the date of
the deadline and whether a request for
withdrawal or termination is timely.
The public should confirm the deadline
for withdrawals and terminations of
MGCRB reclassifications with the
MGCRB.
After consideration of the public
comments we received, for the reasons
discussed earlier and in the FY 2018
IPPS/LTCH PPS proposed rule, we are
finalizing, without modification, the
proposed changes to the regulations at
§ 412.64(i)(3)(iii) and § 412.211(f)(3)(iii)
to provide that hospitals may waive the
application of the out-migration wage
index adjustment within 45 days of the
date of public display of the annual
notice of proposed rulemaking for the
hospital inpatient prospective payment
system at the Office of the Federal
Register. We also are finalizing, without
modification, the proposed changes to
the policy outlined in the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51599
through 51600), so that a Lugar hospital
that qualifies for and accepts the outmigration adjustment, or that no longer
wishes to accept the out-migration
adjustment and instead elects to return
to its deemed urban status, must notify
CMS within 45 days from the date of
public display of the IPPS proposed rule
at the Office of the Federal Register. For
the reasons discussed earlier, we are not
finalizing, as proposed, the changes to
the regulations at § 412.273(c)(1)(ii) and
(c)(2) concerning the timeframe for
submitting a request to the MGCRB to
withdraw or terminate an MGCRB
reclassification. Rather, we are revising
the regulations at § 412.273(c)(1)(ii) and
§ 412.273(c)(2) to clarify our current
policy under these regulations that a
request for withdrawal or termination of
an MGCRB reclassification must be
received by the MGCRB within 45 days
of the date the annual notice of
proposed rulemaking is issued in the
Federal Register. Accordingly, a request
for withdrawal or termination of an
MGCRB reclassification must still be
received by the MGCRB within 45 days
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of issuance in the Federal Register of
CMS’ annual notice of proposed
rulemaking concerning changes to the
inpatient hospital prospective payment
system and proposed payment rates.
Finally, as discussed earlier, as a
courtesy (and independent of the
MGCRB), we will begin posting on the
CMS Web site the annual calendar dates
of the 45-day notification deadlines for
(1) hospitals to notify CMS that they are
waiving the out-migration adjustment;
(2) Lugar hospitals to notify CMS that
they qualify for and accept the outmigration adjustment or no longer wish
to accept the outmigration adjustment
and elect instead to return to deemed
urban status; and (3) hospitals to request
from the MGCRB withdrawal or
termination of an MGCRB
reclassification.
J. Out-Migration Adjustment Based on
Commuting Patterns of Hospital
Employees
In accordance with section
1886(d)(13) of the Act, as added by
section 505 of Public Law 108–173,
beginning with FY 2005, we established
a process to make adjustments to the
hospital wage index based on
commuting patterns of hospital
employees (the ‘‘out-migration’’
adjustment). The process, outlined in
the FY 2005 IPPS final rule (69 FR
49061), provides for an increase in the
wage index for hospitals located in
certain counties that have a relatively
high percentage of hospital employees
who reside in the county but work in a
different county (or counties) with a
higher wage index. Section
1886(d)(13)(B) of the Act requires the
Secretary to use data the Secretary
determines to be appropriate to
establish the qualifying counties. When
the provision of section 1886(d)(13) of
the Act was implemented for the FY
2005 wage index, we analyzed
commuting data compiled by the U.S.
Census Bureau that were derived from
a special tabulation of the 2000 Census
journey-to-work data for all industries
(CMS extracted data applicable to
hospitals). These data were compiled
from responses to the ‘‘long-form’’
survey, which the Census Bureau used
at the time and which contained
questions on where residents in each
county worked (69 FR 49062). However,
the 2010 Census was ‘‘short form’’ only;
information on where residents in each
county worked was not collected as part
of the 2010 Census. The Census Bureau
worked with CMS to provide an
alternative dataset based on the latest
available data on where residents in
each county worked in 2010, for use in
developing a new out-migration
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adjustment based on new commuting
patterns developed from the 2010
Census data beginning with FY 2016. To
determine the out-migration
adjustments and applicable counties for
FY 2016, we analyzed commuting data
compiled by the Census Bureau that
were derived from a custom tabulation
of the American Community Survey
(ACS), an official Census Bureau survey,
utilizing 2008 through 2012 (5-Year)
Microdata. The data were compiled
from responses to the ACS questions
regarding the county where workers
reside and the county to which workers
commute. As we discussed in the FY
2016 and FY 2017 IPPS/LTCH PPS final
rules (80 FR 49501 and 81 FR 56930,
respectively), the same policies,
procedures, and computation that were
used for the FY 2012 out-migration
adjustment were applicable for FY 2016
and FY 2017, and in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19910),
we proposed to use them again for FY
2018. We have applied the same
policies, procedures, and computations
since FY 2012, and we believe they
continue to be appropriate for FY 2018.
We refer readers to the FY 2016 IPPS/
LTCH PPS final rule (80 FR 49500
through 49502) for a full explanation of
the revised data source.
For FY 2018, until such time that
CMS finalizes out-migration
adjustments based on the next Census,
the out-migration adjustment continues
to be based on the data derived from the
custom tabulation of the ACS utilizing
2008 through 2012 (5-Year) Microdata.
For FY 2018, we did not propose any
changes to the methodology or data
source that we used for FY 2016 (81 FR
25071). (We refer readers to a full
discussion of the out-migration
adjustment, including rules on deeming
hospitals reclassified under section
1886(d)(8) or section 1886(d)(10) of the
Act to have waived the out-migration
adjustment, in the FY 2012 IPPS/LTCH
PPS final rule (76 FR 51601 through
51602).) We did not receive any public
comments regarding the FY 2018 outmigration adjustment. Thus, for the
reasons discussed earlier and in the FY
2018 IPPS/LTCH PPS proposed rule, we
are finalizing, without modification, our
proposed policies, procedures,
methodology, and computation for the
out-migration adjustment. Table 2
associated with this final rule (which is
available via the Internet on the CMS
Web site) includes the final outmigration adjustments for the FY 2018
wage index.
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K. Reclassification From Urban to Rural
Under Section 1886(d)(8)(E) of the Act,
Implemented at 42 CFR 412.103
Under section 1886(d)(8)(E) of the
Act, a qualifying prospective payment
hospital located in an urban area may
apply for rural status for payment
purposes separate from reclassification
through the MGCRB. Specifically,
section 1886(d)(8)(E) of the Act provides
that, not later than 60 days after the
receipt of an application (in a form and
manner determined by the Secretary)
from a subsection (d) hospital that
satisfies certain criteria, the Secretary
shall treat the hospital as being located
in the rural area (as defined in
paragraph (2)(D)) of the State in which
the hospital is located. We refer readers
to the regulations at 42 CFR 412.103 for
the general criteria and application
requirements for a subsection (d)
hospital to reclassify from urban to rural
status in accordance with section
1886(d)(8)(E) of the Act. The FY 2012
IPPS/LTCH PPS final rule (76 FR 51595
through 51596) includes our policies
regarding the effect of wage data from
reclassified or redesignated hospitals.
Hospitals must meet the criteria to be
reclassified from urban to rural status
under § 412.103, as well as fulfill the
requirements for the application
process. There may be one or more
reasons that a hospital applies for the
urban to rural reclassification, and the
timeframe that a hospital submits an
application is often dependent on those
reason(s). Because the wage index is
part of the methodology for determining
the prospective payments to hospitals
for each fiscal year, we believe there
should be a definitive timeframe within
which a hospital should apply for rural
status in order for the reclassification to
be reflected in the next Federal fiscal
year’s wage data used for setting
payment rates.
Therefore, after notice of proposed
rulemaking and consideration of public
comments, in the FY 2017 IPPS/LTCH
PPS final rule (81 FR 56931 through
56932), we revised § 412.103(b) by
adding paragraph (6) to specify that, in
order for a hospital to be treated as rural
in the wage index and budget neutrality
calculations under §§ 412.64(e)(1)(ii),
(e)(2), (e)(4), and (h) for payment rates
for the next Federal fiscal year, the
hospital’s filing date must be no later
than 70 days prior to the second
Monday in June of the current Federal
fiscal year and the application must be
approved by the CMS Regional Office in
accordance with the requirements of
§ 412.103. We refer readers to the FY
2017 IPPS/LTCH PPS final rule for a full
discussion of this policy. We clarified
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that the lock-in date does not affect the
timing of payment changes occurring at
the hospital-specific level as a result of
reclassification from urban to rural
under § 412.103. This lock-in date also
does not change the current regulation
that allows hospitals that qualify under
§ 412.103(a) to request, at any time
during a cost reporting period, to
reclassify from urban to rural. A
hospital’s rural status and claims
payment reflecting its rural status
continue to be effective on the filing
date of its reclassification application,
which is the date the CMS Regional
Office receives the application, in
accordance with § 412.103(d). The
hospital’s IPPS claims will be paid
reflecting its rural status on the filing
date (the effective date) of the
reclassification, regardless of when the
hospital applies.
Comment: One commenter suggested
that CMS’ current policy that the
effective date of an urban to rural
reclassification under § 412.103 is the
date the application is received by CMS
be revised to allow flexibility for a later
date. Specifically, the commenter
requested that CMS allow hospitals to
ask for an effective date anytime from
the date the application is received until
up to 60 days after the receipt of the
application, to help hospitals that
experience a short-term reduction in
payment from obtaining rural status
before becoming eligible for increased
payment at a later time. The commenter
stated that amending the regulation in
this way would accommodate the
various reasons why hospitals request
rural status and will be more consistent
with the statutory language at section
1886(d)(8)(E) of the Act which provides
that the Secretary shall treat a hospital
as rural ‘‘not later than 60 days after the
receipt of an application.’’
Response: We did not propose any
such revisions to the policy at § 412.103
in the FY 2018 IPPS/LTCH PPS
proposed rule, but instead explained
and clarified our existing policy. We
appreciate the comments and may
consider the commenter’s request in
future rulemaking.
L. Clarification of Application Deadline
for Rural Referral Center (RRC)
Classification
Section 1886(d)(5)(C)(i) of the Act,
implemented at 42 CFR 412.96,
provides for the classification and
special treatment of rural referral
centers (RRCs). The regulations at
§ 412.96 set forth the criteria that a
hospital must meet in order to qualify
as an RRC. Under § 412.96(b)(1)(ii), a
hospital may qualify as an RRC if it is
located in a rural area and has 275 or
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more beds during its most recently
completed cost reporting period. The
hospital also can obtain RRC status by
showing that at least 50 percent of its
Medicare patients are referred from
other hospitals or from physicians not
on the staff of the hospital, and at least
60 percent of the hospital’s Medicare
patients live more than 25 miles from
the hospital, and at least 60 percent of
all the services that the hospital
furnishes to Medicare beneficiaries are
furnished to beneficiaries who live more
than 25 miles from the hospital
(§ 412.96(b)(2)), or by showing that the
hospital meets the alternative criteria at
§ 412.96(c). We refer readers to 42 CFR
412.96 for a full description of the
criteria for classification as an RRC.
Consistent with section
1886(d)(5)(C)(i) of the Act, the hospital
must submit its application for RRC
status during the last quarter of the
hospital’s cost reporting period, to be
effective with the beginning of the next
cost reporting period. Specifically,
section 1886(d)(5)(C)(i) of the Act
provides that an appeal allowed under
this paragraph must be submitted to the
Secretary (in such form and manner as
the Secretary may prescribe) during the
quarter before the first quarter of the
hospital’s cost reporting period (or, in
the case of a cost reporting period
beginning during October 1984, during
the first quarter of that period), and the
Secretary must make a final
determination with respect to such
appeal within 60 days after the date the
appeal was submitted. Any payment
adjustments necessitated by a
reclassification based upon the appeal
will be effective at the beginning of such
cost reporting period. Therefore, in the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 19911), we clarified that
applications for RRC status must be
submitted during this timeframe. That
is, applications for RRC status must be
submitted during the last quarter of the
cost reporting period before the first
quarter of a hospital’s cost reporting
year. If approved, the RRC status is
effective with the beginning of the
hospital’s cost reporting period
occurring after the last quarter of the
cost reporting period in which the
hospital submits an application.
We also clarified in the proposed rule
that, while RRC applications must be
submitted only within the timeframe
described above, applications for urbanto-rural reclassification under § 412.103
may be submitted at any time for the
hospital to be approved for rural
reclassification. This includes hospitals
seeking rural reclassification under
§ 412.103(a)(3), which states that a
hospital meets criteria for urban-to-rural
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reclassification if the hospital would
qualify as a RRC as set forth in § 412.96,
or as an SCH as set forth in § 412.92, if
the hospital were located in a rural area.
A hospital seeking RRC status based on
a rural reclassification under § 412.103,
including § 412.103(a)(3), must still
submit an application for RRC status
during the last quarter of its cost
reporting year before the next cost
reporting period in accordance with
section 1886(d)(5)(C)(i) of the Act.
While the § 412.103 rural redesignation
would be effective as of the date of filing
the application, in accordance with
§ 412.103(d), the RRC status would be
effective beginning with the hospital’s
cost reporting period occurring after the
last quarter of the cost reporting period
in which the hospital submits an
application. Because a hospital may
only apply for RRC status during the last
quarter of its cost reporting year in
accordance with section 1886(d)(5)(C)(i)
of the Act, hospitals seeking RRC status,
in order to reclassify through the
MGCRB using the special rules for SCHs
and RRCs at § 412.230(a)(3) and the
exceptions at § 412.230(d)(3) for RRCs,
may be disadvantaged due to their cost
reporting year end. As discussed in
section III.I.2. of the preamble of the
proposed rule, we proposed to revise
the regulations at § 412.230(a)(3) and
(d)(3) to allow hospitals to submit
documentation of the approval of SCH
or RRC status (as applicable) to the
MGCRB no later than the first business
day after January 1. We stated in the
proposed rule that we believe our
proposal to accept documentation of
approval of RRC classification, instead
of requiring that the hospital be
classified as a RRC at the time of Board
review, would accommodate more
hospitals with various cost reporting
period endings. We refer readers to
section III.I.2. of the preamble of the
proposed rule for further discussion of
this proposal. We note that, as discussed
in section III.I.2. of the preamble of this
final rule, while we are finalizing our
proposal that a hospital must be
approved for SCH or RRC status, rather
than have active SCH or RRC status, in
order to use the special rules for SCHs
and RRCs and the exceptions for RRCs
under § 412.230(a)(3) and (d)(3), we are
not finalizing our proposal to establish
a deadline of the first business day after
January 1 for hospitals to submit
documentation of SCH and RRC status
approval to the MGCRB.
Comment: One commenter agreed that
the specific timing is required by the
statutory language, but argued that CMS
is applying a ‘‘restrictive interpretation’’
of the RRC application timing
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requirements so that there is not a level
playing field based solely on cost report
year-ends. The commenter suggested an
interpretation of the statute that it
believes could allow hospitals seeking
to obtain RRC status for the purposes of
an MGCRB application to be considered
RRCs even outside of the statutory
timeframe. Specifically, the commenter
pointed to section 1886(d)(10)(D)(iii) of
the Act, which states that, in the case of
a hospital that has ever been classified
by the Secretary as rural referral center,
the MGCRB may not reject the
application on the basis of any
comparison between the average hourly
wage of the hospital and the average
hourly wage of hospitals in the area in
which it is located. According to the
commenter, CMS’ determination that a
hospital meets the rural redesignation
requirements under § 412.103(a)(3) (that
is, the hospital would qualify as an RRC
if it were located in a rural area) could
be considered sufficient classification to
trigger the exemption from the home
area wage test and application of the
special access rules.
Response: As discussed earlier, and as
noted by the commenter, the timeframe
for applying for RRC status is set forth
in the statute. We recognize that certain
hospitals may be disadvantaged due to
their cost reporting year end, and for
that reason we proposed, and are
finalizing (as discussed in section III.I.2.
of the preamble of this final rule)
revisions to the regulations at
§ 412.230(a)(3) and (d)(3) to reflect that
these paragraphs apply to hospitals with
RRC approval (and not only effective
status).
We do not agree with the commenter
that CMS’ determination under
§ 412.103(a)(3) that a hospital would
qualify for RRC status if the hospital
were located in a rural area (which is
one condition under which a hospital
can qualify for § 412.103 rural
redesignation) is considered RRC
classification. In fact, hospitals may
obtain rural reclassification under
§ 412.103(a)(3), but not subsequently
obtain RRC status. Therefore, we do not
believe that such a determination under
§ 412.103(a)(3) is sufficient to satisfy the
requirements at section
1886(d)(10)(D)(iii) of the Act.
M. Process for Requests for Wage Index
Data Corrections
1. Process for Hospitals To Request
Wage Index Data Corrections
The preliminary, unaudited
Worksheet S–3 wage data files for the
proposed FY 2018 wage index were
made available on May 16, 2016, and
the preliminary CY 2013 occupational
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mix data files on May 16, 2016, through
the Internet on the CMS Web site at:
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/Wage-Index-FilesItems/FY2018-Wage-Index-HomePage.html.
On January 30, 2017, we posted a
public use file (PUF) at https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/Wage-Index-Files-Items/FY2018Wage-Index-Home-Page.html containing
FY 2018 wage index data available as of
January 29, 2017. This PUF contains a
tab with the Worksheet S–3 wage data
(which includes Worksheet S–3, Parts II
and III wage data from cost reporting
periods beginning on or after October l,
2013 through September 30, 2014; that
is, FY 2014 wage data), a tab with the
occupational mix data (which includes
data from the CY 2013 occupational mix
survey, Form CMS–10079), a tab
containing the Worksheet S–3 wage data
of hospitals deleted from the January 30,
2017 wage data PUF, and a tab
containing the CY 2013 occupational
mix data (if any) of the hospitals deleted
from the January 30, 2017 wage data
PUF. In a memorandum dated January
27, 2017, we instructed all MACs to
inform the IPPS hospitals that they
service of the availability of the January
30, 2017 wage index data PUFs, and the
process and timeframe for requesting
revisions in accordance with the FY
2018 Wage Index Timetable.
In the interest of meeting the data
needs of the public, beginning with the
proposed FY 2009 wage index, we post
an additional PUF on our Web site that
reflects the actual data that are used in
computing the proposed wage index.
The release of this file does not alter the
current wage index process or schedule.
We notify the hospital community of the
availability of these data as we do with
the current public use wage data files
through our Hospital Open Door Forum.
We encourage hospitals to sign up for
automatic notifications of information
about hospital issues and about the
dates of the Hospital Open Door Forums
at the CMS Web site at: https://
www.cms.gov/Outreach-and-Education/
Outreach/OpenDoorForums/.
In a memorandum dated May 16,
2016, we instructed all MACs to inform
the IPPS hospitals that they service of
the availability of the wage index data
files and the process and timeframe for
requesting revisions. We also instructed
the MACs to advise hospitals that these
data were also made available directly
through their representative hospital
organizations.
If a hospital wished to request a
change to its data as shown in the May
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16, 2016 wage data files and the May 16,
2016 occupational mix data files, the
hospital had to submit corrections along
with complete, detailed supporting
documentation to its MAC by
September 2, 2016. Hospitals were
notified of this deadline and of all other
deadlines and requirements, including
the requirement to review and verify
their data as posted in the preliminary
wage index data files on the Internet,
through the letters sent to them by their
MACs.
November 4, 2016 was the date by
when MACs notified State hospital
associations regarding hospitals that
failed to respond to issues raised during
the desk reviews. The MACs notified
the hospitals by mid-January 2017 of
any changes to the wage index data as
a result of the desk reviews and the
resolution of the hospitals’ revision
requests. The MACs also submitted the
revised data to CMS by January 20,
2017. CMS published the wage index
PUFs that included hospitals’ revised
wage index data on January 30, 2017.
Hospitals had until February 17, 2017,
to submit requests to the MACs for
reconsideration of adjustments made by
the MACs as a result of the desk review,
and to correct errors due to CMS’ or the
MAC’s mishandling of the wage index
data. Hospitals also were required to
submit sufficient documentation to
support their requests.
After reviewing requested changes
submitted by hospitals, MACs were
required to transmit to CMS any
additional revisions resulting from the
hospitals’ reconsideration requests by
March 24, 2017. Under our current
policy, the deadline for a hospital to
request CMS intervention in cases
where a hospital disagreed with a
MAC’s policy interpretation was April
5, 2017. As discussed in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19912), beginning next year (that is,
April 2018 for wage data revisions for
the FY 2019 wage index), we proposed
to require that a hospital that seeks to
challenge the MAC’s handling of wage
data on any basis (including a policy,
factual, or any other dispute) must
request CMS to intervene by the date in
April that is specified as the deadline
for hospitals to appeal MAC
determinations and request CMS’
intervention in cases where the hospital
disagrees with the MAC’s determination
(the wage index timetable would be
updated to reflect the specified date).
We note that, as we did for the FY 2017
wage index, for the FY 2018 wage index,
in accordance with the FY 2018 wage
index timeline posted on the CMS Web
site at https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
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AcuteInpatientPPS/Wage-Index-FilesItems/FY2018-Wage-Index-HomePage.html, the April appeals have to be
sent via mail and email. We refer
readers to the wage index timeline for
complete details.
We did not receive any public
comments regarding our proposal
discussed above. Therefore, we are
finalizing our proposal, without
modification, to require that, beginning
next year (that is, April 2018 for wage
data revisions for the FY 2019 wage
index), a hospital that seeks to challenge
the MAC’s handling of wage data on any
basis (including a policy, factual, or any
other dispute) must request CMS to
intervene by the date in April that is
specified as the deadline for hospitals to
appeal MAC determinations and request
CMS’ intervention in cases where the
hospital disagrees with the MAC’s
determination (as we stated above and
in the proposed rule, the wage index
timetable will be updated to reflect the
specified date).
Hospitals were given the opportunity
to examine Table 2, which was listed in
section VI. of the Addendum to the
proposed rule and available via the
Internet on the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/Wage-Index-Files-Items/FY2018Wage-Index-Home-Page.html. Table 2
associated with the proposed rule
contained each hospital’s proposed
adjusted average hourly wage used to
construct the wage index values for the
past 3 years, including the FY 2014 data
used to construct the proposed FY 2018
wage index. We noted in the proposed
rule (82 FR 19912) that the proposed
hospital average hourly wages shown in
Table 2 only reflect changes made to a
hospital’s data that were transmitted to
CMS by early February 2017.
We posted the final wage index data
PUFs on April 28, 2017 on the Internet
at: https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/Wage-Index-FilesItems/FY2018-Wage-Index-HomePage.html. The April 2017 PUFs were
made available solely for the limited
purpose of identifying any potential
errors made by CMS or the MAC in the
entry of the final wage index data that
resulted from the correction process
previously described (revisions
submitted to CMS by the MACs by
March 24, 2017).
After the release of the April 2017
wage index data PUFs, changes to the
wage and occupational mix data could
only be made in those very limited
situations involving an error by the
MAC or CMS that the hospital could not
have known about before its review of
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the final wage index data files.
Specifically, neither the MAC nor CMS
will approve the following types of
requests:
• Requests for wage index data
corrections that were submitted too late
to be included in the data transmitted to
CMS by the MACs on or before March
24, 2017.
• Requests for correction of errors
that were not, but could have been,
identified during the hospital’s review
of the January 30, 2017 wage index
PUFs.
• Requests to revisit factual
determinations or policy interpretations
made by the MAC or CMS during the
wage index data correction process.
If, after reviewing the April 2017 final
wage index data PUFs, a hospital
believed that its wage or occupational
mix data were incorrect due to a MAC
or CMS error in the entry or tabulation
of the final data, the hospital was given
the opportunity to notify both its MAC
and CMS regarding why the hospital
believed an error exists and provide all
supporting information, including
relevant dates (for example, when it first
became aware of the error). The hospital
was required to send its request to CMS
and to the MAC no later than May 30,
2017. Similar to the April appeals,
beginning with the FY 2015 wage index,
in accordance with the FY 2018 wage
index timeline posted on the CMS Web
site at https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/Wage-Index-FilesItems/FY2018-Wage-Index-HomePage.html, the May appeals were
required to be sent via mail and email
to CMS and the MACs. We refer readers
to the wage index timeline for complete
details.
Verified corrections to the wage index
data received timely by CMS and the
MACs (that is, by May 30, 2017) were
incorporated into the final FY 2018
wage index in this FY 2018 IPPS/LTCH
PPS final rule, which is effective
October 1, 2017.
We created the processes previously
described to resolve all substantive
wage index data correction disputes
before we finalize the wage and
occupational mix data for the FY 2018
payment rates. Accordingly, hospitals
that did not meet the procedural
deadlines set forth above will not be
afforded a later opportunity to submit
wage index data corrections or to
dispute the MAC’s decision with respect
to requested changes. Specifically, our
policy is that hospitals that do not meet
the procedural deadlines set forth
earlier (requiring requests to MACs by
the specified date in February and,
where such requests are unsuccessful,
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requests for intervention by CMS by the
specified date in April) will not be
permitted to challenge later, before the
PRRB, the failure of CMS to make a
requested data revision. We refer
readers also to the FY 2000 IPPS final
rule (64 FR 41513) for a discussion of
the parameters for appeals to the PRRB
for wage index data corrections.
Again, we believe the wage index data
correction process described earlier
provides hospitals with sufficient
opportunity to bring errors in their wage
and occupational mix data to the MAC’s
attention. Moreover, because hospitals
had access to the final wage index data
PUFs by late April 2017, they had the
opportunity to detect any data entry or
tabulation errors made by the MAC or
CMS before the development and
publication of the final FY 2018 wage
index by August 2017, and the
implementation of the FY 2018 wage
index on October 1, 2017. Given these
processes, the wage index implemented
on October 1 should be accurate.
Nevertheless, in the event that errors are
identified by hospitals and brought to
our attention after May 30, 2017, we
retain the right to make midyear
changes to the wage index under very
limited circumstances.
Specifically, in accordance with 42
CFR 412.64(k)(1) of our regulations, we
make midyear corrections to the wage
index for an area only if a hospital can
show that: (1) The MAC or CMS made
an error in tabulating its data; and (2)
the requesting hospital could not have
known about the error or did not have
an opportunity to correct the error,
before the beginning of the fiscal year.
For purposes of this provision, ‘‘before
the beginning of the fiscal year’’ means
by the May deadline for making
corrections to the wage data for the
following fiscal year’s wage index (for
example, May 30, 2017 for the FY 2018
wage index). This provision is not
available to a hospital seeking to revise
another hospital’s data that may be
affecting the requesting hospital’s wage
index for the labor market area. As
indicated earlier, because CMS makes
the wage index data available to
hospitals on the CMS Web site prior to
publishing both the proposed and final
IPPS rules, and the MACs notify
hospitals directly of any wage index
data changes after completing their desk
reviews, we do not expect that midyear
corrections will be necessary. However,
under our current policy, if the
correction of a data error changes the
wage index value for an area, the
revised wage index value will be
effective prospectively from the date the
correction is made.
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In the FY 2006 IPPS final rule (70 FR
47385 through 47387 and 47485), we
revised 42 CFR 412.64(k)(2) to specify
that, effective on October 1, 2005, that
is, beginning with the FY 2006 wage
index, a change to the wage index can
be made retroactive to the beginning of
the Federal fiscal year only when CMS
determines all of the following: (1) The
MAC or CMS made an error in
tabulating data used for the wage index
calculation; (2) the hospital knew about
the error and requested that the MAC
and CMS correct the error using the
established process and within the
established schedule for requesting
corrections to the wage index data,
before the beginning of the fiscal year
for the applicable IPPS update (that is,
by the May 30, 2017 deadline for the FY
2018 wage index); and (3) CMS agreed
before October 1 that the MAC or CMS
made an error in tabulating the
hospital’s wage index data and the wage
index should be corrected.
In those circumstances where a
hospital requested a correction to its
wage index data before CMS calculated
the final wage index (that is, by the May
30, 2017 deadline for the FY 2018 wage
index), and CMS acknowledges that the
error in the hospital’s wage index data
was caused by CMS’ or the MAC’s
mishandling of the data, we believe that
the hospital should not be penalized by
our delay in publishing or
implementing the correction. As with
our current policy, we indicated that the
provision is not available to a hospital
seeking to revise another hospital’s data.
In addition, the provision cannot be
used to correct prior years’ wage index
data; and it can only be used for the
current Federal fiscal year. In situations
where our policies would allow midyear
corrections other than those specified in
42 CFR 412.64(k)(2)(ii), we continue to
believe that it is appropriate to make
prospective-only corrections to the wage
index.
We note that, as with prospective
changes to the wage index, the final
retroactive correction will be made
irrespective of whether the change
increases or decreases a hospital’s
payment rate. In addition, we note that
the policy of retroactive adjustment will
still apply in those instances where a
final judicial decision reverses a CMS
denial of a hospital’s wage index data
revision request.
2. Process for Data Corrections by CMS
After the January Public Use File (PUF)
The process set forth with the wage
index timeline discussed in section
III.M.1. of the preamble of this final rule
allows hospitals to request corrections
to their wage index data within
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prescribed timeframes. In addition to
hospitals’ opportunity to request
corrections of wage index data errors or
MACs’ mishandling of data, CMS has
the authority under section
1886(d)(3)(E) of the Act to make
corrections to hospital wage index and
occupational mix data in order to ensure
the accuracy of the wage index. As we
explained in the FY 2016 IPPS/LTCH
PPS final rule (80 FR 49490 through
49491) and the FY 2017 IPPS/LTCH PPS
final rule (81 FR 56914), section
1886(d)(3)(E) of the Act requires the
Secretary to adjust the proportion of
hospitals’ costs attributable to wages
and wage-related costs for area
differences reflecting the relative
hospital wage level in the geographic
areas of the hospital compared to the
national average hospital wage level. As
discussed in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19913
through 19915), we believe that, under
section 1886(d)(3)(E) of the Act, we have
discretion to make corrections to
hospitals’ data to help ensure that the
costs attributable to wages and wagerelated costs in fact accurately reflect
the relative hospital wage level in the
hospitals’ geographic areas.
We have an established multistep, 15month process for the review and
correction of the hospital wage data that
is used to create the IPPS wage index for
the upcoming fiscal year. Since the
origin of the IPPS, the wage index has
been subject to its own annual review
process, first by the MACs, and then by
CMS. As a standard practice, after each
annual desk review, CMS reviews the
results of the MACs’ desk reviews and
focuses on items flagged during the desk
review, requiring that, if necessary,
hospitals provide additional
documentation, adjustments, or
corrections to the data. This ongoing
communication with hospitals about
their wage data may result in the
discovery by CMS of additional items
that were reported incorrectly or other
data errors, even after the posting of the
January PUF, and throughout the
remainder of the wage index
development process. In addition, the
fact that CMS analyzes the data from a
regional and even national level, unlike
the review performed by the MACs that
review a limited subset of hospitals, can
facilitate additional editing of the data
that may not be readily apparent to the
MACs. In these occasional instances, an
error may be of sufficient magnitude
that the wage index of an entire CBSA
is affected. Accordingly, CMS uses its
authority to ensure that the wage index
accurately reflects the relative hospital
wage level in the geographic area of the
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hospital compared to the national
average hospital wage level, by
continuing to make corrections to
hospital wage data upon discovering
incorrect wage data, distinct from
instances in which hospitals request
data revisions.
We note that CMS corrects errors to
hospital wage data as appropriate,
regardless of whether that correction
will raise or lower a hospital’s average
hourly wage. For example, as discussed
in section III.D.2. of the preamble of the
proposed rule (82 FR 19900 through
19902), in the calculation of the
proposed FY 2018 wage index, upon
discovering that hospitals reported other
wage-related costs on Line 18 of
Worksheet S–3, despite those other
wage-related costs failing to meet the
requirement that other wage related
costs must exceed 1 percent of total
adjusted salaries net of excluded area
salaries, CMS made internal edits to
remove those other wage-related costs
from Line 18. Conversely, if CMS
discovers after conclusion of the desk
review, for example, that a MAC
inadvertently failed to incorporate
positive adjustments resulting from a
prior year’s wage index appeal to a
hospital’s wage related costs such as
pension, CMS would correct that data
error and the hospital’s average hourly
wage would likely increase as a result.
While we maintain CMS’ authority to
conduct additional review and make
resulting corrections at any time during
the wage index development process, in
the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 19914), we proposed a
process for hospitals to request further
review of a correction made by CMS
starting with the FY 2019 wage index.
In order to allow opportunity for input
from hospitals concerning corrections
made by CMS after the posting of the
January PUF, we proposed a process
similar to the existing process in which
hospitals may request corrections to
wage index data displayed in the
January PUF. We stated in the proposed
rule that instances where CMS makes a
correction to a hospital’s data after the
January PUF based on a different
understanding than the hospital about
certain reported costs, for example,
could potentially be resolved using this
proposed process before the final wage
index is calculated. We stated that we
believe this proposed process and
timeline (as described below) would
bring additional transparency to
instances where CMS makes data
corrections after the January PUF, and
would provide opportunities for
hospitals to request further review of
CMS changes in time for the most
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accurate data to be reflected in the final
wage index calculations.
Effective beginning with the FY 2019
wage index development cycle, we
proposed to use existing appeal
deadlines (in place for hospitals to
appeal determinations made by the
MAC during the desk review process)
for hospitals to dispute corrections
made by CMS after posting of the
January PUF that do not arise from a
hospital request for a wage data
revision. Starting with the April appeal
deadline, hospitals would use the
soonest approaching appeal deadline to
dispute any adjustments made by CMS.
However, if a hospital was notified of an
adjustment within 14 days of an appeal
deadline, the hospital would have until
the next appeal deadline to dispute any
adjustments. We believe this would give
hospitals sufficient time to prepare an
appeal of adjustments made by CMS
after the January PUF. Specifically, for
any adjustments made by CMS between
the date the January PUF is posted and
at least 14 calendar days before the
April appeals deadline, we proposed
that hospitals would have until the
April appeals deadline (which, for
example, is April 5 in the FY 2018 Wage
Index Timetable) to dispute the
adjustments. For any adjustments made
by CMS between 13 calendar days
before the April appeals deadline and
14 calendar days before the May appeals
deadline, we proposed that hospitals
would have until the May appeals
deadline (which, for example, is May 30
in the FY 2018 Wage Index Timetable)
to dispute the adjustments. In cases
where hospitals disagree with CMS
adjustments of which they were notified
13 calendar days before the May appeals
deadline or later, the hospitals could
appeal to the PRRB with no need for
further review by CMS before such
appeal.
We are using dates from the FY 2018
Wage Index Timetable in the following
example which was included in the
proposed rule at 82 FR 19914 (we
reiterate that this appeals process would
be effective beginning with the FY 2019
wage index cycle, but for illustrative
purposes, we are using dates from the
FY 2018 Wage Index Timetable, the
most recently published wage index
timetable): A hospital that is notified by
the MAC or CMS of an adjustment to its
wage data after the release of the
January 30, 2017 PUF could use the
April 5, 2017 appeals deadline to
dispute the adjustment. If the hospital is
notified of an adjustment by CMS or the
MAC to its wage data after March 22,
2017 (that is, less than 14 days prior to
the April 5 appeals deadline), it could
use the May 30, 2017 appeals deadline
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38155
to dispute the adjustment. If the hospital
is first notified about the adjustment
after May 16, 2017 (that is, less than 14
days prior to the May 30 deadline), and
disagrees with the adjustment, the
hospital could appeal directly to the
PRRB.
As with the existing process for
requesting wage data corrections, we
proposed that a hospital disputing an
adjustment made by CMS after the
posting of the January PUF would be
required to request a correction by the
first applicable deadline. For example,
using the FY 2018 Wage Index
Timetable for illustrative purposes only,
if a hospital was notified on March 20
of an adjustment to its data by CMS and
did not appeal by April 5, the hospital
would not be able to appeal by May 30
or bring the case before the PRRB. That
is, hospitals that do not meet the
procedural deadlines set forth earlier
would not be afforded a later
opportunity to submit wage index data
corrections or to dispute CMS’ decision
with respect to requested changes. As
with the existing process for hospitals to
request wage data corrections, our
policy is that hospitals that do not meet
the procedural deadlines set forth
earlier would not be permitted to
challenge later, before the PRRB, the
failure of CMS to make a requested data
revision.
In summary, under the statute, CMS
has discretion to make corrections and
revisions to hospitals’ wage data
throughout the multistep wage index
development process, and we proposed
a pathway for hospitals to request
additional review of corrections to their
wage data made by CMS. Beginning
with the development of the FY 2019
wage index, we proposed a process
whereby CMS could continue to correct
data after the posting of the January
PUF, while allowing hospitals to appeal
changes made by CMS using existing
deadlines from the process for hospitals
to request wage data corrections. As
with the existing process, a hospital
would be required to appeal by the first
applicable deadline, if relevant, to
maintain the right to appeal to the PRRB
to dispute a correction to its wage data
made by CMS.
We invited public comments on our
proposals.
Comment: Several commenters stated
that CMS is proposing to limit the time
a provider has to dispute an adjustment
once the January PUF is posted. The
commenters stated that, currently,
hospitals have 1 month to request
corrections for errors in the April 28
PUF. They maintained that the reduced
timelines will require hospitals to
review the posted PUF immediately to
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ensure that the data are correct and take
any necessary action to correct. The
commenters also noted that CMS has
taken a more active role in recent years
in performing additional data analysis
that results in follow-up questions or
requests to hospitals for supporting
data, which require time for hospitals to
develop a response. One commenter
stated that, by reducing time, CMS will
be placing an administrative hardship
on hospitals while they attempt to
respond to detailed audit requests.
Some of the commenters were ‘‘deeply
concerned’’ that the short timeline CMS
proposed to respond to detailed requests
will not allow for comprehensive
analysis and a thorough response. One
commenter specifically requested that
the dispute process be expanded to 28
days prior to the appeal deadline,
instead of the proposed 14 days, to give
hospitals enough time to collect data
and respond in a timely manner.
Response: We believe that the
commenters misunderstood our
proposal as a change to the current
process for hospitals to request wage
data corrections, rather than an
additional process for disputing
corrections made by CMS after the
January PUF that do not arise from a
hospital’s request for wage data
revisions. Under our proposal, hospitals
would still have approximately 1 month
to request corrections for errors in the
April 28 PUF, in accordance with the
wage index timetable. Our proposal
would create an additional process for
hospitals to appeal adjustments or
corrections made by CMS or the MAC
after the normal desk review timeframe
that do not arise from a hospital’s
request for wage data revisions.
Therefore, we do not agree that this
proposal requires hospitals to review
the posted PUF any earlier than
hospitals would do so under the current
policy, or that it constitutes
administrative hardship. Furthermore,
we believe that, rather than limiting
hospitals, our proposal would provide
additional transparency and
opportunities for hospitals to request
further review of CMS changes made
after the January PUF where there is
currently no such established process.
Regarding the concerns that the
proposed timeline is too short and the
suggestion that CMS expand the 14-day
timeline to 28 days, we continue to
believe that our proposed timeline
would give hospitals sufficient time to
prepare an appeal of adjustments made
by CMS after the January PUF. We
believe that a hospital that was notified
of an adjustment at least 2 weeks before
the upcoming deadline has enough time
to prepare an appeal by the upcoming
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deadline. Specifically, starting with the
April appeal deadline, hospitals would
use the soonest approaching appeal
deadline to dispute any adjustments
made by CMS. However, if a hospital
was notified of an adjustment within 14
days of an appeal deadline, the hospital
would have until the next appeal
deadline to dispute any adjustments.
Comment: One commenter did not
state a position on the proposal but
expressed the following concerns: First,
that CMS should add the particulars of
this appeal process to the existing FY
2019 Wage Index Timeline that is
published and made available online
each year by CMS; second, that most
adjustments to the wage data made by
CMS on a routine basis be performed
much earlier in the process than these
April and May appeal deadlines, so that
the proposed appeal process would be
reserved for ‘‘rare and unusual
circumstances requiring CMS’
intervention and adjustment to the
data.’’ Specifically, this commenter
stated that it would oppose a policy that
gives CMS the latitude to
indiscriminately make adjustments to
the hospital wage data this late in the
process where that adjustment was
known of far ahead of time and/or could
have easily been made earlier in the
process.
Response: We appreciate the
commenter’s concerns and suggestions.
In response to the commenter’s first
suggestion, we intend to add the
particulars of this appeal process to the
existing Wage Index Timeline that is
published and made available online
each year by CMS. Second, while we
maintain CMS’ authority under section
1886(d)(3)(E) of the Act to make
corrections to hospitals’ data to help
ensure the accuracy of the wage index,
we note that routine adjustments to the
wage data that are known of far ahead
of time and/or could easily be made
earlier in the process will continue to be
performed earlier in the process than
these April and May appeal deadlines.
After consideration of the public
comments we received, for the reasons
discussed earlier and in the FY 2018
IPPS/LTCH PPS proposed rule, we are
finalizing, without modification, our
proposed process for hospitals to
dispute data corrections made by CMS
after the January PUF that do not arise
from a hospital’s request for wage data
revisions. Effective beginning with the
FY 2019 wage index development cycle,
we will use existing appeal deadlines
(in place for hospitals to appeal
determinations made by the MAC
during the desk review process) for
hospitals to dispute corrections made by
CMS after posting of the January PUF
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that do not arise from a hospital request
for a wage data revisions. Starting with
the April appeal deadline, hospitals
must use the soonest approaching
appeal deadline to dispute any
adjustments made by CMS. However, if
a hospital is notified of an adjustment
within 14 days of an appeal deadline,
the hospital has until the next appeal
deadline to dispute any adjustments, as
discussed earlier. As with the existing
process for requesting wage data
corrections, a hospital disputing an
adjustment made by CMS after the
posting of the January PUF will be
required to request a correction by the
first applicable deadline. For example,
using the FY 2018 Wage Index
Timetable for illustrative purposes only,
if a hospital was notified on March 20
of an adjustment to its data by CMS and
did not appeal by April 5, the hospital
would not be able to appeal by May 30
or bring the case before the PRRB. That
is, hospitals that do not meet the
procedural deadlines set forth above
will not be afforded a later opportunity
to submit wage index data corrections or
to dispute CMS’ decision with respect to
requested changes. Our policy is that
hospitals that do not meet the
procedural deadlines set forth earlier
will not be permitted to challenge later,
before the PRRB, the failure of CMS to
make a requested data revision.
N. Labor-Market Share for the FY 2018
Wage Index
Section 1886(d)(3)(E) of the Act
directs the Secretary to adjust the
proportion of the national prospective
payment system base payment rates that
are attributable to wages and wagerelated costs by a factor that reflects the
relative differences in labor costs among
geographic areas. It also directs the
Secretary to estimate from time to time
the proportion of hospital costs that are
labor-related and to adjust the
proportion (as estimated by the
Secretary from time to time) of
hospitals’ costs which are attributable to
wages and wage-related costs of the
DRG prospective payment rates. We
refer to the portion of hospital costs
attributable to wages and wage-related
costs as the labor-related share. The
labor-related share of the prospective
payment rate is adjusted by an index of
relative labor costs, which is referred to
as the wage index.
Section 403 of Public Law 108–173
amended section 1886(d)(3)(E) of the
Act to provide that the Secretary must
employ 62 percent as the labor-related
share unless this would result in lower
payments to a hospital than would
otherwise be made. However, this
provision of Public Law 108–173 did
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not change the legal requirement that
the Secretary estimate from time to time
the proportion of hospitals’ costs that
are attributable to wages and wagerelated costs. Thus, hospitals receive
payment based on either a 62-percent
labor-related share, or the labor-related
share estimated from time to time by the
Secretary, depending on which laborrelated share resulted in a higher
payment.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50596 through 50607), we
rebased and revised the hospital market
basket. We established a FY 2010-based
IPPS hospital market basket to replace
the FY 2006-based IPPS hospital market
basket, effective October 1, 2013. In that
final rule, we presented our analysis
and conclusions regarding the frequency
and methodology for updating the laborrelated share for FY 2014. Using the FY
2010-based IPPS market basket, we
finalized a labor-related share for FY
2014, FY 2015, FY 2016, and FY 2017
of 69.6 percent. In addition, in FY 2014,
we implemented this rebased and
revised labor-related share in a budget
neutral manner (78 FR 51016). However,
consistent with section 1886(d)(3)(E) of
the Act, we did not take into account
the additional payments that would be
made as a result of hospitals with a
wage index less than or equal to 1.0000
being paid using a labor-related share
lower than the labor-related share of
hospitals with a wage index greater than
1.0000.
For FY 2018, as described in section
IV. of the preamble of the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19916
through 19929), we proposed to rebase
and revise the IPPS market basket
reflecting 2014 data. We also proposed
to recalculate the labor-related share for
discharges occurring on or after October
1, 2017 using the proposed 2014-based
IPPS market basket. As discussed in
Appendix A of the proposed rule, we
proposed this rebased and revised laborrelated share in a budget neutral
manner. However, consistent with
section 1886(d)(3)(E) of the Act, we did
not take into account the additional
payments that would be made as a
result of hospitals with a wage index
less than or equal to 1.0000 being paid
using a labor-related share lower than
the labor-related share of hospitals with
a wage index greater than 1.0000. We
refer readers to section IV. of the
preamble of this final rule and
Appendix A for our finalized policies
for the 2014-based IPPS market basket.
The labor-related share is used to
determine the proportion of the national
IPPS base payment rate to which the
area wage index is applied. We include
a cost category in the labor-related share
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if the costs are labor intensive and vary
with the local labor market. As
described in section IV. of the preamble
of the proposed rule, we proposed to
include in the labor-related share the
national average proportion of operating
costs that are attributable to Wages and
Salaries, Employee Benefits,
Professional Fees: Labor-Related,
Administrative and Facilities Support
Services, Installation, Maintenance, and
Repair Services, and All Other: LaborRelated Services as measured in the
proposed 2014-based IPPS market
basket. Therefore, for FY 2018, we
proposed to use a labor-related share of
68.3 percent for discharges occurring on
or after October 1, 2017.
We refer readers to section IV.B.3. of
the preamble of this final rule for a
discussion of our recalculation of the
labor-related share for discharges
occurring on or after October 1, 2017
using the 2014-based IPPS market
basket.
Prior to January 1, 2016, Puerto Rico
hospitals were paid based on 75 percent
of the national standardized amount and
25 percent of the Puerto Rico-specific
standardized amount. As a result, we
applied the Puerto Rico-specific laborrelated share percentage and nonlaborrelated share percentage to the Puerto
Rico-specific standardized amount.
Section 601 of the Consolidated
Appropriations Act, 2016 (Pub. L. 114–
113) amended section 1886(d)(9)(E) of
the Act to specify that the payment
calculation with respect to operating
costs of inpatient hospital services of a
subsection (d) Puerto Rico hospital for
inpatient hospital discharges on or after
January 1, 2016, shall use 100 percent
of the national standardized amount.
Because Puerto Rico hospitals are no
longer paid with a Puerto Rico-specific
standardized amount as of January 1,
2016, under section 1886(d)(9)(E) of the
Act as amended by section 601 of the
Consolidated Appropriations Act, 2016,
there is no longer a need for us to
calculate a Puerto Rico-specific laborrelated share percentage and nonlaborrelated share percentage for application
to the Puerto Rico-specific standardized
amount. Hospitals in Puerto Rico are
now paid 100 percent of the national
standardized amount and, therefore, are
subject to the national labor-related
share and nonlabor-related share
percentages that are applied to the
national standardized amount.
Accordingly, for FY 2018, we did not
propose a Puerto Rico-specific laborrelated share percentage or a nonlaborrelated share percentage in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19915).
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Comment: Commenters suggested that
CMS consider an approach that will
mitigate significant decreases in
inpatient payments to hospitals as a
result of the proposed decrease in the
labor-related share for FY 2018.
Response: As noted earlier, section
1886(d)(3)(E) of the Act directs the
Secretary to adjust the proportion of the
national prospective payment system
base payment rates that are attributable
to wages and wage-related costs by a
factor that reflects the relative
differences in labor costs among
geographic areas. It also directs the
Secretary to estimate from time to time
the proportion of hospital costs that are
labor-related and to adjust the
proportion (as estimated by the
Secretary from time to time) of
hospitals’ costs which are attributable to
wages and wage-related costs of the
DRG prospective payment rates. In
section IV.B.3. of the preamble of this
final rule, we discuss our recalculation
of the labor-related share for discharges
occurring on or after October 1, 2017,
using the 2014-based IPPS market
basket. We believe that the labor-related
share calculated for FY 2018 accurately
and appropriately reflects the
proportion of hospitals’ costs that are
attributable to wages and wage-related
costs. Therefore, we do not believe it is
necessary or appropriate to mitigate the
effects of the labor-related share
percentage finalized in this rule.
After consideration of the public
comments we received, for the reasons
discussed in section IV.B.3. of the
preamble of this final rule and in the FY
2018 IPPS/LTCH PPS proposed rule, we
are finalizing our proposal to use a
labor-related share of 68.3 percent for
discharges occurring on or after October
1, 2017, for all hospitals (including
Puerto Rico hospitals) whose wage
indexes are greater than 1.0000.
Tables 1A and 1B, which are
published in section VI. of the
Addendum to this FY 2018 IPPS/LTCH
PPS final rule and available via the
Internet on the CMS Web site, reflect the
national labor-related share, which is
also applicable to Puerto Rico hospitals.
For FY 2018, for all IPPS hospitals
(including Puerto Rico hospitals) whose
wage indexes are less than or equal to
1.0000, we are applying the wage index
to a labor-related share of 62 percent of
the national standardized amount. For
all hospitals (including Puerto Rico
hospitals) whose wage indexes are
greater than 1.0000, for FY 2018, we are
applying the wage index to a laborrelated share of 68.3 percent of the
national standardized amount.
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IV. Rebasing and Revising of the
Hospital Market Baskets for Acute Care
Hospitals
A. Background
Effective for cost reporting periods
beginning on or after July 1, 1979, we
developed and adopted a hospital input
price index (that is, the hospital market
basket for operating costs). Although
‘‘market basket’’ technically describes
the mix of goods and services used in
providing hospital care, this term is also
commonly used to denote the input
price index (that is, cost category
weights and price proxies combined)
derived from that market basket.
Accordingly, the term ‘‘market basket’’
as used in this document refers to the
hospital input price index.
The percentage change in the market
basket reflects the average change in the
price of goods and services hospitals
purchase in order to provide inpatient
care. We first used the market basket to
adjust hospital cost limits by an amount
that reflected the average increase in the
prices of the goods and services used to
provide hospital inpatient care. This
approach linked the increase in the cost
limits to the efficient utilization of
resources.
Since the inception of the IPPS, the
projected change in the hospital market
basket has been the integral component
of the update factor by which the
prospective payment rates are updated
every year. An explanation of the
hospital market basket used to develop
the prospective payment rates was
published in the Federal Register on
September 1, 1983 (48 FR 39764). We
also refer readers to the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50596) in
which we discussed the most recent
previous rebasing of the hospital input
price index.
The hospital market basket is a fixedweight, Laspeyres-type price index. A
Laspeyres-type price index measures the
change in price, over time, of the same
mix of goods and services purchased in
the base period. Any changes in the
quantity or mix of goods and services
(that is, intensity) purchased over time
are not measured.
The index itself is constructed in
three steps, which are discussed in the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 19916 through 19929) and in this
final rule. First, a base period is selected
(in the proposed rule, we proposed to
use 2014 as the base period) and total
base period expenditures are estimated
for a set of mutually exclusive and
exhaustive spending categories, with the
proportion of total costs that each
category represents being calculated.
These proportions are called ‘‘cost
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weights’’ or ‘‘expenditure weights.’’
Second, each expenditure category is
matched to an appropriate price or wage
variable, referred to as a ‘‘price proxy.’’
In almost every instance, these price
proxies are derived from publicly
available statistical series that are
published on a consistent schedule
(preferably at least on a quarterly basis).
Finally, the expenditure weight for each
cost category is multiplied by the level
of its respective price proxy. The sum of
these products (that is, the expenditure
weights multiplied by their price index
levels) for all cost categories yields the
composite index level of the market
basket in a given period. Repeating this
step for other periods produces a series
of market basket levels over time.
Dividing an index level for a given
period by an index level for an earlier
period produces a rate of growth in the
input price index over that timeframe.
As noted above, the market basket is
described as a fixed-weight index
because it represents the change in price
over time of a constant mix (quantity
and intensity) of goods and services
needed to provide hospital services. The
effects on total expenditures resulting
from changes in the mix of goods and
services purchased subsequent to the
base period are not measured. For
example, a hospital hiring more nurses
to accommodate the needs of patients
would increase the volume of goods and
services purchased by the hospital, but
would not be factored into the price
change measured by a fixed-weight
hospital market basket. Only when the
index is rebased would changes in the
quantity and intensity be captured, with
those changes being reflected in the cost
weights. Therefore, we rebase the
market basket periodically so that the
cost weights reflect recent changes in
the mix of goods and services that
hospitals purchase (hospital inputs) to
furnish inpatient care between base
periods.
We last rebased the hospital market
basket cost weights effective for FY 2014
(78 FR 50596), with FY 2010 data used
as the base period for the construction
of the market basket cost weights. For
the FY 2018 IPPS/LTCH PPS proposed
rule, we proposed to rebase the cost
structure for the IPPS hospital index
from FY 2010 to 2014, as discussed in
the proposed rule (82 FR 19916 through
19929) and below in this final rule.
B. Rebasing and Revising the IPPS
Market Basket
The terms ‘‘rebasing’’ and ‘‘revising,’’
while often used interchangeably,
actually denote different activities.
‘‘Rebasing’’ means moving the base year
for the structure of costs of an input
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price index (for example, in the
proposed rule, we proposed to shift the
base year cost structure for the IPPS
hospital index from FY 2010 to 2014).
We note that we proposed to no longer
refer to the market basket as a ‘‘FY 2014based’’ market basket and instead
referred to the proposed market basket
as simply ‘‘2014-based’’. We proposed
this change in naming convention for
the market basket because the base year
cost weight data for the proposed
market basket does not reflect only
fiscal year data. For example, the
proposed 2014-based IPPS market
basket uses Medicare cost report data
and other government data that reflect
2014 fiscal year, 2014 calendar year, and
2014 State fiscal year expenses to
determine the base year cost weights.
Given that it is based on a mix of
classifications of 2014 data, we
proposed to refer to the market basket as
‘‘2014-based’’ instead of ‘‘FY 2014based’’ or ‘‘CY 2014-based’’.
‘‘Revising’’ means changing data
sources or price proxies used in the
input price index. As published in the
FY 2006 IPPS final rule (70 FR 47387),
in accordance with section 404 of Public
Law 108–173, CMS determined a new
frequency for rebasing the hospital
market basket. We established a
rebasing frequency of every 4 years and,
therefore, for the FY 2018 IPPS update,
we proposed to rebase and revise the
IPPS market basket from FY 2010 to
2014. We invited public comments on
our proposed methodology. A summary
of the public comments we received and
our responses are included below under
the appropriate subject area.
1. Development of Cost Categories and
Weights
a. Use of Medicare Cost Report Data
The major source of expenditure data
for developing the proposed hospital
market basket cost weights is the 2014
Medicare cost reports. These 2014
Medicare cost reports are for cost
reporting periods beginning on and after
October 1, 2013 and before October 1,
2014. We note that while these dates
appear to reflect fiscal year data, in
order to be classified as a ‘‘2014 cost
report,’’ a hospital’s cost reporting
period must begin between these dates.
For example, we found that of the 2014
Medicare cost reports for IPPS hospitals,
approximately 40 percent of the reports
had a begin date on January 1, 2014,
approximately 30 percent had a begin
date on July 1, 2014, and approximately
18 percent had a begin date on October
1, 2013. For this reason, we are defining
the base year of the market basket as
‘‘2014-based’’ instead of ‘‘FY 2014-
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based’’. We proposed to use 2014 as the
base year because we believe that the
2014 Medicare cost reports represent the
most recent, complete set of Medicare
cost report data available to develop
cost weights for IPPS hospitals at the
time of rulemaking. As was done in
previous rebasings, these cost reports
are from IPPS hospitals only (hospitals
excluded from the IPPS and CAHs are
not included) and are based on IPPS
Medicare-allowable operating costs.
IPPS Medicare-allowable operating costs
are costs that are eligible to be paid
under the IPPS. For example, the IPPS
market basket excludes home health
agency (HHA) costs as these costs would
be paid under the HHA PPS and,
therefore, these costs are not IPPS
Medicare-allowable costs.
We proposed to derive costs for eight
major expenditures or cost categories for
the 2014-based IPPS market basket from
the CMS Medicare cost reports (Form
2552–10, OMB Control Number 0938–
0050): Wages and Salaries, Employee
Benefits, Contract Labor,
Pharmaceuticals, Professional Liability
Insurance (Malpractice), Blood and
Blood Products, Home Office Contract
Labor, and a residual ‘‘All Other’’
category. The residual ‘‘All Other’’
category reflects all remaining costs that
are not captured in the other seven cost
categories. We proposed that, for the
2014-based IPPS market basket, we
obtain costs for one additional major
cost category from the Medicare cost
reports compared to the FY 2010-based
IPPS market basket—Home Office
Contract Labor Costs. We describe
below the detailed methodology for
obtaining costs for each of the seven
cost categories directly determined from
the Medicare cost reports. We received
one specific comment on the detailed
methodology of the major cost weights,
specifically for the Home Office
Contract Labor cost weight. We address
this comment below.
(1) Wages and Salaries Costs
To derive wages and salaries costs for
the Medicare allowable cost centers, we
proposed to first calculate total
unadjusted wages and salaries costs as
reported on Worksheet S–3, part II. We
then proposed to remove the wages and
salaries attributable to non-Medicare
allowable cost centers (that is, excluded
areas) as well as a portion of overhead
wages and salaries attributable to these
excluded areas. Specifically, wages and
salaries costs were equal to total wages
and salaries as reported on Worksheet
S–3, Part II, Column 4, Line 1, less
excluded area wages and salaries
(reported on Worksheet S–3, Part II,
Column 4, Lines 3 and 5 through 10)
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and less overhead wages and salaries
attributable to the excluded areas.
Overhead wages and salaries are
attributable to the entire IPPS facility.
Therefore, we proposed to only include
the proportion attributable to the
Medicare allowable cost centers. We
proposed to estimate the proportion of
overhead wages and salaries that are not
attributable to Medicare allowable costs
centers (that is, excluded areas) by
multiplying the ratio of excluded area
wages and salaries (as defined earlier) to
total wages and salaries (Worksheet S–
3, part II, Column 4, Line 1) by total
overhead wages and salaries (Worksheet
A, Column 1, Lines 4 through 18). A
similar methodology was used to derive
wages and salaries costs in the FY 2010based IPPS market basket.
(2) Employee Benefits Costs
We proposed to derive employee
benefits costs using a similar
methodology as the wages and salaries
costs; that is, reflecting employee
benefits costs attributable to the
Medicare allowable cost centers. First,
we calculated total unadjusted
employee benefits costs as the sum of
Worksheet S–3, Part II, Column 4, Lines
17, 18, 20, and 22. We then excluded
those employee benefits attributable to
the overhead wages and salaries for the
non-Medicare allowable cost centers
(that is, excluded areas). Employee
benefits attributable to the nonMedicare allowable cost centers were
derived by multiplying the ratio of total
employee benefits (equal to the sum of
Worksheet S–3, Part II, Column 4, Lines
17 through 25) to total wages and
salaries (Worksheet S–3, Part II, Column
4, Line 1) by excluded overhead wages
and salaries (as derived above for wages
and salaries costs). A similar
methodology was used in the FY 2010based IPPS market basket.
(3) Contract Labor Costs
Contract labor costs are primarily
associated with direct patient care
services. Contract labor costs for
services such as accounting, billing, and
legal are estimated using other
government data sources as described
below. We proposed to derive contract
labor costs for the 2014-based IPPS
market basket as the sum of Worksheet
S–3, Part II, Column 4, Lines 11, 13 and
15. A similar methodology was used in
the FY 2010-based IPPS market basket.
(4) Professional Liability Insurance
Costs
We proposed that professional
liability insurance (PLI) costs (often
referred to as malpractice costs) be equal
to premiums, paid losses, and self-
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38159
insurance costs reported on Worksheet
S–2, Part I, Columns 1 through 3, Line
118.01. A similar methodology was used
for the FY 2010-based IPPS market
basket.
(5) Pharmaceuticals Costs
We proposed to calculate
pharmaceuticals costs using nonsalary
costs reported for the Pharmacy cost
center (Worksheet A, Column 2, Line
15) and Drugs Charged to Patients cost
center (Worksheet A, Column 2, Line
73) less estimated employee benefits
attributable to these two cost centers.
We proposed to estimate these
employee benefits costs by multiplying
the ratio of total employee benefits
(equal to the sum of Worksheet S–3, Part
II, Column 4, Lines 17 through 25) to
total wages and salaries (Worksheet S–
3, Part II, Column 4, Line 1) by total
wages and salaries costs for the
Pharmacy and Drugs Charged to Patients
cost centers (equal to the sum of
Worksheet A, Column 1, Lines 15 and
73). A similar methodology was used for
the FY 2010-based IPPS market basket.
(6) Blood and Blood Products Costs
We proposed to calculate blood and
blood products costs using nonsalary
costs reported for the Whole Blood &
Packed Red Blood Cells cost center
(Worksheet A, Column 2, Line 62) and
the Blood Storing, Processing, &
Transfusing cost center (Worksheet A,
Column 2, Line 63) less estimated
employee benefits attributable to these
two cost centers. We estimated these
employee benefits costs by multiplying
the ratio of total employee benefits
(equal to the sum of Worksheet S–3, Part
II, Column 4, Lines 17 through 25) to
total wages and salaries (Worksheet S3,
Part II, Column 4, Line 1) by total wages
and salaries for the Whole Blood &
Packed Red Blood Cells and Blood
Storing, Processing, & Transfusing cost
centers (equal to the sum of Worksheet
A, Column 1, Lines 62 and 63). A
similar methodology was used for the
FY 2010-based IPPS market basket.
(7) Home Office Contract Labor Costs
We proposed to determine home
office contract labor costs using data
reported on Worksheet S–3, Part II,
Column 4, line 14. Specifically, we
proposed to determine the Medicare
allowable portion of these costs by
multiplying them by the ratio of total
Medicare allowable operating costs (as
defined in section IV.B.1.b. of the
preamble to the proposed rule and in
section IV.B.1.b. of the preamble of this
final rule) to total operating costs
(calculated as Worksheet B, Part I,
Column 26, Line 202, less Worksheet B,
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Part I, Column 0, Lines 1 through 3).
Home office contract labor costs in the
FY 2010-based IPPS market basket were
calculated using the U.S. Census
Bureau’s Bureau of Economic Analysis
(BEA) Benchmark Input-Output (I–O)
data, as described in section IV.B.1.c. of
the preamble to the proposed rule and
in section IV.B.1.c. of the preamble of
this final rule.
Comment: One commenter stated that
the data reported on Worksheet S–3,
Part II, Column 4, Line 14 is not specific
to home office costs but can include
costs to other related organizations. The
commenter recommended that if the
intent is to only capture home office
costs, CMS use a different data source.
However, if the intent is to capture
home office and other related
organization costs, the commenter
recommended that the label applied to
the major cost category be altered to
reflect the actual cost being utilized (for
example, Home Office/Related Party
Contract Labor Costs).
Response: We agree with the
commenter’s suggestion to alter the
label for this cost category. The
instructions for the Medicare cost report
(CMS form 2552–10) in the CMS
Provider Reimbursement Manual, Part 2
state that the costs included on this line
represent salaries and wage-related costs
paid to personnel who are affiliated
with a home office and/or related
organization, who provide services to
the hospital, and whose salaries are not
included on Worksheet A, Column 1
(CMS Pub. 15–2, Section 4005.2).
According to the CMS Provider
Reimbursement Manual, Part 1, an
organization is defined as being related
to the provider when the provider to a
significant extent is associated or
affiliated with, or has control of, or is
controlled by, the organization
furnishing the services, facilities, or
supplies (CMS Pub 15–1, Section
1002.1).
As discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19923),
the costs included in this proposed
category for the 2014-based IPPS market
basket were previously obtained from
the BEA Benchmark I–O data using the
costs from the NAICS 55 sector
(Management of Companies or
Enterprises). The definition of the
NAICS 55 sector from the BLS Web site
is: (1) Establishments that hold the
securities of (or other equity interests in)
companies and enterprises for the
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purpose of owning a controlling interest
or influencing management decisions or
(2) establishments (except government
establishments) that administer,
oversee, and manage establishments of
the company or enterprise and that
normally undertake the strategic or
organizational planning and decisionmaking role of the company or
enterprise. Establishments that
administer, oversee, and manage may
hold the securities of the company or
enterprise. (https://www.bls.gov/iag/tgs/
iag55.htm).
As was done for the FY 2010-based
IPPS market basket when we used the
Benchmark I–O data, to calculate home
office contract labor costs using the
Medicare cost reports, our intent is to
capture both home office and related
organization compensation costs. Our
proposed methodology of using the
Medicare cost report data meets our
intention and reflects the most current
data on these expenses. We appreciate
the commenter’s suggestion and will
incorporate this suggestion by finalizing
the cost category label to be ‘‘Home
Office/Related Organization Contract
Labor’’ so it is more consistent with the
scope of costs included in this category.
b. Final Major Cost Category
Computation
After we derived costs for the seven
major cost categories for each provider
using the Medicare cost report data as
previously described, we proposed to
address data outliers using the following
steps. First, we divided the costs for
each of the seven categories by total
Medicare allowable operating costs
calculated for the provider to obtain cost
weights for each PPS hospital. We
proposed that total Medicare allowable
operating costs were equal to noncapital
costs (Worksheet B, part I, Column 26
less Worksheet B, part II, Column 26)
that are attributable to the Medicare
allowable cost centers of the hospital.
Medicare allowable cost centers were
defined as Lines 30 through 35, 50, 51,
53 through 60, 62 through 76, 90, 91,
92.01 and 93.
For all of the major cost weights
except the Home Office Contract Labor
cost weight, we then removed those
providers whose derived cost weights
fall in the top and bottom 5 percent of
provider-specific cost weights to ensure
the removal of outliers. After the
outliers were removed, we summed the
costs for each category across all
remaining providers. We then divided
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this by the sum of total Medicare
allowable operating costs across all
remaining providers to obtain a cost
weight for the proposed 2014-based
IPPS market basket for the given
category.
We note that, in the FY 2018 IPPS/
LTCH PPS proposed rule, we
mistakenly referenced that we used the
same trimming methodology for the
Home Office Contract Labor cost weight
that we used for the other major cost
weights (a top and bottom 5 percent
trimming methodology).
For the Home Office Contract Labor
cost weight, we applied a 1-percent toponly trimming methodology. This
allowed all providers’ Medicare
allowable costs to be included, even if
their home office contract labor costs
were zero. We believe, as the Medicare
cost report data (Worksheet S–2, Part 1,
Line 140) indicate, that not all IPPS
hospitals have a home office. IPPS
hospitals without a home office can
incur these expenses directly by having
their own staff, for which the costs
would be included in the Wages and
Salaries and Employee Benefits cost
weights. Alternatively, IPPS hospitals
without a home office could also
purchase related services from external
contractors for which these expenses
would be captured in the residual ‘‘AllOther’’ cost weight. We believe this 1percent top-only trimming methodology
is appropriate as it addresses outliers
while allowing providers with zero
Home Office Contract Labor costs to be
included in the Home Office Contract
Labor cost weight calculation. If we
applied both the top and bottom 5
percent trimming methodology, we
would exclude providers who have zero
Home Office Contract Labor costs.
Finally, we proposed to calculate the
residual ‘‘All Other’’ cost weight that
reflects all remaining costs that are not
captured in the seven cost categories
listed.
Table IV–01 in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19918)
shows the major cost categories and
their respective cost weights as derived
from the Medicare cost reports for the
proposed rule. Table IV–01 below
provides these same major cost
categories and respective cost weights,
with the change made to the Home
Office Contract Labor Cost category
name as discussed earlier in our
response to public comments.
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TABLE IV–01—MAJOR COST CATEGORIES AS DERIVED FROM THE MEDICARE COST REPORTS
Major cost categories
FY 2010
Wages and Salaries ................................................................................................................................................
Employee Benefits ...................................................................................................................................................
Contract Labor .........................................................................................................................................................
Professional Liability Insurance (Malpractice) .........................................................................................................
Pharmaceuticals ......................................................................................................................................................
Blood and Blood Products .......................................................................................................................................
Home Office/Related Organization Contract Labor* ...............................................................................................
‘‘All Other’’ Residual ................................................................................................................................................
45.8
12.7
1.8
1.3
5.4
1.1
31.9
Proposed and
final 2014
42.1
12.0
1.8
1.2
5.9
0.8
4.2
32.0
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*Home Office/Related Organization Contract Labor costs were included in the ‘‘All Other’’ residual cost weight of the FY 2010-based IPPS
market basket.
From FY 2010 to 2014, the Wages and
Salaries and Employee Benefits cost
weights as calculated directly from the
Medicare cost reports decreased by
approximately 3.7 and 0.7 percentage
points, respectively, while the Contract
Labor cost weight was unchanged. The
decrease in the Wages and Salaries cost
weight occurred among most cost
centers and in aggregate for the General
Service (overhead), Inpatient Routine
Service, Ancillary Service, and
Outpatient Service cost centers.
Comment: One commenter expressed
concerns that several of the updated
payment rates based on the proposed
market basket do not accurately account
for the realities facing hospitals and
health systems. For example, the
commenter believed the proposed
market basket cost weights for certain
categories are too low. Specifically, the
weight for employee benefits that
decreased from 12.7 percent to 12.0
percent, and the weight for
pharmaceuticals that increased from 5.4
percent to 5.9 percent. The commenter
further stated that hospitals, similar to
other employers, are experiencing
significant increases in costs for
providing health care to their
employees. The commenter claimed
that, in 2017 alone, employer-sponsored
premiums increased by 3 percent
nationally. The commenter further cited
a study conducted for the American
Hospital Association and the Federation
of American Hospitals, which found
that between FY 2013 and FY 2015,
average annual inpatient drug spending
at community hospitals increased by
23.4 percent and average spending per
admission increased 38.7 percent. The
commenter stated that Virginia hospitals
saw a 9.6-percent increase in spending
on pharmaceuticals between 2014 and
2015 and a 41-percent increase in the
last 6 years. The commenter further
stated that it is important that CMS
ensures any rebasing of the market
basket adequately accounts for these
increased costs.
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Response: As stated in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19916), the market basket is described
as a fixed-weight index because it
represents the change in price over time
of a constant mix (quantity and
intensity) of goods and services needed
to provide hospital services. The effects
on total expenditures resulting from
changes in the mix of goods and
services purchased subsequent to the
base period are not measured. Only
when the index is rebased and updated
cost weights determined would changes
in the quantity and intensity be
captured. Therefore, we rebase the
market basket periodically so that the
cost weights reflect recent changes in
the mix of goods and services that
hospitals purchase (hospital inputs) to
furnish inpatient care between base
periods.
We used a similar methodology for
calculating the Employee Benefits and
Pharmaceuticals cost weights as we
used to derive the FY 2010-based IPPS
market basket. These data are obtained
directly from the Medicare cost reports
completed by IPPS hospitals. In
addition, in the FY 2018 IPPS/LTCH
PPS proposed rule, we provided the
specific fields from the Medicare cost
report that we were proposing to use to
calculate the cost weights. We did not
receive any technical public comments
on these specific methodologies we
proposed.
The change in the cost weight of a
specific category from the current index
(FY 2010) to the rebased index (2014) is
a function of the growth rate of those
specific expenses relative to other
components of the market basket. For
pharmaceuticals, costs increased faster
than other components of the market
basket between FY 2010 and 2014,
which is why the Pharmaceuticals cost
weight increased from 5.4 to 5.9
percent. As discussed in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19917), the Pharmaceuticals cost weight
does not include compensation costs
associated with hospital pharmacy
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employees; rather, these costs are
included in the compensation cost
weight. The increase in pharmaceutical
costs over this period reflects changes in
both the price of prescription drugs,
proxied by the Producer Price Index for
Prescription Drugs, as well the quantity
and intensity of prescriptions.
We note that, for the FY 2018 IPPS
market basket update, pharmaceuticals
price growth contributes approximately
0.4 percentage point to the FY 2018
IPPS market basket update of 2.7
percent, or nearly 15 percent of the
update. This large contribution (relative
to the base year cost weight) reflects not
only a projected FY 2018 prescription
drug price increase that is
approximately 80 percent faster than the
weighted average price associated with
the other remaining market basket cost
categories, but also that over the FY
2014 to FY 2017 time period, the
pharmaceuticals prices are projected to
increase over 25 percent compared to
the price increases of the other market
basket categories combined at
approximately 5 percent. Thus, we
believe that the market basket is
adequately reflecting the recent trends
in prescription drug price growth.
For employee benefits, costs increased
over the FY 2010 to FY 2014 period but
at a slower rate than other components
of the market basket, which resulted in
a slight decrease in the proposed
Employee Benefits cost weight from
12.7 to 12.0 percent. The changes in
employee benefit costs over this period
reflect not only the price changes
associated with employee benefits,
which are proxied by the Employment
Cost Index for All Civilian Workers in
Hospitals, but also any changes in the
mix of workers. For FY 2018, the price
change in the benefits component for
the ECI for hospital workers is projected
to be 2.6 percent.
After consideration of public
comments we received, in this final
rule, we are finalizing our calculation of
the major cost weights of the 2014-based
IPPS market basket as proposed. As
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discussed above, we are making one
revision to change the label of the
proposed ‘‘Home Office Contract Labor’’
category to ‘‘Home Office/Related
Organization Contract Labor’’. However,
there is no effect on the calculation of
the major cost weight for this category
or in how it is apportioned between
Professional Fees: Labor-Related and
Professional Fees: Nonlabor Related as
described in detail in section IV.B.3 of
the preamble of this final rule.
As we did for the FY 2010-based IPPS
market basket (78 FR 50597), we
proposed to allocate contract labor costs
to the Wages and Salaries and Employee
Benefits cost weights based on their
relative proportions for employed labor
under the assumption that contract
labor costs are comprised of both wages
and salaries and employee benefits. The
contract labor allocation proportion for
wages and salaries was equal to the
Wages and Salaries cost weight as a
percent of the sum of the Wages and
Salaries cost weight and the Employee
Benefits cost weight. Using the 2014
Medicare cost report data, this
percentage was 78 percent. Therefore,
we proposed to allocate approximately
78 percent of the Contract Labor cost
weight to the Wages and Salaries cost
weight and 22 percent to the Employee
Benefits cost weight. The FY 2010-based
IPPS market basket also allocated 78
percent of the Contract Labor cost
weight to the Wages and Salaries cost
weight.
Table IV–02 in the proposed rule (82
FR 19918) shows the Wages and Salaries
and Employee Benefits cost weights
after contract labor allocation for the FY
2010-based IPPS market basket and the
proposed 2014-based IPPS market
basket. This table is also included below
to reflect the final 2014-based IPPS
market basket.
TABLE IV–02—WAGES AND SALARIES AND EMPLOYEE BENEFITS COST WEIGHTS AFTER CONTRACT LABOR ALLOCATION
FY 2010based
IPPS market
basket
Major cost categories
Wages and Salaries ................................................................................................................................................
Employee Benefits ...................................................................................................................................................
sradovich on DSK3GMQ082PROD with RULES2
We did not receive any specific public
comments regarding the allocation of
the Contract Labor cost weight to the
Wages and Salaries and Employee
Benefits cost weights. In this final rule,
we are finalizing our methodology of
allocating the Contract Labor cost
weight as we proposed.
c. Derivation of the Detailed Cost
Weights
To further divide the ‘‘All Other’’
residual cost weight estimated from the
2014 Medicare cost report data into
more detailed cost categories, we
proposed to use the 2007 Benchmark I–
O ‘‘Use Tables/Before Redefinitions/
Purchaser Value’’ for NAICS 622000,
Hospitals, published by the BEA. These
data are publicly available at the
following Web site: https://www.bea.gov/
industry/io_annual.htm. The BEA
Benchmark I–O data are generally
scheduled for publication every 5 years
on a lagged basis, with the most recent
data available for 2007. The 2007
Benchmark I–O data are derived from
the 2007 Economic Census and are the
building blocks for BEA’s economic
accounts. Therefore, they represent the
most comprehensive and complete set
of data on the economic processes or
mechanisms by which output is
produced and distributed.22 BEA also
produces Annual I–O estimates.
However, while based on a similar
methodology, these estimates reflect less
comprehensive and less detailed data
22 https://www.bea.gov/papers/pdf/IOmanual_
092906.pdf.
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sources and are subject to revision when
benchmark data become available.
Instead of using the less detailed
Annual I–O data, we proposed to inflate
the detailed 2007 Benchmark I–O data
forward to 2014 by applying the annual
price changes from the respective price
proxies to the appropriate market basket
cost categories that are obtained from
the 2007 Benchmark I–O data. In our
calculations for the proposed rule, we
repeated this practice for each year.
We then calculated the cost shares
that each cost category represents of the
2007 data inflated to 2014. These
resulting 2014 cost shares were applied
to the ‘‘All Other’’ residual cost weight
to obtain the detailed cost weights for
the proposed 2014-based IPPS market
basket. For example, the cost for Food:
Direct Purchases represented 7.3
percent of the sum of the ‘‘All Other’’
2007 Benchmark I–O Hospital
Expenditures inflated to 2014.
Therefore, the Food: Direct Purchases
cost weight represented 7.3 percent of
the proposed 2014-based IPPS market
basket’s ‘‘All Other’’ cost category (32.0
percent), yielding a Food: Direct
Purchases proposed cost weight of 2.3
percent in the proposed 2014-based
IPPS market basket (0.073 × 32.0 percent
= 2.3 percent). For the FY 2010-based
IPPS market basket (78 FR 50597), we
used the same methodology utilizing the
2002 Benchmark I–O data (aged to FY
2010).
Using this methodology, we proposed
to derive 18 detailed cost categories
from the proposed 2014-based IPPS
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47.2
13.1
Proposed and
final 2014based
IPPS market
basket
43.4
12.4
market basket residual cost weight (32.0
percent). These categories were: (1)
Fuel: Oil and Gas; (2) Electricity; (3)
Water and Sewerage; (4) Food: Direct
Purchases; (5) Food: Contract Services;
(6) Chemicals; (7) Medical Instruments;
(8) Rubber and Plastics; (9) Paper and
Printing Products; (10) Miscellaneous
Products; (11) Professional Fees: LaborRelated; (12) Administrative and
Facilities Support Services; (13)
Installation, Maintenance, and Repair
Services; (14) All Other: Labor-Related
Services; (15) Professional Fees:
Nonlabor-Related; (16) Financial
Services; (17) Telephone Services; and
(18) All Other: Nonlabor-Related
Services.
Similar to the 2013-based LTCH
market basket, the proposed 2014-based
IPPS market basket does not include
separate cost categories for Apparel,
Machinery and Equipment, and Postage.
Due to the small weights associated
with these detailed categories and
relatively stable price growth in the
applicable price proxy, we believed that
consolidating these smaller cost
category weights with other cost
categories in the proposed market basket
that experience similar price increases
eliminates unnecessary complexity to
the market basket without having a
material impact on the total market
basket increase. Therefore, we proposed
to include Apparel and Machinery and
Equipment in the Miscellaneous
Products cost category and Postage in
the All-Other: Nonlabor-Related
Services cost category. We note that the
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sradovich on DSK3GMQ082PROD with RULES2
machinery and equipment expenses are
for equipment that is paid for in a given
year and not depreciated over the asset’s
useful life. Depreciation expenses for
movable equipment are reflected in the
proposed 2014-based Capital Input Price
Index (described in section IV.D. of the
preamble of this final rule). For the
proposed 2014-based IPPS market
basket, we also proposed to include a
separate cost category for Installation,
Maintenance, and Repair Services in
order to proxy these costs by a price
index that better reflects the price
changes of labor associated with
maintenance-related services.
We did not receive any specific public
comments on the derivation of the
detailed cost weights. In this final rule,
we are finalizing our methodology for
deriving the detailed cost weights as we
proposed.
2. Selection of Proposed Price Proxies
After computing the proposed 2014
cost weights for the IPPS market basket,
it was necessary to select appropriate
wage and price proxies to reflect the rate
of price change for each expenditure
category. With the exception of the
proxy for professional liability
insurance (PLI), all the proxies we
proposed are based on Bureau of Labor
Statistics (BLS) data and are grouped
into one of the following BLS categories:
• Producer Price Indexes—Producer
Price Indexes (PPIs) measure price
changes for goods sold in markets other
than the retail market. PPIs are
preferable price proxies for goods and
services that hospitals purchase as
inputs because PPIs better reflect the
actual price changes encountered by
hospitals. For example, we proposed to
use a PPI for prescription drugs, rather
than the Consumer Price Index (CPI) for
prescription drugs, because hospitals
generally purchase drugs directly from a
wholesaler. The PPIs that we proposed
to use measure price changes at the final
stage of production.
• Consumer Price Indexes—
Consumer Price Indexes (CPIs) measure
change in the prices of final goods and
services bought by the typical
consumer. Because they may not
represent the price faced by a producer,
we proposed to use CPIs only if an
appropriate PPI is not available, or if the
expenditures are more like those faced
by retail consumers in general rather
than by purchasers of goods at the
wholesale level. For example, the CPI
for food purchased away from home was
proposed to be used as a proxy for
contracted food services.
• Employment Cost Indexes—
Employment Cost Indexes (ECIs)
measure the rate of change in employee
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wage rates and employer costs for
employee benefits per hour worked.
These indexes are fixed-weight indexes
and strictly measure the change in wage
rates and employee benefits per hour.
Appropriately, they are not affected by
shifts in employment mix.
We evaluated the price proxies using
the criteria of reliability, timeliness,
availability, and relevance. Reliability
indicates that the index is based on
valid statistical methods and has low
sampling variability. Timeliness implies
that the proxy is published regularly,
preferably at least once a quarter.
Availability means that the proxy is
publicly available. Finally, relevance
means that the proxy is applicable and
representative of the cost category
weight to which it is applied. We stated
in the proposed rule that we believe the
proposed PPIs, CPIs, and ECIs selected
meet these criteria.
a. Price Proxies for Each Cost Category
Below we present a detailed
explanation of the price proxies that we
proposed for each cost category weight
and a statement of our finalized
policies. We note that many of the
proxies that we proposed to use for the
2014-based IPPS market basket are the
same as those used for the FY 2010based IPPS market basket.
(1) Wages and Salaries
We proposed to use the ECI for Wages
and Salaries for All Civilian Workers in
Hospitals (BLS series code
CIU1026220000000I) to measure the
price growth of this cost category. This
is the same price proxy used in the FY
2010-based IPPS market basket.
(2) Employee Benefits
We proposed to use the ECI for Total
Benefits for All Civilian Workers in
Hospitals to measure the price growth of
this cost category. This ECI is calculated
using the ECI for Total Compensation
for All Civilian Workers in Hospitals
(BLS series code CIU1016220000000I)
and the relative importance of wages
and salaries within total compensation.
This is the same price proxy used in the
FY 2010-based IPPS market basket.
(3) Fuel: Oil and Gas
We proposed to change the proxy
used for the Fuel: Oil and Gas cost
category. The FY 2010-based IPPS
market basket uses the PPI Industry for
Petroleum Refineries (BLS series code
PCU32411–32411–) to proxy these
expenses.
For the proposed 2014-based IPPS
market basket, we proposed to use a
blend of the PPI Industry for Petroleum
Refineries (BLS series code PCU32411–
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38163
32411–) and the PPI Commodity for
Natural Gas (BLS series code
WPU0531). Our analysis of the BEA
2007 Benchmark I–O data (use table
before redefinitions, purchaser’s value
for NAICS 622000 [Hospitals]) shows
that petroleum refineries expenses
account for approximately 70 percent
and Natural Gas expenses account for
approximately 30 percent of the Fuel:
Oil and Gas expenses. Therefore, we
proposed a blended proxy of 70 percent
of the PPI Industry for Petroleum
Refineries (BLS series code PCU32411–
32411–) and 30 percent of the PPI
Commodity for Natural Gas (BLS series
code WPU0531). We stated in the
proposed rule that we believe that these
two price proxies are the most
technically appropriate indices
available to measure the price growth of
the Fuel: Oil and Gas cost category in
the proposed 2014-based IPPS market
basket.
(4) Electricity
We proposed to use the PPI
Commodity for Commercial Electric
Power (BLS series code WPU0542) to
measure the price growth of this cost
category. This is the same price proxy
used in the FY 2010-based IPPS market
basket.
(5) Water and Sewerage
We proposed to use the CPI for Water
and Sewerage Maintenance (All Urban
Consumers) (BLS series code
CUUR0000SEHG01) to measure the
price growth of this cost category. This
is the same price proxy used in the FY
2010-based IPPS market basket.
(6) Professional Liability Insurance
We proposed to proxy price changes
in hospital professional liability
insurance premiums (PLI) using
percentage changes as estimated by the
CMS Hospital Professional Liability
Index. To generate these estimates, we
collected commercial insurance
premiums for a fixed level of coverage
while holding nonprice factors constant
(such as a change in the level of
coverage). This is the same price proxy
used in the FY 2010-based IPPS market
basket.
(7) Pharmaceuticals
We proposed to use the PPI
Commodity for Pharmaceuticals for
Human Use, Prescription (BLS series
code WPUSI07003) to measure the price
growth of this cost category. This is the
same price proxy used in the FY 2010based IPPS market basket.
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(8) Food: Direct Purchases
(10) Chemicals
We proposed to use the PPI
Commodity for Processed Foods and
Feeds (BLS series code WPU02) to
measure the price growth of this cost
category. This is the same price proxy
used in the FY 2010-based IPPS market
basket.
We proposed to continue to use a
four-part blended index composed of
the PPI Industry for Industrial Gas
Manufacturing (BLS series code
PCU325120325120P), the PPI Industry
for Other Basic Inorganic Chemical
Manufacturing (BLS series code
PCU32518–32518–), the PPI Industry for
Other Basic Organic Chemical
Manufacturing (BLS series code
PCU32519–32519–), and the PPI
Industry for Soap and Cleaning
Compound Manufacturing (BLS series
code PCU32561–32561–). We proposed
to update the blended weights using
2007 Benchmark I–O data, which we
also proposed to use for the proposed
(9) Food: Contract Services
We proposed to use the CPI for Food
Away From Home (All Urban
Consumers) (BLS series code
CUUR0000SEFV) to measure the price
growth of this cost category. This is the
same price proxy used in the FY 2010based IPPS market basket.
2014-based IPPS market basket. The FY
2010-based IPPS market basket included
the same blended chemical price proxy,
but used the 2002 Benchmark I–O data
to determine the weights of the blended
chemical price index. The 2007
Benchmark I–O data have a higher
weight for organic chemical products
and a lower weight for the other
chemical products compared to the
2002 Benchmark I–O data.
Table IV–03 in the proposed rule (82
FR 19920) shows the proposed weights
for each of the four PPIs used to create
the blended index compared to those
used for the FY 2010-based IPPS market
basket. This table is also included below
and reflects the final 2014-based IPPS
weights.
TABLE IV–03—BLENDED CHEMICAL WEIGHTS
FY
2010-based
IPPS weights
(%)
Name
PPI
PPI
PPI
PPI
for
for
for
for
Industrial Gas Manufacturing ..........................................................................................
Other Basic Inorganic Chemical Manufacturing .............................................................
Other Basic Organic Chemical Manufacturing ................................................................
Soap and Cleaning Compound Manufacturing ...............................................................
(11) Blood and Blood Products
We proposed to use the PPI Industry
for Blood and Organ Banks (BLS series
code PCU621991621991) to measure the
price growth of this cost category. This
is the same price proxy used in the FY
2010-based IPPS market basket.
sradovich on DSK3GMQ082PROD with RULES2
(12) Medical Instruments
We proposed to use a blended price
proxy for the Medical Instruments cost
category. The 2007 Benchmark InputOutput data show an approximate 50/50
split between Surgical and Medical
Instruments and Medical and Surgical
Appliances and Supplies for this cost
category. Therefore, we proposed a
blend composed of 50 percent of the PPI
Commodity for Surgical and Medical
Instruments (BLS series code WPU1562)
and 50 percent of the PPI Commodity
for Medical and Surgical Appliances
and Supplies (BLS series code
WPU1563). The FY 2010-based IPPS
market basket used the single, higher
level PPI Commodity for Medical,
Surgical, and Personal Aid Devices (BLS
series code WPU156). We stated in the
proposed rule that we believe that the
proposed price proxy better reflects the
mix of expenses for this cost category as
obtained from the 2007 Benchmark I–O
data.
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(13) Rubber and Plastics
We proposed to use the PPI
Commodity for Rubber and Plastic
Products (BLS series code WPU07) to
measure the price growth of this cost
category. This is the same price proxy
used in the FY 2010-based IPPS market
basket.
(14) Paper and Printing Products
We proposed to use the PPI
Commodity for Converted Paper and
Paperboard Products (BLS series code
WPU0915) to measure the price growth
of this cost category. This is the same
price proxy used in the FY 2010-based
IPPS market basket.
(15) Miscellaneous Products
We proposed to use the PPI
Commodity for Finished Goods Less
Food and Energy (BLS series code
WPUFD4131) to measure the price
growth of this cost category. This is the
same price proxy used in the FY 2010based IPPS market basket.
(16) Professional Fees: Labor-Related
We proposed to use the ECI for Total
Compensation for Private Industry
Workers in Professional and Related
(BLS series code CIU2010000120000I) to
measure the price growth of this
category. It includes occupations such
as legal, accounting, and engineering
services. This is the same price proxy
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35
25
30
10
Proposed
and final
2014-Based
IPPS weights
(%)
NAICS
32
17
45
6
325120
325180
325190
325610
used in the FY 2010-based IPPS market
basket.
(17) Administrative and Facilities
Support Services
We proposed to use the ECI for Total
Compensation for Private Industry
Workers in Office and Administrative
Support (BLS series code
CIU2010000220000I) to measure the
price growth of this category. This is the
same price proxy used in the FY 2010based IPPS market basket.
(18) Installation, Maintenance, and
Repair Services
We proposed to use the ECI for Total
Compensation for All Civilian Workers
in Installation, Maintenance, and Repair
(BLS series code CIU1010000430000I) to
measure the price growth of this new
cost category. Previously these costs
were included in the All Other: LaborRelated Services category and were
proxied by the ECI for Total
Compensation for Private Industry
Workers in Service Occupations (BLS
series code CIU2010000300000I). We
believe that this index better reflects the
price changes of labor associated with
maintenance-related services and its
incorporation represents a technical
improvement to the market basket.
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(19) All Other: Labor-Related Services
We proposed to use the ECI for Total
Compensation for Private Industry
Workers in Service Occupations (BLS
series code CIU2010000300000I) to
measure the price growth of this cost
category. This is the same price proxy
used in the FY 2010-based IPPS market
basket.
(20) Professional Fees: Nonlabor-Related
We proposed to use the ECI for Total
Compensation for Private Industry
Workers in Professional and Related
(BLS series code CIU2010000120000I) to
measure the price growth of this
category. This is the same price proxy
that we proposed to use for the
Professional Fees: Labor-Related cost
category and the same price proxy used
in the FY 2010-based IPPS market
basket.
(21) Financial Services
We proposed to use the ECI for Total
Compensation for Private Industry
Workers in Financial Activities (BLS
series code CIU201520A000000I) to
measure the price growth of this cost
category. This is the same price proxy
used in the FY 2010-based IPPS market
basket.
(22) Telephone Services
We proposed to use the CPI for
Telephone Services (BLS series code
CUUR0000SEED) to measure the price
growth of this cost category. This is the
same price proxy used in the FY 2010based IPPS market basket.
(23) All Other: Nonlabor-Related
Services
We proposed to use the CPI for All
Items Less Food and Energy (BLS series
code CUUR0000SA0L1E) to measure the
price growth of this cost category. We
believe that using the CPI for All Items
Less Food and Energy avoids double
counting of changes in food and energy
prices as they are already captured
elsewhere in the market basket. This is
38165
the same price proxy used in the FY
2010-based IPPS market basket. We did
not receive any specific public
comments on the price proxies we
proposed to use for the 2014-based IPPS
market basket. In this final rule, we are
finalizing the use of these price proxies
as we proposed.
After consideration of the public
comments we received, we are
finalizing the 2014-based IPPS market
basket as proposed.
Table IV–04 in the proposed rule (82
FR 19921) set forth the proposed 2014based IPPS market basket, including the
cost categories and their respective
weights and price proxies. For
comparison purposes, the
corresponding FY 2010-based IPPS
market basket cost weights also were
listed. This table is also included below
and reflects the final 2014-based IPPS
market basket.
TABLE IV–04—PROPOSED AND FINAL 2014-BASED IPPS MARKET BASKET COST CATEGORIES, COST WEIGHTS, AND
PRICE PROXIES COMPARED TO FY 2010-BASED IPPS MARKET BASKET COST WEIGHTS
FY
2010-based
IPPS market
basket cost
weights
Cost categories
Proposed and
final
2014-based
IPPS market
basket cost
weights
60.3
47.2
55.8
43.4
B. Employee Benefits 1 ..........................................
13.1
12.4
2. Utilities ......................................................................
A. Fuel: Oil and Gas ..............................................
2.2
0.4
2.5
1.3
B. Electricity ...........................................................
C. Water and Sewerage ........................................
1.7
0.1
1.0
0.1
3. Professional Liability Insurance ................................
1.3
1.2
4. All Other ....................................................................
A. All Other Products .............................................
(1) Pharmaceuticals .......................................
36.1
19.5
5.4
40.5
17.4
5.9
(2) Food: Direct Purchases ............................
(3) Food: Contract Services ...........................
4.2
0.6
2.3
1.3
(4) Chemicals .................................................
(5) Blood and Blood Products ........................
(6) Medical Instruments ..................................
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1. Compensation ...........................................................
A. Wages and Salaries 1 .......................................
1.5
1.1
2.6
0.9
0.8
2.9
(7) Rubber and Plastics .................................
(8) Paper and Printing Products ....................
1.6
1.5
0.8
1.5
(9) Miscellaneous Products 2 ..........................
1.0
1.1
B. Labor-Related Services ....................................
(1) Professional Fees: Labor-Related ............
9.2
5.5
12.5
6.8
(2) Administrative and Facilities Support
Services.
0.6
1.0
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Proposed and final 2014-based IPPS market basket
price proxies
ECI for Wages and Salaries for All Civilian Workers in
Hospitals.
ECI for Total Benefits for All Civilian Workers in Hospitals.
Blend of PPIs for Petroleum Refineries and Natural
Gas.
PPI Commodity for Commercial Electric Power.
CPI for Water and Sewerage Maintenance (All Urban
Consumers).
CMS Hospital Professional Liability Insurance Premium Index.
PPI Commodity for Pharmaceuticals for Human Use,
Prescription.
PPI Commodity for Processed Foods and Feeds.
CPI for Food Away From Home (All Urban Consumers).
Blend of Chemical PPIs.
PPI Industry for Blood and Organ Banks.
Blend of PPI for Surgical and Medical Instruments
and PPI for Medical and Surgical Appliances and
Supplies.
PPI Commodity for Rubber and Plastic Products.
PPI Commodity for Converted Paper and Paperboard
Products.
PPI Commodity for Finished Goods less Food and
Energy.
ECI for Total Compensation for Private Industry
Workers in Professional and Related.
ECI for Total Compensation for Private Industry
Workers in Office and Administrative Support.
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TABLE IV–04—PROPOSED AND FINAL 2014-BASED IPPS MARKET BASKET COST CATEGORIES, COST WEIGHTS, AND
PRICE PROXIES COMPARED TO FY 2010-BASED IPPS MARKET BASKET COST WEIGHTS—Continued
FY
2010-based
IPPS market
basket cost
weights
Cost categories
Proposed and
final
2014-based
IPPS market
basket cost
weights
(3) Installation, Maintenance and Repair
Services.
(4) All Other: Labor-Related Services ............
2.4
3.1
2.3
C. Nonlabor-Related Services ...............................
(1) Professional Fees: Nonlabor-Related .......
7.4
3.7
10.7
5.1
(2) Financial Services .....................................
1.2
3.0
(3) Telephone Services ..................................
(4) All Other: Nonlabor-Related Services 3 ....
0.6
1.9
0.8
1.7
Total ........................................................
100.0
Proposed and final 2014-based IPPS market basket
price proxies
ECI for Total Compensation for Civilian Workers in Installation, Maintenance, and Repair.
ECI for Total Compensation for Private Industry
Workers in Service Occupations.
100.0
ECI for Total Compensation for Private Industry
Workers in Professional and Related.
ECI for Total Compensation for Private Industry
Workers in Financial Activities.
CPI for Telephone Services.
CPI for All Items less Food and Energy.
Note: The cost weights are calculated using three decimal places. For presentational purposes, we are displaying one decimal and therefore,
the detail may not add to the total due to rounding.
1 Contract labor is distributed to wages and salaries and employee benefits based on the share of total compensation that each category represents.
2 The FY 2010-based IPPS market basket Miscellaneous Products cost category also includes Apparel and Machinery and Equipment cost
categories. These costs were not broken out separately in the 2014-based IPPS market basket.
3 The FY 2010-based IPPS market basket All Other: Nonlabor-Related Services cost category also includes the Postage cost category. These
costs were not broken out separately in the 2014-based IPPS market basket.
Table IV–05 in the proposed rule (82
FR 19922) compares both the historical
and forecasted percent changes in the
FY 2010-based IPPS market basket and
the proposed 2014-based IPPS market
basket. The percent changes in the
proposed rule were based on IHS Global
Inc.’s (IGI’s) fourth quarter 2016 forecast
with historical data through third
quarter 2016. The forecasted growth
rates provided in Table IV–05 below are
based on IGI’s more recent second
quarter 2017 forecast with historical
data through first quarter 2017.
TABLE IV–05—FY 2010-BASED AND PROPOSED AND FINAL 2014-BASED IPPS HOSPITAL OPERATING INDEX PERCENT
CHANGE, FY 2013 THROUGH FY 2020
FY
2010-based
IPPS market
basket percent
change
Fiscal year (FY)
Historical data:
FY 2013 ............................................................................................................................................................
FY 2014 ............................................................................................................................................................
FY 2015 ............................................................................................................................................................
FY 2016 ............................................................................................................................................................
Average FYs 2013–2016 ..................................................................................................................................
Forecast:
FY 2017 ............................................................................................................................................................
FY 2018 ............................................................................................................................................................
FY 2019 ............................................................................................................................................................
FY 2020 ............................................................................................................................................................
Average FYs 2017–2020 ..................................................................................................................................
Proposed and
final
2014-based
IPPS market
basket percent
change
2.0
1.8
1.8
1.8
1.9
2.0
1.8
1.6
1.8
1.8
2.6
2.7
2.9
3.0
2.8
2.7
2.7
2.9
3.1
2.9
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Source: IHS Global Inc., 2nd Quarter 2017 forecast.
The percent change in the proposed
and final 2014-based IPPS market basket
is, on average, 0.1 percentage point
lower than the FY 2010-based IPPS
market basket over the FY 2013 to FY
2016 historical time period and on
average 0.1 percentage point higher over
the FY 2017 to FY 2020 forecasted time
period. The difference in the average
growth rates is mostly a result of the
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lower compensation cost weight and the
revised price proxy for the Fuel, Oil and
Gasoline cost category. As stated in
section IV.B.2. of the preamble of the FY
2018 IPPS/LTCH PPS proposed rule
(and in section IV.B.2.a. of the preamble
of this final rule), for the 2014-based
IPPS market basket, we proposed to
revise the price proxy for the Fuel: Oil
and Gas cost category to be a blend of
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the PPI Industry for Petroleum
Refineries (BLS series code PCU32411–
32411–) and the PPI Commodity for
Natural Gas (BLS series code
WPU0531). The FY 2010-based IPPS
market basket used only the PPI
Industry for Petroleum Refineries.
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3. Labor-Related Share
Under section 1886(d)(3)(E) of the
Act, the Secretary estimates from time to
time the proportion of payments that are
labor-related. Section 1886(d)(3)(E) of
the Act states that the Secretary shall
adjust the proportion, (as estimated by
the Secretary from time to time) of
hospitals’ costs which are attributable to
wages and wage-related costs, of the
DRG prospective payment rates. We
refer to the proportion of hospitals’ costs
that are attributable to wages and wagerelated costs as the ‘‘labor-related
share.’’
The labor-related share is used to
determine the proportion of the national
PPS base payment rate to which the area
wage index is applied. We include a
cost category in the labor-related share
if the costs are labor intensive and vary
with the local labor market. For the FY
2018 IPPS/LTCH PPS proposed rule, we
proposed (82 FR 19923) to include in
the labor-related share the national
average proportion of operating costs
that are attributable to the following cost
categories in the proposed 2014-based
IPPS market basket: Wages and Salaries,
Employee Benefits, Professional Fees:
Labor-Related, Administrative and
Facilities Support Services, Installation,
Maintenance, and Repair Services, and
All Other: Labor-Related Services. As
noted in section IV.B.1.c. of the
preamble of the proposed rule, for the
proposed 2014-based IPPS market
basket, we proposed the creation of a
separate cost category for Installation,
Maintenance, and Repair Services.
These expenses were previously
included in the All Other: Labor-Related
Services cost category in the FY 2010based IPPS market basket, along with
other services, including, but not
limited to, janitorial, waste
management, security, and dry
cleaning/laundry services. Because
these services tend to be labor-intensive
and are mostly performed at the facility
(and, therefore, unlikely to be purchased
in the national market), we continue to
believe that they meet our definition of
labor-related services.
Similar to the FY 2010-based IPPS
market basket, we proposed that the
Professional Fees: Labor-Related cost
category includes expenses associated
with advertising and a proportion of
legal services, accounting and auditing,
engineering, management consulting,
and management of companies and
enterprises expenses. As was done in
the FY 2010-based IPPS market basket
rebasing, we proposed to determine the
proportion of legal, accounting and
auditing, engineering, and management
consulting services that meet our
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definition of labor-related services based
on a survey of hospitals conducted by
CMS in 2008. We notified the public of
our intent to conduct this survey on
December 9, 2005 (70 FR 73250) and did
not receive any public comments in
response to the notice (71 FR 8588).
A discussion of the composition of
the survey and poststratification can be
found in the FY 2010 IPPS/LTCH PPS
final rule (74 FR 43850 through 43856).
Based on the weighted results of the
survey, we determined that hospitals
purchase, on average, the following
portions of contracted professional
services outside of their local labor
market:
• 34 percent of accounting and
auditing services;
• 30 percent of engineering services;
• 33 percent of legal services; and
• 42 percent of management
consulting services.
We proposed to apply each of these
percentages to its respective Benchmark
I–O cost category underlying the
professional fees cost category. This is
the methodology that we used to
separate the FY 2010-based IPPS market
basket professional fees cost category
into Professional Fees: Labor-Related
and Professional Fees: Nonlabor-Related
cost categories. We proposed to use the
same methodology and survey results to
separate the professional fees costs for
the proposed 2014-based IPPS market
basket into Professional Fees: LaborRelated and Professional Fees:
Nonlabor-Related cost categories. We
stated that we believe these survey
results are appropriate to use for the
2014-based IPPS market basket as they
empirically determine the proportion of
contracted professional services
purchased by the industry that is
attributable to local firms and the
proportion that is purchased from
national firms.
In the proposed 2014-based IPPS
market basket, nonmedical professional
fees that were subject to allocation
based on these survey results represent
4.9 percent of total operating costs (and
are limited to those fees related to
Accounting & Auditing, Legal,
Engineering, and Management
Consulting services). Based on our
survey results, we proposed to
apportion 3.1 percentage points of the
4.9 percentage point figure into the
Professional Fees: Labor-Related share
cost category and designate the
remaining 1.8 percentage point into the
Professional Fees: Nonlabor-Related cost
category.
Comment: Several commenters
expressed concern about the
methodology CMS proposed to use to
remove a portion of professional fees
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from the labor-related share. Several
commenters believed the Professional
Fees Survey that was gathered in 2008
is outdated. Some of those commenters
stated that it is inappropriate to use data
gathered in 2008 to adjust payments
made in 2018. In addition, one
commenter stated that the survey was
outdated because hospitals have
reduced staff since 2008 and rely more
on consulting services for obtaining
needed personnel expertise. A few
commenters stated that if CMS’
intention is to update the labor-related
share to account for recent changes, it
should also update these survey data.
A few commenters reiterated how, in
previous comments, they stated that
they did not believe the survey could be
statistically representative because it
was based on 108 hospitals. The
commenters also stated that CMS failed
to share data on the characteristics of
the hospitals that responded to the
survey, selection bias, or survey
methodology. The commenters urged
CMS not to use the results of this survey
to estimate the proportion of
professional fees that are labor-related.
Several commenters urged CMS to
continue to investigate alternative
methodologies for determining the
proportion that is labor-related before
implementing any changes.
Response: We first utilized the
Professional Fees Survey in the FY
2006-based IPPS market basket finalized
in the FY 2010 IPPS/LTCH PPS final
rule (74 FR 43843). In response to our
proposal to use this Professional Fees
Survey in the FY 2010 IPPS/LTCH PPS
proposed rule, commenters had similar
requests for additional information on
the survey, specifically requesting the
characteristics of the hospitals that
responded, possible selection bias, and
survey methodology. For the FY 2010
IPPS/LTCH PPS final rule (74 FR
43853), we provided additional
information on the Professional Fees
Survey methodology, sample selection,
and methodology for deriving the final
weights. The FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19923) made note
of this information and provided the
Federal Register reference for the FY
2010 IPPS/LTCH PPS final rule (74 FR
43850 through 43856). Therefore, we
disagree with the commenters’ claim
that we failed to share characteristics of
the hospitals that responded to the
survey, selection bias, and survey
methodology.
With respect to the comment that the
survey is outdated because hospitals
have reduced staff since 2008 and rely
more on consulting services for
obtaining needed personnel expertise,
the Professional Fees Survey is not used
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to determine the level of hospital
staffing relative to contract staffing. As
stated above, the Medicare cost report
data show that over the FY 2010 to FY
2014 time period, the Wages and
Salaries and Employee Benefit cost
weights decreased while the Laborrelated services cost weight increased.
This supports the commenter’s claim
that hospitals have reduced staff and are
relying more on consulting services, and
is reflected in the hospital market
basket. The Professional Fees Survey is
only used to determine the proportion
of Professional Fees costs that are
purchased within a hospital’s local
labor market, a proportion that we
believe is unlikely to change
significantly over time.
With respect to the commenters’
concern regarding alternative
methodologies, we are not aware of any
other currently available data source
regarding the proportion of Professional
Fees that are labor-related. Therefore,
the only possible alternatives to the
current methods would be to assume
that 100 percent of the accounting and
auditing services, engineering services,
legal services, and management
consulting services are purchased in the
national market or assume that 100
percent are purchased in the local labor
market. Neither of these approaches
seems reasonable, given that the 2008
Professional Fees Survey results in the
assumption that 63 percent of those
services are purchased locally (in
aggregate) and the remaining 37 percent
are purchased nationally. As stated in
the FY 2018 IPPS/LTCH PPS proposed
rule, we continue to believe the survey
results are appropriate to use for the
2014-based IPPS market basket as they
empirically determine the proportion of
contracted professional services
purchased by the industry that is
attributable to local firms and the
proportion that is purchased from
national firms. We will continue to
explore options for updating the
Professional Fees Survey to reflect more
recent data for incorporation into future
market basket rebasing and labor-related
share determinations. If conducted, we
encourage providers to respond to the
survey, which would be announced in
the Federal Register as done previously.
After consideration of the public
comments we received, we are
finalizing the use of the Professional
Fees Survey as proposed.
In addition to the professional
services listed earlier, we also proposed
to classify a proportion of the home
office/related organization contract
labor expenses (as this cost category has
been relabeled, as discussed earlier in
section IV.B.1.a. of the preamble of this
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final rule, and is referred to throughout
this discussion) into the Professional
Fees: Labor-Related cost category as was
done in the previous rebasing. For the
FY 2010-based IPPS market basket, we
obtained home office/related
organization contract labor expenses
from the Benchmark I–O data for the
NAICS 55 industry (Management of
Companies and Enterprises). As stated
in section IV.B.1.a. of the preamble to
the FY 2018 IPPS/LTCH PPS proposed
rule, for the 2014-based IPPS market
basket, we proposed to obtain these data
from the Medicare cost reports. We
believe that many of the home office/
related organization contract labor
expenses are labor-intensive and vary
with the local labor market. However,
data indicate that not all IPPS hospitals
with home offices have home offices
located in their local labor market.
Therefore, we proposed to include in
the labor-related share only a proportion
of the home office/related organization
contract labor expenses based on the
methodology described below.
For the FY 2010-based IPPS market
basket, we used data primarily from the
Medicare cost reports and a CMS
database of Home Office Medicare
Records (HOMER) (a database that
provides city and state information
(addresses) for home offices). We
determined the proportion of costs that
should be allocated to the labor-related
share based on the percent of hospital
home office/related organization
contract labor compensation as reported
in Worksheet S–3, Part II. Using this
methodology, we determined that 62
percent of hospitals’ home office/related
organization contract labor
compensation costs were for home
offices located in their respective local
labor markets (defined as the same
Metropolitan Statistical Area (MSA)).
Therefore, we classified 62 percent of
these costs into the Professional Fees:
Labor-Related Services cost category
and the remaining 38 percent into the
Professional Fees: Nonlabor-Related
Services cost category for the FY 2010based IPPS market basket. For a detailed
discussion of this analysis, we refer
readers to the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50601).
For the proposed 2014-based IPPS
market basket, we conducted a similar
analysis of home office data. For
consistency, we believe that it is
important for our analysis on home
office data to be conducted on the same
IPPS hospitals used to derive the
proposed 2014-based IPPS market
basket cost weights. The Medicare cost
report requires a hospital to report
information regarding their home office
provider. Approximately 64 percent of
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IPPS hospitals reported some type of
home office information on their
Medicare cost report for 2014 (for
example, city, State, and zip code).
Using the data reported on the Medicare
cost report, we compared the location of
the hospital with the location of the
hospital’s home office. We then
proposed to determine the proportion of
costs that should be allocated to the
labor-related share based on the percent
of total hospital home office/related
organization contract labor
compensation costs (as reported in
Worksheet S–3, Part II) for those
hospitals that had home offices located
in their respective local labor markets—
defined as being in the same MSA. We
determined a hospital’s and home
office’s MSAs using their zip code
information from the Medicare cost
report. Using this methodology, we
determined that 60 percent of hospitals’
home office/related organization
contract labor compensation costs were
for home offices located in their
respective local labor markets.
Therefore, we proposed to allocate 60
percent of home office expenses to the
labor-related share.
In the proposed 2014-based IPPS
market basket, home office/related
organization contract labor expenses
that were subject to allocation based on
the home office allocation methodology
represent 4.2 percent of total operating
costs. Based on the results of the home
office analysis discussed earlier, we
proposed to apportion 2.5 percentage
points of the 4.2 percentage points
figure into the Professional Fees: LaborRelated cost category and designate the
remaining 1.7 percentage points into the
Professional Fees: Nonlabor-Related cost
category. In summary, based on the two
allocations mentioned earlier, we
apportioned 5.6 percentage points of the
professional fees and home office/
related organization contract labor cost
weights into the Professional Fees:
Labor-Related cost category. This
amount was added to the portion of
professional fees that we already
identified as labor-related using the I–O
data such as contracted advertising and
marketing costs (approximately 1.2
percentage point of total operating costs)
resulting in a Professional Fees: LaborRelated cost weight of 6.8 percent.
The FY 2018 IPPS/LTCH PPS
proposed rule included Table IV–06 (82
FR 19924), which compared the
proposed 2014-based labor-related share
and the FY 2010-based labor-related
share. As discussed in section IV.B.1.b.
of the preamble of the FY 2018 IPPS/
LTCH PPS proposed rule, the Wages
and Salaries and Employee Benefits cost
weights reflect contract labor costs. This
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38169
table is also included below and reflects
the final 2014-based labor-related share.
TABLE IV–06—COMPARISON OF THE FY 2010-BASED LABOR-RELATED SHARE AND THE PROPOSED AND FINAL 2014BASED LABOR-RELATED SHARE
FY 2010based IPPS
market basket
cost weights
Proposed and
final 2014based IPPS
market basket
cost weights
Wages and Salaries ................................................................................................................................................
Employee Benefits ...................................................................................................................................................
Professional Fees: Labor-Related ...........................................................................................................................
Administrative and Facilities Support Services .......................................................................................................
Installation, Maintenance, and Repair Services 1 ....................................................................................................
All Other: Labor-Related Services ...........................................................................................................................
47.2
13.1
5.5
0.6
........................
3.1
43.4
12.4
6.8
1.0
2.4
2.3
Total Labor-Related Share ...............................................................................................................................
69.6
68.3
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Note: Detail may not add to total due to rounding.
1 Installation, Maintenance, and Repair Services costs were previously included in the All Other: Labor-Related Services cost category of the
FY 2010-based IPPS market basket.
Using the cost category weights from
the proposed 2014-based IPPS market
basket, we calculated a labor-related
share of 68.3 percent, approximately 1.3
percentage points lower than the current
labor-related share of 69.6 percent.
Therefore, we proposed to use a laborrelated share of 68.3 percent for
discharges occurring on or after October
1, 2017. We continue to believe, as we
have stated in the past, that these
operating cost categories are related to,
influenced by, or vary with the local
markets. Therefore, our definition of the
labor-related share continues to be
consistent with section 1886(d)(3) of the
Act. We note that section 403 of Public
Law 108–173 amended sections
1886(d)(3)(E) and 1886(d)(9)(C)(iv) of
the Act to provide that the Secretary
must employ 62 percent as the laborrelated share unless 62 percent would
result in lower payments to a hospital
than would otherwise be made.
Comment: Several commenters stated
that they were unable to replicate or
verify the proposed labor-related share.
One commenter stated that it is unclear
how we determined that a reduction to
the labor-related share from 69.6 percent
to 68.3 percent was warranted since we
did not release the base calculations.
Several commenters further stated that
not having access to this information
severely limited their ability to
comment sufficiently on this issue. The
commenters requested that CMS
provide all information necessary to
replicate the agency’s calculation of the
labor-related share, including, but not
limited to, greater clarity of data sources
used; case counts at different points,
such as number of providers after
trimming; provider level data
illustrating what information was used
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in the calculation; and the kinds of
checks CMS made during calculations
to assess and ensure accuracy. The
commenters requested that this
information be provided in advance of
publication of the final rule.
Response: We disagree with the
commenters’ claim that we did not
provide sufficiently detailed
information regarding our calculations
of the labor-related share. As stated in
the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 19923), the labor-related
share is derived using the cost weights
of the proposed 2014-based IPPS market
basket. The FY 2018 IPPS/LTCH PPS
proposed rule included a detailed
description of the data sources and
methodology used to derive all of the
market basket cost weights.
Specifically, section IV.B.1.a. of the
preamble of the proposed rule (82 FR
19916) provided the detailed Medicare
cost report methodology used to
calculate the major cost weights of the
proposed 2014-based IPPS market
basket (including the specific Medicare
cost report worksheets and trimming
methodologies). Section IV.B.1.c. of the
preamble of the proposed rule (82 FR
19918) provided the specific
methodology and data source used to
derive the remaining detailed cost
weights. Section IV.B.3. of the preamble
of proposed rule (82 FR 19923) provided
information regarding how the
Professional Fees cost category was
divided between Labor-related and
Nonlabor-related services. The data
sources used to produce the market
basket cost weights are publicly
available. In addition, contact
information for CMS staff was provided
in the proposed rule to provide the
opportunity to ask any specific
questions regarding the methodology.
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We note that we provided a similar
detailed description of the
methodologies used to derive the 2012based IPF and 2012-based IRF market
baskets in the FY 2016 IPF PPS
proposed rule and the FY 2016 IRF PPS
proposed rule, respectively. In those
instances, stakeholders were able to use
the detailed description in the proposed
rules to closely replicate the proposed
cost weights and suggest methodological
changes that were considered during
final rulemaking.
Therefore, for the reasons stated
earlier, we believe that there was
sufficient detail provided in the FY
2018 IPPS/LTCH PPS proposed rule to
describe the proposed methodology for
deriving the market basket cost weights
and labor-related share.
Comment: Several commenters
opposed the decrease in the laborrelated share from 69.6 percent to 68.3
percent, stating that reducing the laborrelated share further undervalues the
very real differences in hospital-specific
costs. These commenters stated that
such a change to the labor-related share
would specifically harm hospitals in
higher-cost urban areas that already
experience some of the highest labor
costs in the country. Furthermore, they
stated that they opposed reducing the
sensitivity of the prospective payment
system to the different circumstances of
individual hospitals through the
introduction of an approach that would
foster the development of a
reimbursement system that trends
toward the mean despite unquestionable
differences in hospital costs. The
commenters urged CMS to withdraw the
proposal to reduce the labor-related
share for FY 2018.
Response: We disagree with the
commenters’ rationale for the request to
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withdraw the proposal to reduce the
labor-related share. The methodology
used to derive the proposed laborrelated share of 68.3 percent based on
the proposed 2014-based market basket
is the same methodology used to
determine the current labor-related
share of 69.6 percent using the FY 2010based IPPS market basket. The decrease
in the labor-related share of 1.3
percentage points stems from a decrease
in the Wages and Salaries and Employee
Benefit cost weights (which were
derived from the Medicare cost reports),
as discussed in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19918),
accounting for a decrease of 4.5
percentage points. This is partially
offset by an increase in the Labor-related
services cost weight, accounting for an
increase of 3.2 percentage points. As
stated in the FY 2018 IPPS/LTCH PPS
proposed rule, the decrease in the
Wages and Salaries cost weight from FY
2010 to FY 2014 occurred across most
cost centers and in aggregate for the
General Service (overhead), Inpatient
Routine Service, Ancillary Service, and
Outpatient Service cost centers.
Furthermore, the other components of
the IPPS (including, but not limited to,
MS–DRG, wage index, disproportionate
share hospital adjustment, and indirect
medical education adjustment) account
for variations in costs among individual
hospitals. After consideration of the
public comments we received, we are
finalizing our methodology for
calculating the labor-related share of
68.3 percent using the 2014-based IPPS
market basket cost weights.
C. Market Basket for Certain Hospitals
Presently Excluded From the IPPS
In the FY 2010 IPPS/RY 2010 LTCH
PPS final rule (74 FR 43857), we
adopted the use of the FY 2006-based
IPPS operating market basket percentage
increase to update the target amounts
for children’s hospitals, PPS-excluded
cancer hospitals and religious
nonmedical health care institutions
(RNHCIs). Children’s hospitals and PPSexcluded cancer hospitals and RNHCIs
are still reimbursed solely under the
reasonable cost-based system, subject to
the rate-of-increase limits. Under these
limits, an annual target amount
(expressed in terms of the inpatient
operating cost per discharge) is set for
each hospital based on the hospital’s
own historical cost experience trended
forward by the applicable rate-ofincrease percentages.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50603), under the broad
authority in sections 1886(b)(3)(A) and
(B), 1886(b)(3)(E), and 1871 of the Act
and section 4454 of the BBA, consistent
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with our use of the IPPS operating
market basket percentage increase to
update target amounts, we adopted the
use of the FY 2010-based IPPS operating
market basket percentage increase to
update the target amounts for children’s
hospitals, PPS-excluded cancer
hospitals, and RNHCIs that are paid on
the basis of reasonable cost subject to
the rate-of-increase limits under
§ 413.40. In addition, as discussed in the
FY 2015 IPPS/LTCH PPS final rule (79
FR 50156 through 50157), consistent
with §§ 412.23(g), 413.40(a)(2)(ii)(A),
and 413.40(c)(3)(viii), we also have used
the percentage increase in the FY 2010based IPPS operating market basket to
update the target amounts for short–
term acute care hospitals located
outside the 50 States, the District of
Columbia, and Puerto Rico (that is,
hospitals located in the U.S. Virgin
Islands, Guam, the Northern Mariana
Islands, and American Samoa). These
hospitals also are paid on the basis of
reasonable cost, subject to the rate-ofincrease limits under § 413.40.
Due to the small number of children’s
and cancer hospitals and RNHCIs and
hospitals located outside the 50 States,
the District of Columbia, and Puerto
Rico and because these facilities provide
limited Medicare cost report data, we
are unable to create a separate market
basket specifically for these facilities.
Due to the limited cost report data
available, we stated that we believe that
the proposed 2014-based IPPS operating
market basket most closely represents
the cost structure of children’s
hospitals, PPS-excluded cancer
hospitals, RNHCIs, and hospitals
located outside the 50 States, the
District of Columbia, and Puerto Rico.
We believe this is appropriate as the
IPPS operating market basket would
reflect the input price growth for
providing inpatient hospital services
(similar to the services provided by the
above excluded facilities) based on the
specific mix of goods and services
required. Therefore, we proposed to use
the 2014-based IPPS market basket
percentage increase to update the target
amounts for children’s hospitals, PPSexcluded cancer hospitals, RNHCIs, and
hospitals located outside the 50 States,
the District of Columbia, and Puerto
Rico that are paid on the basis of
reasonable cost subject to the rate-ofincrease limits under § 413.40. We
stated that we believe it is the best
available measure of the average
increase in the prices of the goods and
services purchased by children’s
hospitals, the cancer hospitals, RNHCIs,
and hospitals located outside the 50
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Fmt 4701
Sfmt 4700
States, the District of Columbia, and
Puerto Rico in order to provide care.
We did not receive any public
comments on our proposal. Therefore,
we are adopting the use of the 2014based IPPS market basket percentage
increase to update the target amounts
for children’s hospitals, PPS-excluded
cancer hospitals, RNHCIs, and hospitals
located outside the 50 States, the
District of Columbia, and Puerto Rico
that are paid on the basis of reasonable
cost.
D. Rebasing and Revising the Capital
Input Price Index (CIPI)
The CIPI was originally described in
the FY 1993 IPPS final rule (57 FR
40016). There have been subsequent
discussions of the CIPI presented in the
IPPS proposed and final rules. The FY
2014 IPPS/LTCH PPS final rule (78 FR
50603 through 50607) described the
most recent rebasing and revision of the
CIPI to a FY 2010 base year, which
reflected the capital cost structure of
IPPS hospitals available at that time.
For the FY 2018 IPPS update, in the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 19925 through 19929), we
proposed to rebase and revise the CIPI
to a 2014 base year to reflect a more
current structure of capital costs for
IPPS hospitals. This proposed 2014based CIPI was derived using 2014 cost
reports for IPPS hospitals, which
includes providers whose cost reporting
period began on or after October 1,
2013, and prior to September 30, 2014.
While we proposed and finalized the
title of the current CIPI in the FY 2014
IPPS/LTCH proposed and final rules as
‘‘FY 2010-based CIPI’’, for the proposed
CIPI, we proposed to simply refer to the
proposed CIPI as ‘‘2014-based CIPI’’
(dropping the reference to FY). As
discussed in section IV.B. of the
preamble of the proposed rule, for the
2014-based IPPS operating market
basket, we proposed this change in
naming convention for the market
basket because the base year cost weight
data for the proposed market basket do
not reflect only fiscal year data.
Similarly, the proposed 2014-based CIPI
uses Medicare cost report data and other
government data that reflect 2014 fiscal
year, 2014 calendar year, and 2014 State
fiscal year expenses to determine the
base year cost weights and vintage
weights. Given that it is based on a mix
of classifications of 2014 data, we
proposed to refer to the CIPI as ‘‘2014based’’ instead of ‘‘FY 2014-based’’ or
‘‘CY 2014-based’’. However, the
methods and data used to derive each of
these CIPI are similar. As with the FY
2010-based index, we proposed to
develop two sets of weights to derive
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the proposed 2014-based CIPI. The first
set of weights identifies the proportion
of hospital capital expenditures
attributable to each expenditure
category, while the second set of
weights is a set of relative vintage
weights for depreciation and interest.
The set of vintage weights is used to
identify the proportion of capital
expenditures within a cost category that
is attributable to each year over the
useful life of the capital assets in that
category. A more thorough discussion of
vintage weights is provided later in this
section.
Using 2014 Medicare cost reports, we
were able to group capital costs into the
following categories: Depreciation,
Interest, Lease, and Other. For each of
these categories, we proposed to
determine what proportion of total
capital costs the category represents
using the data reported by IPPS
hospitals on Worksheet A–7, which is
the same methodology used for the FY
2010-based CIPI. As shown in the left
column of Table IV–07 in the proposed
rule (82 FR 19926), in 2014,
depreciation expenses accounted for
66.4 percent of total capital costs,
interest expenses accounted for 16.3
percent, leasing expenses accounted for
11.8 percent, and other capital expenses
accounted for 5.5 percent. This table is
also listed below.
We also proposed to allocate lease
costs across each of the remaining
capital cost categories as was done in
the FY 2010-based CIPI. This resulted in
three primary capital cost categories in
the proposed 2014-based CIPI:
Depreciation, Interest, and Other. Lease
costs are unique in that they are not
broken out as a separate cost category in
the proposed 2014-based CIPI. Rather,
we proposed to proportionally
distribute leasing costs among the cost
categories of Depreciation, Interest, and
Other, reflecting the assumption that the
underlying cost structure of leases is
similar to that of capital costs in general.
As was done for the FY 2010-based CIPI,
we proposed to assume that 10 percent
of the lease costs as a proportion of total
capital costs represents overhead and to
assign those costs to the Other capital
cost category accordingly. Therefore, we
assumed that approximately 1.2 percent
(11.8 percent x 0.1) of total capital costs
represent lease costs attributable to
overhead, and we proposed to add this
1.2 percent to the 5.5 percent Other cost
38171
category weight. We then proposed to
distribute the remaining lease costs
(10.6 percent, or 11.8 percent ¥ 1.2
percent) proportionally across the three
cost categories (Depreciation, Interest,
and Other) based on the proportion that
these categories comprise of the sum of
the Depreciation, Interest, and Other
cost categories (excluding lease
expenses). For example, the Other cost
category represented 6.3 percent of all
three cost categories (Depreciation,
Interest, and Other) prior to any lease
expenses being allocated. This 6.3
percent is applied to the 10.6 percent of
remaining lease expenses so that
another 0.7 percent of lease expenses as
a percent of total capital costs is
allocated to the Other cost category.
Therefore, the resulting proposed Other
cost weight is 7.4 percent (5.5 percent
+ 1.2 percent + 0.7 percent). This is the
same methodology used for the FY
2010-based CIPI. The resulting cost
weights of the proposed allocation of
lease expenses were shown in the right
column of Table IV–07 in the proposed
rule (82 FR 19926). This table is also
included below and reflects the final
allocation of lease expenses.
TABLE IV–07—PROPOSED AND FINAL ALLOCATION OF LEASE EXPENSES FOR THE PROPOSED AND FINAL 2014-BASED
CIPI
Proposed and
final cost
shares obtained from
medicare cost
reports
(percent of
total capital
costs)
Cost categories
sradovich on DSK3GMQ082PROD with RULES2
Depreciation .............................................................................................................................................................
Interest .....................................................................................................................................................................
Lease .......................................................................................................................................................................
Other ........................................................................................................................................................................
Finally, we proposed to further divide
the Depreciation and Interest cost
categories. We proposed to separate the
Depreciation cost category into the
following two categories: (1) Building
and Fixed Equipment and (2) Movable
Equipment. We also proposed to
separate the Interest cost category into
the following two categories: (1)
Government/Nonprofit; and (2) Forprofit.
To disaggregate the depreciation cost
weight, we needed to determine the
percent of total depreciation costs for
IPPS hospitals (after the allocation of
lease costs) that are attributable to
building and fixed equipment, which
we hereafter refer to as the ‘‘fixed
percentage.’’ Based on Worksheet A–7
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data from the 2014 IPPS Medicare cost
reports, we have determined that
depreciation costs for building and fixed
equipment account for approximately
49 percent of total depreciation costs,
while depreciation costs for movable
equipment account for approximately
51 percent of total depreciation costs.
As was done for the FY 2010-based CIPI,
we proposed to apply this fixed
percentage to the depreciation cost
weight (after leasing costs are included)
to derive a Depreciation cost weight
attributable to Building and Fixed
Equipment and a Depreciation cost
weight attributable to Movable
Equipment.
To disaggregate the interest cost
weight, we needed to determine the
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Fmt 4701
Sfmt 4700
Proposed and
final cost
shares after
allocation of
lease expenses
(percent of
total capital
costs)
66.4
16.3
11.8
5.5
74.4
18.2
........................
7.4
percent of total interest costs for IPPS
hospitals that are attributable to
government and nonprofit facilities,
which we hereafter refer to as the
‘‘nonprofit percentage,’’ because interest
price pressures tend to differ between
nonprofit and for-profit facilities. We
proposed to use interest costs data from
Worksheet A–7 of the 2014 Medicare
cost reports for IPPS hospitals, which is
the same methodology used for the FY
2010-based CIPI. The nonprofit
percentage determined using this
method is 86 percent. Table IV–08 in
the proposed rule (82 FR 19927)
provides a comparison of the FY 2010based CIPI cost weights and the
proposed 2014-based CIPI cost weights.
This table is also included below and
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Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
reflects the final 2014-based CIPI cost
weights.
After the capital cost category weights
were computed, it was necessary to
select appropriate price proxies to
reflect the rate-of-increase for each
expenditure category. We proposed to
apply the same price proxies as were
used in the FY 2010-based CIPI, which
are listed below and provided in Table
IV–08 in the proposed rule. We also
proposed to continue to vintage weight
the capital price proxies for
Depreciation and Interest to capture the
long-term consumption of capital. This
vintage weighting method is the same
method that was used for the FY 2010based CIPI and is described below.
We proposed to continue to proxy the
Depreciation—Building and Fixed
Equipment cost category by the BEA
Chained Price Index for Private Fixed
Investment in Structures,
Nonresidential, Hospitals and Special
Care (BEA Table 5.4.4. Price Indexes for
Private Fixed Investment in Structures
by Type). As stated in the FY 2010
IPPS/LTCH PPS final rule (74 FR
43860), for the FY 2006-based CIPI we
finalized the use of this index to
measure the price growth of this cost
category. This BEA index is intended to
capture prices for construction of
facilities such as hospitals, nursing
homes, hospices, and rehabilitation
centers. For the Depreciation—Movable
Equipment cost category, we proposed
to continue to measure the price growth
using the PPI Commodity for Machinery
and Equipment (BLS series code
WPU11). This price index reflects price
inflation associated with a variety of
machinery and equipment that would
be utilized by hospitals including but
not limited to communication
equipment, computers, and medical
equipment. For the Nonprofit Interest
and For-profit Interest cost categories,
we proposed to continue to measure the
price growth using the average yield on
domestic municipal bonds (Bond Buyer
20-bond index) and the average yield on
Moody’s Aaa bonds (Federal Reserve),
respectively. As stated above, we
proposed two proxies because interest
price pressures tend to differ between
nonprofit and for-profit facilities.
For the Other capital cost category
(including insurances, taxes, and other
capital-related costs), we proposed to
continue to measure the price growth
using the CPI for Rent of Primary
Residence (All Urban Consumers) (BLS
series code CUUS0000SEHA), which
would reflect the price growth of these
costs. We believe that these price
proxies continue to be the most
appropriate proxies for IPPS capital
costs that meet our selection criteria of
relevance, timeliness, availability, and
reliability.
TABLE IV–08—PROPOSED AND FINAL 2014-BASED CIPI COST WEIGHTS AND PRICE PROXIES WITH FY 2010-BASED CIPI
COST WEIGHTS INCLUDED FOR COMPARISON
FY 2010 cost
weights
Cost categories
Proposed and
final 2014 cost
weights
Total ............................................................................
Depreciation .........................................................
Building and Fixed Equipment ......................
100.0
74.0
36.2
100.0
74.4
36.7
Movable Equipment ......................................
Interest .................................................................
Government/Nonprofit ...................................
37.9
19.2
17.1
37.7
18.2
15.7
For-Profit .......................................................
Other ....................................................................
2.1
6.8
2.5
7.4
Proposed and final price proxy
BEA’s Chained Price Index for Private Fixed Investment in Structures, Nonresidential, Hospitals and
Special Care.
PPI Commodity for Machinery and Equipment.
Average Yield on Domestic Municipal Bonds (Bond
Buyer 20-Bond Index).
Average Yield on Moody’s Aaa Bonds.
CPI for Rent of Primary Residence.
sradovich on DSK3GMQ082PROD with RULES2
Note: The cost weights are calculated using three decimal places. For presentational purposes, we are displaying one decimal and therefore,
the detail may not add to the total due to rounding.
Because capital is acquired and paid
for over time, capital expenses in any
given year are determined by both past
and present purchases of physical and
financial capital. We stated in the
proposed rule that the proposed vintageweighted 2014-based CIPI is intended to
capture the long-term consumption of
capital, using vintage weights for
depreciation (physical capital) and
interest (financial capital). These
vintage weights reflect the proportion of
capital purchases attributable to each
year of the expected life of building and
fixed equipment, movable equipment,
and interest. We proposed to use vintage
weights to compute vintage-weighted
price changes associated with
depreciation and interest expenses.
Vintage weights are an integral part of
the CIPI. Capital costs are inherently
complicated and are determined by
complex capital purchasing decisions,
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over time, based on such factors as
interest rates and debt financing. In
addition, capital is depreciated over
time instead of being consumed in the
same period it is purchased. By
accounting for the vintage nature of
capital, we are able to provide an
accurate and stable annual measure of
price changes. Annual nonvintage price
changes for capital are unstable due to
the volatility of interest rate changes
and, therefore, do not reflect the actual
annual price changes for IPPS capital
costs. The CIPI reflects the underlying
stability of the capital acquisition
process.
To calculate the vintage weights for
depreciation and interest expenses, we
first needed a time series of capital
purchases for building and fixed
equipment and movable equipment. We
found no single source that provides an
appropriate time series of capital
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Fmt 4701
Sfmt 4700
purchases by hospitals for all of the
above components of capital purchases.
The early Medicare cost reports did not
have sufficient capital data to meet this
need. Data we obtained from the
American Hospital Association (AHA)
did not include annual capital
purchases. However, we were able to
obtain data on total expenses back to
1963 from the AHA. Consequently, we
proposed to use data from the AHA
Panel Survey and the AHA Annual
Survey to obtain a time series of total
expenses for hospitals. We then
proposed to use data from the AHA
Panel Survey supplemented with the
ratio of depreciation to total hospital
expenses obtained from the Medicare
cost reports to derive a trend of annual
depreciation expenses for 1963 through
2014. We proposed to separate these
depreciation expenses into annual
amounts of building and fixed
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Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
equipment depreciation and movable
equipment depreciation as determined
earlier. From these annual depreciation
amounts, we derived annual end-of-year
book values for building and fixed
equipment and movable equipment
using the expected life for each type of
asset category. We used the AHA data
and similar methodology to derive the
FY 2010-based IPPS capital market
basket (78 FR 50604).
To continue to calculate the vintage
weights for depreciation and interest
expenses, we also needed to account for
the expected lives for building and fixed
equipment, movable equipment, and
interest for the proposed 2014-based
CIPI. We proposed to calculate the
expected lives using Medicare cost
report data. The expected life of any
asset can be determined by dividing the
value of the asset (excluding fully
depreciated assets) by its current year
depreciation amount. This calculation
yields the estimated expected life of an
asset if the rates of depreciation were to
continue at current year levels,
assuming straight-line depreciation.
Using this proposed method, we
determined the average expected life of
building and fixed equipment to be
equal to 27 years, and the average
expected life of movable equipment to
be equal to 12 years. For the expected
life of interest, we believe that vintage
weights for interest should represent the
average expected life of building and
fixed equipment because, based on
previous research described in the FY
1997 IPPS final rule (61 FR 46198), the
expected life of hospital debt
instruments and the expected life of
buildings and fixed equipment are
similar. We note that the FY 2010-based
CIPI was based on an expected average
life of building and fixed equipment of
26 years and an expected average life of
movable equipment of 12 years.
Multiplying these expected lives by the
annual depreciation amounts results in
annual year-end asset costs for building
and fixed equipment and movable
equipment. We then calculated a time
series, beginning in 1964, of annual
capital purchases by subtracting the
previous year’s asset costs from the
current year’s asset costs.
For the building and fixed equipment
and movable equipment vintage
weights, we proposed to use the real
annual capital-related purchase
amounts for each asset type to capture
the actual amount of the physical
acquisition, net of the effect of price
inflation.
These real annual capital-related
purchase amounts are produced by
deflating the nominal annual purchase
amount by the associated price proxy as
described in the proposed rule, and this
final rule. For the interest vintage
weights, we proposed to use the total
nominal annual capital-related purchase
amounts to capture the value of the debt
instrument (including, but not limited
to, mortgages and bonds). Using these
capital purchases time series specific to
each asset type, we proposed to
calculate the vintage weights for
building and fixed equipment, for
movable equipment, and for interest.
The vintage weights for each asset
type are deemed to represent the
average purchase pattern of the asset
over its expected life (in the case of
building and fixed equipment and
interest, 27 years, and in the case of
movable equipment, 12 years). For each
asset type, we proposed to use the time
series of annual capital purchases
amounts available from 2014 back to
1964. These data allow us to derive
twenty-five 27-year periods of capital
purchases for building and fixed
equipment and interest, and forty 12year periods of capital purchases for
movable equipment. For each 27-year
period for building and fixed equipment
and interest, or 12-year period for
movable equipment, we proposed to
calculate annual vintage weights by
dividing the capital-related purchase
amount in any given year by the total
amount of purchases over the entire 27year or 12-year period. This calculation
was done for each year in the 27-year or
12-year period and for each of the
periods for which we have data. We
then calculated the average vintage
weight for a given year of the expected
life by taking the average of these
vintage weights across the multiple
periods of data.
The vintage weights for the proposed
2014-based CIPI and the FY 2010-based
CIPI were presented in Table IV–09 in
the proposed rule (82 FR 19928). This
table is also included below and reflects
the final 2014-based CIPI.
TABLE IV–09—PROPOSED AND FINAL 2014–BASED CIPI AND FY 2010–BASED CIPI VINTAGE WEIGHTS
Building and fixed equipment
Proposed and
final 2014based 27
years
sradovich on DSK3GMQ082PROD with RULES2
Year 1
1 ...............................................................
2 ...............................................................
3 ...............................................................
4 ...............................................................
5 ...............................................................
6 ...............................................................
7 ...............................................................
8 ...............................................................
9 ...............................................................
10 .............................................................
11 .............................................................
12 .............................................................
13 .............................................................
14 .............................................................
15 .............................................................
16 .............................................................
17 .............................................................
18 .............................................................
19 .............................................................
20 .............................................................
21 .............................................................
22 .............................................................
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0.024
0.025
0.027
0.028
0.030
0.031
0.033
0.034
0.035
0.036
0.037
0.039
0.040
0.040
0.039
0.039
0.040
0.042
0.042
0.042
0.043
0.043
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Frm 00185
Interest
Proposed and
final 2014based 12
years
FY 2010based 26
years
0.023
0.024
0.026
0.028
0.029
0.031
0.032
0.034
0.036
0.038
0.040
0.041
0.042
0.042
0.043
0.044
0.044
0.044
0.044
0.044
0.045
0.045
Fmt 4701
Movable equipment
FY 2010based 12
years
0.062
0.064
0.070
0.074
0.078
0.082
0.086
0.088
0.092
0.097
0.102
0.105
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
0.064
0.068
0.071
0.073
0.076
0.078
0.084
0.088
0.092
0.098
0.103
0.106
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
Sfmt 4700
E:\FR\FM\14AUR2.SGM
14AUR2
Proposed and
final 2014based 27
years
0.012
0.014
0.015
0.017
0.019
0.021
0.023
0.025
0.027
0.029
0.030
0.033
0.035
0.037
0.037
0.040
0.041
0.045
0.048
0.050
0.052
0.054
FY 2010based 26
years
0.012
0.013
0.015
0.017
0.018
0.021
0.023
0.025
0.028
0.030
0.033
0.036
0.038
0.040
0.043
0.045
0.047
0.048
0.051
0.052
0.056
0.057
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TABLE IV–09—PROPOSED AND FINAL 2014–BASED CIPI AND FY 2010–BASED CIPI VINTAGE WEIGHTS—Continued
Building and fixed equipment
Proposed and
final 2014based 27
years
Year 1
23
24
25
26
27
Movable equipment
Interest
FY 2010based 26
years
Proposed and
final 2014based 12
years
FY 2010based 12
years
Proposed and
final 2014based 27
years
FY 2010based 26
years
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
0.042
0.042
0.043
0.043
0.043
0.045
0.046
0.045
0.045
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
0.055
0.057
0.059
0.061
0.062
0.060
0.062
0.064
0.066
........................
Total ..................................................
1.000
1.000
1.000
1.000
1.000
1.000
Note: Numbers may not add to total due to rounding.
1 Vintage weight in the last year (for example, year 27 for the 2014-based CIPI) is applied to the most recent data point and prior vintage
weights are applied going back in time. For example, year 27 vintage weight would be applied to the 2018q3 fixed price proxy level, year 26 vintage weight would be applied to the 2017q3 fixed price proxy level, and so forth.
The process of creating vintageweighted price proxies requires
applying the vintage weights to the
price proxy index where the last applied
vintage weight in Table IV–09 is applied
to the most recent data point. We have
provided on the CMS Web site an
example of how the vintage weighting
price proxies are calculated, using
example vintage weights and example
price indices. The example can be found
under the following CMS Web site link:
https://www.cms.gov/Research-StatisticsData-and-Systems/Statistics-Trendsand-Reports/
MedicareProgramRatesStats/
MarketBasketResearch.html in the zip
file titled ‘‘Weight Calculations as
described in the IPPS FY 2010 Proposed
Rule.’’
Comment: A few commenters
supported the proposal to rebase the
CIPI.
Response: We appreciate the
commenters’ support.
We did not receive any detailed
public comments on our methodology
for deriving the proposed 2014-based
CIPI. After consideration of the public
comments we received, in this final
rule, we are finalizing the 2014-based
CIPI as proposed.
Table IV–10 in the proposed rule (82
FR 19929) compares both the historical
and forecasted percent changes in the
FY 2010-based CIPI and the proposed
2014-based CIPI. The percent changes in
the proposed rule were based on IGI’s
fourth quarter 2016 forecast with
historical data through third quarter
2016. The forecasted growth rates
provided in Table IV–10 below are
based on IGI’s more recent second
quarter 2017 forecast with historical
data through first quarter 2017.
TABLE IV–10—COMPARISON OF FY 2010-BASED AND PROPOSED AND FINAL 2014-BASED CAPITAL INPUT PRICE INDEX,
PERCENT CHANGE, FY 2013 THROUGH FY 2020
CIPI,
FY 2010based
Fiscal year
Historical Data:
FY 2013 ............................................................................................................................................................
FY 2014 ............................................................................................................................................................
FY 2015 ............................................................................................................................................................
FY 2016 ............................................................................................................................................................
Average FYs 2013–2016 ..................................................................................................................................
Forecast:
FY 2017 ............................................................................................................................................................
FY 2018 ............................................................................................................................................................
FY 2019 ............................................................................................................................................................
FY 2020 ............................................................................................................................................................
Average FYs 2017–2020 ..................................................................................................................................
Proposed and
final CIPI,
2014-based
1.1
1.2
1.2
1.1
1.2
1.0
1.2
1.1
1.0
1.1
1.2
1.4
1.4
1.5
1.4
1.1
1.3
1.4
1.5
1.3
sradovich on DSK3GMQ082PROD with RULES2
Source: IHS Global Inc., 2nd quarter 2017 forecast.
IGI forecasts a 1.3 percent increase in
the proposed and final 2014-based CIPI
for FY 2018, as shown in Table IV–10.
The underlying vintage-weighted price
increases for depreciation (including
building and fixed equipment and
movable equipment) and interest
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(including government/nonprofit and
for-profit) based on the proposed 2014based CIPI were included in Table IV–
11 of the proposed rule (82 FR 19929).
Again, the percent changes in the
proposed rule were based on IGI’s
fourth quarter 2016 forecast with
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historical data through third quarter
2016. The forecasted growth rates
provided in Table IV–11 below are
based on IGI’s more recent second
quarter 2017 forecast with historical
data through first quarter 2017.
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38175
TABLE IV–11—PROPOSED AND FINAL 2014-BASED CAPITAL INPUT PRICE INDEX PERCENT CHANGES, TOTAL AND
DEPRECIATION AND INTEREST COMPONENTS—FYS 2013 THROUGH 2020
Fiscal year
Total
Historical Data:
FY 2013 ................................................................................................................................
FY 2014 ................................................................................................................................
FY 2015 ................................................................................................................................
FY 2016 ................................................................................................................................
Forecast:
FY 2017 ................................................................................................................................
FY 2018 ................................................................................................................................
FY 2019 ................................................................................................................................
FY 2020 ................................................................................................................................
Depreciation
Interest
1.0
1.2
1.1
1.0
1.7
1.8
1.8
1.7
¥2.5
¥1.8
¥2.7
¥3.0
1.1
1.3
1.4
1.5
1.6
1.6
1.6
1.6
¥2.2
¥1.3
¥0.5
¥0.1
Source: IHS Global Inc. 2nd quarter 2017 forecast.
Rebasing the CIPI from FY 2010 to
2014 decreased the percent change in
the forecasted update for FY 2018 by 0.1
percentage point, from 1.4 percent to 1.3
percent, as shown in Table IV–10. The
lower FY 2018 update is primarily due
to a change in the vintage weights for
the proposed and final 2014-based CIPI,
which includes updating the asset
purchase data through 2014 and
changing the building and fixed
equipment and interest asset lives from
26 years to 27 years. This lower update
is only partially offset by the change in
the base year weights, which produce a
faster increase due to more weight being
given to the Depreciation cost category
and less weight being given to the
Interest cost category. As shown in
Table IV–11 in the proposed rule (82 FR
19929) and this final rule, for FY 2018,
vintage-weighted price growth is
projected to be positive for the
Depreciation cost category and negative
for the Interest cost category.
V. Other Decisions and Changes to the
IPPS for Operating System
A. Changes to MS–DRGs Subject To
Postacute Care Transfer Policy and MS–
DRG Special Payments Policies (§ 412.4)
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1. Background
Existing regulations at 42 CFR
412.4(a) define discharges under the
IPPS as situations in which a patient is
formally released from an acute care
hospital or dies in the hospital. Section
412.4(b) defines acute care transfers,
and § 412.4(c) defines postacute care
transfers. Our policy set forth in
§ 412.4(f) provides that when a patient
is transferred and his or her length of
stay is less than the geometric mean
length of stay for the MS–DRG to which
the case is assigned, the transferring
hospital is generally paid based on a
graduated per diem rate for each day of
stay, not to exceed the full MS–DRG
payment that would have been made if
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the patient had been discharged without
being transferred.
The per diem rate paid to a
transferring hospital is calculated by
dividing the full MS–DRG payment by
the geometric mean length of stay for
the MS–DRG. Based on an analysis that
showed that the first day of
hospitalization is the most expensive
(60 FR 45804), our policy generally
provides for payment that is twice the
per diem amount for the first day, with
each subsequent day paid at the per
diem amount up to the full MS–DRG
payment (§ 412.4(f)(1)). Transfer cases
also are eligible for outlier payments. In
general, the outlier threshold for transfer
cases, as described in § 412.80(b), is
equal to the fixed-loss outlier threshold
for nontransfer cases (adjusted for
geographic variations in costs), divided
by the geometric mean length of stay for
the MS–DRG, and multiplied by the
length of stay for the case, plus 1 day.
We established the criteria set forth in
§ 412.4(d) for determining which DRGs
qualify for postacute care transfer
payments in the FY 2006 IPPS final rule
(70 FR 47419 through 47420). The
determination of whether a DRG is
subject to the postacute care transfer
policy was initially based on the
Medicare Version 23.0 GROUPER (FY
2006) and data from the FY 2004
MedPAR file. However, if a DRG did not
exist in Version 23.0 or a DRG included
in Version 23.0 is revised, we use the
current version of the Medicare
GROUPER and the most recent complete
year of MedPAR data to determine if the
DRG is subject to the postacute care
transfer policy. Specifically, if the MS–
DRG’s total number of discharges to
postacute care equals or exceeds the
55th percentile for all MS–DRGs and the
proportion of short-stay discharges to
postacute care to total discharges in the
MS–DRG exceeds the 55th percentile for
all MS–DRGs, CMS will apply the
postacute care transfer policy to that
MS–DRG and to any other MS–DRG that
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shares the same base MS–DRG. The
statute directs us to identify MS–DRGs
based on a high volume of discharges to
postacute care facilities and a
disproportionate use of postacute care
services. As discussed in the FY 2006
IPPS final rule (70 FR 47416), we
determined that the 55th percentile is
an appropriate level at which to
establish these thresholds. In that same
final rule (70 FR 47419), we stated that
we will not revise the list of DRGs
subject to the postacute care transfer
policy annually unless we are making a
change to a specific MS–DRG.
To account for MS–DRGs subject to
the postacute care policy that exhibit
exceptionally higher shares of costs very
early in the hospital stay, § 412.4(f) also
includes a special payment
methodology. For these MS–DRGs,
hospitals receive 50 percent of the full
MS–DRG payment, plus the single per
diem payment, for the first day of the
stay, as well as a per diem payment for
subsequent days (up to the full MS–DRG
payment (§ 412.4(f)(6)). For an MS- DRG
to qualify for the special payment
methodology, the geometric mean
length of stay must be greater than 4
days, and the average charges of 1-day
discharge cases in the MS–DRG must be
at least 50 percent of the average charges
for all cases within the MS–DRG. MS–
DRGs that are part of an MS–DRG
severity level group will qualify under
the MS–DRG special payment
methodology policy if any one of the
MS–DRGs that share that same base
MS–DRG qualifies (§ 412.4(f)(6)).
2. Changes for FY 2018
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19929 through
19931), based on our annual review of
MS–DRGs, we identified three MS–
DRGs that we proposed to be included
on the list of MS–DRGs subject to the
special payment transfer policy. As we
discussed in section II.F. of the
preamble of that proposed rule, in
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response to public comments and based
on our analysis of FY 2016 MedPAR
claims data, we proposed to make
changes to MS–DRGs, effective for FY
2018.
As discussed in the preamble of the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 19850), we proposed to delete
MS–DRGs 984, 985, and 986 (Prostatic
O.R. Procedure Unrelated to Principal
Diagnosis with MCC, with CC and
without CC/MCC, respectively) and
reassign the procedure codes currently
assigned to these three MS–DRGs to
MS–DRGs 987, 988, and 989 (NonExtensive O.R. Procedure Unrelated to
Principal Diagnosis with MCC, with CC
and without CC/MCC, respectively).
In light of the proposed changes to the
MS–DRGs for FY 2018, according to the
regulations under § 412.4(d), we
evaluated proposed revised MS–DRGs
987, 988, and 989 (which would contain
the proposed reassigned procedures
from MS–DRGs 984, 985, and 986)
against the general postacute care
transfer policy criteria using the FY
2016 MedPAR data. If an MS–DRG
qualified for the postacute care transfer
policy, we also evaluated that MS–DRG
under the special payment methodology
criteria according to regulations at
§ 412.4(f)(6). We continue to believe it is
appropriate to reassess MS–DRGs when
proposing reassignment of procedure or
diagnosis codes that would result in
material changes to an MS–DRG. MS–
DRGs 987, 988, and 989 are currently
subject to the postacute care transfer
policy. We stated in the proposed rule
that as a result of our review, the
proposed revised MS–DRGs 987, 988,
and 989 continue to qualify to be
included on the list of MS–DRGs that
are subject to the postacute care transfer
policy. We did not propose to change
the postacute care transfer policy status
for MS–DRGs 987, 988, and 989.
As discussed in section II.F.14.b. of
the preamble of this FY 2018 IPPS/
LTCH PPS final rule, we are finalizing
the proposed revisions to these MS–
DRGs. Using the March 2017 update of
the FY 2016 MedPAR file, we developed
the following chart which sets forth the
most recent analysis of the postacute
care transfer policy criteria completed
for this final rule.
LIST OF REVISED MS–DRGS SUBJECT TO REVIEW OF POSTACUTE CARE TRANSFER POLICY STATUS FOR FY 2018
Revised MS–
DRG
MS–DRG title
987 .................
Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis with
MCC.
Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis with CC.
Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis without
MCC/CC.
988 .................
989 .................
Postacute care
transfers
(55th percentile: 1,418)
Short-stay
postacute care
transfers
Percent of
short-stay
postacute care
transfers to all
cases
(55th percentile:
7.80629%)
8,485
4,395
1,117
13.16441
Yes.
8,876
3,774
817
9.20460
Yes.
2,364
* 568
53
* 2.24196
Total cases
Postacute care
transfer policy
status
Yes. **
* Indicates a current postacute care transfer policy criterion that the MS–DRG did not meet.
** As described in the policy at 42 CFR 412.4(d)(3)(ii)(D), MS–DRGs that share the same base MS–DRG will all qualify under the postacute
care transfer policy if any one of the MS–DRGs that share that same base MS–DRG qualifies.
As we discussed in the proposed rule,
we also determined that proposed
revised MS–DRGs 987, 988, and 989
would meet the criteria for the MS–DRG
special payment methodology. MS–
DRGs 987, 988, and 989 are not
currently listed as being subject to the
special payment policy. Therefore, we
proposed that these three proposed
revised MS–DRGs would be subject to
the MS–DRG special payment
methodology, effective FY 2018.
We did not receive any public
comments on this proposal. Therefore,
we are finalizing the proposed changes
to the special payment policy status of
MS–DRGs 987, 988, and 989. We note
that, in a chart in the proposed rule (82
FR 19931), we erroneously listed the
geometric mean length of stay for MS–
DRG 988 as 8.6 days. The figure should
have been 4.4 days (which, for this final
rule, is revised to 4.3 days as a result of
the most recent data analysis).
Regardless, because the revised
geometric mean length of stay is also
greater than 4 days, MS–DRG 988
qualifies for special payment policy
status, and as described in the policy at
42 CFR 412.4(d)(6)(iv), MS–DRGs 987
and 989 also qualify, consistent with
our proposal. Using the March 2017
update of the FY 2016 MedPAR file, we
developed the following chart which set
forth the most recent data analysis of the
special payment methodology criteria
completed for this final rule.
LIST OF REVISED MS–DRGS SUBJECT TO REVIEW OF SPECIAL PAYMENT POLICY STATUS FOR FY 2018
Geometric
mean length of
stay
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Revised MS–
DRG
MS–DRG title
987 .................
Non-Extensive O.R. Procedure Unrelated to Principal
Diagnosis with MCC.
Non-Extensive O.R. Procedure Unrelated to Principal
Diagnosis with CC.
988 .................
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Average
charges of
1-day discharges
50 percent of
average
charges for all
cases within
MS–DRG
Special payment
policy status
7.9
$52,050
Yes *.
4.3
Sfmt 4700
$33,424
34,443
28,404
Yes.
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38177
LIST OF REVISED MS–DRGS SUBJECT TO REVIEW OF SPECIAL PAYMENT POLICY STATUS FOR FY 2018—Continued
Geometric
mean length of
stay
Revised MS–
DRG
MS–DRG title
989 .................
Non-Extensive O.R. Procedure Unrelated to Principal
Diagnosis without MCC/CC.
50 percent of
average
charges for all
cases within
MS–DRG
Average
charges of
1-day discharges
2.2
0
0
Special payment
policy status
Yes.*
* As described in the policy at 42 CFR 412.4(d)(6)(iv), MS–DRGs that share the same base MS–DRG will all qualify under the MS–DRG special payment policy if any one of the MS–DRGs that share that same base MS–DRG qualifies.
The finalized special payment policy
status of these three MS–DRGs is
reflected in Table 5 associated with this
final rule, which is listed in section VI.
of the Addendum to this final rule and
available via the Internet on the CMS
Web site.
B. Changes in the Inpatient Hospital
Update for FY 2018 (§ 412.64(d))
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1. FY 2018 Inpatient Hospital Update
In accordance with section
1886(b)(3)(B)(i) of the Act, each year we
update the national standardized
amount for inpatient hospital operating
costs by a factor called the ‘‘applicable
percentage increase.’’ As discussed in
the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 19931 through 19933), for
FY 2018, we are setting the applicable
percentage increase by applying the
adjustments listed in this section in the
same sequence as we did for FY 2017.
Specifically, consistent with section
1886(b)(3)(B) of the Act, as amended by
sections 3401(a) and 10319(a) of the
Affordable Care Act, we are setting the
applicable percentage increase by
applying the following adjustments in
the following sequence. The applicable
percentage increase under the IPPS is
equal to the rate-of-increase in the
hospital market basket for IPPS
hospitals in all areas, subject to—
(a) A reduction of one-quarter of the
applicable percentage increase (prior to
the application of other statutory
adjustments; also referred to as the
market basket update or rate-of-increase
(with no adjustments)) for hospitals that
fail to submit quality information under
rules established by the Secretary in
accordance with section
1886(b)(3)(B)(viii) of the Act;
(b) A reduction of three-quarters of
the applicable percentage increase (prior
to the application of other statutory
adjustments; also referred to as the
market basket update or rate-of-increase
(with no adjustments)) for hospitals not
considered to be meaningful EHR users
in accordance with section
1886(b)(3)(B)(ix) of the Act;
(c) An adjustment based on changes
in economy-wide productivity (the
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multifactor productivity (MFP)
adjustment); and
(d) An additional reduction of 0.75
percentage point as required by section
1886(b)(3)(B)(xii) of the Act.
Sections 1886(b)(3)(B)(xi) and
(b)(3)(B)(xii) of the Act, as added by
section 3401(a) of the Affordable Care
Act, state that application of the MFP
adjustment and the additional FY 2018
adjustment of 0.75 percentage point may
result in the applicable percentage
increase being less than zero.
We note that, in compliance with
section 404 of the MMA, in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19916 through 19923), we proposed to
replace the FY 2010-based IPPS
operating market basket with the
rebased and revised 2014-based IPPS
operating market basket for FY 2018. We
proposed to base the proposed FY 2018
market basket update used to determine
the applicable percentage increase for
the IPPS on IHS Global Inc.’s (IGI’s)
fourth quarter 2016 forecast of the
proposed 2014-based IPPS market
basket rate-of-increase with historical
data through third quarter 2016, which
was estimated to be 2.9 percent. We
proposed that if more recent data
subsequently became available (for
example, a more recent estimate of the
market basket and the MFP adjustment),
we would use such data, if appropriate,
to determine the FY 2018 market basket
update and the MFP adjustment in this
final rule. We received public comments
regarding the rebasing and revising of
the IPPS operating market basket and
refer readers to section IV.B. of this final
rule for a complete discussion on the
rebasing and revising of the market
basket. In section IV.B., we are
finalizing our proposals without
modification and, therefore, are using
the finalized rebased and revised 2014based IPPS market basket rate-ofincrease for FY 2018.
Based on the most recent data
available for this FY 2018 IPPS/LTCH
PPS final rule (that is, IGI’s second
quarter 2017 forecast of the 2014-based
IPPS market basket rate-of-increase with
historical data through first quarter
2017), we estimate that the FY 2018
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market basket update used to determine
the applicable percentage increase for
the IPPS is 2.7 percent.
For FY 2018, depending on whether
a hospital submits quality data under
the rules established in accordance with
section 1886(b)(3)(B)(viii) of the Act
(hereafter referred to as a hospital that
submits quality data) and is a
meaningful EHR user under section
1886(b)(3)(B)(ix) of the Act (hereafter
referred to as a hospital that is a
meaningful EHR user), there are four
possible applicable percentage increases
that can be applied to the standardized
amount as specified in the table that
appears later in this section.
In the FY 2012 IPPS/LTCH PPS final
rule (76 FR 51689 through 51692), we
finalized our methodology for
calculating and applying the MFP
adjustment. As we explained in that
rule, section 1886(b)(3)(B)(xi)(II) of the
Act, as added by section 3401(a) of the
Affordable Care Act, defines this
productivity adjustment as equal to the
10-year moving average of changes in
annual economy-wide, private nonfarm
business MFP (as projected by the
Secretary for the 10-year period ending
with the applicable fiscal year, calendar
year, cost reporting period, or other
annual period). The Bureau of Labor
Statistics (BLS) publishes the official
measure of private nonfarm business
MFP. We refer readers to the BLS Web
site at https://www.bls.gov/mfp for the
BLS historical published MFP data.
MFP is derived by subtracting the
contribution of labor and capital input
growth from output growth. The
projections of the components of MFP
are currently produced by IGI, a
nationally recognized economic
forecasting firm with which CMS
contracts to forecast the components of
the market baskets and MFP. As we
discussed in the FY 2016 IPPS/LTCH
PPS final rule (80 FR 49509), beginning
with the FY 2016 rulemaking cycle, the
MFP adjustment is calculated using the
revised series developed by IGI to proxy
the aggregate capital inputs.
Specifically, in order to generate a
forecast of MFP, IGI forecasts BLS
aggregate capital inputs using a
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regression model. A complete
description of the MFP projection
methodology is available on the CMS
Web site at: https://www.cms.gov/
Research-Statistics-Data-and-Systems/
Statistics-Trends-and-Reports/
MedicareProgramRatesStats/
MarketBasketResearch.html. As
discussed in the FY 2016 IPPS/LTCH
PPS final rule, if IGI makes changes to
the MFP methodology, we will
announce them on our Web site rather
than in the annual rulemaking.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19932), for FY
2018, we proposed an MFP adjustment
of 0.4 percentage point. Similar to the
market basket update, for the proposed
rule, we used IGI’s fourth quarter 2016
forecast of the MFP adjustment to
compute the proposed MFP adjustment.
As noted previously, we proposed that
if more recent data subsequently
become available, we would use such
data, if appropriate, to determine the FY
2018 market basket update and the MFP
adjustment for the final rule. Based on
the most recent data available for this
final rule, we have determined an MFP
adjustment of 0.6 percentage point for
FY 2018.
We did not receive any public
comments on our proposal to use the
most recent available data to determine
the final market basket update and the
MFP adjustment. Therefore, for this
final rule, we are finalizing a market
basket update of 2.7 percent and an
MFP adjustment of 0.6 percentage point
based on the most recent available data.
Based on the most recent data
available for this final rule, as described
previously, we have determined four
applicable percentage increases to the
standardized amount for FY 2018, as
specified in the following table:
FY 2018 APPLICABLE PERCENTAGE INCREASES FOR THE IPPS
Hospital
submitted
quality data
and is a
meaningful
EHR user
FY 2018
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Market Basket Rate-of-Increase ......................................................................
Adjustment for Failure to Submit Quality Data under Section
1886(b)(3)(B)(viii) of the Act .........................................................................
Adjustment for Failure to be a Meaningful EHR User under Section
1886(b)(3)(B)(ix) of the Act ..........................................................................
MFP Adjustment under Section 1886(b)(3)(B)(xi) of the Act ..........................
Statutory Adjustment under Section 1886(b)(3)(B)(xii) of the Act ...................
Applicable Percentage Increase Applied to Standardized Amount .................
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19932), we
proposed to revise the existing
regulations at 42 CFR 412.64(d) to
reflect the current law for the FY 2018
update. Specifically, in accordance with
section 1886(b)(3)(B) of the Act, we
proposed to revise paragraph (vii) of
§ 412.64(d)(1) to include the applicable
percentage increase to the FY 2018
operating standardized amount as the
percentage increase in the market basket
index, subject to the reductions
specified under § 412.64(d)(2) for a
hospital that does not submit quality
data and § 412.64(d)(3) for a hospital
that is not a meaningful EHR user, less
an MFP adjustment and less an
additional reduction of 0.75 percentage
point.
We did not receive any public
comments on our proposed changes to
the regulations at § 412.64(d)(1)(vii) and,
therefore, are finalizing these proposed
changes without modification in this
final rule.
Section 1886(b)(3)(B)(iv) of the Act
provides that the applicable percentage
increase to the hospital-specific rates for
SCHs equals the applicable percentage
increase set forth in section
1886(b)(3)(B)(i) of the Act (that is, the
same update factor as for all other
hospitals subject to the IPPS). Therefore,
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Hospital did
not submit
quality data
and is a
meaningful
EHR user
Hospital did
not submit
quality data
and is not a
meaningful
EHR user
2.7
2.7
2.7
2.7
0.0
0.0
¥0.675
¥0.675
0.0
¥0.6
¥0.75
1.35
¥2.025
¥0.6
¥0.75
¥0.675
0.0
¥0.6
¥0.75
0.675
¥2.025
¥0.6
¥0.75
¥1.35
the update to the hospital-specific rates
for SCHs also is subject to section
1886(b)(3)(B)(i) of the Act, as amended
by sections 3401(a) and 10319(a) of the
Affordable Care Act.
As discussed in section V.H. of the
preamble of the FY 2018 IPPS/LTCH
PPS proposed rule and in this final rule,
section 205 of the Medicare Access and
CHIP Reauthorization Act of 2015
(MACRA) (Pub. L. 114–10, enacted on
April 16, 2015) extended the MDH
program (which, under previous law,
was to be in effect for discharges on or
before March 31, 2015 only) for
discharges occurring on or after April 1,
2015, through FY 2017 (that is, for
discharges occurring on or before
September 30, 2017). Therefore, under
current law, the MDH program will
expire at the end of FY 2017.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19932), for FY
2018, we proposed updates to the
hospital-specific rates applicable to
SCHs based on IGI’s fourth quarter 2016
forecast of the proposed 2014-based
IPPS market basket update with
historical data through third quarter
2016. Similarly, we used IGI’s fourth
quarter 2016 forecast of the MFP
adjustment. We proposed that if more
recent data subsequently became
available (for example, a more recent
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Hospital
submitted
quality data
and is not a
meaningful
EHR user
estimate of the market basket increase
and the MFP adjustment), we would use
such data, if appropriate, to determine
the update in the final rule.
We did not receive any public
comments with regard to our proposal.
Therefore, we are finalizing the proposal
to determine the update to the hospitalspecific rates for SCHs in this final rule
using the most recent data available.
For this final rule, based on the most
recent available data, we are finalizing
the following updates to the hospitalspecific rates applicable to SCHs (using
IGI’s second quarter 2017 forecast of the
2014-based IPPS market basket update
and the MFP adjustment): An update of
1.35 percent for a hospital that submits
quality data and is a meaningful EHR
user; an update of 0.675 percent for a
hospital that fails to submit quality data
and is a meaningful EHR user; an
update of –0.675 percent for a hospital
that submits quality data and is not a
meaningful EHR user; and an update of
–1.35 percent for a hospital that fails to
submit quality data and is not a
meaningful EHR user.
2. FY 2018 Puerto Rico Hospital Update
As discussed in the FY 2017 IPPS/
LTCH PPS final rule (81 FR 56937
through 56938), prior to January 1, 2016,
Puerto Rico hospitals were paid based
on 75 percent of the national
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standardized amount and 25 percent of
the Puerto Rico-specific standardized
amount. Section 601 of Public Law 114–
113 amended section 1886(d)(9)(E) of
the Act to specify that the payment
calculation with respect to operating
costs of inpatient hospital services of a
subsection (d) Puerto Rico hospital for
inpatient hospital discharges on or after
January 1, 2016, shall use 100 percent
of the national standardized amount.
Because Puerto Rico hospitals are no
longer paid with a Puerto Rico-specific
standardized amount under the
amendments to section 1886(d)(9)(E) of
the Act, there is no longer a need for us
to determine an update to the Puerto
Rico standardized amount. Hospitals in
Puerto Rico are now paid 100 percent of
the national standardized amount and,
therefore, are subject to the same update
to the national standardized amount
discussed under section V.B.1. of the
preamble of this final rule. Accordingly,
in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19932 through
19933), for FY 2018, we proposed an
applicable percentage increase of 1.75
percent to the standardized amount for
hospitals located in Puerto Rico. We did
not receive any public comments on our
proposal. Based on the most recent
available data, we are finalizing an
applicable percentage increase of 1.35
percent to the standardized amount for
hospitals located in Puerto Rico.
We note that section
1886(b)(3)(B)(viii) of the Act, which
specifies the adjustment to the
applicable percentage increase for
‘‘subsection (d)’’ hospitals that do not
submit quality data under the rules
established by the Secretary, is not
applicable to hospitals located in Puerto
Rico.
In addition, section 602 of Public Law
114–113 amended section 1886(n)(6)(B)
of the Act to specify that Puerto Rico
hospitals are eligible for incentive
payments for the meaningful use of
certified EHR technology, effective
beginning FY 2016, and also to apply
the adjustments to the applicable
percentage increase under section
1886(b)(3)(B)(ix) of the Act to Puerto
Rico hospitals that are not meaningful
EHR users, effective FY 2022.
Accordingly, because the provisions of
section 1886(b)(3)(B)(ix) of the Act are
not applicable to hospitals located in
Puerto Rico until FY 2022, the
adjustments under this provision are not
applicable for FY 2018.
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C. Change to Volume Decrease
Adjustment for Sole Community
Hospitals (SCHs) and MedicareDependent, Small Rural Hospitals
(MDHs) (§§ 412.92 and 412.108)
1. Background
Sections 1886(d)(5)(D) and (d)(5)(G) of
the Act provide special payment
protections under the IPPS to sole
community hospitals (SCHs) and
Medicare-dependent, small rural
hospitals (MDHs), respectively. Section
1886(d)(5)(D)(iii) of the Act defines an
SCH in part as a hospital that the
Secretary determines is located more
than 35 road miles from another
hospital or that, by reason of factors
such as isolated location, weather
conditions, travel conditions, or absence
of other like hospitals (as determined by
the Secretary), is the sole source of
inpatient hospital services reasonably
available to Medicare beneficiaries. The
regulations at 42 CFR 412.92 set forth
the criteria that a hospital must meet to
be classified as a SCH. For more
information on SCHs, we refer readers
to the FY 2009 IPPS/LTCH PPS final
rule (74 FR 43894 through 43897).
Section 1886(d)(5)(G)(iv) of the Act
defines an MDH as a hospital that is
located in a rural area, has not more
than 100 beds, is not an SCH, and has
a high percentage of Medicare
discharges (that is, not less than 60
percent of its inpatient days or
discharges during the cost reporting
period beginning in FY 1987 or two of
the three most recently audited cost
reporting periods for which the
Secretary has a settled cost report were
attributable to inpatients entitled to
benefits under Part A). The regulations
at 42 CFR 412.108 set forth the criteria
that a hospital must meet to be
classified as an MDH. The MDH
program is not authorized by statute
beyond September 30, 2017. Therefore,
beginning October 1, 2017, all hospitals
that previously qualified for MDH status
under section 1886(d)(5)(G) of the Act
will no longer have MDH status and will
be paid based on the IPPS Federal rate.
For additional information on the MDH
program and the payment methodology,
we refer readers to the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51683
through 51684).
2. Changes to the Volume Decrease
Adjustment Calculation Methodology
for SCHs
Section 1886(d)(5)(D)(ii) and section
1886(d)(5)(G)(iii) of the Act require that
the Secretary adjust the payments made
to an SCH and MDH, respectively, as
may be necessary to fully compensate
the hospital for the fixed costs it incurs
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38179
in providing inpatient hospital services,
including the reasonable cost of
maintaining necessary core staff and
services, when it experiences a decrease
of more than 5 percent in its total
number of inpatient discharges due to
circumstances beyond its control. These
adjustments are known as ‘‘volume
decrease adjustments.’’
The regulations governing volume
decrease adjustments are found at 42
CFR 412.92(e) for SCHs and § 412.108(d)
for MDHs. As noted earlier, the MDH
program is set to expire as of October 1,
2017. As such, we proposed that if the
MDH program ends up being extended
by law, similar to how it was extended
by section 205 of the MACRA (Pub. L.
114–10) and prior legislation, the
proposed changes to the volume
decrease adjustment methodology and
the proposed amendment to
§ 412.92(e)(3) for SCHs would also be
made to the parallel requirements for
MDHs under § 412.108(d)(3).
To qualify for a volume decrease
adjustment, the SCH must: (a) Submit
documentation demonstrating the size
of the decrease in discharges and the
resulting effect on per discharge costs;
and (b) show that the decrease is due to
circumstances beyond the hospital’s
control. If an SCH demonstrates to the
MAC’s satisfaction that it has suffered a
qualifying decrease in total inpatient
discharges, the MAC determines the
appropriate amount, if any, due to the
SCH as an adjustment.
As we have noted in Section 2810.1
of the Provider Reimbursement Manual,
Part 1 (PRM–1) and in adjudications
rendered by the PRRB and the CMS
Administrator, under the current
methodology, the MAC determines a
volume decrease adjustment amount not
to exceed a cap calculated as the
difference between the lesser of (1) the
hospital’s current year’s Medicare
inpatient operating costs or (2) its prior
year’s Medicare inpatient operating
costs multiplied by the appropriate IPPS
update factor, and the hospital’s total
MS–DRG revenue for inpatient
operating costs (including outlier
payments, DSH payments, and IME
payments). In determining the volume
decrease adjustment amount, the MAC
considers the individual hospital’s
needs and circumstances, including the
reasonable cost of maintaining
necessary core staff and services in view
of minimum staffing requirements
imposed by State agencies; the
hospital’s fixed costs (including
whether any semi-fixed costs are to be
considered fixed) other than those costs
paid on a reasonable cost basis; and the
length of time the hospital has
experienced a decrease in utilization.
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We have set forth interpretive
guidance regarding volume decrease
adjustments in the preambles to various
rules and in Section 2810.1 of the PRM–
1. The adjustment also has been the
subject of a series of adjudications,
rendered by the PRRB and the CMS
Administrator. For example, we refer
readers to Greenwood County Hospital
Eureka, Kansas, v. Blue Cross Blue
Shield Association/Blue Cross Blue
Shield of Kansas, 2006 WL 3050893
(PRRB August 29, 2006); Unity
Healthcare Muscatine, Iowa v. Blue
Cross Blue Shield Association/
Wisconsin Physicians Service, 2014 WL
5450066 (CMS Administrator September
4, 2014); Lakes Regional Healthcare
Spirit Lake, Iowa v. Blue Cross Blue
Shield Association/Wisconsin
Physicians Service, 2014 WL 5450078
(CMS Administrator September 4,
2014); Fairbanks Memorial Hospital v.
Wisconsin Physician Services/BlueCross
BlueShield Association, 2015 WL
5852432 (CMS Administrator, August 5,
2015); St. Anthony Regional Hospital v.
Wisconsin Physicians Service, 2016 WL
7744992 (CMS Administrator October 3,
2016); and Trinity Regional Medical
Center v. Wisconsin Physician Services,
2017 WL 2403399 (CMS Administrator
February 9, 2017). In those
adjudications, the PRRB and the CMS
Administrator have recognized that: (1)
The volume decrease adjustment is
intended to compensate qualifying
SCHs for their fixed costs only, and that
variable costs are to be excluded from
the adjustment; and (2) an SCH’s
volume decrease adjustment should be
reduced to reflect the compensation of
fixed costs that has already been made
through MS–DRG payments.
However, some hospitals have
recently expressed concerns regarding
the exact calculations that the MACs use
when determining the volume decrease
adjustment. The issue also has been
addressed in some recent decisions of
the PRRB. As the above referenced
Administrator decisions illustrate and
explain, under the current calculation
methodology, the MACs calculate the
volume decrease adjustment by
subtracting the entirety of the hospital’s
total MS–DRG revenue for inpatient
operating costs, including outlier
payments and IME and DSH payments
in the cost reporting period in which the
volume decrease occurred, from fixed
costs in the cost reporting period in
which the volume decrease occurred,
minus any adjustment for excess staff. If
the result of that calculation is greater
than zero and less than the cap, the
hospital receives that amount in a lumpsum payment. If the result of that
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calculation is zero or less than zero, the
hospital does not receive a volume
decrease payment adjustment.
Under the IPPS, MS–DRG payments
are not based on an individual
hospital’s actual costs in a given cost
reporting period. However, the main
issue raised by the PRRB and individual
hospitals is that, under the current
calculation methodology, if the
hospital’s total MS–DRG revenue for
treating Medicare beneficiaries for
which it incurs inpatient operating costs
(consisting of fixed, semi-fixed, and
variable costs) exceeds the hospital’s
fixed costs, the calculation by the MACs
results in no volume decrease
adjustment for the hospital. In some
recent decisions, the PRRB has
indicated that it believes it would be
more appropriate for the MACs to adjust
the hospital’s total MS–DRG revenue
from Medicare by looking at the ratio of
a hospital’s fixed costs to its total costs
(as determined by the MAC) and
applying that ratio as a proxy for the
share of the hospital’s MS–DRG
payments that it assumes are
attributable (or allocable) to fixed costs,
and then comparing that estimate of the
fixed portion of MS–DRG payments to
the hospital’s fixed costs. In this way,
the calculation would compare
estimated Medicare revenue for fixed
costs to the hospital’s fixed costs when
determining the volume decrease
adjustment.
We continue to believe that our
current approach in calculating volume
decrease adjustments is reasonable and
consistent with the statute. The relevant
statutory provisions, at sections
1886(d)(5)(D)(ii) and 1886(d)(5)(G)(iii) of
the Act, are silent about and thus
delegate to the Secretary the
responsibility of determining which
costs are to be deemed ‘‘fixed’’ and what
level of adjustment to IPPS payments
may be necessary to ensure that total
Medicare payments have fully
compensated an SCH or MDH for its
‘‘fixed costs.’’ These provisions suggest
that the volume decrease adjustment
amount should be reduced (or
eliminated as the case may be) to the
extent that some or all of an SCH’s or
MDH’s fixed costs have already been
compensated through other Medicare
subsection (d) payments. The
Secretary’s current approach is also
consistent with the regulations and the
PRM–1. Like the statute, the relevant
regulations do not address variable
costs, and the regulations and the PRM–
1 (along with the Secretary’s preambles
to issued rules (48 FR 39781 through
39782 and 55 FR 15156) and
adjudications) all make it clear that the
volume decrease adjustment is intended
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to compensate qualifying SCHs and
MDHs for their fixed costs, not for their
variable costs, and that variable costs
are to be excluded from the volume
decrease adjustment calculation.
Nevertheless, we understand why
hospitals might take the view that CMS
should make an effort, in some way, to
ascertain whether a portion of MS–DRG
payments can be allocated or attributed
to fixed costs in order to fulfill the
statutory mandate to ‘‘fully
compensate’’ a qualifying SCH for its
fixed costs.
Accordingly, after considering these
views, in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19933), we
proposed to prospectively change how
the MACs calculate the volume decrease
adjustments and require that the MACs
compare estimated Medicare revenue
for fixed costs to the hospital’s fixed
costs to remove any conceivable
possibility that a hospital that qualifies
for the volume decrease adjustment
could ever be less than fully
compensated for fixed costs as a result
of the application of the adjustment. We
proposed that, in order to estimate the
fixed portion of the Medicare revenue,
the MACs would apply the ratio of the
hospital’s fixed costs to total costs in the
cost reporting period when it
experienced the volume decrease to the
hospital’s total Medicare revenue in that
same cost reporting period. We
proposed to revise the regulations at 42
CFR 412.92(e)(3) to reflect our proposed
change in the MAC’s calculation of the
volume decrease adjustment that would
apply prospectively to cost reporting
periods beginning on or after October 1,
2017, and to reflect that the language
requiring that the volume decrease
adjustment amount not exceed the
difference between the hospital’s
Medicare inpatient operating costs and
the hospital’s total DRG revenue for
inpatient operating costs would only
apply to cost reporting periods
beginning before October 1, 2017, but
not to subsequent cost reporting
periods. Under the proposed
methodology, if a hospital’s total MS–
DRG payment is less than its total
Medicare inpatient operating costs, the
sum of any resulting volume decrease
adjustment payment and its MS–DRG
payment would never exceed its total
Medicare inpatient operating costs due
to the fact that the fixed cost percentage
is applied to the MS–DRG payment in
calculating the volume decrease
adjustment amount. By taking the ratio
derived from the subset of fixed costs to
total costs and applying that same ratio
to the MS–DRG payment, we ensure that
the sum of a hospital’s IPPS payment
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and its volume decrease adjustment
payment would never exceed its total
Medicare inpatient operating costs, thus
negating the need for a cap calculation.
Thus, the proposed methodology would
render the current volume decrease
adjustment cap calculation obsolete.
Conversely, if a hospital’s total MS–DRG
payment is greater than its total
Medicare inpatient operating costs,
calculating a volume decrease
adjustment using the proposed
methodology would result in a negative
payment amount, which would yield a
volume decrease adjustment payment of
zero. Finally, if a hospital’s total MS–
DRG payment is equal to its total
Medicare inpatient operating costs,
calculating a volume decrease
adjustment using the proposed
methodology would also yield a volume
decrease adjustment payment of zero.
Furthermore, we believe that because a
hospital could not foresee a decrease in
its volume from one year to the next and
would therefore not plan for a volume
decrease adjustment, the volume
decrease adjustment payment should
therefore not be limited to a cap that is
based on the previous year’s costs. For
these reasons, we proposed to remove
the cap calculation from the volume
decrease adjustment calculation
methodology in future periods. We
believe that this new approach to
calculating the volume decrease
adjustment, like the current
methodology, is reasonable and
consistent with the statute.
We proposed that these proposed
changes in the MAC’s calculation of the
volume decrease adjustment would be
prospective, effective for cost reporting
periods beginning on or after October 1,
2017. We indicated in the proposed rule
that if these proposed changes are
adopted, we also intended to update
Section 2810.1 of the PRM–1 to reflect
the changes in the calculation of the
volume decrease adjustment by the
MAC. For volume decrease adjustments
for earlier cost reporting periods, we
stated that the current calculation
methodology would continue. In
addition, we stated that we were not
proposing to change any part of the
methodology, criteria, rules, or
presumptions we consider and apply in
determining whether to classify a given
cost as fixed, semi-fixed, or variable for
purposes of the volume decrease
adjustment.
In the proposed rule, we presented
the following example to illustrate the
calculation of the volume decrease
adjustment by the MAC under our
proposed change. We note that, as
presented in our proposed rule, the
example may have implied that under
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the proposed methodology, the MACs
would apply the ratio of the hospital’s
Medicare fixed costs to total Medicare
costs, rather than ‘‘the ratio of the
hospital’s fixed costs to total costs in the
cost reporting period when it
experienced the volume decrease to the
hospital’s total Medicare revenue in that
same cost reporting period,’’ as stated
elsewhere in the preamble (82 FR
19934). We have modified the example
below to address this inconsistency and
to clarify our intent by including
additional details to more clearly
illustrate how Medicare fixed costs and
the fixed MS–DRG revenue are
calculated and used in the calculation,
including to reflect that this same ratio,
that is, the hospital’s fixed inpatient
costs to total inpatient costs, is applied
to total Medicare costs to arrive at fixed
Medicare costs, as under the current
methodology.
Example: In its cost reporting period
beginning October 1, 2017, Hospital A
has total Medicare inpatient operating
costs equaling $1,600,000 and total MS–
DRG revenue (including outlier
payments, IME and DSH) of $1,400,000.
The MAC determines that the hospital
qualifies for a volume decrease
adjustment for this cost reporting
period. The MAC classifies $2,720,000
of Hospital A’s total (Medicare and nonMedicare) costs as fixed and $480,000 as
variable. Hospital A’s fixed cost ratio is
therefore .85 = $2,720,000/($2,720,000 +
$480,000) = $2,720,000/$3,200,000. The
MAC applies this ratio to the (1) total
MS–DRG revenue of $1,400,000 to
estimate the hospital’s fixed MS–DRG
revenue to be $1,190,000 and (2) total
Medicare inpatient operating costs to
estimate the hospital’s fixed Medicare
costs to be $1,360,000. The volume
decrease adjustment payment is then
calculated by comparing the fixed MS–
DRG revenue of $1,190,000 to the
Medicare fixed costs of $1,360,000,
resulting in a volume decrease
adjustment payment of $170,000
($1,360,000 minus $1,190,000).
Under the current methodology used
by the MACs, Hospital A would receive
no volume decrease adjustment
payment because its total MS–DRG
revenue from Medicare of $1,400,000
exceeded the hospital’s Medicare fixed
costs of $1,360,000. Furthermore, under
the current methodology, but not under
our proposed methodology, it is
possible that a hospital would still
receive no volume decrease adjustment
payment even if its Medicare fixed costs
exceeded its total MS–DRG revenue if
those fixed costs exceeded the previous
year’s costs updated for inflation.
We also proposed changes to an
adjustment that might be made to a
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38181
hospital’s staffing costs in calculating
the volume decrease adjustment. The
statute and regulations and the PRM–1
imply, and we have expressly indicated
in prior rulemaking, most recently in
the FY 2006 rulemaking, our belief that
not all staff costs can necessarily be
considered fixed costs (71 FR 48056
through 48060). Therefore, we currently
require a hospital, when applying for a
volume decrease adjustment, to
demonstrate that it appropriately
adjusted the number of staff in inpatient
areas of the hospital based on the
decrease in the number of inpatient
days but not beyond minimum levels as
required by State or local laws. If a
hospital does not appropriately adjust
its number of staff, the cost of
maintaining those staff members is
deducted from the total volume
decrease adjustment payment. In
reviewing the volume decrease
adjustment calculation, we have also
weighed the administrative burden on
the hospital of making this
demonstration to CMS, as compared to
an assumption that it is likely that a
hospital would, in its normal course of
business, adjust its staffing levels as
revenue declines. In the absence of
evidence to contrary, we believe that a
hospital would adjust its staffing levels
as revenue declines rather than
maintain those staffing levels for the
sole purpose of potentially having those
staffing costs eventually reflected in a
Medicare volume decrease adjustment
payment that the hospital may or may
not qualify for when it files its cost
report. Therefore, we proposed to
modify the volume decrease adjustment
process to no longer require that a
hospital explicitly demonstrate that it
appropriately adjusted the number of
staff in inpatient areas of the hospital
based on the decrease in the number of
inpatient days and to no longer require
the MAC to adjust the volume decrease
adjustment payment amount for excess
staffing. We proposed that these changes
would be effective for cost reporting
periods beginning on or after October 1,
2017.
Comment: Commenters supported
CMS’ proposed changes to the volume
decrease adjustment methodology to (1)
apply the ratio of the hospital’s fixed
costs to total costs in the cost reporting
period when it experienced the volume
decrease to the hospital’s total Medicare
revenue in that same cost reporting
period; (2) remove the cap calculation
from the volume decrease adjustment
calculation methodology in future
periods; (3) no longer require that a
hospital explicitly demonstrate that it
appropriately adjusted the number of
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staff in inpatient areas of the hospital
based on the decrease in the number of
inpatient days; and (4) no longer require
the MAC to adjust the volume decrease
adjustment payment amount for excess
staffing. However, commenters
suggested that CMS apply these
proposals retrospectively with a gamut
of suggestions as to the specific types of
volume decrease adjustment
determinations for which to apply the
proposed methodology: Pending volume
decrease adjustment determinations;
volume decrease adjustment
determinations currently under appeal;
unsettled cost reports; volume decrease
adjustment determinations that are still
within the PRRB appeal timeline;
volume decrease adjustment
determinations for which the MAC has
issued a recoupment demand; volume
decrease adjustment determinations for
all open cost reports, regardless of
whether an appeal was made; and all
open cost reports, including those for
which a volume decrease adjustment
was not requested.
Some commenters asserted that what
CMS outlined in the proposed rule as its
‘‘current methodology’’ was not, in fact,
the current methodology being applied
consistently across the board and that
applying that methodology to pending
volume decrease adjustment cases
would amount to retroactive
rulemaking. The commenters added that
the proposed methodology, or the
‘‘proxy methodology,’’ is not, in fact,
new because it has been referenced in
PRRB decisions and has been used by
some MACs at times. Other commenters
stated that critical funding to hospitals
for pending volume decrease adjustment
determinations should not be at risk due
to a lack of standardization across CMS
and MAC decisions.
Response: We appreciate the
commenters’ support of our proposed
changes to the volume decrease
adjustment methodology. We disagree
with the commenters’ assertion that the
methodology that we outlined as our
‘‘current methodology’’ is not current
but a new methodology that we are
introducing as ‘‘current.’’ While there
may have been inconsistencies in
volume decrease adjustment
determinations made by some MACs,
inconsistent MAC determinations and
PRRB decisions that are subsequently
reversed by the Administrator do not
establish agency policy nor bind the
agency. Furthermore, our current
methodology has been upheld by the
PRRB in Greenwood County Hospital
Eureka, Kansas, v. Blue Cross Blue
Shield Association/Blue Cross Blue
Shield of Kansas, 2006 WL 3050893
(PRRB, August 29, 2006) and clearly
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outlined in the Administrator’s
decisions in Unity Healthcare
Muscatine, Iowa v. Blue Cross Blue
Shield Association/Wisconsin
Physicians Service, 2014 WL 5450066
(CMS Administrator September 4,
2014); Lakes Regional Healthcare Spirit
Lake, Iowa v. Blue Cross Blue Shield
Association/Wisconsin Physicians
Service, 2014 WL 5450078 (CMS
Administrator September 4, 2014);
Fairbanks Memorial Hospital v.
Wisconsin Physician Services/BlueCross
BlueShield Association, 2015 WL
5852432 (CMS Administrator, August 5,
2015); St. Anthony Regional Hospital v.
Wisconsin Physicians Service, 2016 WL
7744992 (CMS Administrator October 3,
2016); and Trinity Regional Medical
Center v. Wisconsin Physician Services,
2017 WL 2403399 (CMS Administrator
February 9, 2017), to name a few. For
these reasons, we disagree with the
commenters that our current policy was
not the established policy, and we
believe that applying this policy does
not constitute retroactive rulemaking.
Indeed, some of these same commenters
are currently awaiting a court decision
in a pending appeal in which they
challenged the exact methodology
which they claim in their comments is
not ‘‘current policy’’ but a redefined
‘‘new policy.’’
We also do not agree that we should
apply our proposed methodology
retroactively. The IPPS is a prospective
system and, absent legislation, a judicial
decision, or other compelling
considerations to the contrary, we
generally make changes to IPPS
regulations effective prospectively based
on the date of discharge or the start of
a cost reporting period within a certain
Federal fiscal year. We believe following
our usual approach and applying the
new methodology for cost reporting
periods beginning on or after October 1,
2017 would allow for the most equitable
application of this methodology among
all IPPS providers seeking to qualify for
volume decrease adjustments. For these
reasons, we are finalizing that our
proposed changes to the volume
decrease adjustment methodology will
apply prospectively for cost reporting
periods beginning on or after October 1,
2017.
Comment: One commenter suggested
that, because CMS did not issue
updated core staffing factors for FY 2012
or later, the proposed change to no
longer require a hospital to explicitly
demonstrate that it appropriately
adjusted the number of staff in inpatient
areas of the hospital based on the
decrease in the number of inpatient
days and to no longer require the MAC
to adjust the volume decrease
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adjustment payment amount for excess
staffing be effective for cost reporting
periods beginning on or after October 1,
2011.
Response: We appreciate the
commenter’s support of our effort to
streamline the volume decrease
adjustment determination process by
eliminating the core staffing adjustment.
However, we disagree with the
suggestion to apply this change
retroactively. As noted earlier, the IPPS
is a prospective system and we
generally make changes effectively
prospectively. The absence of updated
core staffing data does not undermine
the policy that we expressly indicated
in prior rulemaking. Therefore, we do
not see any compelling reason to apply
this change retrospectively.
Comment: Some commenters
addressed areas of volume decrease
adjustment policy for which we did not
propose any changes. These included
waiving the requirement for hospitals to
demonstrate that the decrease in
discharges was beyond the hospital’s
control; to no longer require the removal
of variable costs and calculate the
volume decrease adjustment by
subtracting the MS–DRG payment from
total inpatient costs; shortening the
timeline in which MACs need to make
volume decrease adjustment
determinations; and stopping MACs
from rejecting requests for volume
decrease adjustments before an NPR is
issued.
Response: We appreciate the
commenters’ concerns. However,
because we did not make any proposals
related to these specific policy areas and
we consider these comments to be out
of the scope of the proposed rule, we are
not addressing them in this final rule.
After consideration of the public
comments we received, we are
finalizing our policies as proposed, with
one modification to our proposed
amendment to § 412.92(e)(3) to reflect
these policies. We are finalizing our
proposal to prospectively require that
the MACs compare Medicare revenue
allocable to fixed costs from the cost
reporting period in which the hospital
experienced the volume decrease to the
hospital’s fixed costs from that same
cost reporting period when calculating a
volume decrease adjustment and that
the cap will no longer be applied to the
volume decrease adjustment calculation
methodology. We proposed to revise the
regulations at § 412.92(e)(3) to reflect
these changes. However, our proposed
regulatory text did not precisely capture
the new calculation methodology that
we described in the preamble to the
proposed rule, and which we are now
finalizing, in one respect. Specifically,
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the preamble to the proposed rule stated
that, under the proposed change in the
MAC’s calculation of the volume
decrease adjustment, ‘‘in order to
estimate the fixed portion of the
Medicare revenue, the MACs would
apply the ratio of the hospital’s fixed
costs to total costs in the cost reporting
period when it experienced the volume
decrease to the hospital’s total Medicare
revenue in that same cost reporting
period’’ (82 FR 19934). By contrast, the
proposed regulatory text in the
proposed rule stated that the ratio to be
applied by the MAC would be ‘‘the ratio
of the hospital’s fixed Medicare
inpatient operating costs to its total
Medicare inpatient operating costs’’ (82
FR 20161). Therefore, consistent with
the proposed policy which we are now
finalizing, we are deleting the two
instances of the words ‘‘Medicare’’ that
appear in the clause quoted in the
preceding sentence. Accordingly, as
finalized, the second sentence of
§ 412.92(e)(3) specifies that, effective for
cost reporting periods beginning on or
after October 1, 2017, the MAC
determines a lump sum adjustment
amount equal to the difference between
the hospital’s fixed Medicare inpatient
operating costs and the hospital’s total
MS–DRG revenue based on MS–DRGadjusted prospective payment rates for
inpatient operating costs (including
outlier payments for inpatient operating
costs determined under subpart F of
Part 412 and additional payments made
for inpatient operating costs for
hospitals that serve a disproportionate
share of low-income patients as
determined under § 412.106 and for
indirect medical education costs as
determined under § 412.105) multiplied
by the ratio of the hospital’s fixed
inpatient operating costs to its total
inpatient operating costs. We also are
finalizing our proposal to prospectively
modify the volume decrease adjustment
process to no longer require that a
hospital explicitly demonstrate that it
appropriately adjusted the number of
staff in inpatient areas of the hospital
based on the decrease in the number of
inpatient days and to no longer require
the MAC to adjust the volume decrease
adjustment payment amount for excess
staffing. These changes will be effective
for cost reporting periods beginning on
or after October 1, 2017. As we noted
earlier, we proposed that if the MDH
program ends up being extended by law,
similar to how it was extended by
section 205 of the MACRA (Pub. L. 114–
10) and prior legislation, these changes
to the volume decrease adjustment
methodology and the amendment to
§ 412.92(e)(3) for SCHs would also be
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made to the parallel requirements for
MDHs under § 412.108(d)(3). To that
end, we are modifying the regulations at
§ 412.108(d)(3) by modifying the
introductory paragraph to crossreference the requirements found at
§ 412.92(e)(3). This will allow for
consistency in the regulations governing
volume decrease adjustments should the
MDH program be extended.
D. Rural Referral Centers (RRCs) Annual
Updates to Case-Mix Index and
Discharge Criteria (§ 412.96)
Under the authority of section
1886(d)(5)(C)(i) of the Act, the
regulations at § 412.96 set forth the
criteria that a hospital must meet in
order to qualify under the IPPS as a
rural referral center (RRC). RRCs receive
some special treatment under both the
DSH payment adjustment and the
criteria for geographic reclassification.
Section 402 of Public Law 108–173
raised the DSH payment adjustment for
RRCs such that they are not subject to
the 12-percent cap on DSH payments
that is applicable to other rural
hospitals. RRCs also are not subject to
the proximity criteria when applying for
geographic reclassification. In addition,
they do not have to meet the
requirement that a hospital’s average
hourly wage must exceed, by a certain
percentage, the average hourly wage of
the labor market area in which the
hospital is located.
Section 4202(b) of Public Law 105–33
states, in part, that any hospital
classified as an RRC by the Secretary for
FY 1991 shall be classified as such an
RRC for FY 1998 and each subsequent
fiscal year. In the August 29, 1997 IPPS
final rule with comment period (62 FR
45999), we reinstated RRC status for all
hospitals that lost that status due to
triennial review or MGCRB
reclassification. However, we did not
reinstate the status of hospitals that lost
RRC status because they were now
urban for all purposes because of the
OMB designation of their geographic
area as urban. Subsequently, in the
August 1, 2000 IPPS final rule (65 FR
47089), we indicated that we were
revisiting that decision. Specifically, we
stated that we would permit hospitals
that previously qualified as an RRC and
lost their status due to OMB
redesignation of the county in which
they are located from rural to urban, to
be reinstated as an RRC. Otherwise, a
hospital seeking RRC status must satisfy
all of the other applicable criteria. We
use the definitions of ‘‘urban’’ and
‘‘rural’’ specified in Subpart D of 42 CFR
part 412. One of the criteria under
which a hospital may qualify as an RRC
is to have 275 or more beds available for
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38183
use (§ 412.96(b)(1)(ii)). A rural hospital
that does not meet the bed size
requirement can qualify as an RRC if the
hospital meets two mandatory
prerequisites (a minimum case-mix
index (CMI) and a minimum number of
discharges), and at least one of three
optional criteria (relating to specialty
composition of medical staff, source of
inpatients, or referral volume). (We refer
readers to § 412.96(c)(1) through (c)(5)
and the September 30, 1988 Federal
Register (53 FR 38513) for additional
discussion.) With respect to the two
mandatory prerequisites, a hospital may
be classified as an RRC if—
• The hospital’s CMI is at least equal
to the lower of the median CMI for
urban hospitals in its census region,
excluding hospitals with approved
teaching programs, or the median CMI
for all urban hospitals nationally; and
• The hospital’s number of discharges
is at least 5,000 per year, or, if fewer, the
median number of discharges for urban
hospitals in the census region in which
the hospital is located. The number of
discharges criterion for an osteopathic
hospital is at least 3,000 discharges per
year, as specified in section
1886(d)(5)(C)(i) of the Act.
1. Case-Mix Index (CMI)
Section 412.96(c)(1) provides that
CMS establish updated national and
regional CMI values in each year’s
annual notice of prospective payment
rates for purposes of determining RRC
status. The methodology we used to
determine the national and regional CMI
values is set forth in the regulations at
§ 412.96(c)(1)(ii). The national median
CMI value for FY 2018 is based on the
CMI values of all urban hospitals
nationwide, and the regional median
CMI values for FY 2018 are based on the
CMI values of all urban hospitals within
each census region, excluding those
hospitals with approved teaching
programs (that is, those hospitals that
train residents in an approved GME
program as provided in § 413.75). These
values are based on discharges
occurring during FY 2016 (October 1,
2015 through September 30, 2016), and
include bills posted to CMS’ records
through March 2016.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19936), we
proposed that, in addition to meeting
other criteria, if rural hospitals with
fewer than 275 beds are to qualify for
initial RRC status for cost reporting
periods beginning on or after October 1,
2017, they must have a CMI value for
FY 2016 that is at least—
• 1.6635 (national—all urban); or
• The median CMI value (not
transfer-adjusted) for urban hospitals
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(excluding hospitals with approved
teaching programs as identified in
§ 413.75) calculated by CMS for the
census region in which the hospital is
located.
The proposed median CMI values by
region were set forth in the proposed
rule (82 FR 19936). We stated in the
proposed rule that we intended to
update these proposed CMI values in
the FY 2018 final rule to reflect the
updated FY 2016 MedPAR file, which
will contain data from additional bills
received through March 2017. We did
not receive any public comments on our
proposal. Based on the latest available
data (FY 2016 bills received through
March 2017), in addition to meeting
other criteria, if rural hospitals with
fewer than 275 beds are to qualify for
initial RRC status for cost reporting
periods beginning on or after October 1,
2017, they must have a CMI value for
FY 2016 that is at least—
• 1.6638 (national—all urban); or
• The median CMI value (not
transfer-adjusted) for urban hospitals
(excluding hospitals with approved
teaching programs as identified in
§ 413.75) calculated by CMS for the
census region in which the hospital is
located.
The final CMI values by region are set
forth in the table below:
Case-mix
index value
Region
1.
2.
3.
4.
5.
6.
7.
8.
9.
New England (CT, ME, MA, NH, RI, VT) ........................................................................................................................................
Middle Atlantic (PA, NJ, NY) ...........................................................................................................................................................
South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV) ...............................................................................................................
East North Central (IL, IN, MI, OH, WI) ..........................................................................................................................................
East South Central (AL, KY, MS, TN) .............................................................................................................................................
West North Central (IA, KS, MN, MO, NE, ND, SD) ......................................................................................................................
West South Central (AR, LA, OK, TX) ............................................................................................................................................
Mountain (AZ, CO, ID, MT, NV, NM, UT, WY) ...............................................................................................................................
Pacific (AK, CA, HI, OR, WA) .........................................................................................................................................................
A hospital seeking to qualify as an
RRC should obtain its hospital-specific
CMI value (not transfer-adjusted) from
its MAC. Data are available on the
Provider Statistical and Reimbursement
(PS&R) System. In keeping with our
policy on discharges, the CMI values are
computed based on all Medicare patient
discharges subject to the IPPS MS–DRGbased payment.
2. Discharges
Section 412.96(c)(2)(i) provides that
CMS set forth the national and regional
numbers of discharges criteria in each
year’s annual notice of prospective
payment rates for purposes of
determining RRC status. As specified in
section 1886(d)(5)(C)(ii) of the Act, the
national standard is set at 5,000
discharges. In the FY 2018 IPPS/LTCH
PPS proposed rule, for FY 2018, we
proposed to update the regional
standards based on discharges for urban
hospitals’ cost reporting periods that
began during FY 2015 (that is, October
1, 2014 through September 30, 2015),
which were the latest cost report data
available at the time this proposed rule
was developed. Therefore, we proposed
that, in addition to meeting other
criteria, a hospital, if it is to qualify for
initial RRC status for cost reporting
periods beginning on or after October 1,
2017, must have, as the number of
discharges for its cost reporting period
that began during FY 2015, at least—
• 5,000 (3,000 for an osteopathic
hospital); or
• The median number of discharges
for urban hospitals in the census region
in which the hospital is located. (We
refer readers to the table set forth in the
FY 2018 IPPS/LTCH PPS proposed rule
at 82 FR 19936.) In the proposed rule,
we stated that we intended to update
these numbers in the FY 2018 final rule
based on the latest available cost report
data.
We did not receive any public
comments on our proposal.
Based on the latest discharge data
available at this time, that is, for cost
reporting periods that began during FY
2015, the final median number of
discharges for urban hospitals by census
region are set forth in the following
table.
Number of
discharges
Region
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1.
2.
3.
4.
5.
6.
7.
8.
9.
New England (CT, ME, MA, NH, RI, VT) ........................................................................................................................................
Middle Atlantic (PA, NJ, NY) ...........................................................................................................................................................
South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV) ...............................................................................................................
East North Central (IL, IN, MI, OH, WI) ..........................................................................................................................................
East South Central (AL, KY, MS, TN) .............................................................................................................................................
West North Central (IA, KS, MN, MO, NE, ND, SD) ......................................................................................................................
West South Central (AR, LA, OK, TX) ............................................................................................................................................
Mountain (AZ, CO, ID, MT, NV, NM, UT, WY) ...............................................................................................................................
Pacific (AK, CA, HI, OR, WA) .........................................................................................................................................................
We note that the median number of
discharges for hospitals in each census
region is greater than the national
standard of 5,000 discharges. Therefore,
under this final rule, 5,000 discharges is
the minimum criterion for all hospitals,
except for osteopathic hospitals for
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which the minimum criterion is 3,000
discharges.
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1.4192
1.5133
1.5405
1.5896
1.5086
1.6344
1.6950
1.7580
1.6473
8,080
9,988
10,552
8,181
8,647
7,709
5,325
8,735
9,101
E. Payment Adjustment for Low-Volume
Hospitals (§ 412.101)
1. Expiration of Temporary Changes to
Low-Volume Hospital Payment Policy
Under section 1886(d)(12) of the Act,
as amended, most recently by section
204 of the Medicare Access and CHIP
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Reauthorization Act of 2015 (MACRA),
Public Law 114–10, the temporary
changes in the low-volume hospital
payment policy originally provided by
the Affordable Care Act and extended
through subsequent legislation are
effective through FY 2017. Beginning
with FY 2018, the preexisting lowvolume hospital payment adjustment
and qualifying criteria, as implemented
in FY 2005 and discussed later in this
section, will resume. We discuss the
payment policies for FY 2018 in section
V.E.3. of the preamble of this final rule.
2. Background
Section 1886(d)(12) of the Act, as
added by section 406(a) of Public Law
108–173, provides for a payment
adjustment to account for the higher
costs per discharge for low-volume
hospitals under the IPPS, effective
beginning FY 2005. Sections 3125 and
10314 of the Affordable Care Act
amended section 1886(d)(12) of the Act
by modifying the definition of a lowvolume hospital and the methodology
for calculating the payment adjustment
for low-volume hospitals, effective only
for discharges occurring during FYs
2011 and 2012. Specifically, the
provisions of the Affordable Care Act
amended the qualifying criteria for lowvolume hospitals to specify, for FYs
2011 and 2012, that a hospital qualifies
as a low-volume hospital if it is more
than 15 road miles from another
subsection (d) hospital and has less than
1,600 discharges of individuals entitled
to, or enrolled for, benefits under
Medicare Part A during the fiscal year.
In addition, the statute, as amended by
the Affordable Care Act, provides that
the low-volume hospital payment
adjustment (that is, the percentage
increase) is determined using a
continuous linear sliding scale ranging
from 25 percent for low-volume
hospitals with 200 or fewer discharges
of individuals entitled to, or enrolled
for, benefits under Medicare Part A in
the fiscal year to 0 percent for lowvolume hospitals with greater than
1,600 discharges of such individuals in
the fiscal year. The temporary changes
to the low-volume hospital qualifying
criteria and the payment adjustment
originally provided by the Affordable
Care Act were extended by subsequent
legislation, most recently through FY
2017 by section 204 of the MACRA. (We
refer readers to the FY 2017 IPPS/LTCH
PPS final rule (81 FR 56941 through
59943) for a detailed summary of the
applicable legislation.) Under current
law, beginning with FY 2018, the
preexisting low-volume hospital
qualifying criteria and payment
adjustment, as implemented in FY 2005
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and described in this section, will
resume. The regulations implementing
the low-volume hospital adjustment
provided by section 1886(d)(12) of the
Act are located at 42 CFR 412.101.
The additional payment adjustment to
a low-volume hospital provided for
under section 1886(d)(12) of the Act is
in addition to any payment calculated
under this section. Therefore, the
additional payment adjustment is based
on the per discharge amount paid to the
qualifying hospital under section 1886
of the Act. In other words, the lowvolume add-on payment amount is
based on total per discharge payments
made under section 1886 of the Act,
including capital, DSH, IME, and
outliers. For hospitals paid based on the
hospital-specific rate, the low-volume
add-on payment amount is based on
either the Federal rate or the hospitalspecific rate, whichever results in a
greater operating IPPS payment.
Section 1886(d)(12)(C)(i) of the Act
defines a low-volume hospital, for fiscal
years other than FYs 2011 through 2017,
as a subsection (d) hospital (as defined
in paragraph (1)(B)) that the Secretary
determines is located more than 25 road
miles from another subsection (d)
hospital and that has less than 800
discharges during the fiscal year.
Section 1886(d)(12)(C)(ii) of the Act
further stipulates that the term
‘‘discharge’’ means an inpatient acute
care discharge of an individual,
regardless of whether the individual is
entitled to benefits under Medicare Part
A. Therefore, for fiscal years other than
FYs 2011 through 2017, the term
‘‘discharge’’ refers to total discharges,
regardless of payer (that is, not only
Medicare discharges). Furthermore,
section 1886(d)(12)(B) of the Act
requires, for discharges occurring in FYs
2005 through 2010 and FY 2018 and
subsequent years, that the Secretary
determine an applicable percentage
increase for these low-volume hospitals
based on the ‘‘empirical relationship’’
between the standardized cost-per-case
for such hospitals and the total number
of discharges of such hospitals and the
amount of the additional incremental
costs (if any) that are associated with
such number of discharges. The statute
thus mandates that the Secretary
develop an empirically justifiable
adjustment based on the relationship
between costs and discharges for these
low-volume hospitals. Section
1886(d)(12)(B)(iii) of the Act limits the
applicable percentage increase
adjustment to no more than 25 percent.
Based on an analysis we conducted
for the FY 2005 IPPS final rule (69 FR
49099 through 49102), a 25-percent lowvolume adjustment to all qualifying
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38185
hospitals with less than 200 discharges
was found to be most consistent with
the statutory requirement to provide
relief to low-volume hospitals where
there is empirical evidence that higher
incremental costs are associated with
low numbers of total discharges. In the
FY 2006 IPPS final rule (70 FR 47432
through 47434), we stated that
multivariate analyses supported the
existing low-volume adjustment
implemented in FY 2005.
3. Payment Adjustment for FY 2018 and
Subsequent Fiscal Years
In accordance with section
1886(d)(12) of the Act, beginning with
FY 2018, the low-volume hospital
definition and payment adjustment
methodology will revert back to the
statutory requirements that were in
effect prior to the amendments made by
the Affordable Care Act and extended
by subsequent legislation. Therefore,
effective for FY 2018 and subsequent
years, in order to qualify as a lowvolume hospital, a subsection (d)
hospital must be more than 25 road
miles from another subsection (d)
hospital and have less than 200
discharges (that is, less than 200
discharges total, including both
Medicare and non-Medicare discharges)
during the fiscal year. As discussed
earlier, the statute specifies that a lowvolume hospital must have less than
800 discharges during the fiscal year.
However, as required by section
1886(d)(12)(B)(i) of the Act and as
discussed earlier, the Secretary has
developed an empirically justifiable
payment adjustment based on the
relationship, for IPPS hospitals with less
than 800 discharges, between the
additional incremental costs (if any) that
are associated with a particular number
of discharges. Based on an analysis we
conducted for the FY 2005 IPPS final
rule (69 FR 49099 through 49102), a 25percent low-volume adjustment to all
qualifying hospitals with less than 200
discharges was found to be most
consistent with the statutory
requirement to provide relief for lowvolume hospitals where there is
empirical evidence that higher
incremental costs are associated with
low numbers of total discharges. (Under
the policy we established in that same
final rule, hospitals with between 200
and 799 discharges do not receive a lowvolume hospital adjustment.)
As described earlier, for FYs 2005
through 2010 and FY 2018 and
subsequent years, the discharge
determination is made based on the
hospital’s number of total discharges,
that is, Medicare and non-Medicare
discharges. The hospital’s most recently
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submitted cost report is used to
determine if the hospital meets the
discharge criterion to receive the lowvolume payment adjustment in the
current year (§ 412.101(b)(2)(i)). We use
cost report data to determine if a
hospital meets the discharge criterion
because this is the best available data
source that includes information on
both Medicare and non-Medicare
discharges. We note that, for FYs 2011
through 2017, we used the most recently
available MedPAR data to determine the
hospital’s Medicare discharges because
only Medicare discharges were used to
determine if a hospital met the
discharge criterion for those years.
For FY 2018 and for subsequent fiscal
years, in addition to a discharge
criterion, the eligibility for the lowvolume payment adjustment is also
dependent upon the hospital meeting
the mileage criterion specified at
§ 412.101(b)(2)(i). Specifically, to meet
the mileage criterion to qualify for the
low-volume payment adjustment for FY
2018 and subsequent fiscal years, a
hospital must be located more than 25
road miles from the nearest subsection
(d) hospital. We define, at § 412.101(a),
the term ‘‘road miles’’ to mean ‘‘miles’’
as defined at § 412.92(c)(1) (75 FR 50238
through 50275 and 50414).
In the FY 2011 IPPS/LTCH PPS final
rule (75 FR 50238 through 50275 and
50414) and subsequent rulemaking,
most recently in the FY 2017 IPPS/
LTCH PPS final rule (81 FR 56942
through 56943), we discussed the
process for requesting and obtaining the
low-volume hospital payment
adjustment. In order to qualify for the
low-volume hospital payment
adjustment, a hospital must provide to
its MAC sufficient evidence to
document that it meets the discharge
and distance requirements. The MAC
will determine, based on the most
recent data available, if the hospital
qualifies as a low-volume hospital, so
that the hospital will know in advance
whether or not it will receive a payment
adjustment. The MAC and CMS may
review available data, in addition to the
data the hospital submits with its
request for low-volume hospital status,
in order to determine whether or not the
hospital meets the qualifying criteria.
In order to receive a low-volume
hospital payment adjustment under
§ 412.101, a hospital must notify and
provide documentation to its MAC that
it meets the mileage criterion. The use
of a Web-based mapping tool as part of
documenting that the hospital meets the
mileage criterion for low-volume
hospitals is acceptable. The MAC will
determine if the information submitted
by the hospital, such as the name and
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street address of the nearest hospitals,
location on a map, and distance (in road
miles, as defined in the regulations at
§ 412.101(a)) from the hospital
requesting low-volume hospital status,
is sufficient to document that it meets
the mileage criterion. If not, the MAC
will follow up with the hospital to
obtain additional necessary information
to determine whether or not the hospital
meets the low-volume mileage criterion.
In addition, the MAC will refer to the
hospital’s most recently submitted cost
report to determine whether or not the
hospital meets the discharge criterion. A
hospital should refer to its most recently
submitted cost report for total
discharges (Medicare and nonMedicare) in order to decide whether or
not to apply for low-volume hospital
status for a particular fiscal year. A
hospital must continue to meet the
qualifying criteria at § 412.101(b)(2)(i) as
a low-volume hospital (that is, the
discharge criterion and the mileage
criterion) in order to receive the
payment adjustment in that year; that is,
low-volume hospital status is not based
on a ‘‘one-time’’ qualification (75 FR
50238 through 50275).
As discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19938),
in order to be a low-volume hospital in
FY 2018 and subsequent fiscal years, in
accordance with our previously
established procedure, a hospital must
make a written request for low-volume
hospital status that is received by its
MAC by September 1 immediately
preceding the start of the Federal fiscal
year for which the hospital is applying
for low-volume hospital status in order
for the 25-percent, low-volume, add-on
payment adjustment to be applied to
payments for its discharges for the fiscal
year beginning on or after October 1
immediately following the request (that
is, the start of the Federal fiscal year).
For a hospital whose request for lowvolume hospital status is received after
September 1, if the MAC determines the
hospital meets the criteria to qualify as
a low-volume hospital, the MAC will
apply the 25-percent, low-volume, addon payment adjustment to determine
payment for the hospital’s discharges for
the fiscal year, effective prospectively
within 30 days of the date of the MAC’s
low-volume status determination.
Specifically, for FY 2018, a hospital
must make a written request for lowvolume hospital status that is received
by its MAC no later than September 1,
2017, in order for the 25-percent, lowvolume, add-on payment adjustment to
be applied to payments for its
discharges beginning on or after October
1, 2017 (through September 30, 2018).
Under this procedure, a hospital that
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qualified for the low-volume hospital
payment adjustment for FY 2017 may
continue to receive a low-volume
hospital payment adjustment for FY
2018 without reapplying if it meets both
the discharge criterion and the mileage
criterion applicable for FY 2018. As in
previous years, in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19938),
we proposed that such a hospital must
send written verification that is received
by its MAC no later than September 1,
2017, stating that it meets the mileage
criterion applicable for FY 2018. For FY
2018, we further proposed that this
written verification must also state,
based upon the most recently submitted
cost report, that the hospital meets the
discharge criterion applicable for FY
2018 (that is, less than 200 discharges
total, including both Medicare and nonMedicare discharges). If a hospital’s
request for low-volume hospital status
for FY 2018 is received after September
1, 2017, and if the MAC determines the
hospital meets the criteria to qualify as
a low-volume hospital, the MAC will
apply the 25-percent, low-volume, addon payment adjustment to determine the
payment for the hospital’s FY 2018
discharges, effective prospectively
within 30 days of the date of the MAC’s
low-volume hospital status
determination. We noted that this
process mirrors our established
application process but is updated to
ensure that providers currently
receiving the low-volume hospital
payment adjustment verify that they
meet both the mileage criterion and the
discharge criterion applicable for FY
2018 to continue receiving the
adjustment for FY 2018. For additional
information on our established
application process for the low-volume
hospital payment adjustment, we refer
readers to the FY 2017 IPPS/LTCH PPS
final rule (81 FR 56942 through 56943).
Comment: A few commenters
expressed concern about the financial
impact of the expiration of the
temporary changes to the low-volume
hospital payment adjustment provided
for by the Affordable Care Act and
extended through subsequent legislation
(most recently the MACRA). Some
commenters supported legislative action
that would make permanent these
changes to the low-volume hospital
payment adjustment. Other commenters
requested that CMS use the existing
statutory authority to make the lowvolume adjustment to qualifying
hospitals that have less than 800 total
discharges rather than only to qualifying
hospitals that have less than 200 total
discharges. These commenters did not
provide any data analysis in support of
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their comments to expand the lowvolume hospital adjustment to
qualifying hospitals that have less than
800 total discharges.
One commenter questioned whether
CMS would be making any claims
processing or cost report changes in
light of the expiration of the temporary
changes to the low-volume hospital
payment adjustment.
Response: As noted earlier in the
preamble of this final rule and as
discussed in response to public
comments in the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53408 through
53409) and the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50612 through 50613),
to implement the original low-volume
hospital payment adjustment provision,
and as mandated by statute, we
developed an empirically justified
adjustment based on the relationship
between costs and total discharges of
hospitals with less than 800 total
(Medicare and non-Medicare)
discharges. Specifically, we performed
several regression analyses to evaluate
the relationship between hospitals’ costs
per case and discharges, and found that
an adjustment for hospitals with less
than 200 total discharges is most
consistent with the statutory
requirement to provide for additional
payments to low-volume hospitals
where there is empirical evidence that
higher incremental costs are associated
with lower numbers of discharges (69
FR 49101 through 49102). Based on
these analyses, we established a lowvolume hospital policy under which
qualifying hospitals with less than 200
total discharges receive a payment
adjustment of an additional 25 percent.
(Section 1886(d)(12)(B)(iii) of the Act
limits the applicable percentage
increase adjustment to no more than 25
percent.) In the future, we may
reevaluate the low-volume hospital
adjustment policy; that is, the definition
of a low-volume hospital and the
payment adjustment. However, because
we are not aware of any analysis or
empirical evidence that would support
expanding the originally established a
low-volume hospital adjustment policy,
we did not make any proposals
regarding the low-volume hospital
payment adjustment for FY 2018 and
are not making any changes to the lowvolume hospital payment adjustment
policy in this final rule.
Therefore, the low-volume hospital
definition and payment adjustment
methodology will revert back to the
policy established under statutory
requirements that were in effect prior to
the amendments made by the Affordable
Care Act and extended through
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subsequent legislation (most recently
the MACRA).
With regard to the comment regarding
revisions to claims processing or the
cost report, any such changes will be
addressed through subregulatory
guidance or other avenues, as
appropriate.
After consideration of the public
comments we received, we are
finalizing our proposals as described
above, without modification.
As described earlier, for FYs 2005
through 2010 and FY 2018 and
subsequent fiscal years, the discharge
determination will be made based on
the hospital’s number of total
discharges; that is, Medicare and nonMedicare discharges. The hospital’s
most recently submitted cost report is
used to determine if the hospital meets
the discharge criterion to receive the
low-volume hospital payment
adjustment in the current year
(§ 412.101(b)(2)(i)). We use cost report
data to determine if a hospital meets the
discharge criterion because this is the
best available data source that includes
information on both Medicare and nonMedicare discharges. As we noted in the
proposed rule, for FYs 2011 through
2017, we used the most recently
available MedPAR data to determine the
hospital’s Medicare discharges because
only Medicare discharges were used to
determine if a hospital met the
discharge criterion for those years. In
addition to a discharge criterion, the
eligibility for the low-volume hospital
payment adjustment also will be
dependent upon the hospital meeting
the mileage criterion specified at
§ 412.101(b)(2)(i). Specifically, to meet
the mileage criterion to qualify for the
low-volume hospital payment
adjustment for FY 2018 and subsequent
fiscal years, a hospital must be located
more than 25 road miles from the
nearest subsection (d) hospital.
For FY 2018, as discussed in the
proposed rule, we will continue to use
the established process for requesting
and obtaining the low-volume hospital
payment adjustment. That is, in order to
receive a low-volume hospital payment
adjustment under § 412.101, a hospital
must notify and provide documentation
to its MAC that it meets the discharge
and distance requirements. The MAC
will determine, based on the most
recent data available, if the hospital
qualifies as a low-volume hospital, so
that the hospital will know in advance
whether or not it will receive a payment
adjustment. The MAC and CMS may
review available data, in addition to the
data the hospital submits with its
request for low-volume hospital status,
in order to determine whether or not the
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38187
hospital meets the qualifying criteria.
(For additional details on our
established process for the low-volume
hospital payment adjustment, we refer
readers to the FY 2017 IPPS/LTCH PPS
final rule (81 FR 56942 through 56943).)
Consistent with our previously
established procedure, for FY 2018, a
hospital must make a written request for
low-volume hospital status that is
received by its MAC no later than
September 1, 2017, in order for the 25percent low-volume hospital payment
adjustment to be applied to payments
for its discharges beginning on or after
October 1, 2017 (through September 30,
2018). Under this procedure, a hospital
that qualified for the low-volume
hospital payment adjustment for FY
2017 may continue to receive a lowvolume hospital payment adjustment for
FY 2018 without reapplying if it meets
both the discharge criterion and the
mileage criterion applicable for FY
2018. As in previous years, such a
hospital must send written verification
that is received by its MAC no later than
September 1, 2017, stating that it meets
the mileage criterion applicable for FY
2018. In addition, for such a hospital,
this written verification must also state,
based upon the most recently submitted
cost report, that the hospital meets the
discharge criterion applicable for FY
2018 (that is, less than 200 discharges
total, including both Medicare and nonMedicare discharges). If a hospital’s
request for low-volume hospital status
for FY 2018 is received after September
1, 2017, and if the MAC determines the
hospital meets the criteria to qualify as
a low-volume hospital, the MAC will
apply the 25-percent low-volume
hospital payment adjustment to
determine the payment for the hospital’s
FY 2018 discharges, effective
prospectively within 30 days of the date
of the MAC’s low-volume hospital
status determination.
In the FY 2016 IPPS interim final rule
with comment period (80 FR 49594
through 49597 and 49767), we made
conforming changes to the regulations at
42 CFR 412.101 to reflect the extension
of the changes to the qualifying criteria
and the payment adjustment
methodology for low-volume hospitals
through FY 2017 in accordance with
section 204 of the MACRA. Under these
revisions, beginning with FY 2018,
consistent with current law, the lowvolume hospital qualifying criteria and
payment adjustment methodology will
return to the criteria and methodology
that were in effect prior to the
amendments made by the Affordable
Care Act (that is, the low-volume
hospital payment policy in effect for
FYs 2005 through 2010). Therefore, no
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further revisions to the policy or to the
regulations at § 412.101 are required to
conform them to the statutory
requirement that the low-volume
hospital policy in effect prior to the
Affordable Care Act will again be in
effect for FY 2018 and subsequent years.
As discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19938),
for this reason, we did not propose
specific amendments to the regulations
at § 412.101 to reflect the expiration of
the temporary changes to the lowvolume hospital payment adjustment
policy originally provided for by the
Affordable Care Act, but we proposed
that if these temporary changes to the
low-volume hospital payment policy
were to be extended by law, similar to
extensions provided most recently
through FY 2017 by MACRA, we would
make conforming changes to the
regulations at § 412.101(b) through (d),
as appropriate, to reflect any such
extension. Because, as of the time of the
development of this final rule, these
temporary changes to the low-volume
hospital payment policy have not been
extended by law, we are not making any
such conforming changes. As noted
previously, any changes to the cost
report will be addressed through
subregulatory guidance or other
avenues, as appropriate.
4. Parallel Low-Volume Hospital
Payment Adjustment Regarding
Hospitals Operated by the Indian Health
Services (IHS) or a Tribe
As previously stated, section
1886(d)(12)(C) of the Act and our
regulations at 42 CFR 412.101(b)(2)
require that, in order to qualify for the
low-volume hospital payment
adjustment, a hospital must be located
more than a specified number of miles
from the nearest subsection (d) hospital
(referred to as the mileage criterion).
Section 1886(d)(1)(B) of the Act defines
a ‘‘subsection (d) hospital’’ as a hospital
located in one of the 50 States or District
of Columbia, other than the specified
excluded types of hospitals. As stated in
prior rulemaking (for example, 79 FR
50153 (August 22, 2014), 78 FR 61194
and 61196 (October 3, 2013), 78 FR
50710 (August 19, 2013), 78 FR 27623
(May 10, 2013), 77 FR 53397 (August 31,
2012), 77 FR 27965 (May 11, 2012), 75
FR 50307 (August 16, 2010)), CMS
considers IHS and Tribal hospitals to be
subsection (d) hospitals. However, in
the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 19939), we stated that, given
the unique nature of IHS and Tribal
hospitals and the populations they
serve, as discussed below, we believe it
would be appropriate to provide
additional flexibility in determining
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eligibility for the low-volume hospital
payment adjustment for IHS and Tribal
hospitals and non-IHS hospitals that are
located less than the specified mileage
from one another. Specifically, we
proposed that, for an IHS or Tribal
hospital, only its proximity to other IHS
or Tribal hospitals would be used to
determine if the mileage criterion is
met. Similarly, for a non-IHS hospital,
only its proximity to other non-IHS
hospitals would be used to determine if
the mileage criterion is met.
Except for emergencies and a few
other limited special cases, those
individuals who are not members of a
federally recognized Tribe are not
eligible for treatment at IHS or Tribal
hospitals. Therefore, such a hospital is
not a valid option for the general
Medicare population, including local
residents who are not members of a
federally recognized Tribe or not
otherwise eligible for IHS services.
Therefore, we stated that we believe it
would be appropriate to not consider
IHS and Tribal hospitals when
evaluating whether a non-IHS hospital
meets the mileage criterion.
Likewise, we stated that we believe it
would be appropriate to not consider
non-IHS hospitals when evaluating
whether an IHS or Tribal hospital meets
the mileage criterion. The principal
mission of the IHS is the provision of
health care to American Indians and
Alaska Natives throughout the United
States. In carrying out that mission, IHS
operates under two primary authorizing
statutes. The first statute, the Snyder
Act, authorizes IHS to expend such
moneys as Congress may determine
from time to time appropriate for the
conservation of the health of American
Indians or Alaska Natives. We refer
readers to 25 U.S.C. 13 (providing that
the Bureau of Indian Affairs (BIA) will
expend funds as appropriated for,
among other things, the conservation of
health of American Indians and Alaska
Natives); and 42 U.S.C. 2001(a)
(transferring the responsibility for
American Indian and Alaska Native
health care from BIA to HHS). The
second statute, the Indian Health Care
Improvement Act (IHCIA), established
IHS as an agency within the Public
Health Service of HHS and provides
authority for numerous programs to
address particular health initiatives for
American Indians and Alaska Natives,
such as alcohol and substance abuse
and diabetes (25 U.S.C. 1601 et seq.).
IHS and Tribal hospitals are charged
with addressing the health of American
Indians and Alaska Natives and are
uniquely situated to provide services to
this population. For this reason, we
stated that we believe it would be
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appropriate to not consider the non-IHS
hospitals when evaluating whether an
IHS or Tribal hospital meets the mileage
criterion.
Because IHS and Tribal hospitals are
subsection (d) hospitals, in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19339), we proposed to use our
authority under section 1886(d)(5)(I)(i)
of the Act to provide an adjustment
equal to the applicable low-volume
adjustment provided for under section
1886(d)(12) of the Act for an IHS or
Tribal hospital whose sole disqualifier
for the low-volume hospital adjustment
is its proximity to a non-IHS hospital,
and for a non-IHS hospital whose sole
disqualifier is its proximity to an IHS or
Tribal hospital. Such an adjustment
would provide that, practically
speaking, an IHS or Tribal hospital
would be able to receive a low-volume
hospital adjustment based on its
distance to the nearest IHS or Tribal
hospital, and a non-IHS hospital would
be able to qualify to receive a lowvolume hospital adjustment based on its
distance to the nearest non-IHS hospital.
We believe it is appropriate to apply
this authority here, given the unique
characteristics of IHS and Tribal
hospitals, as discussed above. To
implement this proposed adjustment,
we proposed to revise 42 CFR 412.101
by adding paragraph (e) to provide that,
for discharges occurring in FY 2018 and
subsequent years, only the distance
between IHS or Tribal hospitals would
be considered when assessing whether
an IHS or Tribal hospital meets the
mileage criterion under § 412.101(b)(2).
Similarly, only the distance between
non-IHS hospitals would be considered
when assessing whether a non-IHS
hospital meets the mileage criterion
under § 412.101(b)(2).
Comment: Commenters supported the
proposed parallel adjustment so that, for
discharges occurring in FY 2018 and
subsequent years, only the distance
between IHS or Tribal hospitals would
be considered when assessing whether
an IHS or Tribal hospital meets the
mileage criterion under § 412.101(b)(2),
and similarly, only the distance between
non-IHS hospitals would be considered
when assessing whether a non-IHS
hospital meets the mileage criterion
under § 412.101(b)(2). Several
commenters urged CMS to apply this
proposal retroactively as, according to
some commenters, they did not believe
CMS has always considered IHS and
Tribal hospitals to be subsection (d)
hospitals for purposes of the lowvolume payment adjustment, while
other commenters believed that IHS and
Tribal hospitals are not ‘‘like’’ hospitals.
Some commenters asked CMS to state in
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its final rule that the proposed addition
of paragraph (e) to § 412.101 is a
codification and clarification of existing
policy regarding dissimilar hospitals,
and that under that policy it is proper
to approve a low-volume hospital
adjustment to a hospital despite its
proximity to an IHS or Tribal hospital.
In general, commenters pointed to one
or more of the following reasons in
support of their assertion that the
proposed rule is a codification and
clarification of existing policy rather
than a new policy: (1) Published CMS
and MAC guidance that commenters
claim has provided for a ‘‘like hospital’’
standard since the implementation of
the adjustment (for example,
Transmittal 1347, Change Request 8627
(February 14, 2014)); (2) a hospital that
is within 15 miles of an IHS hospital
and also has sole community hospital
status indicates that such hospitals and
IHS facilities are not ‘‘like hospitals’’;
(3) assertions that some MACs had, at
times for some cost reporting periods (or
portions thereof), allowed non-IHS
hospitals whose sole disqualifier was
proximity to an IHS or Tribal hospital
to receive a low-volume hospital
adjustment; and (4) two Departmental
Appeals Board decisions for cases
which involved CAH designation not
eligibility for a low-volume hospital
adjustment (Cibola General Hospital,
DAB No. 2387 (2011) and La Paz
Regional Hospital, DAB CR 2883
(2013)), that commenters asserted found
that ‘‘IHS facilities should be
disregarded in determining a hospital’s
eligibility for Medicare program
classifications that are based on
proximity to other Medicare hospitals.’’
Response: We appreciate the
commenters’ support of our proposal.
Because we have consistently
considered IHS and Tribal hospitals to
be subsection (d) hospitals, as noted in
the preambles of the above cited rules,
we believe it is inappropriate to apply
this parallel adjustment retroactively.
While CMS may have in certain
instances used terms such as ‘‘like’’ in
place of ‘‘subsection (d)’’ when issuing
subregulatory guidance for the lowvolume hospital adjustment and there
may have been inconsistencies in lowvolume hospital adjustment
determinations made by some
contractors, these factors do not
establish agency policy or bind the
agency. Indeed, CMS’ regulations at
§ 412.101(b)(2) clearly refer to the
proximity to the nearest subsection (d)
hospital, consistent with section
1886(d)(12)(C)(i) of the Act, but neither
the statutory nor the regulatory
provisions that govern the low-volume
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hospital adjustment refer to a ‘‘like’’
hospital standard. The SCH regulations
at § 412.92(a), by comparison, expressly
refer to proximity to a ‘‘like’’ hospital
(as defined at § 412.92(c)(2)), consistent
with section 1886(d)(5)(D)(iii) of the
Act.
Moreover, the DAB decisions cited by
the commenters concerned the
certification of a hospital for CAH
status, not the requirements for
determining proximity to a subsection
(d) hospital for purposes of the lowvolume hospital payment adjustment.
To the extent that these decisions could
be interpreted to mean that the DAB has
held that IHS hospitals may not, by
implication, be subsection (d) hospitals,
we reiterate that CMS has a
longstanding policy of considering IHS
and Tribal hospitals to be subsection (d)
hospitals (as noted in the preambles to
the rules cited above). As a result, we
believe that it is necessary to amend the
regulation governing the low-volume
hospital payment adjustment in order to
provide flexibility in determining
eligibility for the adjustment. Therefore,
after consideration of the public
comments we received, we are
finalizing this proposal, including our
proposed revisions to 42 CFR 412.101,
without modification.
F. Indirect Medical Education (IME)
Payment Adjustment Factor for FY 2018
(§ 412.105)
Under the IPPS, an additional
payment amount is made to hospitals
with residents in an approved graduate
medical education (GME) program in
order to reflect the higher indirect
patient care costs of teaching hospitals
relative to nonteaching hospitals. The
payment amount is determined by use
of a statutorily specified adjustment
factor. The regulations regarding the
calculation of this additional payment,
known as the IME adjustment, are
located at § 412.105. We refer readers to
the FY 2012 IPPS/LTCH PPS final rule
(76 FR 51680) for a full discussion of the
IME adjustment and IME adjustment
factor. Section 1886(d)(5)(B)(ii)(XII) of
the Act provides that, for discharges
occurring during FY 2008 and fiscal
years thereafter, the IME formula
multiplier is 1.35. Accordingly, in the
FY 2018 IPPS/LTH PPS proposed rule
(82 FR 19940), we stated that, for
discharges occurring during FY 2018,
the formula multiplier is 1.35. We
estimate that application of this formula
multiplier for the FY 2018 IME
adjustment will result in an increase in
IPPS payment of 5.5 percent for every
approximately 10 percent increase in
the hospital’s resident-to-bed ratio.
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Comment: One commenter stated that
it appreciated that the resident-to-bed
ratio is statutorily required for purposes
of calculating the IME adjustment. The
commenter requested that, in order to
respond to physician shortages,
policymakers provide additional
funding to train future physicians and
urged CMS to consider additional
funding that would supplement the
current IME adjustment factor.
Response: We appreciate the
commenter’s comment. As noted above,
the IME adjustment factor is statutory
and the calculation of the IME payment
is also specified in statute. Accordingly,
for discharges occurring during FY
2018, the formula multiplier is 1.35.
G. Payment Adjustment for Medicare
Disproportionate Share Hospitals
(DSHs) for FY 2018 (§ 412.106)
1. General Discussion
Section 1886(d)(5)(F) of the Act
provides for additional Medicare
payments to subsection (d) hospitals
that serve a significantly
disproportionate number of low-income
patients. The Act specifies two methods
by which a hospital may qualify for the
Medicare disproportionate share
hospital (DSH) adjustment. Under the
first method, hospitals that are located
in an urban area and have 100 or more
beds may receive a Medicare DSH
payment adjustment if the hospital can
demonstrate that, during its cost
reporting period, more than 30 percent
of its net inpatient care revenues are
derived from State and local
government payments for care furnished
to needy patients with low incomes.
This method is commonly referred to as
the ‘‘Pickle method.’’ The second
method for qualifying for the DSH
payment adjustment, which is the most
common, is based on a complex
statutory formula under which the DSH
payment adjustment is based on the
hospital’s geographic designation, the
number of beds in the hospital, and the
level of the hospital’s disproportionate
patient percentage (DPP). A hospital’s
DPP is the sum of two fractions: the
‘‘Medicare fraction’’ and the ‘‘Medicaid
fraction.’’ The Medicare fraction (also
known as the ‘‘SSI fraction’’ or ‘‘SSI
ratio’’) is computed by dividing the
number of the hospital’s inpatient days
that are furnished to patients who were
entitled to both Medicare Part A and
Supplemental Security Income (SSI)
benefits by the hospital’s total number
of patient days furnished to patients
entitled to benefits under Medicare Part
A. The Medicaid fraction is computed
by dividing the hospital’s number of
inpatient days furnished to patients
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who, for such days, were eligible for
Medicaid, but were not entitled to
benefits under Medicare Part A, by the
hospital’s total number of inpatient days
in the same period.
Because the DSH payment adjustment
is part of the IPPS, the statutory
references to ‘‘days’’ in section
1886(d)(5)(F) of the Act have been
interpreted to apply only to hospital
acute care inpatient days. Regulations
located at § 412.106 govern the
Medicare DSH payment adjustment and
specify how the DPP is calculated as
well as how beds and patient days are
counted in determining the Medicare
DSH payment adjustment. Under
§ 412.106(a)(1)(i), the number of beds for
the Medicare DSH payment adjustment
is determined in accordance with bed
counting rules for the IME adjustment
under § 412.105(b).
Section 3133 of the Patient Protection
and Affordable Care Act, as amended by
section 10316 of the same Act and
section 1104 of the Health Care and
Education Reconciliation Act (Pub. L.
111–152), added a section 1886(r) to the
Act that modifies the methodology for
computing the Medicare DSH payment
adjustment. (For purposes of this final
rule, we refer to these provisions
collectively as section 3133 of the
Affordable Care Act.) Beginning with
discharges in FY 2014, hospitals that
qualify for Medicare DSH payments
under section 1886(d)(5)(F) of the Act
receive 25 percent of the amount they
previously would have received under
the statutory formula for Medicare DSH
payments. This provision applies
equally to hospitals that qualify for DSH
payments under section
1886(d)(5)(F)(i)(I) of the Act and those
hospitals that qualify under the Pickle
method under section 1886(d)(5)(F)(i)(II)
of the Act.
The remaining amount, equal to an
estimate of 75 percent of what otherwise
would have been paid as Medicare DSH
payments, reduced to reflect changes in
the percentage of individuals who are
uninsured, is available to make
additional payments to each hospital
that qualifies for Medicare DSH
payments and that has uncompensated
care. The payments to each hospital for
a fiscal year are based on the hospital’s
amount of uncompensated care for a
given time period relative to the total
amount of uncompensated care for that
same time period reported by all
hospitals that receive Medicare DSH
payments for that fiscal year.
As provided by section 3133 of the
Affordable Care Act, section 1886(r) of
the Act requires that, for FY 2014 and
each subsequent fiscal year, a
subsection (d) hospital that would
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otherwise receive DSH payments made
under section 1886(d)(5)(F) of the Act
receives two separately calculated
payments. Specifically, section
1886(r)(1) of the Act provides that the
Secretary shall pay to such subsection
(d) hospital (including a Pickle hospital)
25 percent of the amount the hospital
would have received under section
1886(d)(5)(F) of the Act for DSH
payments, which represents the
empirically justified amount for such
payment, as determined by the MedPAC
in its March 2007 Report to Congress.
We refer to this payment as the
‘‘empirically justified Medicare DSH
payment.’’
In addition to this empirically
justified Medicare DSH payment,
section 1886(r)(2) of the Act provides
that, for FY 2014 and each subsequent
fiscal year, the Secretary shall pay to
such subsection (d) hospital an
additional amount equal to the product
of three factors. The first factor is the
difference between the aggregate
amount of payments that would be
made to subsection (d) hospitals under
section 1886(d)(5)(F) of the Act if
subsection (r) did not apply and the
aggregate amount of payments that are
made to subsection (d) hospitals under
section 1886(r)(1) of the Act for such
fiscal year. Therefore, this factor
amounts to 75 percent of the payments
that would otherwise be made under
section 1886(d)(5)(F) of the Act.
The second factor is, for FYs 2014
through 2017, 1 minus the percent
change in the percent of individuals
under the age of 65 who are uninsured,
determined by comparing the percent of
such individuals who were uninsured
in 2013, the last year before coverage
expansion under the Affordable Care
Act (as calculated by the Secretary
based on the most recent estimates
available from the Director of the
Congressional Budget Office before a
vote in either House on the Health Care
and Education Reconciliation Act of
2010 that, if determined in the
affirmative, would clear such Act for
enrollment), and the percent of
individuals who were uninsured in the
most recent period for which data are
available (as so calculated) minus 0.1
percentage point for FY 2014, and
minus 0.2 percentage point for FYs 2015
through 2017. For FYs 2014 through
2017, the baseline for the estimate of the
change in uninsurance is fixed by the
most recent estimate of the
Congressional Budget Office before the
final vote on the Health Care and
Education Reconciliation Act of 2010,
which is contained in a March 20, 2010
letter from the Director of the
Congressional Budget Office to the
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Speaker of the House. (The March 20,
2010 letter is available for viewing on
the following Web site: https://
www.cbo.gov/sites/default/files/111thcongress-2009-2010/costestimate/
amendreconprop.pdf.)
For FY 2018 and subsequent fiscal
years, the second factor is 1 minus the
percent change in the percent of
individuals who are uninsured, as
determined by comparing the percent of
individuals who were uninsured in
2013 (as estimated by the Secretary,
based on data from the Census Bureau
or other sources the Secretary
determines appropriate, and certified by
the Chief Actuary of CMS), and the
percent of individuals who were
uninsured in the most recent period for
which data are available (as so
estimated and certified), minus 0.2
percentage point for FYs 2018 and 2019.
The third factor is a percent that, for
each subsection (d) hospital, represents
the quotient of the amount of
uncompensated care for such hospital
for a period selected by the Secretary (as
estimated by the Secretary, based on
appropriate data), including the use of
alternative data where the Secretary
determines that alternative data are
available which are a better proxy for
the costs of subsection (d) hospitals for
treating the uninsured, and the
aggregate amount of uncompensated
care for all subsection (d) hospitals that
receive a payment under section 1886(r)
of the Act. Therefore, this third factor
represents a hospital’s uncompensated
care amount for a given time period
relative to the uncompensated care
amount for that same time period for all
hospitals that receive Medicare DSH
payments in the applicable fiscal year,
expressed as a percent.
For each hospital, the product of these
three factors represents its additional
payment for uncompensated care for the
applicable fiscal year. We refer to the
additional payment determined by these
factors as the ‘‘uncompensated care
payment.’’
Section 1886(r) of the Act applies to
FY 2014 and each subsequent fiscal
year. In the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50620 through 50647)
and the FY 2014 IPPS interim final rule
with comment period (78 FR 61191
through 61197), we set forth our policies
for implementing the required changes
to the Medicare DSH payment
methodology made by section 3133 of
the Affordable Care Act for FY 2014. In
those rules, we noted that, because
section 1886(r) of the Act modifies the
payment required under section
1886(d)(5)(F) of the Act, it affects only
the DSH payment under the operating
IPPS. It does not revise or replace the
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capital IPPS DSH payment provided
under the regulations at 42 CFR part
412, subpart M, which were established
through the exercise of the Secretary’s
discretion in implementing the capital
IPPS under section 1886(g)(1)(A) of the
Act.
Finally, section 1886(r)(3) of the Act
provides that there shall be no
administrative or judicial review under
section 1869, section 1878, or otherwise
of any estimate of the Secretary for
purposes of determining the factors
described in section 1886(r)(2) of the
Act or of any period selected by the
Secretary for the purpose of determining
those factors. Therefore, there is no
administrative or judicial review of the
estimates developed for purposes of
applying the three factors used to
determine uncompensated care
payments, or the periods selected in
order to develop such estimates.
2. Eligibility for Empirically Justified
Medicare DSH Payments and
Uncompensated Care Payments
As indicated earlier, the payment
methodology under section 3133 of the
Affordable Care Act applies to
‘‘subsection (d) hospitals’’ that would
otherwise receive a DSH payment made
under section 1886(d)(5)(F) of the Act.
Therefore, hospitals must receive
empirically justified Medicare DSH
payments in a fiscal year in order to
receive an additional Medicare
uncompensated care payment for that
year. Specifically, section 1886(r)(2) of
the Act states that, in addition to the
payment made to a subsection (d)
hospital under section 1886(r)(1) of the
Act, the Secretary shall pay to such
subsection (d) hospitals an additional
amount. Because section 1886(r)(1) of
the Act refers to empirically justified
Medicare DSH payments, the additional
payment under section 1886(r)(2) of the
Act is limited to hospitals that receive
empirically justified Medicare DSH
payments in accordance with section
1886(r)(1) of the Act for the applicable
fiscal year.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50622) and the FY 2014
IPPS interim final rule with comment
period (78 FR 61193), we provided that
hospitals that are not eligible to receive
empirically justified Medicare DSH
payments in a fiscal year will not
receive uncompensated care payments
for that year. We also specified that we
would make a determination concerning
eligibility for interim uncompensated
care payments based on each hospital’s
estimated DSH status for the applicable
fiscal year (using the most recent data
that are available). We indicated that
our final determination on the hospital’s
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eligibility for uncompensated care
payments will be based on the hospital’s
actual DSH status at cost report
settlement for that payment year.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50622) and the FY 2015
IPPS/LTCH PPS final rule (79 FR
50006), we specified our policies for
several specific classes of hospitals
within the scope of section 1886(r) of
the Act. We refer readers to those two
final rules for a detailed discussion of
our policies. In summary, we specified
the following:
• Subsection (d) Puerto Rico hospitals
that are eligible for DSH payments also
are eligible to receive empirically
justified Medicare DSH payments and
uncompensated care payments under
the new payment methodology (78 FR
50623 and 79 FR 50006).
• Maryland hospitals are not eligible
to receive empirically justified Medicare
DSH payments and uncompensated care
payments under the payment
methodology of section 1886(r) of the
Act because they are not paid under the
IPPS. As discussed in the FY 2015 IPPS/
LTCH PPS final rule (79 FR 50007),
effective January 1, 2014, the State of
Maryland elected to no longer have
Medicare pay Maryland hospitals in
accordance with section 1814(b)(3) of
the Act and entered into an agreement
with CMS that Maryland hospitals will
be paid under the Maryland All-Payer
Model. However, under the Maryland
All-Payer Model, Maryland hospitals
still are not paid under the IPPS.
Therefore, they remain ineligible to
receive empirically justified Medicare
DSH payments or uncompensated care
payments under section 1886(r) of the
Act.
• SCHs that are paid under their
hospital-specific rate are not eligible for
Medicare DSH payments. SCHs that are
paid under the IPPS Federal rate receive
interim payments based on what we
estimate and project their DSH status to
be prior to the beginning of the Federal
fiscal year (based on the best available
data at that time) subject to settlement
through the cost report, and if they
receive interim empirically justified
Medicare DSH payments in a fiscal year,
they also will receive interim
uncompensated care payments for that
fiscal year on a per discharge basis,
subject as well to settlement through the
cost report. Final eligibility
determinations will be made at the end
of the cost reporting period at
settlement, and both interim empirically
justified Medicare DSH payments and
uncompensated care payments will be
adjusted accordingly (78 FR 50624 and
79 FR 50007).
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38191
• MDHs are paid based on the IPPS
Federal rate or, if higher, the IPPS
Federal rate plus 75 percent of the
amount by which the Federal rate is
exceeded by the updated hospitalspecific rate from certain specified base
years (76 FR 51684). The IPPS Federal
rate used in the MDH payment
methodology is the same IPPS Federal
rate that is used in the SCH payment
methodology. Section 205 of the
Medicare Access and CHIP
Reauthorization Act of 2015 (MACRA),
Public Law 114–10, enacted April 16,
2015, extended the MDH program for
discharges on or after April 1, 2015,
through September 30, 2017. Because
MDHs are paid based on the IPPS
Federal rate, for FY 2017, MDHs
continue to be eligible to receive
empirically justified Medicare DSH
payments and uncompensated care
payments if their DPP is at least 15
percent. We apply the same process to
determine MDHs’ eligibility for
empirically justified Medicare DSH and
uncompensated care payments, as we
do for all other IPPS hospitals, through
September 30, 2017. We note that there
has not been legislation at the time of
development of this final rule that
would extend the MDH program beyond
September 30, 2017. However, if the
MDH program were to be extended
beyond its current expiration date,
similar to how it was extended under
MACRA, MDHs would continue to be
paid based on the IPPS Federal rate or,
if higher, the IPPS Federal rate plus 75
percent of the amount by which the
Federal rate is exceeded by the updated
hospital-specific rate from certain
specified base years. Accordingly, if the
MDH program were to be extended
beyond its current expiration date of
September 30, 2017, we would continue
to make a determination concerning
eligibility for interim uncompensated
care payments based on each hospital’s
estimated DSH status for the applicable
fiscal year (using the most recent data
that are available). Our final
determination on the hospital’s
eligibility for uncompensated care
payments would be based on the
hospital’s actual DSH status at cost
report settlement for that payment year.
In addition, as we do for all IPPS
hospitals, we would calculate a
numerator for Factor 3 for all MDHs,
regardless of whether they are projected
to be eligible for Medicare DSH
payments during the fiscal year, but the
denominator for Factor 3 would be
based on the uncompensated care data
from the hospitals that we have
projected to be eligible for Medicare
DSH payments during the fiscal year.
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These policies for MDHs would only
apply in FY 2018 if the MDH program
is extended by statute, beyond its
current expiration date of September 30,
2017.
• IPPS hospitals that have elected to
participate in the Bundled Payments for
Care Improvement initiative and IPPS
hospitals that are participating in the
mandatory Comprehensive Care for
Joint Replacement Model, the Episode
Payment Models, or the Cardiac
Rehabilitation Incentive Payment Model
continue to be paid under the IPPS (77
FR 53342) and, therefore, are eligible to
receive empirically justified Medicare
DSH payments and uncompensated care
payments (78 FR 50625 and 79 FR
50008).
• Hospitals Participating in the Rural
Community Hospital Demonstration
Program are not eligible to receive
empirically justified Medicare DSH
payments and uncompensated care
payments under section 1886(r) of the
Act because they are not paid under the
IPPS (78 FR 50625 and 79 FR 50008).
The Rural Community Hospital
Demonstration Program was originally
authorized for a 5-year period by section
410A of the Medicare Prescription Drug,
Improvement, and Modernization Act of
2003 (MMA) (Pub. L. 108–173), and
extended for another 5-year period by
sections 3123 and 10313 of the
Affordable Care Act (Pub. L. 114–255).
The period of performance for this 5year extension period ended December
31, 2016. Section 15003 of the 21st
Century Cures Act (Pub. L. 114–255),
enacted December 13, 2016, again
amended section 410A of Public Law
108–173 to require a 10-year extension
period (in place of the 5-year extension
required by the Affordable Care Act), to
begin on the date immediately following
the last day of the initial 5-year period.
Section 15003 also requires that, no
later than 120 days after enactment of
Public Law 114–255, the Secretary issue
a solicitation to select additional
hospitals to participate in the
demonstration program for the second 5
years of the 10-year extension period so
long as the maximum number of 30
hospitals stipulated by the Affordable
Care Act is not exceeded. (We refer
readers to section V.L. of the preamble
of this final rule for a full discussion of
the provisions of section 15003 of
Public Law 114–255 and our
implementation of this provision.) As of
the time of development of this final
rule, the entire set of hospitals that will
participate in the second 5 years of the
extension period is unknown. However,
we intend to apply a similar payment
methodology during the remainder of
the extension period. As a result, we
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expect that hospitals participating in the
demonstration will not receive
empirically justified DSH payments,
and that they will be excluded from
receiving interim and final
uncompensated care payments for FY
2018 and subsequent fiscal years for the
duration of the second 5 years of the
extension period.
3. Empirically Justified Medicare DSH
Payments
As we have discussed earlier, section
1886(r)(1) of the Act requires the
Secretary to pay 25 percent of the
amount of the Medicare DSH payment
that would otherwise be made under
section 1886(d)(5)(F) of the Act to a
subsection (d) hospital. Because section
1886(r)(1) of the Act merely requires the
program to pay a designated percentage
of these payments, without revising the
criteria governing eligibility for DSH
payments or the underlying payment
methodology, we stated in the FY 2014
IPPS/LTCH PPS final rule that we did
not believe that it was necessary to
develop any new operational
mechanisms for making such payments.
Therefore, in the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50626), we
implemented this provision by advising
MACs to simply adjust the interim
claim payments to the requisite 25
percent of what would have otherwise
been paid. We also made corresponding
changes to the hospital cost report so
that these empirically justified Medicare
DSH payments can be settled at the
appropriate level at the time of cost
report settlement. We provided more
detailed operational instructions and
cost report instructions following
issuance of the FY 2014 IPPS/LTCH PPS
final rule that are available on the CMS
Web site at: https://www.cms.gov/
Regulations-and-Guidance/Guidance/
Transmittals/2014-Transmittals-Items/
R5P240.html.
4. Uncompensated Care Payments
As we discussed earlier, section
1886(r)(2) of the Act provides that, for
each eligible hospital in FY 2014 and
subsequent years, the uncompensated
care payment is the product of three
factors. These three factors represent our
estimate of 75 percent of the amount of
Medicare DSH payments that would
otherwise have been paid, an
adjustment to this amount for the
percent change in the national rate of
uninsurance compared to the rate of
uninsurance in 2013, and each eligible
hospital’s estimated uncompensated
care amount relative to the estimated
uncompensated care amount for all
eligible hospitals. Below we discuss the
data sources and methodologies for
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computing each of these factors, our
final policies for FYs 2014 through
2017, and our proposed and final
policies for FY 2018.
a. Calculation of Factor 1 for FY 2018
Section 1886(r)(2)(A) of the Act
establishes Factor 1 in the calculation of
the uncompensated care payment.
Section 1886(r)(2)(A) of the Act states
that this factor is equal to the difference
between (1) the aggregate amount of
payments that would be made to
subsection (d) hospitals under section
1886(d)(5)(F) of the Act if section
1886(r) of the Act did not apply for such
fiscal year (as estimated by the
Secretary); and (2) the aggregate amount
of payments that are made to subsection
(d) hospitals under section 1886(r)(1) of
the Act for such fiscal year (as so
estimated). Therefore, section
1886(r)(2)(A)(i) of the Act represents the
estimated Medicare DSH payments that
would have been made under section
1886(d)(5)(F) of the Act if section
1886(r) of the Act did not apply for such
fiscal year. Under a prospective
payment system, we would not know
the precise aggregate Medicare DSH
payment amount that would be paid for
a Federal fiscal year until cost report
settlement for all IPPS hospitals is
completed, which occurs several years
after the end of the Federal fiscal year.
Therefore, section 1886(r)(2)(A)(i) of the
Act provides authority to estimate this
amount, by specifying that, for each
fiscal year to which the provision
applies, such amount is to be estimated
by the Secretary. Similarly, section
1886(r)(2)(A)(ii) of the Act represents
the estimated empirically justified
Medicare DSH payments to be made in
a fiscal year, as prescribed under section
1886(r)(1) of the Act. Again, section
1886(r)(2)(A)(ii) of the Act provides
authority to estimate this amount.
Therefore, Factor 1 is the difference
between our estimates of: (1) The
amount that would have been paid in
Medicare DSH payments for the fiscal
year, in the absence of the new payment
provision; and (2) the amount of
empirically justified Medicare DSH
payments that are made for the fiscal
year, which takes into account the
requirement to pay 25 percent of what
would have otherwise been paid under
section 1886(d)(5)(F) of the Act. In other
words, this factor represents our
estimate of 75 percent (100 percent
minus 25 percent) of our estimate of
Medicare DSH payments that would
otherwise be made, in the absence of
section 1886(r) of the Act, for the fiscal
year.
As we did for FY 2017, in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
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19943), in order to determine Factor 1
in the uncompensated care payment
formula for FY 2018, we proposed to
continue the policy established in the
FY 2014 IPPS/LTCH PPS final rule (78
FR 50628 through 50630) and in the FY
2014 IPPS interim final rule with
comment period (78 FR 61194) of
determining Factor 1 by developing
estimates of both the aggregate amount
of Medicare DSH payments that would
be made in the absence of section
1886(r)(1) of the Act and the aggregate
amount of empirically justified
Medicare DSH payments to hospitals
under 1886(r)(1) of the Act. These
estimates will not be revised or updated
after we know the final Medicare DSH
payments for FY 2018.
Therefore, in order to determine the
two elements of proposed Factor 1 for
FY 2018 (Medicare DSH payments prior
to the application of section 1886(r)(1)
of the Act, and empirically justified
Medicare DSH payments after
application of section 1886(r)(1) of the
Act), for the proposed rule, we used the
most recently available projections of
Medicare DSH payments for the fiscal
year, as calculated by CMS’ Office of the
Actuary using the most recently filed
Medicare hospital cost report with
Medicare DSH payment information and
the most recent Medicare DSH patient
percentages and Medicare DSH payment
adjustments provided in the IPPS
Impact File.
For purposes of calculating proposed
Factor 1 and modeling the impact of the
FY 2018 IPPS/LTCH PPS proposed rule,
we used the Office of the Actuary’s
January 2017 Medicare DSH estimates,
which were based on data from the
December 2016 update of the Medicare
Hospital Cost Report Information
System (HCRIS) and the FY 2017 IPPS/
LTCH PPS final rule IPPS Impact file,
published in conjunction with the
publication of the FY 2017 IPPS/LTCH
PPS final rule. Because SCHs that are
projected to be paid under their
hospital-specific rate are excluded from
the application of section 1886(r) of the
Act, these hospitals also were excluded
from the January 2017 Medicare DSH
estimates. Furthermore, because section
1886(r) of the Act specifies that the
uncompensated care payment is in
addition to the empirically justified
Medicare DSH payment (25 percent of
DSH payments that would be made
without regard to section 1886(r) of the
Act), Maryland hospitals participating
in the Maryland All-Payer Model that
do not receive DSH payments were also
excluded from the Office of the
Actuary’s January 2017 Medicare DSH
estimates. Hospitals that had been
participating in the Rural Community
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Hospital Demonstration Program
through December 31, 2016 were
included in these estimates. (As
discussed earlier, the Affordable Care
Act authorized a 5-year extension
period for the demonstration, which
ended December 31, 2016.) The
demonstration was extended for an
additional 5 years by section 15003 of
Public Law 114–255. Although the
hospitals that will participate in the
second 5 years of the extension period
had not been determined at the time of
development of the proposed rule, we
stated that we intend to apply a similar
payment methodology during the
second 5 years of the extension period
as for the earlier periods of the
demonstration. Therefore, hospitals
participating in the demonstration
would not be eligible to receive DSH
payments. We stated in the proposed
rule that if the hospitals participating in
the second 5 years of the extension
period are known prior to the
development of the Medicare DSH
estimates for the FY 2018 final rule,
these hospitals would be excluded from
the Office of the Actuary’s final
Medicare DSH estimates for FY 2018.
For the proposed rule, using the data
sources discussed earlier, the Office of
the Actuary used the most recently
submitted Medicare cost report data to
identify Medicare DSH payments and
the most recent Medicare DSH payment
adjustments provided in the IPPS
Impact File, and applied inflation
updates and assumptions for future
changes in utilization and case-mix to
estimate Medicare DSH payments for
the upcoming fiscal year. The January
2017 Office of the Actuary estimate for
Medicare DSH payments for FY 2017,
without regard to the application of
section 1886(r)(1) of the Act, was
approximately $16.003 billion. This
estimate excluded Maryland hospitals
participating in the Maryland All-Payer
Model and SCHs paid under their
hospital-specific payment rate.
Therefore, based on the January 2017
estimate, the estimate for empirically
justified Medicare DSH payments for FY
2017, with the application of section
1886(r)(1) of the Act, was approximately
$4.001 billion (or 25 percent of the total
amount of estimated Medicare DSH
payments for FY 2018). Under
§ 412.l06(g)(1)(i) of the regulations,
Factor 1 is the difference between these
two estimates of the Office of the
Actuary. Therefore, in the proposed
rule, we proposed that Factor 1 for FY
2018 was $12,001,915,095.04, which is
equal to 75 percent of the total amount
of estimated Medicare DSH payments
for FY 2017 ($16,002,553,460.05 minus
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38193
$4,000,638,365.01). We invited public
comments on our proposed calculation
of Factor 1 for FY 2018.
Comment: A number of commenters
requested greater transparency in the
methodology used by CMS and the
OACT to estimate aggregate DSH
payments that would have been paid
absent implementation of the Affordable
Cart Act, particularly with respect to the
calculation of estimated DSH payments
for purposes of determining Factor 1.
The commenters believed that CMS has
not adequately explained its
methodology in calculating DSH
payments and urged CMS to clarify the
methodology and provide additional
information on the factor assumptions
used to make these projections. One
commenter noted that providing a table
explaining the factors applied for FYs
2015–2018 to estimate Medicare DSH
expenditures using a 2014 baseline is
not sufficient, given that CMS does not
provide more detail on the completion
factor used to adjust the FY 2015 and
FY 2016 claims data used for the
‘‘Discharges’’ column. The commenter
stated that this lack of information
severely limited the public’s ability to
comment on the projections and
estimates for Factor 1. Commenters also
requested that this information be
provided in advance of the publication
of the FY 2018 IPPS/LTCH PPS final
rule and in future proposed rules each
year.
The majority of comments on Factor
1 related to the ‘‘Other’’ and
‘‘Discharges’’ factors that are used to
estimate Medicare DSH expenditures.
Some commenters stated that there is
variability in the factors and requested
full disclosure of the methodology and
the various components used to
estimate the catch-all ‘‘Other’’ column.
A number of commenters noted that,
other than the statements in the
proposed rule, CMS provided no further
explanation for the specific items that
make up the ‘‘Other’’ column or the
value of each component. Specifically,
one commenter expressed concern that
the annual growth rate due to ‘‘other’’
factors projected by CMS increased from
4.9 percent in FY 2015 to 6.9 percent in
FY 2017, while it decreased by 1
percent in FY 2018. Commenters
requested that CMS provide a
breakdown of the factors influencing
these changes and their impact on FY
2018 DSH estimates to allow providers
to understand and verify these
projections, as well as to make
meaningful comments, if warranted.
Many commenters also asked CMS to
explain how Medicaid expansion is
accounted for in the ‘‘Other’’ column
used to determine the Factor 1 estimate.
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A few commenters stated that the effect
of Medicaid expansion on the agency’s
projection of the amount of traditional
DSH payments that would have been
paid in FY 2014, absent of the
Affordable Care Act, has varied
erratically in the agency’s successive
rulemakings for FYs 2015 through 2018.
Another commenter noted that the most
recent Congressional Budget Office
report showed a 32-percent increase in
Medicaid/CHIP enrollment as a result of
Medicaid expansion, and expected that
this increase in enrollment would result
in a substantial increase in DSH
payments that is not reflected in
OACT’s DSH estimate for Factor 1.
Commenters objected to CMS’
statement from prior rulemaking that
‘‘the increase due to Medicaid
expansion is not as large as commenters
contended due to the actuarial
assumption that the new enrollees are
healthier than the average Medicaid
recipient, and, therefore, use fewer
hospital services.’’ Some commenters
asserted that there is no solid
evidentiary basis for the assumption
that new Medicaid enrollees are
healthier, and requested that CMS
reconsider and discontinue use of this
assumption. In addition, the
commenters argued that CMS should by
now have accurate information
regarding States that have expanded
Medicaid, and that CMS should utilize
the available enrollment and/or
utilization information from Medicaid
expansion programs either to support or
refute the assumption that the Medicaid
expansion population is healthier than
the average Medicaid recipient. Many
commenters also stated that the level of
Medicaid expansion included in the
calculation of Factor 1, including the
adjustments made to Factor 1 to account
for the estimated Medicaid expansion in
FY 2018, is unclear. The commenters
requested that CMS resolve the
inconsistency with the decrease in the
uninsured rate from 14 percent in 2013
to 8.15 percent in 2018 due to Medicaid
expansion, and fully account for the
increase in Medicaid participation in
the Factor 1 calculation.
Response: We thank the commenters
for their input. As in previous years, we
would like to clarify that Factor 1 is not
estimated in isolation. The Factor 1
estimates for proposed rules are
generally consistent with the economic
assumptions and actuarial analysis used
to develop the President’s Budget
estimates under current law, and the
Factor 1 estimates for the final rule are
generally consistent with those used for
the Midsession Review of the
President’s Budget. For additional
information on the development of the
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President’s Budget, we refer readers to
the Office of Management and Budget
Web site at: https://www.whitehouse
.gov/omb/budget. For additional
information on the specific economic
assumptions used in the Midsession
Review of the President’s FY 2018
Budget, we refer readers to the
‘‘Midsession Review of the President’s
FY 2018 Budget’’ available on the Office
of Management and Budget Web site at:
https://www.whitehouse.gov/omb/
budget. For a general overview of the
principal steps involved in projecting
future inpatient costs and utilization,
we refer readers to the ‘‘2017 Annual
Report of the Boards of Trustees of the
Federal Hospital Insurance and Federal
Supplementary Medical Insurance Trust
Funds’’ available on the CMS Web site
at: https://www.cms.gov/ResearchStatistics-Data-and-Systems/StatisticsTrends-and-Reports/ReportsTrust
Funds/?redirect=/
reportstrustfunds/ under ‘‘Downloads.’’
For the OACT’s memorandum
describing its methodology and
estimates, we refer readers to ‘‘OACT
Memorandum on DSH Factor 1 for FY
2018’’ available on the CMS Web site at:
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/dsh.html under
‘‘Downloads’’.
As we did in the FY 2017 IPPS/LTCH
PPS final rule (81 FR 56950), later in
this section, we provide additional
information regarding the data sources,
methods, and assumptions employed by
the actuaries in determining the OACT’s
updated estimate of Factor 1 for FY
2018. We believe that this discussion
addresses the methodological concerns
raised by commenters regarding the
various assumptions used in the
estimate, including the ‘‘Other’’ and
‘‘Discharges’’ assumptions and also
provides additional information
regarding how we address the Medicaid
and CHIP expansion. However, we note
that, with regard to the commenters’
questions and concerns regarding the
use of completion factors to adjust
preliminary data, the OACT assumed a
discharge completion factor of 99
percent for FY 2015 and 98 percent for
FY 2016. Similarly, the OACT assumed
that case-mix for these years was
stabilized at the time of the estimate and
no additional completion factor
adjustment was needed. These
assumptions are consistent with
historical patterns of completion factors
that have been determined for discharge
and case-mix numbers.
Regarding the commenters’ assertion
that Medicaid expansion is not
adequately accounted for in the ‘‘Other’’
column and that there is no evidentiary
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basis for the assumption that the newly
covered Medicaid expansion population
is healthier than the average Medicaid
recipient, we note that, based on data
from the Midsession Review of the
President’s Budget, the OACT assumed
per capita spending for Medicaid
beneficiaries who enrolled due to the
expansion to be 50 percent of the
average per capita spending of a preexpansion Medicaid beneficiary due to
the better health of these beneficiaries.
This assumption is consistent with
recent internal estimates of Medicaid
per capita spending pre-expansion and
post-expansion.
Comment: In addition to requesting
that the methodology and assumptions
used for Factor 1 be made public before
the publication of the final rule and
with the proposed rule each subsequent
year, commenters requested that CMS
furnish interested parties with advance
opportunity to comment on new
calculations based on the more recent
data that CMS intends ultimately to use
for the final rule. One commenter
believed that CMS’ rulemaking is flawed
because different data and calculations
are used in the final rule than were used
for purposes of the proposed rule,
without any opportunity for the
hospitals to comment. This commenter
requested that CMS make clear that it
will use different or updated data to
determine payments for uncompensated
care in the final rule. The commenter
believed that the proposal to determine
the amount of hospitals’ uncompensated
care payments based on data first
released with the final rule and on
which hospitals will have no
meaningful opportunity to comment
violates notice-and-comment
rulemaking requirements. As discussed
earlier, several commenters noted the
variability in the values of the ‘‘Other’’
column as well as in the factor applied
to account for Medicaid expansion; one
of the commenters called on CMS to
explain why these values were allowed
to change from one rulemaking to the
next when the agency has otherwise
taken the position that the estimates
used to determine uncompensated care
payments should be fixed when made
and not be reconciled with data that
become available later.
Response: We believe that
stakeholders had notice and a full
opportunity to comment on the
methodology that would be used to
determine uncompensated care
payments, including the data sources
that would be used. As a result,
commenters had a full opportunity to
raise any concerns regarding the
appropriateness of the data generally,
even if the actual data were not yet
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available, consistent with the
requirements for notice-and-comment
rulemaking under the Administrative
Procedure Act. With respect to concerns
about the variability of the factors used
to estimate Factor 1, we note that, in the
FY 2014 IPPS/LTCH PPS final rule (78
FR 50630), using the discretion afforded
in the statute to estimate the aggregate
amount of DSH payments that would be
made in the absence of section 1886(r)
of the Act, we finalized a policy of
defining the methodology for
calculating Factor 1 using the OACT’s
biannual Medicare DSH payment
projections, which are typically
available around February of each year
(based on data from December of the
previous year) as part of the President’s
Budget, and around July (based on data
from June) as part of the Midsession
Review of the President’s Budget.
Comment: One commenter requested
that, in light of its concerns about the
data sources and methods used to
estimate Factor 1, CMS adopt a process
to reconcile data for Factor 1.
Commenters noted their concern that
the DSH payment estimates for FY 2014
through FY 2017, as displayed in the
table for factors applied to update the
Medicare DSH baseline in the FY 2018
proposed rule, compared to original
projections from the respective payment
year from the FY 2014 through FY 2017
final rules, show that Factor 1 would
have been higher, in retrospect, over
that period of time. In other words,
commenters noted how, based on the
more recent data used in the FY 2018
proposed rule, the Factor 1 estimates are
higher compared to the data available at
the time of the past final rules.
Response: We continue to believe that
applying our best estimates
prospectively is most conducive to
administrative efficiency, finality, and
predictability in payments (78 FR
50628; 79 FR 50010; 80 FR 49518; and
81 FR 56949). We believe that, in
affording the Secretary the discretion to
estimate the amount of these payments
and by including a prohibition against
administrative and judicial review of
those estimates in section 1886(r)(3) of
the Act, Congress recognized the
importance of finality and predictability
in payments. As a result, we do not
agree with the commenter that we
should establish a process for
reconciling our estimate of Factor 1.
However, we note that, in reviewing the
OACT’s prior estimates for DSH
payments compared to more updated
estimates and/or actual experience, from
FY 2005 to FY 2017, the original
estimates have been higher than either
the more updated estimates and/or
actual experience for 8 of the 14 years
and lower than actual experience in
only 6 years.
After consideration of the public
comments received, we are finalizing
our proposed methodology for
calculating Factor 1 for FY 2018. We
discuss the resulting Factor 1 amount
for FY 2018 below.
To determine Factor 1 and to model
the impact of this provision for FY 2018,
we used the Office of the Actuary’s June
2017 Medicare DSH estimates based on
data from the March 2017 update of the
cost report data for FY 2014 included in
the HCRIS and the Impact File
published in conjunction with the
publication of the FY 2017 IPPS/LTCH
PPS final rule. Because SCHs that are
projected to be paid under their
hospital-specific rate are excluded from
the application of section 1886(r) of the
Act, these hospitals also were excluded
from the June 2017 Medicare DSH
estimates. Furthermore, because
Maryland hospitals participating in the
Maryland All-Payer Model do not
receive DSH payments, these hospitals
also are excluded from the Office of the
Actuary’s Medicare DSH estimates. At
the time of development of this final
rule, the set of hospitals participating in
the Rural Community Hospital
Demonstration program is still
unknown. As a result, it was not
possible for these hospitals to be
excluded from the Office of the
Actuary’s Medicare DSH estimates.
However, we expect that hospitals
participating in the demonstration will
not receive empirically justified DSH
payments, and that they will be
38195
excluded from receiving interim and
final uncompensated care payments for
FY 2018 and subsequent fiscal years for
the duration of the second 5 years of the
extension period.
For this final rule, using the data
sources discussed above, the Office of
the Actuary used the most recently
submitted Medicare cost report data for
FY 2014 to identify Medicare DSH
payments and the most recent Medicare
DSH payment adjustments provided in
the Impact File published in
conjunction with the publication of the
FY 2017 IPPS/LTCH PPS final rule and
applied update factors and assumptions
for future changes in utilization and
case-mix to estimate Medicare DSH
payments for the upcoming fiscal year.
The June 2017 Office of the Actuary
estimate for Medicare DSH payments for
FY 2018, without regard to the
application of section 1886(r)(1) of the
Act, was approximately $15.533 billion.
This estimate excluded Maryland
hospitals participating in the Maryland
All-Payer Model and SCHs paid under
their hospital-specific payment rate.
Therefore, based on the June 2017
estimate, the estimate for empirically
justified Medicare DSH payments for FY
2018, with the application of section
1886(r)(1) of the Act, is approximately
$3.888 billion (or 25 percent of the total
amount of estimated Medicare DSH
payments for FY 2018). Under
§ 412.106(g)(1)(i) of the regulations,
Factor 1 is the difference between these
two estimates of the Office of the
Actuary. Therefore, in this final rule,
Factor 1 for FY 2018 is
$11,664,704,643.27, which is equal to
75 percent of the total amount of
estimated Medicare DSH payments for
FY 2018 ($15,552,939,524.36 minus
$3,888,234,881.09).
The Office of the Actuary’s final
estimates for FY 2018 began with a
baseline of $12.395 billion in Medicare
DSH expenditures for FY 2014. The
following table shows the factors
applied to update this baseline through
the current estimate for FY 2018:
FACTORS APPLIED FOR FY 2015 THROUGH FY 2018 TO ESTIMATE MEDICARE DSH EXPENDITURES USING 2014
BASELINE
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FY
2015
2016
2017
2018
Update
.........................................................
.........................................................
.........................................................
.........................................................
1.014
1.009
1.0015
1.018088
Discharges
Case-mix
1.0068
0.9742
0.9952
1.0070
1.005
1.027
1.005
1.005
Other
Total
1.0496
1.0685
1.0535
0.9935
* Rounded.
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1.0769
1.0787
1.0553
1.0236
Estimated
DSH payment
(in billions) *
$13.348
14.398
15.194
15.533
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In this table, the ‘‘Discharges’’ column
shows the increase in the number of
Medicare fee-for-service (FFS) inpatient
hospital discharges. The figures for FY
2015 and FY 2016 are based on
Medicare claims data that have been
adjusted by a completion factor. The
discharge figure for FY 2017 is based on
preliminary data for 2017. The
discharge figure for FY 2018 is an
assumption based on recent trends
recovering back to the long-term trend
and assumptions related to how many
beneficiaries will be enrolled in
Medicare Advantage (MA) plans. The
case-mix column shows the increase in
case-mix for IPPS hospitals. The casemix figures for FY 2015 and FY 2016 are
based on actual data adjusted by a
completion factor. The FY 2017 increase
is based on preliminary data.
The FY 2018 increase is based on the
recommendation of the 2010–2011
Medicare Technical Review Panel. The
Market basket
percentage
FY
2015
2016
2017
2018
eligibility and, for 2017 and thereafter,
that 55 percent of such individuals
would reside in expansion States. In the
future, these assumptions may change
based on actual participation by States.
For a discussion of general issues
regarding Medicaid projections, we refer
readers to the 2016 Actuarial Report on
the Financial Outlook for Medicaid
(https://www.cms.gov/ResearchStatistics-Data-and-Systems/Research/
ActuarialStudies/Downloads/
MedicaidReport2016.pdf). We note that,
in developing their estimates of the
effect of Medicaid expansion on
Medicare DSH expenditures, our
actuaries have assumed that the new
Medicaid enrollees are healthier than
the average Medicaid recipient and,
therefore, use fewer hospital services.
The table below shows the factors that
are included in the ‘‘Update’’ column of
the above table:
‘‘Other’’ column shows the increase in
other factors that contribute to the
Medicare DSH estimates. These factors
include the difference between the total
inpatient hospital discharges and the
IPPS discharges, and various
adjustments to the payment rates that
have been included over the years but
are not reflected in the other columns
(such as the change in rates for the 2midnight stay policy). In addition, the
‘‘Other’’ column includes a factor for the
Medicaid expansion due to the
Affordable Care Act. The factor for
Medicaid expansion was developed
using public information and statements
for each State regarding its intent to
implement the expansion. Based on this
information, it is assumed that 50
percent of all individuals who were
potentially newly eligible Medicaid
enrollees in 2016 resided in States that
had elected to expand Medicaid
.....................................................................................
.....................................................................................
.....................................................................................
.....................................................................................
Affordable
Care Act
payment
reductions
2.9
2.4
2.7
2.7
Multifactor
productivity
adjustment
¥0.2
¥0.2
¥0.75
¥0.75
¥0.5
¥0.5
¥0.3
¥0.6
Documentation
and coding
¥0.8
¥0.8
¥1.5
0.4588
Total update
percentage
1.4
0.9
0.15
1.8088
Note: All numbers are based on Midsession Review of FY 2018 President’s Budget projections.
b. Calculation of Factor 2 for FY 2018
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(1) Background
Section 1886(r)(2)(B) of the Act
establishes Factor 2 in the calculation of
the uncompensated care payment.
Specifically, section 1886(r)(2)(B)(i) of
the Act provides that, for each of FYs
2014, 2015, 2016, and 2017, a factor
equal to 1 minus the percent change in
the percent of individuals under the age
of 65 who are uninsured, as determined
by comparing the percent of such
individuals (1) who were uninsured in
2013, the last year before coverage
expansion under the Affordable Care
Act (as calculated by the Secretary
based on the most recent estimates
available from the Director of the
Congressional Budget Office before a
vote in either House on the Health Care
and Education Reconciliation Act of
2010 that, if determined in the
affirmative, would clear such Act for
enrollment); and (2) who are uninsured
in the most recent period for which data
are available (as so calculated), minus
0.1 percentage point for FY 2014 and
minus 0.2 percentage point for each of
FYs 2015, 2016, and 2017.
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Section 1886(r)(2)(B)(i)(I) of the Act
further indicates that the percent of
individuals under 65 without insurance
in 2013 must be the percent of such
individuals who were uninsured in
2013, the last year before coverage
expansion under the Affordable Care
Act (as calculated by the Secretary
based on the most recent estimates
available from the Director of the
Congressional Budget Office before a
vote in either House on the Health Care
and Education Reconciliation Act of
2010 that, if determined in the
affirmative, would clear such Act for
enrollment). The Health Care and
Education Reconciliation Act (Pub. L.
111–152) was enacted on March 30,
2010. It was passed in the House of
Representatives on March 21, 2010, and
by the Senate on March 25, 2010.
Because the House of Representatives
was the first House to vote on the Health
Care and Education Reconciliation Act
of 2010 on March 21, 2010, we have
determined that the most recent
estimate available from the Director of
the Congressional Budget Office ‘‘before
a vote in either House on the Health
Care and Education Reconciliation Act
of 2010 . . .’’ (emphasis added)
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appeared in a March 20, 2010 letter
from the director of the CBO to the
Speaker of the House. Therefore, we
believe that only the estimates in this
March 20, 2010 letter meet the statutory
requirement under section
1886(r)(2)(B)(i)(I) of the Act. (To view
the March 20, 2010 letter, we refer
readers to the Web site at: https://
www.cbo.gov/sites/default/files/111thcongress-2009-2010/costestimate/
amendreconprop.pdf.)
In its March 20, 2010 letter to the
Speaker of the House of Representatives,
the CBO provided two estimates of the
‘‘post-policy uninsured population.’’
The first estimate is of the ‘‘Insured
Share of the Nonelderly Population
Including All Residents’’ (82 percent)
and the second estimate is of the
‘‘Insured Share of the Nonelderly
Population Excluding Unauthorized
Immigrants’’ (83 percent). In the FY
2014 IPPS/LTCH PPS final rule (78 FR
50631), we used the first estimate that
includes all residents, including
unauthorized immigrants. We stated
that we believe this estimate is most
consistent with the statute, which
requires us to measure ‘‘the percent of
individuals under the age of 65 who are
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uninsured’’ and provides no exclusions
except for individuals over the age of
65. In addition, we stated that we
believe that this estimate more fully
reflects the levels of uninsurance in the
United States that influence
uncompensated care for hospitals than
the estimate that reflects only legal
residents. The March 20, 2010 CBO
letter reports these figures as the
estimated percentage of individuals
with insurance. However, because
section 1886(r)(2)(B)(i) of the Act
requires that we compare the percent of
individuals who are uninsured in the
most recent period for which data are
available with the percent of individuals
who were uninsured in 2013, in the FY
2014 IPPS/LTCH PPS final rule, we
used the CBO insurance rate figure and
subtracted that amount from 100
percent (that is, the total population
without regard to insurance status) to
estimate the 2013 baseline percent of
individuals without insurance.
Therefore, for FYs 2014 through 2017,
our estimate of the uninsurance
percentage for 2013 was 18 percent.
Section 1886(r)(2)(B)(i) of the Act
requires that we compare the baseline
uninsurance rate to the percent of such
individuals who are uninsured in the
most recent period for which data are
available (as so calculated). In the FY
2014, FY 2015, FY 2016, and FY 2017
IPPS/LTCH PPS final rules (78 FR
50634, 79 FR 50014, 80 FR 49522, and
81 FR 56952, respectively), we used the
same data source, CBO estimates, to
calculate this percent of individuals
without insurance. In response to public
comments, we also agreed that we
should normalize the CBO estimates,
which are based on the calendar year,
for the Federal fiscal years for which
each calculation of Factor 2 is made (78
FR 50633). Therefore, for the FY 2017
IPPS/LTCH PPS final rule (81 FR
56952), we used the most recently
available estimate of the uninsurance
rate, which was based on the CBO’s
March 2016 estimates of the effects of
the Affordable Care Act on health
insurance coverage (which are available
at https://www.cbo.gov/sites/default/
files/114th-congress-2015-2016/reports/
51385-HealthInsuranceBaseline.pdf).
The CBO’s March 2016 estimate of
individuals under the age of 65 with
insurance in CY 2016 was 90 percent.
Therefore, the CBO’s most recent
estimate of the rate of uninsurance in
CY 2016 was 10 percent (that is, 100
percent minus 90 percent). The CBO’s
March 2016 estimate of individuals
under the age of 65 with insurance in
CY 2017 was also 90 percent. Therefore,
the CBO’s most recent estimate of the
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rate of uninsurance in CY 2017 available
for the FY 2017 final rule was also 10
percent (that is, 100 percent minus 90
percent).
The calculation of the final Factor 2
for FY 2017, employing a weighted
average of the CBO projections for CY
2016 and CY 2017, was as follows:
• CY 2016 rate of insurance coverage
(March 2016 CBO estimate): 90 percent.
• CY 2017 rate of insurance coverage
(March 2016 CBO estimate): 90 percent.
• FY 2016 rate of insurance coverage:
(90 percent * .25) + (90 percent * .75)
= 90 percent.
• Percent of individuals without
insurance for 2013 (March 2010 CBO
estimate): 18 percent.
• Percent of individuals without
insurance for FY 2017 (weighted
average): 10 percent.
1¥⎢((0.10–0.18)/0.18)⎢ = 1¥ 0.4444 =
0.5555 (55.56 percent)
0.5556 (55.56 percent)¥.002 (0.2
percentage points for FY 2017
under section 1886(r)(2)(B)(i) of the
Act) = 0.5536 or 55.36 percent
0.5536 = Factor 2
Therefore, the final Factor 2 for FY
2017 was 55.36 percent.
The FY 2017 final uncompensated
care amount was: $10,797,476,782.62 ×
0.5536 = $5,977,483,146.86.
38197
changes to the methodology for
determining Factor 2 and the viability of
potential alternative data sources in the
FY 2018 IPPS/LTCH PPS proposed rule.
As we discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19945),
in our analysis of a potential data source
for the rate of uninsurance for purposes
of computing Factor 2 in FY 2018, we
considered the following: (a) The extent
to which the source accounted for the
full U.S. population; (b) the extent to
which the source comprehensively
accounted for both public and private
health insurance coverage in deriving its
estimates of the number of uninsured;
(c) the extent to which the source
utilized data from the Census Bureau;
(d) the timeliness of the estimates; (e)
the continuity of the estimates over
time; (f) the accuracy of the estimates;
and (g) the availability of projections
(including the availability of projections
using an established estimation
methodology that would allow for
calculation of the rate of uninsurance
for the applicable Federal fiscal year).
As we explained in the proposed rule,
these considerations are consistent with
the statutory requirement that this
estimate be based on data from the
Census Bureau or other sources the
Secretary determines appropriate and
help to ensure the data source will
provide reasonable estimates for the rate
FY 2017 Uncompensated
Care Total Available ... $5,977,483,146.86 of uninsurance that are available in
conjunction with the IPPS rulemaking
cycle.
(2) Methodology for Calculation of
In the FY 2018 IPPS/LTCH PPS
Factor 2 for FY 2018
proposed rule (82 FR 19946 and 19947),
Section 1886(r)(2)(B)(ii) of the Act
we explained that we have determined
permits the use of a data source other
that the source that, on balance, best
than the CBO estimates to determine the meets all of these considerations is the
percent change in the rate of
uninsured estimates produced by CMS’
uninsurance beginning in FY 2018. In
Office of the Actuary (OACT) as part of
addition, for FY 2018 and subsequent
the development of the National Health
years, the statute does not require that
Expenditure Accounts (NHEA). The
the estimate of the percent of
NHEA represents the government’s
individuals who are uninsured be
official estimates of economic activity
limited to individuals who are under 65. (spending) within the health sector. The
Specifically, the statute states that, for
information contained in the NHEA has
FY 2018 and subsequent fiscal years, the been used to study numerous topics
second factor is 1 minus the percent
related to the health care sector,
change in the percent of individuals
including, but not limited to, changes in
who are uninsured, as determined by
the amount and cost of health services
comparing the percent of individuals
purchased and the payers or programs
who were uninsured in 2013 (as
that provide or purchase these services;
estimated by the Secretary, based on
the economic causal factors at work in
data from the Census Bureau or other
the health sector; the impact of policy
sources the Secretary determines
changes, including major health reform;
appropriate, and certified by the Chief
and comparisons to other countries’
Actuary of CMS) and the percent of
health spending. Of relevance to the
individuals who were uninsured in the
determination of Factor 2 is that the
most recent period for which data are
comprehensive and integrated structure
available (as so estimated and certified), of the NHEA creates an ideal tool for
minus 0.2 percentage point for FYs 2018 evaluating changes to the health care
and 2019. In the FY 2017 IPPS/LTCH
system, such as the mix of the insured
PPS final rule (81 FR 56952), we
and uninsured because this mix is
indicated that we planned to address
integral to the well-established NHEA
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methodology. Below we describe some
aspects of the methodology used to
develop the NHEA that we believe are
particularly relevant in estimating the
percent change in the rate of
uninsurance for FY 2018. A full
description of the methodology used to
develop the NHEA is available on the
CMS Web site at: https://www.cms.gov/
Research-Statistics-Data-and-Systems/
Statistics-Trends-and-Reports/
NationalHealthExpendData/
Downloads/DSM-15.pdf.
The NHEA estimates of U.S.
population reflect the Census Bureau’s
definition of the resident-based
population, which includes all people
who usually reside in the 50 States or
the District of Columbia, but excludes
residents living in Puerto Rico and areas
under U.S. sovereignty, members of the
U.S. Armed Forces overseas, and U.S.
citizens whose usual place of residence
is outside of the United States, plus a
small (typically less than 0.2 percent of
population) adjustment to reflect Census
undercounts. In past years, the estimates
for Factor 2 were made using the CBO’s
uninsured population estimates for the
under 65 population. For FY 2018 and
subsequent years, the statute does not
restrict the estimate to the measurement
of the percent of individuals under the
age of 65 who are uninsured.
Accordingly, as we explained in the
proposed rule, we believe it is
appropriate to use an estimate that
reflects the rate of uninsurance in the
United States across all age groups. In
addition, we continue to believe that a
resident-based population estimate
more fully reflects the levels of
uninsurance in the United States that
influence uncompensated care for
hospitals than an estimate that reflects
only legal residents. The NHEA
estimates of uninsurance are for the
total U.S. population (all ages) and not
by specific age cohort, such as the
population under the age of 65.
The NHEA includes comprehensive
enrollment estimates for total private
health insurance (PHI) (including direct
and employer-sponsored plans),
Medicare, Medicaid, the Children’s
Health Insurance Program (CHIP), and
other public programs, and estimates of
the number of individuals who are
uninsured. Estimates of total PHI
enrollment are available for 1960
through 2015, estimates of Medicaid,
Medicare, and CHIP enrollment are
available for the length of the respective
programs, and all other estimates
(including the more detailed estimates
of direct-purchased and employersponsored insurance) are available for
1987 through 2015. The NHEA data are
publicly available on the CMS Web site
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at: https://www.cms.gov/ResearchStatistics-Data-and-Systems/StatisticsTrends-and-Reports/
NationalHealthExpendData/.
In order to compute Factor 2, the first
metric that is needed is the proportion
of the total U.S. population that was
uninsured in 2013. In developing the
estimates for the NHEA, OACT’s
methodology included using the
number of uninsured individuals for
1987 through 2009 based on the
enhanced Current Population Survey
(CPS) from the State Health Access Data
Assistance Center (SHADAC). The CPS,
sponsored jointly by the U.S. Census
Bureau and the U.S. Bureau of Labor
Statistics (BLS), is the primary source of
labor force statistics for the population
of the United States. (We refer readers
to the Web site at: https://
www.census.gov/programs-surveys/
cps.html.) The enhanced CPS, available
from SHADAC (available at https://
datacenter.shadac.org) accounts for
changes in the CPS methodology over
time. OACT further adjusts the
enhanced CPS for an estimated
undercount of Medicaid enrollees (a
population that is often not fully
captured in surveys that include
Medicaid enrollees due to a perceived
stigma associated with being enrolled in
the Medicaid program or confusion
about the source of their health
insurance).
To estimate the number of uninsured
individuals for 2010 through 2014,
OACT extrapolates from the 2009 CPS
data using data from the National Health
Interview Survey (NHIS) The NHIS is
one of the major data collection
programs of the National Center for
Health Statistics (NCHS), which is part
of the Centers for Disease Control and
Prevention (CDC). The U.S. Census
Bureau is the data collection agent for
the NHIS.
The NHIS results have been
instrumental over the years in providing
data to track health status, health care
access, and progress toward achieving
national health objectives. For further
information regarding the NHIS, we
refer readers to the CDC Web site at:
https://www.cdc.gov/nchs/nhis/
index.htm. For 2015, the estimate of the
rate of uninsurance in the NHEA
matches with the estimate from the
NHIS.
The next metrics needed to compute
Factor 2 are projections of the rate of
uninsurance in both calendar years 2017
and 2018. On an annual basis, the
OACT projects enrollment and spending
trends for the coming 10-year period.
Those projections (currently for years
2016 through 2025) use the latest NHEA
historical data, which presently run
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through 2015. The NHEA projection
methodology accounts for expected
changes in enrollment across all of the
categories of insurance coverage
previously listed. The sources for
projected growth rates in enrollment for
Medicare, Medicaid, and CHIP include
the latest Medicare Trustees Report, the
Medicaid Actuarial Report, or other
updated estimates as produced by the
OACT. Projected rates of growth in
enrollment for private health insurance
and the uninsured are based largely on
OACT’s econometric models, which rely
on the set of macroeconomic
assumptions underlying the latest
Medicare Trustees Report. Greater detail
can be found in OACT’s report titled
‘‘Projections of National Health
Expenditure: Methodology and Model
Specification,’’ which is available on the
CMS Web site at: https://www.cms.gov/
Research-Statistics-Data-and-Systems/
Statistics-Trends-and-Reports/
NationalHealthExpendData/
Downloads/ProjectionsMethodology.pdf
As discussed in the proposed rule, the
use of data from the NHEA to estimate
the rate of uninsurance is consistent
with the statute and meets the criteria
we have identified for determining the
appropriate data source. Section
1886(r)(2)(B)(ii) of the Act instructs the
Secretary to estimate the rate of
uninsurance for purposes of Factor 2
based on data from the Census Bureau
or other sources the Secretary
determines appropriate. The NHEA
utilizes data from the Census Bureau;
the estimates are available in time for
the IPPS rulemaking cycle; the estimates
are produced by OACT on an annual
basis and are expected to continue to be
produced for the foreseeable future; and
projections are available for calendar
year time periods that span the
upcoming fiscal year. Timeliness and
continuity are important considerations
because of our need to be able to update
this estimate annually. Accuracy is also
a very important consideration and, all
things being equal, we would choose the
most accurate data source that
sufficiently meets our other criteria.
Using these data sources and the
methodologies described above, OACT
estimates that the uninsured rate for the
historical, baseline year of 2013 was 14
percent and for CYs 2017 and 2018 is
8.3 percent and 8.1 percent,
respectively. As required by section
1886(r)(2)(B)(ii) of the Act, the Chief
Actuary of CMS has certified these
estimates. As with the CBO estimates on
which we based Factor 2 in prior fiscal
years, the NHEA estimates are for a
calendar year. In the rulemaking for FY
2014, many commenters noted that the
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uncompensated care payments are made
on fiscal year and not a calendar year
basis and requested that CMS normalize
the CBO estimate to reflect a fiscal year
basis. Specifically, commenters
requested that CMS calculate a weighted
average of the CBO estimate for October
through December 2013 and the CBO
estimate for January through September
2014 when determining Factor 2 for FY
2014. We agreed with the commenters
that normalizing the estimate to cover
FY 2014 rather than CY 2014 would
more accurately reflect the rate of
uninsurance that hospitals would
experience during the FY 2014 payment
year. Accordingly, we estimated the rate
of uninsurance for FY 2014 by
calculating a weighted average of the
CBO estimates for CY 2013 and CY 2014
(78 FR 50633). We have continued this
weighted average approach in each
fiscal year since FY 2014.
We continue to believe that, in order
to estimate the rate of uninsurance
during a fiscal year more accurately,
Factor 2 should reflect the estimated
rate of uninsurance that hospitals will
experience during the fiscal year, rather
than the rate of uninsurance during only
one of the calendar years that the fiscal
year spans. However, we have concerns
about the future potential for the
uninsured rate to vary nonuniformly in
the 2 calendar years that the fiscal year
spans (for example, due to changes in
the economy or changes in legislation).
Nevertheless, for FY 2018, because
OACT’s current estimates of the percent
of individuals without insurance in CY
2017 and CY 2018 are relatively close,
we stated in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19947) that
we do not believe this is a significant
policy issue, and we proposed to
continue with the weighted average
approach used in past fiscal years in
order to estimate the rate of uninsurance
for FY 2018.
The calculation of the proposed
Factor 2 for FY 2018 using a weighted
average of OACT’s projections for CY
2017 and CY 2018 was as follows:
• Percent of individuals without
insurance for CY 2013: 14 percent.
• Percent of individuals without
insurance for CY 2017: 8.3 percent.
• Percent of individuals without
insurance for CY 2018: 8.1 percent.
• Percent of individuals without
insurance for FY 2018 (0.25 times 0.083)
+ (0.75 times 0.081): 8.15 percent
1¥⎢((0.0815–0.14)/0.14)| = 1¥0.4179 =
0.5821 (58.21 percent)
1¥⎢((0.0815–0.14)/0.14)| = 1¥0.4179 =
0.5821 (58.21 percent)
0.5821 (58.21 percent)¥.002 (0.2
percentage points for FY 2018
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under section 1886(r)(2)(B)(ii) of the
Act) = 0.5801 or 58.01 percent
0.5801 = Factor 2
Therefore, the proposed Factor 2 for
FY 2018 was 58.01 percent.
The proposed FY 2018
uncompensated care amount was:
$12,001,915,095.04 × 0.5801 =
$6,962,310,946.63.
Proposed FY 2018 Uncompensated Care
Total Available ............
$6,962,310,946.63
We invited public comments on our
proposed methodology for calculation of
Factor 2 for FY 2018.
Comment: Several commenters
supported the proposal to use the
uninsured estimates produced by CMS’
OACT as part of the development of the
NHEA in estimating the percent change
in the rate of uninsurance for FY 2018.
Some of these commenters stated that,
in their view, the estimates produced by
OACT are timely, complete, and more
accurately capture the change in the
number of uninsured individuals than
CBO’s historical estimate of the rate of
uninsurance in 2013. A few commenters
noted that the data source adds greater
transparency to the process as the
NHEA estimates are publicly available,
while other commenters urged CMS to
ensure that all data are provided with
complete transparency of the type of
data and data collection methods that
are used. One commenter requested
further explanation for our assumption
regarding underreporting of Medicaid
coverage in the survey data and the
corresponding adjustment to our
estimate of the rate of uninsurance, and
then contended that this assumption
was applied inconsistently between
Factors 1 and 2.
Commenters supported the proposed
methodology for determining Factor 2
because they believed it provides a more
accurate comparison when evaluating
changes in the uninsured population
since 2013, noting that the amount
available to make uncompensated care
payments in FY 2017 was lower using
CBO estimates than if the NHEA data
had been used. A number of
commenters asked CMS to
retrospectively apply the NHEA
estimates when measuring the effect of
changes in Medicare DSH policy across
time periods prior to FY 2018. Some of
these commenters recognized that CMS
does not have the authority to
retroactively change estimates from
prior years, but suggested that CMS
consider this point in its analysis of
payment changes occurring from the
proposal to move from the use of low-
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38199
income patient days to Worksheet S–10
data to estimate uncompensated care.
Several commenters requested that
CMS use the most recent estimates
available and update them in a timely
manner. The commenters also requested
that CMS account for any legislative or
policy changes that may have an effect
on the uninsurance rate during FY 2018.
Several commenters expressed
concern about the sustainability of
continued reductions to aggregate
uncompensated care payments due to
the application of Factor 2. The
commenters noted that, as insurance
coverage increases, the aggregate
amount available for uncompensated
care payments will decline and thus
reduce the amount of payments to be
made.
Response: We appreciate the
commenters’ support for our proposal to
begin using the uninsured estimates
produced by OACT in the computation
of Factor 2 for FY 2018. Section
1886(r)(2)(B)(ii) of the Act permits us to
use a data source other than CBO
estimates to determine the percent
change in the rate of uninsurance
beginning in FY 2018. We believe that
the NHEA data, on balance, best meet
all of our considerations to ensure that
the data source meets the statutory
requirement that the estimate be based
on data from the Census Bureau or other
sources the Secretary determines
appropriate and will provide reasonable
estimates of the rate of uninsurance that
are available in conjunction with the
IPPS rulemaking cycle. In the FY 2018
IPPS/LTCH PPS proposed rule, we
provided additional information
regarding the data sources, methods,
and assumptions employed by the
actuaries in determining the OACT’s
updated estimate of Factor 2 for FY
2018. We believe that this discussion
addresses the concerns raised by
commenters regarding the various
assumptions used in the estimate.
Regarding the assumption of
undercount for Medicaid enrollees in
surveys, we refer readers to research by
Michael Davern, et al. as cited by the
NHEA’s Methodology Paper available
on the CMS Web site at: https://
www.cms.gov/Research-Statistics-Dataand-Systems/Statistics-Trends-andReports/NationalHealthExpendData/
Downloads/DSM-15.pdf. With respect to
the commenters’ request to
retrospectively apply the NHEA
estimates when measuring the effect of
changes in Medicare DSH policy,
section 1886(r)(2)(B)(ii) of the Act states
that, for FY 2018 and subsequent fiscal
years, Factor 2 is determined by
comparing the percent of individuals
who were uninsured in 2013, as
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estimated by the Secretary, based on
data from the Census Bureau or other
sources the Secretary determines
appropriate, and certified by the Chief
Actuary of CMS, and the percent of
individuals who were uninsured in the
most recent period for which data are
available, as so estimated and certified.
Because the statute specifies the use of
these estimates only for FY 2018 and
subsequent years, and section
1886(r)(2)(B)(i) of the Act expressly
requires the use of CBO estimates for
prior fiscal years, we do not believe that
we have authority to use the NHEA data
to retroactively recalculate uninsurance
rates for previous years.
In response to the commenters who
requested that we update the estimates
and account for any legislative or policy
changes that may affect the uninsurance
rate in FY 2018, in the FY 2018 IPPS/
LTCH PPS proposed rule, we indicated
that we considered timeliness and
accuracy when selecting the NHEA as
the appropriate data on which to base
our estimates of the rate of uninsurance.
Furthermore, we continue to believe
that applying our best estimate of the
change in the rate of uninsurance for a
fiscal year prospectively would be most
conducive to administrative efficiency,
finality, and predictability in payments.
Finally, in response to concerns about
the decrease in the amount available to
make uncompensated care payments,
we believe that the intent of the statute
is to reduce the amount available to
make uncompensated care payments to
reflect the decline in the number of
uninsured individuals and the expected
corresponding decrease in the amount
of uncompensated care.
After consideration of the public
comments we received, we are
finalizing the proposed calculation of
Factor 2 for this FY 2018 IPPS/LTCH
PPS final rule. The estimates of the
percent of uninsured individuals have
been certified by the Chief Actuary of
CMS as discussed in the proposed rule.
The final calculation using a weighted
average of OACT’s projections for CY
2017 and CY 2018 is as follows:
• Percent of individuals without
insurance for CY 2013: 14 percent.
• Percent of individuals without
insurance for CY 2017: 8.3 percent.
• Percent of individuals without
insurance for CY 2018: 8.1 percent.
• Percent of individuals without
insurance for FY 2018 (0.25 times 0.083)
+ (0.75 times 0.081): 8.15 percent
1¥⎢((0.0815¥0.14)/0.14)⎢ = 1¥0.4179 =
0.5821 (58.21 percent)
0.5821 (58.21 percent)¥.002 (0.2
percentage points for FY 2018
under section 1886(r)(2)(B)(ii) of the
Act) = 0.5801
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0.5801 = Factor 2
Therefore, the final Factor 2 for FY
2018 is 58.01 percent.
The FY 2018 final uncompensated
care amount is: $11,664,704,643.27 ×
0.5801 = $6,766,695,163.56.
and (3) the timing and manner of
computing the quotient for each
hospital estimated to receive Medicare
DSH payments. The statute instructs the
Secretary to estimate the amounts of
uncompensated care for a period based
on appropriate data. In addition, we
FY 2018 Uncompensated
note that the statute permits the
Care Total Available ... $6,766,695,163.56 Secretary to use alternative data in the
case where the Secretary determines
c. Calculation of Factor 3 for FY 2018
that such alternative data are available
that are a better proxy for the costs of
(1) Background
subsection (d) hospitals for treating
Section 1886(r)(2)(C) of the Act
individuals who are uninsured.
defines Factor 3 in the calculation of the
In the course of considering how to
uncompensated care payment. As we
determine Factor 3 during the
have discussed earlier, section
1886(r)(2)(C) of the Act states that Factor rulemaking process for FY 2014, we
considered defining the amount of
3 is equal to the percent, for each
uncompensated care for a hospital as
subsection (d) hospital, that represents
the uncompensated care costs of each
the quotient of (1) the amount of
hospital and determined that Worksheet
uncompensated care for such hospital
for a period selected by the Secretary (as S–10 of the Medicare cost report
potentially provides the most complete
estimated by the Secretary, based on
data regarding uncompensated care
appropriate data (including, in the case
costs for Medicare hospitals. However,
where the Secretary determines
because of concerns regarding variations
alternative data are available that are a
in the data reported on Worksheet S–10
better proxy for the costs of subsection
and the completeness of these data, we
(d) hospitals for treating the uninsured,
did not propose to use data from
the use of such alternative data)); and
Worksheet S–10 to determine Factor 3
(2) the aggregate amount of
for FY 2014, the first year this provision
uncompensated care for all subsection
was in effect, or for FY 2015, 2016, or
(d) hospitals that receive a payment
under section 1886(r) of the Act for such 2017. When we first discussed using
Worksheet S–10 to allocate hospitals’
period (as so estimated, based on such
shares of uncompensated care costs in
data).
the FY 2014 IPPS/LTCH PPS final rule
Therefore, Factor 3 is a hospital(78 FR 50638), we explained why we
specific value that expresses the
believed that it was premature to use
proportion of the estimated
uncompensated care costs reported on
uncompensated care amount for each
Worksheet S–10 for FY 2014.
subsection (d) hospital and each
subsection (d) Puerto Rico hospital with Specifically, at that time, the most
recent available cost reports would have
the potential to receive Medicare DSH
been from FYs 2010 and 2011, which
payments relative to the estimated
were submitted on or after May 1, 2010,
uncompensated care amount for all
when the new Worksheet S–10 went
hospitals estimated to receive Medicare
into effect. We believed that concerns
DSH payments in the fiscal year for
which the uncompensated care payment about the standardization and
is to be made. Factor 3 is applied to the
completeness of the Worksheet S–10
product of Factor 1 and Factor 2 to
data could be more acute for data
determine the amount of the
collected in the first year of the
uncompensated care payment that each
Worksheet’s use (78 FR 50635). In
eligible hospital will receive for FY
addition, we believed that it would be
2014 and subsequent fiscal years. In
most appropriate to use data elements
order to implement the statutory
that have been historically publicly
requirements for this factor of the
available, subject to audit, and used for
uncompensated care payment formula,
payment purposes (or that the public
it was necessary to determine: (1) The
understands will be used for payment
definition of uncompensated care or, in
purposes) to determine the amount of
other words, the specific items that are
uncompensated care for purposes of
to be included in the numerator (that is, Factor 3 (78 FR 50635). At the time we
the estimated uncompensated care
issued the FY 2014 IPPS/LTCH PPS
amount for an individual hospital) and
final rule, we did not believe that the
the denominator (that is, the estimated
available data regarding uncompensated
uncompensated care amount for all
care from Worksheet S–10 met these
hospitals estimated to receive Medicare
criteria and, therefore, we believed they
DSH payments in the applicable fiscal
were not reliable enough to use for
year); (2) the data source(s) for the
determining FY 2014 uncompensated
estimated uncompensated care amount; care payments. Accordingly, for FY
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2014, we concluded that utilization of
insured low-income patients would be a
better proxy for the costs of hospitals in
treating the uninsured. For FYs 2015,
2016, and 2017, the cost reports used for
calculating uncompensated care
payments (that is, FYs 2011, 2012, and
2013) were also submitted prior to the
time that hospitals were on notice that
Worksheet S–10 could be the data
source for calculating uncompensated
care payments. Therefore, we believed it
was also appropriate to use proxy data
to calculate Factor 3 for these years.
We stated in the preamble of the FY
2017 IPPS/LTCH PPS proposed rule that
we believed that, for FY 2018, many of
the above concerns would no longer be
relevant. That is, hospitals were on
notice as of FY 2014 that Worksheet S–
10 could eventually become the data
source for CMS to calculate
uncompensated care payments.
Furthermore, hospitals’ cost reports
from FY 2014 had been publicly
available for some time, and CMS had
analyses of Worksheet S–10 conducted
both internally and by stakeholders
demonstrating that Worksheet S–10
accuracy had improved over time.
Specifically, as discussed in the FY
2017 IPPS/LTCH PPS proposed rule (81
FR 25090), MedPAC has provided
analyses that found that current
Worksheet S–10 data are a better proxy
for predicting audited uncompensated
care costs than Medicaid/Medicare SSI
days, and that the data on Worksheet S–
10 would improve over time as the data
are actually used to make payments.
CMS has also undertaken an extensive
analysis of the Worksheet S–10 data,
benchmarking it against the data on
uncompensated care costs reported to
the Internal Revenue Service (IRS) on
Form 990 by not-for-profit hospitals.
(This analysis, performed by Dobson
DaVanzo & Associates, LLC, under
contract to CMS, was included in a
report entitled ‘‘Improvements to
Medicare Disproportionate Share
Hospital (DSH) Payments Report:
Benchmarking S–10 Data Using IRS
Form 990 Data and Worksheet S–10
Trend Analyses,’’ which is available on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/dsh.html under the Downloads
section.) The analysis determined a
strong and converging correlation
between the amounts for Factor 3
derived using the IRS Form 990 and
Worksheet S–10 data, suggesting that
Worksheet S–10 uncompensated care
data are becoming more stable over
time. As we discussed in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
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19947 through 19948), given these
results and in light of the fact that
hospitals have been on notice since the
FY 2014 rulemaking that CMS intended
eventually to use Worksheet S–10 as the
data source for calculating
uncompensated care payments, we
believed it would be appropriate to
propose to begin incorporating
Worksheet S–10 data for purposes of
calculating Factor 3 starting in FY 2018.
In section IV.F.4.d. of the preamble of
the FY 2017 IPPS/LTCH PPS proposed
rule (81 FR 25090 through 25094), we
proposed a methodology and timeline
for incorporating Worksheet S–10 data
in the calculation of Factor 3 beginning
in FY 2018 and invited public
comments on that proposal.
While some commenters, including
MedPAC, were supportive of the
proposal, many other commenters
expressed concerns about a perceived
lack of clarity in the Worksheet S–10
instructions and their belief in the
necessity of a strict audit mechanism to
capture aberrant uncompensated care
costs reported on Worksheet S–10.
Many commenters also cited the report
from Dobson DaVanzo, which
concluded that hospitals are doing a
better job of reporting their
uncompensated care data on Worksheet
S–10 than they did a few years ago.
However, these commenters disagreed
with CMS about the significance of this
observation. One commenter stated that
even if it is true in the aggregate that
hospitals are reporting data more
accurately on Worksheet S–10, the zerosum nature of the calculation of
uncompensated care payments is such
that the remaining inaccuracy and lack
of uniformity in the data reported can
have a very large impact on hospitals.
The commenter asserted that if
hospitals, for whatever reason, overreport their uncompensated care, they
benefit financially from doing so, while
those that do not aggressively report
suffer financial harm. The commenter
concluded that, for this reason, the
possibility that some hospitals are
generally ‘‘doing better’’ with reporting
data is not good enough. All hospitals
must do better, and until they do, the
commenter believed that data from
Worksheet S–10 are not accurate enough
for public policymaking purposes. Other
commenters asserted that the Dobson/
DaVanzo study did not illustrate or even
evaluate whether data from Worksheet
S–10 are a reasonable proxy for the costs
hospitals incur in providing care to the
uninsured. These commenters pointed
to their own analyses, which indicated
that the most notable aberrations in
Worksheet S–10 data reporting occur
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38201
among public hospitals, which do not
file a Form 990 and are therefore
missing from the Dobson/DaVanzo
analysis.
On balance, after considering all of
the comments, we elected not to finalize
our proposal to begin to incorporate
Worksheet S–10 into the calculation of
Factor 3 for FY 2018 in the FY 2017
IPPS/LTCH PPS final rule. We stated
that we were postponing the decision
regarding when to begin incorporating
data from Worksheet S–10 and
proceeding with certain additional
quality control and data improvement
measures to the Worksheet S–10
instructions as commenters had
requested. We indicated that we would
consider further whether the current
Worksheet S–10 data or a proxy should
be used to calculate Factor 3 for FY
2018 and subsequent fiscal years. We
also expressed our intention to explore
whether there is an appropriate proxy
for uncompensated care that could be
used to calculate Factor 3 until we
determine that data from the revised
Worksheet S–10 can be used for this
purpose. We stated that we would
undertake notice-and-comment
rulemaking to address the issue of the
appropriate data to use to determine
Factor 3 for FY 2018 and subsequent
years.
(2) Data Sources for FY 2018
Since the publication of the FY 2017
final rule and as part of our ongoing
quality control and data improvement
measures for Worksheet S–10, we have
updated the benchmarking analysis
described in the report ‘‘Improvements
to Medicare Disproportionate Share
Hospital (DSH) Payments Report:
Benchmarking S–10 Data Using IRS
Form 990 Data and Worksheet S–10
Trend Analyses’’ posted with the FY
2017 IPPS/LTCH PPS proposed rule. A
copy of the updated analysis was made
available in conjunction with the FY
2018 IPPS/LTCH PPS proposed rule on
the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/Downloads/FY2018-NPRM-Updateof-Benchmarking-S-10-Data.pdf. As
discussed in the FY 2017 IPPS/LTCH
PPS proposed rule, the purpose of the
benchmarking analysis was to
determine if Worksheet S–10
uncompensated care data are becoming
more stable over time (81 FR 25090). In
the report issued in conjunction with
the FY 2017 rulemaking, we conducted
an analysis of 2010, 2011, and 2012
Worksheet S–10 data and IRS Form 990
data from the same years. Using IRS
Form 990 data for tax years 2010, 2011,
and 2012 (the latest available years at
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that time) as a benchmark, we compared
key variables derived from Worksheet
S–10 and IRS Form 990 data, such as
charity care and bad debt. The analysis
was completed using data from
hospitals that had completed both
Worksheet S–10 and IRS Form 990
across all study years, yielding a sample
of 788 not-for-profit hospitals
(representing 668 unique Taxpayer
Identification Numbers). Because Factor
3 is used to determine the Medicare
uncompensated care payment amount
for each hospital, we calculated the
amounts for Factor 3 for the matched
hospitals using charity care and bad
debt, and compared the Factor 3
distributions calculated using data from
IRS Form 990 and Worksheet S–10. Key
findings indicated that the amounts for
Factor 3 derived using the IRS Form 990
and Worksheet S–10 data were highly
correlated. In addition, the correlation
coefficient between the amounts for
Factor 3 calculated from the IRS Form
990 and Worksheet S–10 had increased
over time, from 0.71 in 2010 to 0.77 in
2011 and 0.80 in 2012, demonstrating
an increasing convergence between the
data sources.
As we discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19949),
in the updated analysis performed for
the FY 2018 rulemaking, we again
compared Worksheet S–10 and IRS
Form 990 data and assessed the
correlation in Factor 3s derived from
each of the data sources. We conducted
an analysis of 2011, 2012, and 2013
Worksheet S–10 data and IRS Form 990
data from the same years. (The previous
analysis used data from 2010 to 2012.)
Using IRS Form 990 data for tax years
2011, 2012, and 2013 (again, the latest
available years) as a benchmark, we
utilized the same methodology as was
used in the previous analysis, which
yielded a sample of 1,061 not-for-profit
hospitals (representing 918 unique
Taxpayer Identification Numbers) and
found that the amounts for Factor 3
derived using the IRS Form 990 and
Worksheet S–10 data continue to be
highly correlated and that, within the
larger sample in the updated analysis,
this correlation continues to increase
over time, from 0.80 in 2011 to 0.85 in
2013. (The highest correlation found in
the earlier analysis performed for the FY
2017 rulemaking was 0.80.)
The fact that this most recent analysis,
which was performed after the issuance
of the FY 2017 IPPS/LTCH PPS final
rule, continues to demonstrate a high
correlation between the amounts for
Factor 3 derived using the IRS 990 data
and the Worksheet S–10 data and that
this correlation continues to increase
over time leads us to believe that we
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have reached a tipping point with
respect to the use of the Worksheet S–
10 data. Specifically, we can no longer
conclude that alternative data are
available for FY 2014 that are a better
proxy for the costs of subsection (d)
hospitals for treating individuals who
are uninsured than the data on
uncompensated care costs reported on
the Worksheet S–10. However, we
stated in the proposed rule that we
continue to believe that it is appropriate
to use low-income insured days as a
proxy for uncompensated care costs for
years prior to FY 2014. Hospitals did
not have notice that the Worksheet S–
10 data from these years might be used
for purposes of computing
uncompensated care payments and, as a
result, may not have fully appreciated
the importance of reporting their
uncompensated care costs as completely
and accurately as possible.
We found further evidence for this
tipping point when we examined
changes to the FY 2014 Worksheet S–10
data submitted by hospitals since the
publication of the FY 2017 IPPS/LTCH
PPS final rule. In the FY 2017 IPPS/
LTCH PPS final rule, as part of our
ongoing quality control and data
improvement measures for the
Worksheet S–10, we referred readers to
Change Request 9648, Transmittal 1681,
titled ‘‘The Supplemental Security
Income (SSI)/Medicare Beneficiary Data
for Fiscal Year 2014 for Inpatient
Prospective Payment System (IPPS)
Hospitals, Inpatient Rehabilitation
Facilities (IRFs), and Long Term Care
Hospitals (LTCH),’’ issued on July 15,
2016 (available at: https://www.cms.gov/
Regulations-and-Guidance/Guidance/
Transmittals/Downloads/
R1681OTN.pdf). In this transmittal, as
part of the process for ensuring
complete submission of Worksheet S–10
by all eligible DSH hospitals, we
instructed MACs to accept amended
Worksheets S–10 for FY 2014 cost
reports submitted by hospitals (or initial
submissions of Worksheet S–10 if none
had been submitted previously) and to
upload them to the Health Care Provider
Cost Report Information System (HCRIS)
in a timely manner. The transmittal
stated that, for revisions to be
considered, hospitals were required to
submit their amended FY 2014 cost
report containing the revised Worksheet
S–10 (or a completed Worksheet S–10 if
no data were included on the previously
submitted cost report) to the MAC no
later than September 30, 2016.
As discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19949),
we examined hospitals’ FY 2014 cost
reports to see if the Worksheet S–10
data on those cost reports have changed
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as a result of the opportunity for
hospitals to submit revised Worksheet
S–10 data for FY 2014. Specifically, we
compared hospitals’ FY 2014 Worksheet
S–10 data as they existed in the first
quarter of CY 2016 with data from the
fourth quarter of CY 2016. We found
that the FY 2014 Worksheet S–10 data
had changed over that time period for
approximately one quarter of hospitals
that receive uncompensated care
payments. As we discussed in the
proposed rule, the fact that the
Worksheet S–10 data changed for such
a significant number of hospitals
following a review of the cost report
data they originally submitted and that
the revised Worksheet S–10 information
is available to be used in determining
uncompensated care costs contributes to
our belief that we can no longer
conclude that alternative data are
available that are a better proxy than the
Worksheet S–10 data for the costs of
subsection (d) hospitals for treating
individuals who are uninsured.
Commenters have also provided
equity arguments with respect to the
relationship between uncompensated
care payments and the expansion of
Medicaid in certain States under the
authority provided by the Affordable
Care Act. The commenters have made a
twofold argument. First, they have
argued that hospitals in States that did
not expand Medicaid treat a higher
number of uninsured patients compared
to hospitals in States that did expand
Medicaid and, as a result, provide more
uncompensated care. However, since
the implementation of the new DSH
payment methodology under section
3133 of the Affordable Care Act in FY
2014, these hospitals have experienced
reductions in the payments for
uncompensated care due to the national
decline in the uninsured rate driven in
large part by Medicaid expansions in
other States. Second, they have argued
that hospitals in nonexpansion States
will be penalized a second time when
Medicaid utilization is used as part of
the basis for determining Factor 3
because their Medicaid utilization has
not grown as much relative to hospitals
in expansion States. Although CMS has
not yet used data affected by Medicaid
expansion when determining Factor 3,
commenters are concerned that they
will be penalized in future calculations
when these data are used.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50639), we recognized that,
in using Medicaid days as part of the
proxy for uncompensated care, it would
be possible for hospitals in States that
choose to expand Medicaid to receive
higher uncompensated care payments
because they may have more Medicaid
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patient days than hospitals in a State
that does not choose to expand
Medicaid. Because the earliest Medicaid
expansions under the Affordable Care
Act began in 2014, the 2011, 2012, and
2013 Medicaid days data used to
determine Factor 3 for FY 2017 are the
most recent available data on Medicaid
utilization that do not reflect the effects
of these Medicaid expansions.
Accordingly, if we were to use only lowincome insured days to estimate
uncompensated care in FY 2018, we
would need to hold the time period of
these data constant and use data on
Medicaid days from 2011, 2012, and
2013 in order to avoid the risk of any
redistributive effects arising from the
decision to expand Medicaid in certain
States. As a result, we would be using
older data that may provide a less
accurate proxy for the level of
uncompensated care being furnished by
hospitals in FY 2018, contributing to
our growing concerns regarding the
continued use of low-income insured
days as a proxy for uncompensated care
costs in FY 2018.
In the proposed rule, we also noted
that when weighing the new
information that has become available to
us regarding the Worksheet S–10 and
the low-income days proxy since the FY
2018 rulemaking, we are not
considering these developments in
isolation, but rather in the context of the
information that we previously
considered as part our discussions of
the Worksheet S–10 data in prior
rulemaking. Part of this background is
provided by the 2007 MedPAC analysis
of data from the Government
Accountability Office (GAO) and the
American Hospital Association (AHA),
which suggests that Medicaid days and
low income Medicare days are not a
good proxy for uncompensated care
costs (80 FR 49525). Additional analyses
performed by MedPAC showed that the
correlation between audited
uncompensated care data from 2009 and
the data from the FY 2011 Worksheet S–
10 was over 0.80, as compared to a
correlation of approximately 0.50
between the audited uncompensated
care data and 2011 Medicare SSI and
Medicaid days. Based on this analysis,
MedPAC concluded that use of
Worksheet S–10 data was already better
than using Medicare SSI and Medicaid
days as a proxy for uncompensated care
costs, and that the data on Worksheet S–
10 would improve over time as the data
are actually used to make payments (81
FR 25090). Furthermore, MedPAC in the
past has raised concerns about the lowincome days proxy we have used
historically because it is an inpatient
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measure and much of the
uncompensated care provided by
certain hospitals, including rural
hospitals, occurs in the emergency room
or other outpatient areas. In its
comments on the FY 2017 IPPS/LTCH
PPS proposed rule, MedPAC again
recommended that we start using the
Worksheet S–10 data with a phase-in
(81 FR 56962).
In summary, as we stated in the FY
2018 IPPS/LTCH PPS proposed rule,
when weighing the new information
that has become available to us since the
FY 2017 rulemaking in conjunction
with the information regarding
Worksheet S–10 data and the lowincome days proxy that we have
analyzed as part of our consideration of
this issue in prior rulemaking, we can
no longer conclude that alternative data
to the Worksheet S–10 are available for
FY 2014 that are a better proxy for the
costs of subsection (d) hospitals for
treating individuals who are uninsured.
Comment: Many commenters
expressed disapproval that CMS
‘‘backtracked’’ on its decision in the FY
2017 IPPS/LTCH PPS final rule to
postpone incorporating data from
Worksheet S–10 into the calculation of
Factor 3 and voiced their confusion and
surprise over the apparent change in
policy. These commenters noted that
CMS’ position in the FY 2017 IPPS/
LTCH PPS final rule was that additional
time was needed to make certain
modifications and clarifications to the
cost report instructions for Worksheet
S–10, as well as to explore suggestions
made by commenters in previous years
for ensuring the consistent submission
of Worksheet S–10 by hospitals when
filing their cost reports (such as software
edits to flag negative, unusual, or
missing data or a missing Worksheet S–
10). They added that CMS stated that
this postponement also allowed time for
hospitals to more accurately complete
and submit the form. The commenters
observed that CMS’ stated intent in the
FY 2017 IPPS/LTCH PPS final rule was
to begin to incorporate Worksheet S–10
data into the computation of Factor 3
once these additional measures to
ensure data quality and completeness
are in place, and no later than FY 2021,
yet CMS had reversed this decision by
proposing to use Worksheet S–10 data
from FY 2014 in the calculation of
Factor 3 for FY 2018 in the FY 2018
IPPS/LTCH PPS proposed rule.
Response: We appreciate the
comments regarding our proposal to
begin using data from Worksheet S–10
in the calculation of Factor 3 in FY
2018. As stated in the FY 2018 IPPS/
LTCH PPS proposed rule and explained
in greater detail below, when weighing
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the new information that has become
available to us since the FY 2017
rulemaking, in conjunction with the
information regarding Worksheet S–10
data and the low-income days proxy
that we have analyzed as part of our
consideration of this issue in prior
rulemaking, we can no longer conclude
that alternative data to the Worksheet S–
10 are available for FY 2014 that are a
better proxy for the costs of subsection
(d) hospitals for treating individuals
who are uninsured.
Comment: Several commenters
approved of CMS’ proposal to begin
using data from Worksheet S–10 in the
calculation of Factor 3 prior to FY 2021.
MedPAC stated that using Worksheet S–
10 data, in conjunction with select
auditing of cost reports, will lead to
better estimates of uncompensated care
costs than the continued use of the
current proxy of Medicaid and SSI days.
Other commenters echoed MedPAC’s
statement, noting that the metrics from
Worksheet S–10 appear to provide a
better assessment of a hospital’s
uncompensated care costs than the
current proxy data, which assess only
low-income insured days and distribute
the bulk of Medicare DSH payments
based on the amount of inpatient care a
hospital delivers to Medicaid patients
and recipients of SSI payments. One
commenter cited the December 2016
article in Health Affairs (Stensland, et
al.), which estimated that Medicare
payments on average are reduced by $20
for every additional uninsured patient a
hospital treats, to support the argument
that the distribution of uncompensated
care payments according to a hospital’s
proportion of low-income insured days
results in payments that are poorly
correlated with a hospital’s true
uncompensated care burden. The
commenter asserted that
uncompensated care payments should
compensate hospitals based on their
delivery of care to the uninsured rather
than based on a proxy that is poorly
correlated with the costs of treating the
uninsured.
As in previous years, commenters also
believed that the proposed methodology
for FY 2018 brings parity and equity
across the States, regardless of their
decision to expand Medicaid.
Commenters stated that implementation
of the proposal to use data from
Worksheet S–10 will create more
balance between Medicaid expansion
and nonexpansion States, especially
because hospitals in nonexpansion
States are ‘‘at a significant
disadvantage’’ under the current proxy
methodology. The commenters noted
that, under the current methodology
used to calculate Factor 3, hospitals in
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nonexpansion States bear a greater
uncompensated care burden, yet are
effectively penalized in Medicare DSH
allocations twice: First, because they
incur a reduction in the total amount
available to be distributed as
uncompensated care payments based on
the national decline in the uninsured
rate that largely reflects the experience
of expansion States; and second,
because their Medicaid utilization rates
remain relatively flat compared to the
increasing rates of hospitals in
expansion States, resulting in lower
uncompensated care payments. These
commenters believed that FY 2018 is an
appropriate time to transition to
Worksheet S–10, as CMS proposed,
using an average of 2 years of Medicaid
and SSI days data in conjunction with
1 year of Worksheet S–10 data that
eliminates the use of the low-income
insured days proxy for FY 2014 when
many States expanded Medicaid.
Furthermore, as proposed, the amount
available for uncompensated care
payments would increase by
approximately $1 billion in FY 2018,
which helps mitigate the financial
impact of transitioning to Worksheet S–
10 data for hospitals treating higher
numbers of Medicaid and SSI patients
and fewer uninsured patients.
In response to arguments that further
refinement of Worksheet S–10 is
needed, one commenter pointed to
separate evaluations performed by
MedPAC and the consulting firm
Dobson DaVanzo, which both found a
high degree of correlation between data
reported on Worksheet S–10 and
audited uncompensated care data, as
evidence that the information currently
reported on Worksheet S–10 is
satisfactory for purposes of allocating
uncompensated care payments. The
commenter argued that while CMS
should continue to refine the
instructions for Worksheet S–10, the
transition from the proxy of low-income
insured days to Worksheet S–10 as a
method of allocating uncompensated
care payments will never take place if
CMS postpones the transition until the
Worksheet S–10 data are perfect. The
commenter stated that, despite years of
refinements, Medicare has yet to
achieve perfection in the Medicare cost
report data; nevertheless, there are
various examples throughout the
Medicare inpatient PPS in which
payments are made based on the best
available information from the Medicare
cost report. This commenter was
troubled that CMS had delayed the
implementation of Worksheet S–10
until no later than FY 2021 in the FY
2017 IPPS/LTCH PPS final rule, and
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encouraged CMS to finalize its proposal
to begin incorporating Worksheet S–10
data in the calculation of Factor 3 for FY
2018.
Response: We appreciate the support
for our proposal to begin to incorporate
Worksheet S–10 data into the
computation of Factor 3 for FY 2018.
We agree with the commenters that FY
2018 is an appropriate time to begin
using Worksheet S–10 data in the
calculation of Factor 3 due to a
confluence of factors, including
evidence that the Worksheet S–10 data
are improving over time and concerns
that the proxy data for FY 2014 and
subsequent years will reflect the effects
of Medicaid expansion. As we stated in
the FY 2018 IPPS/LTCH PPS proposed
rule, we can no longer conclude that
alternative data to the Worksheet S–10
are available for FY 2014 that are a
better proxy for the costs of subsection
(d) hospitals for treating individuals
who are uninsured. We also
acknowledge that the approximately
$800 million increase in the total
amount available to make
uncompensated care payments will help
to mitigate the impact of this change on
hospitals that serve a large number of
Medicaid and SSI patients and fewer
uninsured patients.
Comment: Many commenters opposed
the use of Worksheet S–10 to compute
Factor 3 and allocate uncompensated
care costs beginning in FY 2018. Most
of these commenters maintained their
position from previous years that, while
Worksheet S–10 has the potential to
serve as a more exact measure of
hospital uncompensated care costs, the
data reported are not presently a reliable
and accurate reflection of these
uncompensated care costs. These
commenters disagree with CMS that the
agency has reached a ‘‘tipping point’’
and shared observations that they
believe refute each of the factors cited
in the FY 2018 IPPS/LTCH PPS
proposed rule as a reason to begin using
Worksheet S–10 data. Overall,
commenters stated that the rationale
provided by CMS for transitioning to the
use of data from Worksheet S–10—that
the accuracy of the data has improved
over time—was not sufficient to justify
the transition.
With respect to the Dobson DaVanzo
report, which showed a strong
correlation between Factor 3 values
derived from data reported on IRS 990
Schedule H and Worksheet S–10,
several commenters noted limitations
that they believe should be taken into
consideration when using these findings
to support the use of Worksheet S–10
data. Commenters noted that a simple
correlation between two data sources
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that have not been reviewed for
accuracy does not support the statistical
validity of the uncompensated care data
reported on Worksheet S–10.
Furthermore, commenters noted that
because the data from IRS 990 do not
include for-profit and government
hospitals, the sample used in the
analysis is not representative of the
universe of hospitals receiving Medicare
DSH payments and therefore presents
biased results. One commenter observed
that the analysis overrepresents certain
States and underrepresents other States.
Another commenter noted some specific
line items that illustrate inconsistencies
between the IRS 990 data and the S–10
data. For example, the commenter stated
that in tax year 2011, the IRS 990
Schedule H changed such that bad debt
expense is no longer reported at cost,
and filing organizations were no longer
instructed to multiply bad debt expense
by their CCR, a change that is not
reflected in the Worksheet S–10
instructions and which the Dobson
analysis does not take into
consideration.
Commenters continued to express
concerns about the lack of accurate and
consistent data being reported on
Worksheet S–10, primarily due to what
they perceive as a lack of clear and
concise line level instructions.
Commenters pointed out that, in the FY
2017 IPPS/LTCH PPS final rule (81 FR
56963), CMS agreed to institute certain
additional quality control and data
improvement measures prior to moving
forward with incorporating Worksheet
S–10 data into the calculation of Factor
3. However, the commenters pointed
out that, aside from a brief window in
2016 for hospitals to submit corrected
data on their FY 2014 Worksheet S–10
by September 30, 2016, and the issuance
of revised instructions (Transmittal 10)
in November 2016 that are applicable to
cost reports beginning on or after
October 1, 2016, no additional quality
control and data improvement measures
have been implemented. Furthermore,
commenters asserted that the
clarifications and guidance with respect
to the instructions for Worksheet S–10
issued by CMS are not sufficient to
ensure consistent submission of
uncompensated care data, and that the
25 percent of hospitals that either
resubmitted their FY 2014 Worksheet S–
10 or provided a missing FY 2014
Worksheet S–10 do not present
significant evidence that the problems
with Worksheet S–10 reporting have
been resolved. One commenter took
issue with CMS’ statement in the
proposed rule that it does not anticipate
making any further modifications to the
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instructions for completing Worksheet
S–10 at this time, and asserted that
hospitals should have the benefit of a
final rule and instructions that can be
referenced in completing Worksheet S–
10 data for future cost reports, ensuring
accuracy, consistency and
completeness.
Because many commenters were
concerned that unclear reporting
instructions on Worksheet S–10 would
result in inconsistent and inaccurate
reporting of data, commenters requested
that, after more precise instructions are
provided, CMS apply a strict auditing
process for information reported on the
Worksheet S–10 before it is used to
determine uncompensated care costs.
The commenters believed that simply
tying information reported on
Worksheet S–10 to payment and
requiring its regular use will not
improve the accuracy of the data. In
addition, commenters requested that
CMS ensure that its contractors
administer an auditing process
consistently and make the instructions
for such an audit public. To support
their claim that auditing is needed,
many commenters shared observations
regarding anomalies they identified in
data from Worksheet S–10 and
associated concerns. A number of
commenters shared their own analyses
that looked at the small proportion of
hospitals receiving a large share of
uncompensated care payments, and the
proportion of hospitals that reported
aberrant data relating to uncompensated
care costs. The commenters stated that
the aberrant numbers reported by some
hospitals illustrate some combination of
misinterpretation of Worksheet S–10
instructions, lack of clarity of those
instructions, and possible attempts by
providers to maximize their Medicare
DSH dollars.
MedPAC also commented that a
hospital’s charges may have errors that
could result in overstating
uncompensated care costs. To limit the
effect of aberrant charges, MedPAC
suggested that CMS could screen out
Worksheet S–10 data where there were
high levels of reported uncompensated
care relative to total operating costs
reported on the cost report (for example,
50 percent of operating costs). MedPAC
expected that very few hospitals would
report uncompensated care costs in
excess of this threshold. For hospitals
that did exceed this threshold, MedPAC
suggested using 2015 Worksheet S–10
data if they were available. If the
hospital insisted that the 2014 data were
correct, MedPAC suggested that CMS
require the hospital to provide support
for the 2014 data. If the hospital did not
provide audited financial statements
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supporting the uncompensated care
reported, MedPAC suggested that the
reported uncompensated care could be
reduced down to a threshold of 50
percent of operating costs. Other
commenters also discussed examining
the ratio of the reported uncompensated
care to total operating costs to identify
aberrant data. They provided additional
ratio examples such as uncompensated
care costs relative to total revenue,
operating budget, Worksheet C total
costs, or Worksheet C total charges.
Some commenters suggested that CMS
adopt an empirically derived upper
threshold for the ratio of
uncompensated care costs to operating
costs, and then prioritize those hospitals
that exceeded the threshold for audit
purposes. One commenter’s example of
an empirically derived threshold was 3
standard deviations from the mean for
the ratio of uncompensated care costs to
total operating costs.
The majority of the commenters who
opposed the use of Worksheet S–10 in
FY 2018 stated that the low-income
insured days proxy is more accurate
than Worksheet S–10 in its current
form. They suggested that CMS should
continue to use this proxy on a
temporary basis to distribute
uncompensated care payments until the
data from Worksheet S–10 are more
reliable, or CMS should consider using
a methodology that utilizes a permanent
blend of data from Worksheet S–10 and
low-income insured days. Some
commenters believed that the proposed
methodology for calculating Factor 3 in
FY 2018, which excludes Medicaid
shortfalls from the calculation of
uncompensated care costs, could lead to
a huge inequity, as there would be a
substantial redistribution of Medicare
DSH payments from Medicaid
expansion States to non-expansion
States. While one commenter referred to
CMS’ potential legal concern about
continuing to use low-income insured
days as a proxy for uncompensated care
for FY 2014 and subsequent years,
several commenters and their outside
counsel concluded that CMS has the
authority to ‘‘fashion an ‘appropriate’
calculation using proxy data as it has
already been doing for three years,
adjusted proxy data or blended data.’’
Commenters stated that using
uncompensated care data from
Worksheet S–10 for computing
uncompensated care payments would
be highly redistributive, with many
hospitals experiencing significant
swings in their payments. Commenters
noted that using data from Worksheet
S–10 to calculate Factor 3, as opposed
to using the current low-income insured
days proxy, has serious implications for
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entire States. Many commenters noted
that the States that would lose
uncompensated care dollars are States
that have expanded their Medicaid
programs, as the current proxy captures
Medicaid days and the Worksheet S–10
does not. One analysis showed that the
Worksheet S–10 data would be highly
redistributive to the extent that 10
percent of hospitals would receive 77
percent of total gains in uncompensated
care payments among all hospitals,
while other hospitals would experience
significant losses. One commenter
indicated that the losses it anticipates if
the proposal to incorporate data from
the Worksheet S–10 in FY 2018 is
finalized will not only hamper its
system’s ability to provide care through
different service lines, but will also
affect its ability to participate in
different types of value-based
purchasing programs. Another
commenter noted that the cuts CMS
outlines also are far more redistributive
than had been intended when the
Affordable Care Act was enacted in
2010 prior to the Supreme Court ruling
that rendered Medicaid expansion
optional.
Response: We thank the commenters
for their input. In previous rulemaking
cycles, commenters, both in favor of and
opposed to use of a proxy for
calculation of Factor 3, requested that
CMS provide a timeline and
implementation process for when and
how the Worksheet S–10 data would be
used for determining uncompensated
care costs (for example, we refer readers
to the FY 2016 IPPS/LTCH PPS final
rule (80 FR 49524)). We note that we
have been receiving such requests since
the rulemaking for the FY 2014 IPPS/
LTCH PPS final rule, and that hospitals
have been on notice since FY 2014 that
Worksheet S–10 could eventually
become the data source for computing
Factor 3. With this in mind, and based
on the growing evidence that Worksheet
S–10 is improving over time, we
proposed to begin incorporating
Worksheet S–10 data from FY 2014 cost
reports into the calculation of Factor 3
for FY 2018.
We understand the commenters’
concerns about the limitations of the
IRS 990 correlation analysis and the
shortcomings of using the study
findings to support assertions about the
validity of the Worksheet S–10 data.
Notwithstanding those limitations, a
few commenters supported the findings
and the use of Worksheet S–10 in FY
2018. Although we acknowledge that
the analysis was limited to not-for-profit
hospitals, we believe it is relevant to our
assessment of the overall quality of the
data reported on Worksheet S–10.
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Because many not-for-profit hospitals
are eligible for empirically justified
Medicare DSH payments and, therefore,
uncompensated care payments, we
believe they represent a suitable
standard of comparison. Furthermore, as
stated in the proposed rule, we did not
make the decision to propose to begin
Worksheet S–10 implementation in FY
2018 based on the correlation analysis
alone. MedPAC also submitted an
analysis that corroborated the results of
the Dobson DaVanzo report, showing a
high level of correlation between
audited uncompensated care data and
uncompensated care costs reported on
Worksheet S–10 and a lower correlation
between the audited uncompensated
care data and Medicaid and SSI days.
After considering the comments
submitted by MedPAC and others
regarding the potential for aberrant data
to be reported on the Worksheet S–10,
we agree that using the ratio of
uncompensated care costs to total
operating costs to identify potentially
aberrant data when determining the
Factor 3 amounts for FY 2018 has merit.
We acknowledge that it is not possible
to determine a perfect threshold for
when this ratio reflects potentially
aberrant data. However, after a review of
the comments received, we do not
believe that it is appropriate to have no
threshold, nor do we believe that it is
appropriate to delay beginning to
incorporate the Worksheet S–10 data in
the calculation of Factor 3 in pursuit of
a perfect threshold. It is relatively
straightforward to identify the extreme
end of the spectrum of possible
threshold values: it does not appear to
us to be reasonable for a hospital to have
uncompensated care costs that exceed
all of its operating expenses (that is, a
threshold of 100 percent or more). Using
the data currently available to us, we
have attempted to determine the most
appropriate threshold above which it
would be reasonable to believe that
aberrant uncompensated care data may
have been reported. While we do not
want to include aberrant data in the
determination of Factor 3, we also do
not want to inappropriately reduce FY
2018 uncompensated care payments to
a hospital with a legitimately high ratio.
Weighing all of these considerations, we
believe it is appropriate to adopt
MedPAC’s suggestion that
uncompensated care costs in excess of
half a hospital’s total operating expenses
may be potentially aberrant. In the rare
situations where a hospital has a FY
2014 ratio in excess of 50 percent, we
also agree with MedPAC and other
commenters that it would be
appropriate to utilize 2015 data in some
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manner to address the potentially
aberrant 2014 Worksheet S–10 data. As
we have previously indicated, we do not
believe it would be appropriate to use
Worksheet S–10 data from years prior to
FY 2014 in the determination of Factor
3. Therefore, the most widely available
Worksheet S–10 data available to us if
a hospital exceeds the threshold for its
FY 2014 Worksheet S–10 data are the
FY 2015 Worksheet S–10 data. We
believe that when a hospital has
reported uncompensated care costs in
excess of 50 percent of operating costs,
the issue is most likely its FY 2014
uncompensated care costs and not its
FY 2014 total operating expenses.
Accordingly, we will determine the
ratio of FY 2015 uncompensated care
costs to FY 2015 total operating
expenses from the hospital’s FY 2015
cost report and apply that ratio to the
FY 2014 total operating expenses from
the hospital’s FY 2014 cost report to
determine an adjusted amount of
uncompensated care costs for FY 2014.
Under this approach, if a hospital has a
consistently high ratio across the 2
years, we are less likely to
inappropriately reduce its
uncompensated care payments.
However, if a hospital has a much
lower ratio in FY 2015, we believe it is
reasonable to believe that the data
reported for FY 2014 were aberrant.
Specifically, after considering the public
comments received, for hospitals where
the ratio of uncompensated care costs
relative to total operating costs for the
hospital’s 2014 cost report (as reported
on Worksheet G, Part 3, Line 4) exceeds
50 percent, we will determine the ratio
of uncompensated care costs relative to
total operating costs from the hospital’s
2015 cost report (as of March 2017) and
apply that ratio to the hospital’s total
operating costs from the 2014 cost
report to determine an adjusted amount
of uncompensated care costs for FY
2014. We will then substitute this
amount for the FY 2014 Worksheet S–
10 data when determining Factor 3 for
FY 2018. We believe this approach,
which affects the data from three
hospitals, balances our desire to exclude
potentially aberrant data from a small
number of hospitals in the
determination of Factor 3 with our
concern regarding inappropriately
reducing FY 2018 uncompensated care
payments to a hospital that may have a
legitimately high ratio. As discussed
elsewhere in this section, we are
developing audit protocols for the
Worksheet S–10 data for use in future
rulemaking. We will consider in future
rulemaking whether continued use of
this adjustment or an alternative
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adjustment is necessary for subsequent
years.
We appreciate the commenters’
concerns relating to the instructions for
Worksheet S–10. In November 2016, we
issued Transmittal 10, which clarified
and revised the instructions for the
Worksheet S–10, including the
instructions regarding the reporting of
charity care charges. Transmittal 10 is
available for download on the CMS Web
site at: https://www.cms.gov/
Regulations-and-Guidance/Guidance/
Transmittals/2016-Transmittals-Items/
R10P240.html. In Transmittal 10, we
clarified that hospitals may include
discounts given to uninsured patients
who meet the hospital’s charity care
criteria in effect for that cost reporting
period. This clarification applied to cost
reporting periods beginning prior to
October 1, 2016, as well as cost
reporting periods beginning on or after
October 1, 2016. As a result, nothing
prohibits a hospital from considering a
patient’s insurance status as a criterion
in its charity care policy. A hospital
determines its own financial criteria as
part of its charity care policy. The
instructions for the Worksheet S–10 set
forth that hospitals may include
discounts given to uninsured patients,
including patients with coverage from
an entity that does not have a
contractual relationship with the
provider, who meet the hospital’s
charity care criteria in effect for that cost
reporting period. In addition, we revised
the instructions for the Worksheet S–10
for cost reporting periods beginning on
or after October 1, 2016, to provide that
charity care charges must be determined
in accordance with the hospital’s
charity care criteria/policy and written
off in the cost reporting period,
regardless of the date of service. We will
continue to work with our stakeholders
to address their concerns regarding the
reporting of uncompensated care
through provider education and
refinement of the instructions to the
Worksheet S–10.
We also understand the commenters’
concerns regarding the effects on
hospitals’ payments of moving from
calculating Factor 3 using a proxy based
on low-income days to the use of
uncompensated care data from
Worksheet S–10. As discussed in prior
rulemaking, in using Medicaid and
Medicare SSI days as a proxy for
uncompensated care, we recognize that
it would be possible for hospitals in
States that choose to expand Medicaid
to receive higher uncompensated care
payments because they may have more
Medicaid patient days than hospitals in
a State that does not choose to expand
Medicaid. We believe that the
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redistribution of payments from
hospitals that serve a greater number of
Medicaid patients to hospitals that serve
more uninsured patients is consistent
with the intent of the Affordable Care
Act. However, as described below, we
have proposed a methodology that
would help to stabilize payments and
protect hospitals from undue
fluctuations by gradually incorporating
Worksheet S–10 data into the
calculation of Factor 3. In addition, the
approximately $800 million increase in
the amount available to be distributed as
uncompensated care payments will also
help to offset some of the redistributive
effects of moving to Worksheet S–10 in
FY 2018.
Regarding some commenters’
recommendation that we continue to
use low-income insured days to
calculate Factor 3, either on their own
or in a permanent blend with Worksheet
S–10 data, we note that the earliest
Medicaid expansions under the
Affordable Care Act began in 2014.
Therefore, in order to insulate the
calculation of Factor 3 from the effects
of Medicaid expansion, Medicaid days
must be drawn from cost reporting
periods prior to FY 2014. This prohibits
the use of low-income insured days on
a permanent basis, as the data will
become too old to ensure accuracy.
However, the methodology of using 3
years of data to estimate uncompensated
care that we first adopted for FY 2017
and that we again proposed for FY 2018
would help to protect hospitals from
undue payment fluctuations by using a
blend of low-income insured days data
and Worksheet S–10 data on a
temporary basis.
When all of these factors are taken
into consideration, we maintain that we
can no longer conclude that alternative
data to the Worksheet S–10 are available
for FY 2014 that are a better proxy for
the costs of subsection (d) hospitals for
treating individuals who are uninsured.
We believe that continued use of
Worksheet S–10 will improve the
accuracy and consistency of the
reported data, especially in light of our
concerted efforts to allow hospitals to
review and resubmit their Worksheet S–
10 data for past years and the use of
select audit protocols to trim aberrant
uncompensated care costs and replace
them with more reasonable amounts.
Comment: Many commenters,
whether supporting or opposing the
eventual use of Worksheet S–10,
believed that it was premature to use its
data in the calculation of Factor 3 for FY
2018. The commenters noted that, given
that data elements used for the
distribution of uncompensated care
payments must be ‘‘historically publicly
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available, subject to audit, and used for
payment purposes,’’ CMS has not met
its own criteria for using Worksheet S–
10 data to determine the distribution of
uncompensated care payments. They
stated that this is particularly
troublesome because CMS has stated
that it does not anticipate completing
desk audits of data from Worksheet S–
10 until FY 2020.
Most commenters recommended that
CMS delay the use of data from
Worksheet S–10 for at least 1 year, and
up to 3 years, or until CMS has put
processes in place to ensure consistent
submissions by all hospitals as
discussed in the FY 2017 IPPS/LTCH
PPS final rule. Specifically, the majority
of commenters stated that before
Worksheet S–10 data are used, CMS
must improve and clarify the
instructions for Worksheet S–10 to
ensure consistent reporting, and also
implement audits of the data from
Worksheet S–10.
One commenter suggested that these
audits be conducted outside of the
regular cost report audit for FY 2014
cost reports to ensure consistency with
the Worksheet S–10’s cost reporting
instructions. The commenter also
indicated that CMS may need to
develop separate audit protocols for
different cost reporting periods, as there
are differences between the Worksheet
S–10 instructions for cost reporting
periods beginning before October 1,
2016 and those beginning on or after
that date. The commenter urged CMS to
make proposed audit instructions to the
MACs available in advance and to
gather additional stakeholder input
before finalizing an audit approach, and
noted that making the instructions
available in advance would help the
agency to identify issues that need
additional refinement. Several
commenters suggested that the data be
audited in a rigorous manner, similar to
wage index data. One commenter
provided a list of metrics for CMS to
consider including in a guide for MACs
for their audits of the Worksheet S–10
data. Several other commenters
disagreed with CMS’ decision not to
share the audit criteria with hospitals,
and asked that CMS also release the
audit criteria for charity care and nonMedicare bad debt. Similarly,
commenters asked that before data from
Worksheet S–10 are used, CMS
implement additional steps to eliminate
outliers, including data that represent
unreasonable uncompensated care costs.
However, the commenters also noted
that CMS must allow hospitals a way to
appeal any adjustments made to their
data, and that CMS needs to allow a
grace period similar to the Medicaid
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DSH audits before the results of the
audit have financial consequences.
Many commenters who urged CMS to
delay the use of data from Worksheet S–
10 also provided recommendations for
CMS to address during the intervening
time. Commenters requested that, before
Worksheet S–10 data are put to use,
CMS further educate hospitals about
how to complete the Worksheet S–10
accurately and consistently and allow
them to correct their data retroactively.
This would include providing hospitals
the opportunity to amend previously
submitted worksheets for FY 2014 and
FY 2015. The commenters emphasized
the importance of providing this
opportunity because the previous
September 30, 2016 deadline for
amending 2014 cost reports meant that
the revised instructions for the
Worksheet S–10 published in November
2016 could not be used because the
deadline for resubmission had already
passed. In addition, commenters
recommended that CMS convene a
stakeholder technical advisory group to
make Worksheet S–10 data
recommendations.
Response: We acknowledge the
concerns raised by commenters
regarding the use of data from
Worksheet S–10 in the calculation of
Factor 3 for FY 2018. However, as we
stated in the FY 2018 IPPS/LTCH PPS
proposed rule, when weighing the new
information that has become available to
us since the FY 2017 rulemaking in
conjunction with the information
regarding Worksheet S–10 data and the
low-income days proxy that we have
analyzed as part of our consideration of
this issue in prior rulemaking, we can
no longer conclude that alternative data
to the Worksheet S–10 are available for
FY 2014 that are a better proxy for the
costs of subsection (d) hospitals for
treating individuals who are uninsured.
We also note that, as part of our ongoing
quality control and data improvement
measures to continue to improve the
Worksheet S–10 data over time, we have
revised the cost report instructions and
are currently developing an audit
process. With respect to the cost
reporting instructions, on November 18,
2016, we issued Transmittal 10 which
updated the instructions for Form 2552–
10. Specifically, we updated the
instructions in Section 4012 of Chapter
40 of the Provider Reimbursement
Manual, Part II. The instructions clarify
the reporting of charity care charges.
Transmittal 10 is available for download
on the CMS Web site at: https://
www.cms.gov/Regulations-andGuidance/Guidance/Transmittals/2016Transmittals-Items/R10P240.html.
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With respect to the audit process, in
the FY 2017 IPPS/LTCH PPS final rule
(81 FR 56964), we stated that we
intended to provide standardized
instructions to the MACs to guide them
in determining when and how often a
hospital’s Worksheet S–10 should be
reviewed. We indicated that we would
not make the MACs’ review protocol
public, as all CMS desk review and
audit protocols are confidential and are
for CMS and MAC use only. The
instructions for the MACs are still under
development and will be provided to
the MACs as soon as possible and in
advance of any audit. We refer readers
to the FY 2017 IPPS/LTCH PPS final
rule (81 FR 56964) for a complete
discussion concerning the issues that
we are considering in developing the
instructions that will be provided to the
MACs.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19955), we stated
our belief that cost reports beginning in
FY 2017 will be the first cost reports for
which the Worksheet S–10 data will be
subject to a desk review. In addition,
due to the overwhelming feedback from
commenters emphasizing the
importance of audits in ensuring the
accuracy and consistency of the
Worksheet S–10 data, we expect cost
reports beginning in FY 2014, FY 2015,
and FY 2016 to be subject to further
scrutiny after submission.
We will continue to work with our
stakeholders to address their concerns
through provider education and further
refinement of the instructions to the
Worksheet S–10 as appropriate.
In reference to allowing hospitals to
amend or submit new data for
Worksheet S–10 for FYs 2014 and 2015,
we note that, as discussed in the FY
2017 IPPS/LTCH PPS final rule,
hospitals were given the opportunity to
revise and resubmit their data for FY
2014. For revisions to be considered,
hospitals were required to submit their
amended FY 2014 cost report containing
the revised Worksheet S–10 (or a
completed Worksheet S–10 if no data
were included on the previously
submitted cost report) to the MAC no
later than September 30, 2016. Although
commenters asserted that the September
30, 2016 deadline for amending 2014
cost reports meant that the revised
instructions for Worksheet S–10
published in November 2016 could not
be used because the deadline had
already passed, the changes to the
instructions for Worksheet S–10 did not
apply to FY 2014 cost reports as they
were limited to cost reporting periods
beginning on or after October 1, 2016.
However, we note that the clarification
that only the charges of uninsured
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patients who do not meet the hospital’s
charity care criteria for a full or partial
discount must be excluded from charity
care could affect hospitals who
provided discounts to uninsured
patients who met the hospital’s charity
care policy in FY 2014. Accordingly, we
are allowing hospitals another
opportunity to resubmit data for FY
2014 Worksheets S–10, and they may
include these charges if they were
previously omitted. For revisions to be
considered, hospitals must submit their
amended FY 2014 cost report containing
the revised Worksheet S–10 (or a
completed Worksheet S–10 if no data
were included on the previously
submitted cost report) to the MAC no
later than September 30, 2017. We note
that these revised data will not be used
to calculate Factor 3 for FY 2018, but
will be available for use in future years
if we propose and finalize a
methodology for determining Factor 3
that uses FY 2014 Worksheet S–10 data.
We will provide hospitals with a
similar opportunity for FY 2015 cost
reports. We refer readers to Change
Request 10026, Transmittal 1863, titled
‘‘The Supplemental Security Income
(SSI)/Medicare Beneficiary Data for
Fiscal Year 2015 for Inpatient
Prospective Payment System (IPPS)
Hospitals, Inpatient Rehabilitation
Facilities (IRFs), and Long Term Care
Hospitals (LTCH),’’ issued on June 30,
2017 (available at https://www.cms.gov/
Regulations-and-Guidance/Guidance/
Transmittals/2017-Transmittals-Items/
R1863OTN.html). In this transmittal, as
a step in the process of ensuring
complete submission of Worksheet S–10
by all DSH-eligible hospitals, we
instruct MACs to accept amended
Worksheets S–10 of FY 2015 cost
reports submitted by hospitals (or initial
submissions of Worksheet S–10 if none
have been submitted previously) and to
upload them to the Health Care Provider
Cost Report Information System (HCRIS)
in a timely manner. The transmittal
states that, for revisions to be
considered, hospitals must submit their
amended FY 2015 cost report containing
the revised Worksheet S–10 (or a
completed Worksheet S–10 if no data
were included on the previously
submitted cost report) to the MAC no
later than September 30, 2017.
After consideration of the public
comments received, we are finalizing
our proposal to begin incorporating
Worksheet S–10 into the calculation of
Factor 3 beginning in FY 2018. We
discuss below our proposed
methodology for how we would begin to
incorporate Worksheet S–10 data into
the calculation of Factor 3 of the
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uncompensated care payment
methodology.
(3) Time Period for Calculating Factor 3
for FY 2018, Including Methodology for
Incorporating Worksheet S–10 Data
Section 1886(r)(2)(C) of the Act not
only governs the selection of the data to
be used in calculating Factor 3, but also
allows the Secretary the discretion to
determine the time periods from which
we will derive the data to estimate the
numerator and the denominator of the
Factor 3 quotient. Specifically, section
1886(r)(2)(C)(i) of the Act defines the
numerator of the quotient as the amount
of uncompensated care for such hospital
for a period selected by the Secretary.
Section 1886(r)(2)(C)(ii) of the Act
defines the denominator as the aggregate
amount of uncompensated care for all
subsection (d) hospitals that receive a
payment under section 1886(r) of the
Act for such period. In the FY 2014
IPPS/LTCH PPS final rule (78 FR
50638), we adopted a process of making
interim payments with final cost report
settlement for both the empirically
justified Medicare DSH payments and
the uncompensated care payments
required by section 3133 of the
Affordable Care Act. Consistent with
that process, we also determined the
time period from which to calculate the
numerator and denominator of the
Factor 3 quotient in a way that would
be consistent with making interim and
final payments. Specifically, we must
have Factor 3 values available for
hospitals that we estimate will qualify
for Medicare DSH payments and for
those hospitals that we do not estimate
will qualify for Medicare DSH payments
but that may ultimately qualify for
Medicare DSH payments at the time of
cost report settlement.
In the FY 2017 IPPS/LTCH PPS final
rule, in order to mitigate undue
fluctuations in the amount of
uncompensated care payments to
hospitals from year to year and smooth
over anomalies between cost reporting
periods, we finalized a policy of
calculating a hospital’s share of
uncompensated care based an average of
data derived from three cost reporting
periods instead of one cost reporting
period. As explained in the preamble to
the FY 2017 IPPS/LTCH PPS final rule
(81 FR 56957 through 56959), instead of
determining Factor 3 using Medicaid
days from a single cost reporting period
and the most recent available data on
Medicare SSI utilization, as we did in
FY 2014, FY 2015, and FY 2016, we
used Medicaid days from three cost
reporting periods (FYs 2011, 2012, and
2013) and SSI days from the three most
recent available years of SSI utilization
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data (FYs 2012, 2013, and 2014) to
compute Factor 3 for FY 2017. We
continued to extract Medicaid days data
from the most recent update of HCRIS,
which for FY 2017 was the March 2016
update. Furthermore, instead of
determining a single Factor 3 as we have
done since the first year of the
uncompensated care payment in FY
2014, we calculated an individual
Factor 3 for each of the three cost
reporting periods, which we then
averaged by the number of cost
reporting years with data to compute the
final Factor 3 for a hospital. Under this
policy, if a hospital had merged, we
would combine data from both hospitals
for the cost reporting periods in which
the merger was not reflected in the
surviving hospital’s cost report data to
compute Factor 3 for the surviving
hospital.
Moreover, to further reduce undue
fluctuations in a hospital’s
uncompensated care payments, if a
hospital filed multiple cost reports
beginning in the same fiscal year, we
combined data from the multiple cost
reports so that a hospital could have a
Factor 3 calculated using more than one
cost report within a cost reporting
period. We codified these changes for
FY 2017 by amending the regulations at
§ 412.106(g)(1)(iii)(C).
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19951), we
proposed to continue to use the
methodology finalized in FY 2017 and
to compute Factor 3 for FY 2018 using
an average of data from three cost
reporting periods instead of one cost
reporting period. Consistent with the
methodology used to calculate Factor 3
for FY 2017, we proposed to advance
the time period of the data used in the
calculation of Factor 3 forward by 1 year
and use data from FY 2012, FY 2013,
and FY 2014 cost reports. For the
reasons we described earlier, we
explained our belief that it would not be
appropriate to use Worksheet S–10 data
for periods prior to FY 2014. Rather, for
cost reporting periods prior to FY 2014,
we indicated that we believe it would be
appropriate to continue to use lowincome insured days. Accordingly, with
a time period that includes 3 cost
reporting years consisting of FY 2014,
FY 2013, and FY 2012, we proposed to
use Worksheet S–10 data for the FY
2014 cost reporting period and the lowincome insured days proxy data for the
two earlier cost reporting periods. In
order to perform this calculation, we
will draw three sets of data (2 years of
Medicaid utilization data and 1 year of
Worksheet S–10 data) from the most
recent available HCRIS extract, which
was the December 2016 update of
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HCRIS for the FY 2018 IPPS/LTCH PPS
proposed rule and is the March 2017
update of HCRIS for this final rule.
Accordingly, for FY 2018, in addition to
the Worksheet S–10 data for FY 2014,
we proposed to use Medicaid days from
FY 2012 and FY 2013 cost reports and
FY 2014 and FY 2015 SSI ratios. We
also proposed to continue to use FY
2012 cost report data submitted to CMS
by IHS and Tribal hospitals to
determine Medicaid days for those
hospitals. (Cost report data from IHS
and Tribal hospitals are included in
HCRIS beginning in FY 2013, and are no
longer submitted separately.) We also
proposed to continue the policies that
were finalized in the FY 2015 IPPS/
LTCH PPS final rule (79 FR 50020) to
address several specific issues
concerning the process and data to be
employed in determining Factor 3 in the
case of hospital mergers as well as the
policies finalized in the FY 2017 IPPS/
LTCH PPS final rule concerning
multiple cost reports beginning in the
same fiscal year (81 FR 56957).
We stated in the proposed rule that
we believe this approach, if we were to
propose to continue it for FY 2019 and
FY 2020, would have the effect of
transitioning the incorporation of data
from Worksheet S–10 into the
calculation of Factor 3. Starting with 1
year of Worksheet S–10 data in FY 2018,
an additional year of Worksheet S–10
data would be incorporated into the
calculation of Factor 3 in FY 2019, and
the use of low-income insured days
would be phased out by FY 2020.
In addition, in the proposed rule we
acknowledged the concerns regarding
IHS/Tribal hospitals and subsection (d)
Puerto Rico hospitals that some
commenters expressed in response to
the FY 2017 proposal to begin using
Worksheet S–10 data to determine
Factor 3 in FY 2018. According to some
of these commenters, the use of data
from Worksheet S–10 to calculate
uncompensated care may jeopardize all
of the IHS/Tribal hospitals’
uncompensated care payments due to
their unique funding structure. With
respect to Puerto Rico, other
commenters asserted that the use of
Worksheet S–10 data may not be
appropriate, given the historical
treatment of subsection (d) Puerto Rico
hospitals under the statutory provisions
governing payments under Medicaid
and Medicare Part A and its impact on
the reporting of uncompensated care
payments by these hospitals. After
consideration of the concerns, we
indicated that we believe the
uncompensated care data reported by
Puerto Rico and IHS/Tribal hospitals
needs to be further examined and
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38209
should not be used for FY 2018. For the
reasons described earlier related to the
impact of the Medicaid expansion
beginning in FY 2014, we also stated
that we do not believe it would be
appropriate to calculate a Factor 3 for
these hospitals using FY 2014 lowincome insured days. Because we do not
believe it is appropriate to use the FY
2014 uncompensated care data for these
hospitals and we also do not believe it
is appropriate to use the FY 2014 lowincome insured days, we stated that we
believe the best proxy for the costs of
Puerto Rico and IHS/Tribal hospitals for
treating the uninsured is the low
income-insured days data for FY 2012
and FY 2013. Accordingly, in the FY
2018 IPPS/LTCH PPS proposed rule (82
FR 19951), we proposed for these
hospitals that when we compute the
individual Factor 3s for each of the
three cost reporting periods that are
used to determine Factor 3, rather than
computing a Factor 3 using Worksheet
S–10 data from the hospital’s FY 2014
cost report, we would substitute the
Factor 3 calculated using the hospital’s
FY 2013 low-income insured days. That
is, in order to determine the Factor 3 for
FY 2018, we would calculate an average
of three individual Factor 3s using the
Factor 3 calculated using FY 2013 cost
report data twice and the Factor 3
calculated using FY 2012 cost report
data once. We indicated that we believe
it is appropriate to double-weight the
Factor 3 calculated using FY 2013 data
as it reflects the most recent available
information regarding the hospital’s
low-income insured days before any
expansion of Medicaid. We also noted
that, as we were not making any
proposals with respect to the calculation
of Factor 3 for FY 2019 in the FY 2018
IPPS/LTCH PPS proposed rule, we
would reexamine the use of the
Worksheet S–10 data for Puerto Rico
and IHS/Tribal hospitals as part of the
FY 2019 rulemaking. In addition, we
proposed to continue to use a proxy for
SSI days consisting of 14 percent of a
hospital’s Medicaid days for Puerto Rico
hospitals, as finalized in the FY 2017
IPPS/LTCH PPS final rule (81 FR 56953
through 56956).
Therefore, for FY 2018, we proposed
to compute Factor 3 for each hospital
by—
• Step 1: Calculating Factor 3 using
the low-income insured days proxy
based on FY 2012 cost report data and
the FY 2014 SSI ratio;
• Step 2: Calculating Factor 3 using
the insured low-income days proxy
based on FY 2013 cost report data and
the FY 2015 SSI ratio;
• Step 3: Calculating Factor 3 based
on the FY 2014 Worksheet S–10 data (or
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using the Factor 3 calculated in Step 2
for Puerto Rico and IHS/Tribal
hospitals); and
• Step 4: Averaging the Factor 3
values from Steps 1, 2, and 3; that is,
adding the Factor 3 values from FY
2012, FY 2013, and FY 2014 for each
hospital, and dividing that amount by
the number of cost reporting periods
with data to compute an average Factor
3.
We invited public comments on our
proposed methodology for calculating
Factor 3 for FY 2018. We also noted that
if this proposed methodology was
adopted for FY 2018, we would expect
to propose to use a similar methodology
for calculating Factor 3 for subsequent
years, meaning that for FY 2019 we
would expect to incorporate data from
the FY 2015 Worksheet S–10 into the
methodology and drop the FY 2012 lowincome insured day proxy data.
However, we did not make any
proposals with respect to the calculation
of Factor 3 for FY 2019 in the FY 2018
IPPS/LTCH PPS proposed rule.
Comment: While many commenters
supported CMS’ proposal to use a 3-year
average to calculate Factor 3 for FY
2018, some commenters also provided
suggestions for modified or alternative
methodologies to calculate Factor 3 in
FY 2018 and beyond. Many of these
commenters opposed the use of
Worksheet S–10 data beginning in FY
2018 and recommended a delay of at
least 1 year to allow for further
refinement of the Worksheet S–10
instructions and audit protocols to
identify and remove aberrant
uncompensated care costs. Several
commenters requested that, instead of
adding Factor 3 values from FY 2012,
FY 2013, and FY 2014 for each hospital,
and dividing that amount by the number
of cost reporting periods with data, CMS
continue to use the same data that was
used to calculate uncompensated care
payments in FY 2017 (Medicaid days
from FYs 2011, 2012, and 2013 cost
reports and SSI days from FY 2012, FY
2013, and FY 2014 SSI ratios) for
purposes of calculating uncompensated
care payments to hospitals in FY 2018.
The commenters noted that using these
data during a 1-year delay in
incorporating Worksheet S–10 data
would avoid including post-Medicaid
expansion data for FY 2014 in the
Factor 3 calculation.
Many commenters asked that CMS
implement a stop-loss policy to protect
hospitals that lose more than 5 to 10
percent in DSH payments in any given
year as a result of transitioning to use
of Worksheet S–10 data. These
commenters suggested that this stoploss should extend beyond the
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transition to help hospitals with
decreasing uncompensated care
payments adjust to their new payment
levels. However, other commenters
noted that a permanent stop-loss would
not be warranted, given that a 3-year
phase-in is an appropriate way to
temporarily reduce the impact of new
provisions.
One commenter recommended that
any measure of uncompensated care
should account for the different sources
of uncompensated care burden hospitals
incur as they treat low income patients
in a changing coverage landscape. The
commenter suggested that CMS use a
permanent hybrid methodology that
includes both a hospital’s low-income
insured days and uncompensated care
costs from Worksheet S–10 to calculate
its Factor 3. This commenter
recommended that instead of
transitioning entirely to Worksheet S–10
data (presumably in FY 2020), CMS use
a weighted average of low-income
insured days and uncompensated care
costs from Worksheet S–10, with lowincome insured days weighted 25
percent and Worksheet S–10 data
weighted 75 percent.
Another commenter suggested an
alternative 5-year phase-in, beginning in
FY 2019. This commenter
recommended that the weight accorded
to data from Worksheet S–10 from FY
2014 be limited in the first year to 10
percent, with the remaining 90 percent
determined using data on low-income
insured days for FYs 2012 and 2013. In
the second year, the commenter
suggested that 2 years of data from
Worksheet S–10 (FY 2014 and FY 2015)
would be averaged and would equal 20
percent, with the remaining 80 percent
weight accorded to the data on lowincome insured days from FYs 2012 and
2013. In the third year, the commenter
suggested that Worksheet S–10 data
from FYs 2016 and 2017 would be
averaged and weighted at 40 percent,
with 60 percent weight accorded to the
data on low income insured days. The
commenter added that the phase-in
process would continue in Year 4, FY
2022, with the use of averaged FY 2017
and FY 2018 Worksheet S–10 data with
80 percent weight, the remainder
accorded to the data on low-income
insured days. According to the
commenter, Year 5 of the phase-in
would utilize Worksheet S–10 as the
sole data source, with an average of
audited data from FYs 2017 through
2019.
While many commenters expressed
approval of the proposed 3-year phasein approach to using data from
Worksheet S–10, there were other
varying opinions expressed regarding
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the length of the phase-in period. Many
commenters agreed with the proposed
3-year phase-in following a period of
delay, as outlined above. However,
other commenters encouraged CMS to
expedite the transition to Worksheet S–
10 data with potentially no phase-in.
Commenters who recommended no
phase-in noted that Worksheet S–10
uses the most accurate information
available on uncompensated care costs,
and while it is not perfect, no cost
report schedule or other source of
information provided by individual
hospitals will ever achieve perfection.
Conversely, other commenters requested
that CMS consider a longer phase-in
period. These commenters
recommended a minimum 5-year
transition period to gradually phase-in
the use of Worksheet S–10 data once the
data have been audited. According to
the commenters, this longer phase-in
would mitigate the effect on hospitals of
the redistribution in uncompensated
care payments resulting from the
inclusion of data from the Worksheet S–
10.
One commenter did not agree with
the use of a 3-year average in the
computation of Factor 3 because it
would result in the use of dated
information and is not a reasonable
solution to solve data anomalies. This
commenter requested that CMS use both
Medicaid and Medicare SSI days from
the most recent available full year of
cost report data to compute Factor 3 for
FY 2018. However, most commenters
supported the use of 3 years of data in
the calculation of Factor 3 in FY 2018,
regardless of whether they supported a
1-year delay prior to implementing the
use of Worksheet S–10 data or the
implementation of the use of Worksheet
S–10 data in FY 2018, as proposed.
Response: We appreciate the
commenters’ support for the use of a 3year average in the calculation of Factor
3 for FY 2018. We also appreciate the
comments regarding alternative
timelines for incorporating Worksheet
S–10 data into the calculation of Factor
3 and alternative methods for
computing proxies for uncompensated
care costs. As we stated in the FY 2018
IPPS/LTCH PPS proposed rule, when
weighing the new information that has
become available to us since the FY
2017 rulemaking in conjunction with
the information regarding Worksheet S–
10 data and the low-income days proxy
that we have analyzed as part of our
consideration of this issue in prior
rulemaking, we can no longer conclude
that alternative data to the Worksheet S–
10 are available for FY 2014 that are a
better proxy for the costs of subsection
(d) hospitals for treating individuals
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who are uninsured. For these reasons,
we believe that it is appropriate to begin
to incorporate the Worksheet S–10 data
in the calculation of Factor 3 starting in
FY 2018. We note that the proposals in
the FY 2018 IPPS/LTCH PPS proposed
rule were limited to FY 2018, and that
we did not make any proposals with
respect to the data that would be used
to calculate Factor 3 for subsequent
years. As a result, it would be premature
for CMS to establish policies for future
years in this final rule. We will consider
the commenters’ suggestions for further
incorporating Worksheet S–10 into the
calculation of Factor 3, or computing
proxies for uncompensated care costs
using a blend of Worksheet S–10 data,
low-income insured days, or other data
sources, in future rulemaking.
With respect to the stop-loss policy
that one commenter suggested, we
believe that the use of 3 years of data
instead of 1 year of data already
provides assurance that hospitals’
uncompensated care payments will
remain reasonably stable and
predictable, and would not be subject to
unpredictable swings and anomalies in
a hospital’s low-income insured days or
reported uncompensated care costs. As
a result, because there is already a
mechanism for smoothing the transition
from the use of low-income insured
days to the use of Worksheet S–10 data
in place, we do not believe a stop-loss
policy is necessary at this time.
Comment: One commenter requested
that CMS consider using a proxy for
Puerto Rico hospitals’ SSI days in
computing the empirically justified DSH
payment amount, or 25 percent of the
amount that would have been paid for
Medicare DSH prior to implementation
of section 3133 of the Affordable Care
Act.
Response: In the FY 2018 IPPS/LTCH
PPS proposed rule, we did not propose
any changes to the methodology used to
calculate empirically justified Medicare
DSH payments. Therefore, we consider
this comment to be outside the scope of
the proposed rule. However, we note
that while section 1886(r)(2)(C)(i) of the
Act allows for the use of alternative data
as a proxy to determine the costs of
subsection (d) hospitals for treating the
uninsured for purposes of determining
uncompensated care payments, section
1886(r)(1) of the Act requires the
Secretary to pay an empirically justified
DSH payment that is equal to 25 percent
of the amount of the Medicare DSH
payment that would otherwise be made
under section 1886(d)(5)(F) of the Act to
a subsection (d) hospital for the fiscal
year. Because section 1886(d)(5)(F)(vi)
of the Act, which prescribes the
disproportionate patient percentage
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used to determine empirically justified
Medicare DSH payments, specifically
calls for the use of SSI days in the
Medicare fraction and does not allow
the use of alternative data, we do not
believe there is any legal basis for CMS
to use a proxy for Puerto Rico hospitals’
SSI days in the calculation of the
empirically justified Medicare DSH
payment under section 1886(r)(1) of the
Act.
Comment: Several commenters
supported the proposal to use 14
percent of Medicaid days as a proxy for
Medicare SSI days when determining
Factor 3 for Puerto Rico hospitals. These
commenters stated that they appreciated
the attention and effort by CMS to
develop a fair and appropriate method
to estimate SSI days for Puerto Rico
hospitals, as the SSI program is
statutorily unavailable to U.S. citizens
residing in the Territories.
One commenter recommended that
CMS examine data to evaluate future
proxy alternatives for Puerto Rico
hospitals, such as using data for
Medicare beneficiaries with Medicaid
eligibility (dual eligible beneficiaries).
The commenter proposed that CMS
initiate a plan to work with hospitals in
Puerto Rico to formally review and
define cost report data for recent years
in relation to the documentation of
hospital inpatient days for dual eligible
beneficiaries. As a second step, the
commenter recommended that CMS
allow hospitals in Puerto Rico to
resubmit the pertinent worksheets of the
cost reports for past years, to
appropriately document the inpatient
days for dual-eligible beneficiaries.
Response: We appreciate the support
for our continued use of 14 percent of
a Puerto Rico hospital’s Medicaid days
as a proxy for SSI days. Because we are
continuing to use insured low-income
patient days as a proxy for
uncompensated care as part of the
Factor 3 calculation in FY 2018 and
residents of Puerto Rico are not eligible
for SSI benefits, we believe it is
important to create a proxy for SSI days
for Puerto Rico hospitals.
Regarding the comment
recommending that we use inpatient
days for Medicare beneficiaries
receiving Medicaid as this proxy, we
have examined this concept and have
been unable to identify a systematic
source for these data for Puerto Rico
hospitals. Specifically, we note that
inpatient utilization for Medicare
beneficiaries entitled to Medicaid is not
reported by hospitals on the Medicare
cost report, either within or outside
Puerto Rico. We expect to further
address issues related to estimating the
amount of uncompensated care for
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hospitals in Puerto Rico as part of the
FY 2019 rulemaking.
Comment: A few commenters
expressed concern that the use of data
from Worksheet S–10 to calculate
uncompensated care costs does not take
into account the IHS’s unique funding
structure and therefore may jeopardize
all uncompensated care payments for
IHS hospitals. The commenters stated
that, due to their unique funding
structure, Indian Health Care Providers
(IHCPs) do not have uncompensated
care costs under Worksheet S–10. They
indicated that because funding for the
costs of patient care is provided through
congressional appropriations, all care is
considered compensated, even though
appropriations fund only approximately
59 percent of the health care needs for
American Indians/Alaska Natives. The
commenters also stated that many
Tribes and Tribal organizations invest
non-Federal resources in their health
care programs to furnish care that could
easily be classified as uncompensated
care because IHCPs may not charge
beneficiaries to receive care and, thus,
may not have the accounting methods to
track these costs. As a result, the
commenters stated that IHCP hospitals
are currently unable to report charity
care and non-Medicare bad debt
consistent with the proposed definition
of uncompensated care in the proposed
rule. Therefore, the commenters
requested that CMS consult with IHS
and Tribal stakeholders to estimate the
amount of uncompensated care
furnished in IHCP hospitals. The
commenters also stated that the
opportunity to submit comments on the
rulemaking process is not considered
meaningful consultation in accordance
with Executive Order 13175 or the CMS
Tribal consultation policy approved
December 5, 2015, and that additional
Tribal consultation is necessary.
Response: We appreciate these
comments and acknowledge that the use
of data from Worksheet S–10 to
calculate uncompensated care costs
does not take into account the unique
funding structure of IHS hospitals and
therefore using these data to determine
Factor 3 may have an unintended
impact on the uncompensated care
payments to these hospitals. Through
consultation and communication with
IHS and Tribal hospitals, including an
All Tribes’ Call on May 22, 2017, to
discuss the FY 2018 IPPS/LTCH PPS
proposed rule, we have confirmed that
it would not be appropriate to use FY
2014 uncompensated care cost data
from Worksheet S–10 to calculate Factor
3 for IHS and Tribal hospitals.
In the FY 2018 IPPS/LTCH PPS
proposed rule, we proposed for IHS
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hospitals that when we compute the
individual Factor 3s for each of the
three cost reporting periods that are
used to determine Factor 3, rather than
computing a Factor 3 using Worksheet
S–10 data from the hospital’s FY 2014
cost report, we would substitute the
Factor 3 calculated using the hospital’s
FY 2013 low-income insured days. That
is, in order to determine the Factor 3 for
FY 2018, we would calculate an average
of three individual Factor 3s using the
Factor 3 calculated using FY 2013 cost
report data twice and the Factor 3
calculated using FY 2012 cost report
data once. We believe it is appropriate
to double-weight the Factor 3 calculated
using FY 2013 data as it reflects the
most recent available information
regarding the hospital’s low-income
insured days before any expansion of
Medicaid. We note that we did not make
any proposals with respect to the
calculation of Factor 3 for FY 2019 in
the FY 2018 proposed rule. We will
reexamine the use of the Worksheet S–
10 data for IHS/Tribal hospitals as part
of the FY 2019 rulemaking.
Comment: Many commenters asked
CMS to change, rescind, or otherwise
edit methodologies with respect to allinclusive rate providers, which several
commenters called ‘‘inappropriate’’ and
‘‘erroneous.’’ Several commenters
suggested a separate audit protocol to
address the unique circumstances of allinclusive billers, and to ensure that their
uncompensated care is accurately
captured. They observed that because
all-inclusive rate providers do not use
charges, the CCR on the Worksheet S–
10 would be inaccurate. One commenter
suggested the use of an audit protocol
akin to the one that is used to audit
charity care reported by CAHs for
purposes of the meaningful use
program.
One suggestion to ameliorate the
issues regarding all-inclusive rate
providers was to add a line to the
Worksheet S–10 that asks hospitals ‘‘Are
you an all-inclusive biller?’’ that would
provide an alternative methodology for
those hospitals to calculate their CCRs.
Another suggestion was to allow allinclusive rate providers to submit their
own CCRs, so they could explain or
correct their data prior to CMS
substitution of the hospital-reported
CCR with the statewide average. A third
suggestion was to use the
uncompensated care costs as reported
by all-inclusive rate providers on Line
30 of Worksheet S–10 (as opposed to
converting charges to costs using the
CCR reported on Line 1 of Worksheet S–
10 or a statewide average CCR as CMS
proposed) or to use low-income days as
a proxy for uncompensated care when
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calculating Factor 3 either for all allinclusive rate providers or for public allinclusive rate providers.
Response: We appreciate the concerns
and suggestions raised by commenters
with respect to the CCRs that will be
used in determining the uncompensated
care costs of all-inclusive rate providers.
Given the unique charge structure of allinclusive rate providers, we have
determined that it would not be
appropriate to use FY 2014
uncompensated care cost data from
Worksheet S–10 to calculate Factor 3 for
these hospitals, and we will instead use
an alternate methodology that is
consistent with the methodology that
we proposed for IHS/Tribal hospitals
and Puerto Rico hospitals, which also
experience special circumstances that
could potentially affect the validity of
their Worksheet S–10 data. We note that
we did not make any proposals with
respect to the calculation of Factor 3 for
FY 2019 or subsequent years in the FY
2018 proposed rule; we will reexamine
the use of the Worksheet S–10 data for
all-inclusive rate providers as part of the
FY 2019 rulemaking.
After consideration of the public
comments we received, we are
finalizing our proposal to incorporate 1
year of Worksheet S–10 data into the
calculation of Factor 3 in FY 2018 in
conjunction with data on low-income
insured days for FYs 2012 and 2013. We
will continue to use data from three cost
reports, which will gradually
incorporate data from Worksheet S–10
into the calculation of Factor 3.
We also are finalizing our proposal
not to incorporate Worksheet S–10 data
for Puerto Rico hospitals and IHS and
Tribal hospitals, but will double-weight
the 2013 Factor 3 calculated for these
hospitals. In addition, we will not use
Worksheet S–10 data for all-inclusive
rate providers, but will also doubleweight the 2013 Factor 3 calculated for
these hospitals. We believe that the
uncompensated care data reported by
Puerto Rico hospitals, IHS/Tribal
hospitals, and all-inclusive rate
providers on Worksheet S–10 need to be
further examined and should not be
used in determining Factor 3 for FY
2018. Because we do not believe it is
appropriate to use the FY 2014
uncompensated care data for these
hospitals and we also do not believe it
is appropriate to use the FY 2014 lowincome insured days due to the effects
of Medicaid expansion, we believe that
the best proxy for the costs of Puerto
Rico hospitals, IHS/Tribal hospitals, and
all-inclusive rate providers for treating
the uninsured is the low-income
insured days data for FY 2012 and FY
2013.
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In addition, we are finalizing the
proposed amendment to the regulation
at § 412.106(g)(1)(iii)(C) to reflect the
data that will be used to calculate Factor
3 for FY 2018. We have made a minor
modification to the proposed text of the
regulation in order to clarify that data
on uncompensated care costs will not be
used to determine Factor 3 for Puerto
Rico hospitals, IHS and Tribal hospitals,
and all-inclusive rate providers.
For new hospitals that do not have
data for any of the three cost reporting
periods used in the Factor 3 calculation,
we will continue to apply the new
hospital policy finalized in the FY 2014
IPPS/LTCH PPS final rule (78 FR
50643). That is, the hospital will not
receive either interim empirically
justified Medicare DSH payments or
interim uncompensated care payments.
However, if the hospital is later
determined to be eligible to receive
empirically justified Medicare DSH
payments based on its FY 2018 cost
report, the hospital will also receive an
uncompensated care payment
calculated using a Factor 3, where the
numerator is the uncompensated care
costs reported on Worksheet S–10 of the
hospital’s FY 2018 cost report, and the
denominator is the sum of
uncompensated care costs reported on
Worksheet S–10 of all DSH eligible
hospitals’ FY 2014 cost reports as
prospectively determined during
rulemaking. We note that, given the
selected time period of the data used to
calculate Factor 3, any hospitals with a
CCN established after October 1, 2014
will be considered new and subject to
this policy.
As we have done for each proposed
and final rule beginning in FY 2014, in
conjunction with this final rule, we will
publish on the CMS Web site a table
listing Factor 3 for all hospitals that we
estimate will receive empirically
justified Medicare DSH payments in FY
2018 (that is, those hospitals that will
receive interim uncompensated care
payments during the fiscal year), and for
the remaining subsection (d) hospitals
and subsection (d) Puerto Rico hospitals
that have the potential of receiving a
Medicare DSH payment in the event
that they receive an empirically justified
Medicare DSH payment for the fiscal
year as determined at cost report
settlement.
In conjunction with the proposed
rule, we published a supplemental data
file containing a list of the mergers that
we were aware of and the computed
uncompensated care payment for each
merged hospital. Hospitals had 60 days
from the date of public display of the FY
2018 IPPS/LTCH PPS proposed rule to
review the table and supplemental data
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file published on the CMS Web site and
to notify CMS in writing of any
inaccuracies. We stated in the proposed
rule that we would address these
comments as appropriate in the table
and the supplemental data file that we
publish on the CMS Web site in
conjunction with the publication of this
FY 2018 IPPS/LTCH PPS final rule.
Hospitals will have until August 31,
2017, to review and submit comments
on the accuracy of the table and
supplemental data file published in
conjunction with this final rule.
Comments may be submitted to the
CMS inbox at Section3133DSH@
cms.hhs.gov through August 31, 2017,
and any changes to Factor 3 will be
posted on the CMS Web site prior to
October 1, 2017.
Comment: Some commenters
provided specific information regarding
merger situations involving their
hospitals and requested that CMS
consider these mergers in determining
Factor 3 for FY 2018 payments. A few
commenters also pointed out that
specific data for the calculation of
Factor 3, such as Medicaid days, were
incorrect due to missing cost report data
in the HCRIS extract for the applicable
year. In addition, a few commenters
noted inaccuracies in the FY 2018
Proposed Rule Supplemental Data File,
which, in some cases, had not been
updated to reflect the most recent FY
2014 cost report filed in accordance
with CMS Transmittal 1681. CMS
Transmittal 1681 instructed MACs to
accept amended Worksheets S–10 for
FY 2014 cost reports submitted by
hospitals (or initial submissions of
Worksheet S–10 if none had been
submitted previously) and to upload
them to the Health Care Provider Cost
Report Information System (HCRIS) in a
timely manner if received no later than
September 30, 2016.
Response: We thank the commenters
for their input. We have updated our list
of mergers based on information
submitted by the MACs as of June 2017.
In addition, we have reviewed the
commenters’ submissions of mergers not
previously identified in the proposed
rule and have updated our list
accordingly. We also have reviewed the
commenters’ submissions regarding
missing or incorrect Worksheet S–10
data from FY 2014 cost reports in the FY
2018 Proposed Rule Supplemental Data
File and included those data that were
submitted timely and inadvertently
excluded from the March 2017 HCRIS
extract due to MAC or CMS error. We
will continue to pay diligent attention to
data inaccuracies and work internally
and with our contractors to resolve
these issues in a timely manner.
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(4) Methodological Considerations for
Calculating Factor 3
• Annualizing short cost reports. As
we explained in the FY 2017 IPPS/
LTCH PPS final rule (81 FR 56957
through 56959) and in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19953), we believe that for hospitals that
file multiple cost reports beginning in
the same year, combining the data from
these cost reports has the benefit of
supplementing the data of hospitals that
filed cost reports that are less than 12
months, such that the basis of their
uncompensated care payments and
those of hospitals that filed full-year 12month cost reports would be more
equitable. In response to our original
proposal in the FY 2017 IPPS/LTCH
PPS proposed rule to combine data from
multiple cost reports, many hospitals
stated that while they were appreciative
of CMS’ efforts to provide a more
equitable playing field for hospitals that
filed short cost reports, they believed
that expanding the time period of the
data used to calculate Factor 3 as well
as combining data across multiple cost
reports would not remedy the fact that
some hospitals are still disadvantaged
by having less than 36 months of data
in their Factor 3 calculation (81 FR
56959). Other commenters opposed the
use of multiple cost reporting periods if
it would result in a hospital having
more than 12 months of data in the
Factor 3 calculation for a year, and
recommended that CMS prorate the data
to a 12-month period. Similarly, other
commenters recommended that CMS
annualize cost report data for any cost
reporting period that is less than 12
months. In the FY 2017 IPPS/LTCH PPS
final rule, we acknowledged that,
although we had not made any proposal
in the FY 2017 IPPS/LTCH PPS
proposed rule to annualize the cost
reports used to calculate Factor 3, the
situations presented by commenters,
including both long and short cost
reporting periods, pose unique
challenges in the context of estimating
Factor 3. We stated that we intended to
consider the issue further and might
address the issue in future rulemaking.
For the FY 2018 IPPS/LTCH PPS
proposed rule, taking into consideration
the feedback from hospitals that have
been disadvantaged in the Factor 3
calculation due to cost reports that do
not span a full year, we proposed to
annualize Medicaid data if a hospital’s
cost report does not equal 12 months of
data. We did not propose to annualize
SSI days because we do not obtain these
data from hospital cost reports in
HCRIS. Rather, we obtain these data
from the latest available SSI ratios
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posted on the Medicare DSH homepage
(https://www.cms.gov/medicare/
medicare-fee-for-service-payment/
AcuteInpatientPPS/dsh.html), which are
aggregated at the hospital level and do
not have the information needed to
determine if the data should be
annualized.
Under this proposal, if the time
between the start date of a hospital’s
cost reporting year and the end date of
its cost reporting year is less than 12
months, we proposed that we would
annualize the Medicaid days so that the
hospital has 12 months of data included
in its Factor 3 calculation. Conversely,
if the time between the aforementioned
start date and the end date is greater
than 12 months, we would annualize
the Medicaid days to achieve 12 months
of Medicaid days data. If a hospital files
more than one cost report beginning in
the same fiscal year, we would first
combine the data across the multiple
cost reports before determining the
difference between the start date and the
end date to see if annualization is
needed.
To annualize the Medicaid days for a
long or short cost reporting year, we
proposed that we would divide the
length of a full year (365 or 366 calendar
days, as applicable) by the length of the
cost reporting year (the number of
calendar days in the cost reporting year)
and then multiply the quotient by the
number of Medicaid days in the cost
reporting year.
For instance, a cost reporting year that
is 285 calendar days long with 1,200
Medicaid days would be annualized as
follows: (365/285) * 1,200 = 1,537 days.
A cost reporting year that is 385
calendar days long with 1,200 Medicaid
days would be annualized using the
same formula: (365/385) * 1,200 = 1,137
days.
Likewise, because long and short cost
reporting periods pose the same
challenges in the context of estimating
Factor 3 using hospital uncompensated
care costs, we proposed to annualize the
uncompensated care cost data reported
on Worksheet S–10 for cost reports that
do not equal 12 months of data, by
dividing the length of a full year (365 or
366 calendar days, as applicable) by the
length of the cost reporting year
(number of calendar days in the cost
reporting year) and then multiplying the
quotient by the total reported
uncompensated care costs for the cost
reporting year.
For instance, a cost reporting year that
is 285 calendar days long reporting
$10,500,000 in uncompensated care
costs would be annualized as follows:
(365/285) * $10,500,000 = $13,447,368.
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A cost reporting year that is 385
calendar days long reporting
$10,500,000 in uncompensated care
costs would be annualized using the
same formula: (365/385) * $10,500,000 =
$9,954,545.
If a hospital files more than one cost
report beginning in the same fiscal year,
we proposed that we would first
combine the data across the multiple
cost reports before determining the
length of the cost reporting year to see
if annualization is needed.
We invited public comment on our
proposal to annualize the cost reports
used to calculate Factor 3 for FY 2018.
In addition, as noted earlier, our
proposal to continue calculating a
hospital’s share of uncompensated care
payments using a time period that
includes 3 cost reporting years was also
designed to mitigate undue fluctuations
in the amount of uncompensated care
payments to hospitals from year to year
and smooth over anomalies between
cost reporting periods. Given that our
proposal to annualize the cost reports
used to calculate Factor 3 for FY 2018
would also mitigate fluctuations in the
amount of uncompensated care
payments from year to year, we also
sought public comment on the degree to
which the use of three cost reporting
years would still be necessary if we
were to adopt our proposal to annualize
the cost reports used to calculate Factor
3, or if instead the use of a single cost
reporting year or two cost reporting
years would be appropriate. In order to
facilitate public comments, we
indicated that we intend to post on our
Web site a data file containing
information similar to the information
provided in section I.H.5., ‘‘Effects of
the Proposed Changes to Medicare DSH
and Uncompensated Care Payments for
FY 2018’’ of Appendix A of the
proposed rule. However, instead of
reflecting our proposed approach of
calculating Factor 3 using a time period
that includes 3 cost reporting years, it
would reflect an alternative approach of
calculating Factor 3 using only the most
recent year (FY 2014) of our proposed
3-year average. In all other respects, the
calculation of Factor 3 would remain
the same.
Comment: Many commenters
supported CMS’ proposal to annualize
cost reports that do not reflect 12
months of data (short and long periods).
One commenter specifically supported
the proposal to annualize Medicare SSI
days for the Factor 3 calculation, while
another commenter supported the
proposal to combine data from multiple
cost reports beginning in the same fiscal
year before annualization.
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Response: We appreciate the support
for the proposal to annualize cost
reports that do not meet the 12-month
threshold. However, we reiterate that
the proposal did not apply to Medicare
SSI days as these data are not obtained
directly from cost reports in HCRIS
(unlike Medicaid days and
uncompensated care cost data), but
rather from a file posted on the CMS
Web site: https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/dsh.html,
where the data are aggregated at the
hospital level and without the
information to determine if
annualization is needed. Therefore, we
are unable to annualize Medicare SSI
days as we proposed for Medicaid days
from Worksheet S–2 and
uncompensated care cost data from
Worksheet S–10 of the Medicare cost
report.
After consideration of the comments
we received, we are finalizing our
proposal to annualize cost reports that
do not have 12 months of data. As stated
in the FY 2018 IPPS/LTCH PPS
proposed rule, if the time between the
start date of a hospital’s cost reporting
year and the end date of its cost
reporting year is less than 12 months,
we will annualize the Medicaid days so
that the hospital has 12 months of data
included in its Factor 3 calculation.
Conversely, if the time between the
aforementioned start date and the end
date is greater than 12 months, we will
annualize the Medicaid days to achieve
12 months of Medicaid days data. If a
hospital files more than one cost report
beginning in the same fiscal year, we
will first combine the data across the
multiple cost reports before determining
the difference between the start date and
the end date to see if annualization is
needed.
• Scaling Factor. Under the
methodology adopted in the FY 2017
IPPS/LTCH PPS final rule and as we
proposed to apply in FY 2018, if a
hospital does not have data for one or
more of the three cost reporting periods,
we would compute Factor 3 for the
periods available and average those. In
other words, we would divide the sum
of the individual Factor 3s by the
number of cost reporting periods with
data so as not to disadvantage hospitals
that are missing data for one or more
cost reporting periods. Following the
publication of the FY 2017 IPPS/LTCH
PPS final rule, several hospitals noted
that this aspect of the methodology
resulted in the Factor 3 values of DSH
eligible hospitals in Table 18 and the
Medicare DSH Supplemental Data File
adding up to slightly greater than one,
which resulted in total uncompensated
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care payments somewhat exceeding the
estimate published in the FY 2017 final
rule. Specifically, for hospitals that have
fewer than 3 cost reporting years with
data, dividing the individual Factor 3s
by the number of cost reporting years
with data (that is, 2 cost reporting years
or 1 cost reporting year) results in a
higher average Factor 3 than if the
individual Factor 3s were divided by
the number of cost reporting years,
regardless of whether or not there is
data (that is, 3 cost reporting years). For
example, a hospital with no data for FY
2011 and a Factor 3 of 0.000051762 for
FY 2012 and 0.000049852 for FY 2013
will have an average Factor 3 of
0.000050807 if divided by 2 but an
average Factor 3 of only 0.000033871 if
divided by 3. After reviewing the data
in Table 18 and the Medicare DSH
Supplemental Data File, which were
published in conjunction with the FY
2017 IPPS/LTCH PPS final rule, we
concluded that the hospitals’
observations are correct and that an
adjustment is needed so that total
uncompensated care payments do not
exceed the estimated amount available
to make uncompensated care payments
as discussed in section V.G.4.b of the
preamble of this final rule.
Accordingly, to address the effects of
averaging Factor 3s calculated for three
separate fiscal years, we proposed to
apply a scaling factor to the Factor 3
values of all DSH eligible hospitals so
that total uncompensated care payments
are consistent with the estimated
amount available to make
uncompensated care payments for FY
2018. We proposed to first compute
Factor 3 and the uncompensated care
payments for all hospitals that we
anticipate qualifying for Medicare DSH
payments in FY 2018. We proposed to
then divide 1 (the expected sum of all
eligible hospitals’ Factor 3 values) by
the actual sum of all eligible hospitals’
Factor 3 values and multiply the
quotient by each hospital’s total
uncompensated care payment to obtain
scaled uncompensated care payment
amounts whose sum is consistent with
the estimate of the total amount
available to make uncompensated care
payments. The hospital-specific
uncompensated care amount would
then be divided by a 3-year claims
average to obtain the amount of the
interim uncompensated care payment
the hospital will receive for each claim.
As an illustration of the calculation of
the scaling factor, applying this
proposal to the FY 2017 uncompensated
care payments would have resulted in a
scaling factor of 0.9992 (1/1.0008). We
noted that the FY 2017 uncompensated
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care payments as calculated for the FY
2017 IPPS final rule exceeded the
estimated amount by approximately $5
million due to the lack of a scaling
factor.
We invited public comments on our
proposal to apply a scaling factor to all
DSH eligible hospitals’ Factor 3 values
for FY 2018.
Comment: One commenter supported
applying a scaling factor to Factor 3 and
noted that it would prevent artificial
inflation of a hospital’s amount of
uncompensated care in the absence of 3
years of cost report data.
Response: We appreciate the
commenter’s support for the proposed
scaling factor.
After consideration of the comments
we received, we are finalizing our
proposal to implement a scaling factor
to all DSH eligible hospitals’ Factor 3
values for FY 2018.
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(5) Methodological Considerations for
Incorporating Worksheet S–10 Data
• Definition of uncompensated care.
In the FY 2014 IPPS/LTCH PPS
rulemaking, we considered three
potential definitions of uncompensated
care: Charity care; charity care + bad
debt; and charity care + bad debt +
Medicaid shortfalls. As we explained in
the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50634), we considered proposing
to define the amount of uncompensated
care for a hospital as the
uncompensated care costs of that
hospital and considered potential data
sources for those costs. We examined
the literature on uncompensated care
and the concepts of uncompensated care
used in various public and private
programs, and considered input from
stakeholders and public comments in
various forums, including the national
provider call that we held in January
2013. Our review of the information
from these sources indicated that there
is some variation in how different
States, provider organizations, and
Federal programs define
‘‘uncompensated care.’’ However, a
common theme of almost all these
definitions is that they include both
‘‘charity care’’ and ‘‘bad debt’’ as
components of ‘‘uncompensated care.’’
Therefore, a definition that incorporates
the most commonly used factors within
uncompensated care as reported by
stakeholders would include charity care
costs and bad debt costs. Worksheet S–
10 employs the definition of charity care
plus non-Medicare bad debt.
Specifically:
Cost of Charity Care (Line 23)
+ Cost of non-Medicare bad debt
expanse (Line 29)
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Cost of non-Medicare uncompensated
care (Line 30)
Where:
• Cost of charity care = Cost of initial
obligation of patients approved for
charity care (line 21) minus partial
payment by patients approved for charity
care (line 22).
• Cost of non-Medicare bad debt expense =
Cost to charge ratio (line 1) times nonMedicare and nonreimbursable bad debt
expense (line 28).
In the FY 2017 IPPS/LTCH PPS
proposed rule (81 FR 25092), we
proposed to adopt a definition of
uncompensated care costs that included
charity care and non-Medicare bad debt.
We explained that we believe there are
compelling arguments for excluding
Medicaid shortfalls from the definition
of uncompensated care, including the
fact that several government agencies
and key stakeholders do not consider
Medicaid shortfalls in their definition of
uncompensated care and that excluding
Medicaid shortfalls from the
uncompensated care definition allows
Medicare uncompensated care
payments to target hospitals that have a
disproportionate share of
uncompensated care for patients with
no insurance coverage. Although we did
not finalize the proposed definition of
uncompensated care costs as part of the
FY 2017 rulemaking, we continue to
believe a definition of uncompensated
care that incorporates the most
commonly used factors within
uncompensated care as reported by
stakeholders would include charity care
costs and non-Medicare bad debt costs,
which correlates to Line 30 of
Worksheet S–10. Therefore, in the FY
2018 IPPS/LTCH PPS proposed rule (82
FR 19954), we again proposed that, for
purposes of calculating Factor 3 and
uncompensated care costs beginning in
FY 2018, ‘‘uncompensated care’’ would
be defined as the amount on line 30 of
Worksheet S–10, which is the cost of
charity care (Line 23) and the cost of
non-Medicare bad debt (Line 29). We
invited public comments on this
proposal.
Comment: Several commenters
supported the proposed definition of
uncompensated care as charity care plus
non-Medicare bad debt. However, a
common concern expressed by these
commenters, as well as those
commenters who disagreed with the
proposed definition, was the inclusion
of Medicaid shortfalls in the definition
of uncompensated care as captured by
Worksheet S–10. Commenters stated
that excluding Medicaid shortfalls from
the definition of uncompensated care
severely penalizes hospitals that care for
a large number of Medicaid patients
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because, while uninsured costs have
declined as people have gained coverage
through Medicaid, hospitals continue to
lose money on Medicaid patients as the
Medicaid payment rates are often below
the cost of providing health care
services. The commenters also stated
that including Medicaid losses in the
definition of uncompensated care would
align with the Medicaid DSH program
and the IRS method of calculating the
community benefit provided by
nonprofit hospitals. Some commenters
also requested that shortfalls from CHIP
and State and local indigent care
programs be included in
uncompensated care costs along with
charity care and non-Medicare bad debt.
Other commenters supported the
exclusion of Medicaid shortfalls from
the definition of uncompensated care.
One of these commenters pointed out
that the current use of low-income
insured days as a proxy for
uncompensated care already penalizes
hospitals in nonexpansion States as
their Medicaid ratio is lower than
hospitals in expansion States. The
commenter believed that including
Medicaid shortfalls in the definition of
uncompensated care would exacerbate
this impact. In addition, the commenter
supported the exclusion of Medicaid
shortfalls from the definition of
uncompensated care because it believed
that Medicaid programs vary by State,
making the data on shortfalls less
reliable. Commenters added that
excluding Medicaid unreimbursed costs
from non-Medicare uncompensated care
will result in a more equitable
distribution of uncompensated care
payments. Another commenter believed
that continuing to exclude Medicaid
shortfalls from Factor 3 calculations will
improve the accuracy and consistency
of the data reported on Worksheet S–10.
In addition, commenters noted that
computing losses on Medicaid patients
is operationally problematic because it
is unclear how much Medicaid
shortfalls are left after the Medicare
DSH payment is made. That is,
commenters noted that Medicare DSH
payments may already be covering the
Medicaid shortfalls.
In addition to comments about the
Medicaid shortfalls, commenters
observed that States differ in how they
define uncompensated care costs, and
that not all costs incurred by hospitals
in treating the uninsured are categorized
as charity care and bad debt, such as in
the case of discounts to the uninsured
who are unable to pay or unwilling to
provide means-tested information.
Specifically, commenters pointed out
that Worksheet S–10 does not capture
all of the information relevant to the
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purposes of section 3133 of the
Affordable Care Act. To this end, one
commenter noticed definitional
discrepancies in Worksheet S–10 that
failed to recognize the requirement
under section 3133 of the Affordable
Care Act that the amount of
uncompensated care costs of subsection
(d) hospitals reflect the costs of treating
the uninsured, which should include
costs incurred through non-means
tested uninsured discount programs.
Commenters expressed concern for the
disregard of uninsured discounts,
which, according to them, results in
uncompensated care being
undercounted.
Several commenters stated that the
uncompensated care definition should
be expanded to include discounts to the
uninsured and underinsured as well as
those who self-pay. According to one
commenter, such discounts should
include ‘‘self-pay imposed charge
discounts,’’ ‘‘state mandated self-pay
charge discounts,’’ and ‘‘means tested’’
charge discounts. The same commenter
stated that, despite CMS’ concerns that
adding self-pay discounts into
uncompensated care may result in
situations where payments exceed costs,
overall self-pay patient payments are
immaterial in the aggregate and would
not be a significant factor in such a
calculation.
Some commenters also argued that
adopting a policy that excludes
discounts would inappropriately
penalize hospitals that offer uninsured
discounts and disincentivize hospitals
from offering this financial help to the
uninsured. To this end, commenters
noted that Worksheet S–10 does not
adequately reflect discounts to the
uninsured and expressed concern that
hospitals that attempt to collect on a full
debt with no discount receive the same
or a higher uncompensated care total as
hospitals that do provide discounts.
Specifically, one commenter noted that
the current policy for uninsured
discounts is irrational because it gives
special treatment to those hospitals
unwilling to discount care for the
uninsured. Another commenter argued
that discounts offered to the uninsured
are costs that hospitals incur in
providing care for such patients;
therefore, regardless of whether they are
called ‘‘discounts’’ or some other term,
they should be incorporated in the
definition of uncompensated care in
Worksheet S–10. One commenter also
noted that it applies discounts
according to its charity patients’
liability, which includes both
coinsurance and deductible for covered
services, and the costs of services
provided but not covered by the
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patient’s insurance, stating that this
practice is ‘‘industry standard’’ as well
as allowable under IRS Form 990.
Echoing calls from others, the
commenter suggested that CMS revise
the definitions for uncompensated care
to reflect the entirety of costs to
hospitals for providing charity care,
including uninsured discounts.
In contrast to the support for the
inclusion of discounts to the uninsured
in the definition of uncompensated care,
one commenter believed that expansion
of the definition of uncompensated care
to include discounts to the uninsured is
flawed because these discounts are
nonlegitimate ‘‘costs’’ for community
health reporting. The commenter stated
that hospitals in its State have a long
history of discounts to the uninsured
through an Attorney General’s
agreement, and that the State tends to
have a higher-than-normal adoption rate
of high-deductible health plans.
Therefore, the commenter has come to
this conclusion regarding these
discounts based on its own significant
experience.
Response: In general, we will attempt
to address commenters’ concerns in
future cost report clarifications to
ensure that Worksheet S–10 is an
appropriate instrument to collect the
information necessary to implement
section 3133 of the Affordable Care Act.
With regard to the comments regarding
Medicaid shortfalls, we recognize
commenters’ concerns but continue to
believe there are other compelling
arguments for excluding Medicaid
shortfalls from the definition of
uncompensated care, including the fact
that several key stakeholders do not
consider Medicaid shortfalls in their
definition of uncompensated care, and
that it is most consistent with section
3133 of the Affordable Care Act for
Medicare uncompensated care
payments to target hospitals that incur
a disproportionate share of
uncompensated care for patients with
no insurance coverage. Conceptual
issues aside, we note that even if we
were to adjust the definition of
uncompensated care to include
Medicaid shortfalls, this would not be a
feasible option at this time due to
computational limitations. Specifically,
computing such losses is operationally
problematic because Medicaid pays
hospitals a single DSH payment that in
part covers the hospital’s costs in
providing care to the uninsured and in
part covers estimates of the Medicaid
‘‘shortfalls.’’ Therefore, it is not clear
how CMS would determine how much
of the ‘‘shortfalls’’ is left after the
Medicaid DSH payment is made. In
addition, in some States, hospitals
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return a portion of their Medicaid
revenues to the State via provider taxes,
making the computation of ‘‘shortfalls’’
even more complex. Accordingly, we
continue to believe it is appropriate to
apply a definition of uncompensated
care costs that includes charity care and
non-Medicare bad debt for FY 2018.
With regard to the comments that
States differ in how they define
uncompensated care costs, and that
hospitals’ costs of treating the uninsured
are not always categorized as charity
care and bad debt, such as in the case
of discounts to the uninsured who are
unable to pay or unwilling to provide
income information, we believe the
commenters are referring to the
Worksheet S–10 instructions for Line
20, which state, in part, ‘‘Do not include
charges for either uninsured patients
given discounts without meeting the
hospital’s charity care criteria or
patients given courtesy discounts.’’ We
believe that hospitals have the
discretion to design their charity care
policies as appropriate, and may
include discounts offered to uninsured
patients as ‘‘charity care.’’ However, we
will also further consider the concern
raised by the commenter as to whether
CMS’ current instructions are
inadvertently creating a disincentive to
offer such discounts, and we may
consider revisions to the instructions on
Line 20 of Worksheet S–10 to further
clarify when patient discounts would be
considered charity care versus bad debt.
Comment: Many commenters
expressed concerns relating to, and
provided suggestions for, calculating
charity care and bad debt as captured on
Worksheet S–10:
• Commenters expressed confusion
about what is identified as an indigent
care program, and when charity care
and Medicaid noncovered charges are
components of charity care, pointing out
that there are several areas of confusion
and areas that might encourage
individual interpretation. In addition,
commenters believed that government
providers are misreporting data related
to charity care by including all charges
for their indigent care/general relief
patient populations as charity care
while not accounting for offsetting
payments. The commenters expressed
their view that services furnished under
these programs are not uncompensated,
but are funded through State and local
tax assessments. Therefore, the
commenters requested that CMS require
that patient charges cannot be included
in the cost of charity care unless the
related services are not covered by an
indigent care program. More generally,
commenters stated that hospitals have
difficulty in identifying where to report
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nonpatient-specific payments that are
received to offset charity care and bad
debt.
• Commenters raised a similar
concern about Line 20 of Worksheet S–
10 regarding a possible discrepancy
between considering noncovered
charges for Medicaid patients as eligible
for charity care, but not allowing
noncovered charges for patients that
have some commercial coverage to be
considered charity care. In particular,
according to commenters, the current
methodology used to calculate the cost
of charity care for insured patients is
incorrect because it asks hospitals to
apply a CCR to deductibles and
coinsurance in order to arrive at the
cost, which will significantly understate
the cost of charity care because
coinsurance and deductibles are
typically a function of the payment rate
rather than the hospital’s charges for the
service. To this end, one commenter
noted that waived deductibles and
coinsurance for charity care insured
patients would always be expected to be
less than, and only a fraction of, full
charges for charity care for uninsured
patients. Commenters suggested that
CMS develop a separate CCR applicable
to deductible and coinsurance amounts
to calculate the cost of charity care.
• One commenter requested that
instructions for the Worksheet S–10
ensure that the dollar amount reported
for Line 22, Column 2 represents
payments from both patients and
insurers for specific patient accounts
that were granted charity care during
the cost reporting period.
• A few commenters stated that any
further revision to the instructions for
Line 20 of Worksheet S–10 should
reference a hospital’s ‘‘financial
assistance policy’’ for consistency with
the terminology used in the regulations
implementing section 501(r) of the
Internal Revenue Code, which require
hospitals to establish financial
assistance policies and to reduce
charges for services furnished to
individuals who qualify for assistance
under those policies. In addition,
commenters suggested that CMS clarify
that Federal law does not mandate
eligibility criteria for a hospital’s
financial assistance policy.
• Commenters stated that hospitals
report charity care amounts for patients
that qualify for partial charity
inconsistently, and requested that CMS
clarify how amounts should be reported
for patients that qualify for partial
charity care, including both uninsured
individuals as well as patients with
financial responsibility after their
insurance pays. In addition, one
commenter asked CMS to provide
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guidance that protects facilities that
expanded their tiered partial charity
care programs in order to cover more
individuals falling within a broader
income scale.
• Many commenters believed that the
definition of bad debt is unclear and
that the methodology CMS uses to arrive
at the cost of bad debt significantly
understates the uncompensated care
expense that hospitals incur as a result
of uncollectable amounts. Commenters
also asked for clarification on whether
or not non-Medicare bad debt claimed
on Line 26 of Worksheet S–10 should be
netted of recoveries received during the
cost report period.
• Commenters also expressed concern
in regard to patients who have some
form of insurance but are not able to
meet their cost sharing responsibility, in
particular coinsurance and deductibles.
These commenters believed that
applying the hospital’s CCR to the
amount on Line 26 of Worksheet S–10
understates the costs associated with
deductibles and coinsurance for insured
patients written off as bad debt. The
commenters recommended that CMS
revise Worksheet S–10 to require
separate reporting for bad debt written
off for the uninsured and for those who
are insured but cannot afford their cost
sharing, similar to the instructions for
Line 20.
• Several commenters observed that
the current Worksheet S–10
methodology may provide an incentive
to hospitals to overstate charity care,
compromising the fidelity of the
information collected.
• One commenter stated that bad debt
and charity care should be considered
reductions to expected hospital
payment and thus should not treated as
hospital charges and adjusted by the
CCR.
• One commenter believed that
charity care and bad debt are not valid
measures of a hospital’s uncompensated
care burden, as charity care may be
offset with direct taxes, appropriations,
and/or uncompensated care payments.
Response: We intend to consider the
various issues raised by the commenters
that directly relate to reporting of
charity care and bad debt costs on
Worksheet S–10 as we continue to
review Worksheet S–10. We will
continue to work with our stakeholders
to address their concerns through
provider education and further
refinement of the instructions to the
Worksheet S–10 as appropriate. We also
clarify that the bad debt claimed on Line
26 of Worksheet S–10 must be net of
bad debt recoveries received during the
cost report period.
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• Trims to apply to CCRs on Line 1
of Worksheet S–10. As we noted in the
FY 2017 IPPS/LTCH PPS proposed and
final rules (81 FR 25093 and 81 FR
56971), commenters have suggested that
uncompensated care costs reported on
Worksheet S–10 should be audited due
to extremely high values consistently
reported by some hospitals. In response
to these comments, we reviewed the
Worksheet S–10 data and identified
approximately 10 to 20 hospitals that
have anomalous uncompensated care
costs. We note that many of these
hospitals are public hospitals, which
can have charging practices that are
distinct from other hospital types. We
believe that, just as we apply trims to
hospitals’ CCRs to eliminate anomalies
when calculating outlier payments for
extraordinarily high cost cases
(§ 412.84(h)(3)(ii)), it is appropriate to
apply statistical trims to the CCRs on
Worksheet S–10, Line 1 that are
considered anomalies. Specifically,
§ 412.84(h)(3)(ii) states that the
Medicare contractor may use a
statewide CCR for hospitals whose
operating or capital CCR is in excess of
3 standard deviations above the
corresponding national geometric mean
(that is, the CCR ‘‘ceiling’’). This mean
is recalculated annually by CMS and
published in the proposed and final
IPPS rules each year. To control for data
anomalies, in the FY 2017 rulemaking,
we considered approaches that would
trim hospitals’ CCRs to ensure
reasonable CCRs are used to convert
charges to costs for purposes of
determining uncompensated care costs.
After considering the comments
received in response to the FY 2017
IPPS/LTCH PPS proposed rule, which
were discussed in the FY 2017 IPPS/
LTCH PPS final rule (81 FR 56971
through 56973), in the FY 2018 IPPS/
LTH PPS proposed rule (82 FR 19954
and 19955), for FY 2018, we proposed
the following alternative methodology
for trimming CCRs:
Step 1: Remove Maryland hospitals.
In addition, we will remove allinclusive rate providers, as they have
charge structures that differ from other
IPPS hospitals, and providers that did
not report a CCR on Worksheet S–10,
Line 1, and assign them the statewide
average CCR in step 5 below.
Step 2: For hospitals with multiple
cost reports included in the 2014 HCRIS
data, (a) combine the amounts from
Worksheet C, Part I, Line 202, Column
3 from each cost report to calculate total
costs, (b) combine the amounts from
Worksheet C, Part I, Line 202, Column
8 from each cost report to calculate total
charges, and (c) divide the total costs by
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the total charges to arrive at a
recalculated CCR.
Step 3: Calculate a CCR ‘‘ceiling’’
using the CCRs reported on Worksheet
S–10, Line 1, from all IPPS hospitals
that were not removed in Step 1
(including non-DSH eligible hospitals),
or the recalculated CCR described in
Step 2. The ceiling is calculated as 3
standard deviations above the national
geometric mean CCR. This approach is
consistent with our calculation of the
CCR ceiling used for high-cost outliers.
Remove all hospitals that exceed the
ceiling so that these aberrant CCRs do
not skew the calculation of the
statewide average CCR. Based on the
information currently available to us
during the development of this final
rule, this trim would remove 9 hospitals
that have CCRs above the calculated
ceiling of 0.932.
Step 4: Using the CCRs for the
remaining hospitals in Step 3,
determine the urban and rural statewide
average CCRs using Line 1 of Worksheet
S–10 for hospitals within each State
(including non-DSH eligible hospitals),
weighted by the sum of total inpatient
discharges and outpatient visits from
Worksheet S–3, Part I, Line 14, Column
14.
Step 5: Assign the appropriate
statewide average CCR (urban or rural)
calculated in Step 4 to all hospitals with
a CCR greater than 3 standard deviations
above the corresponding national
geometric mean (that is, the CCR
‘‘ceiling’’), as well as to providers that
did not report a CCR on Worksheet S–
10, Line 1. The statewide average CCR
would therefore be applied to 27
hospitals, of which 18 did not report a
CCR on Worksheet S–10, Line 1 and 9
had a CCR that exceeded the calculated
ceiling of 0.932. (We note that the
number of hospitals that are assigned
the statewide average CCR has changed
significantly from the estimates
included in the proposed rule due to
our decision not to incorporate
Worksheet S–10 data into the
calculation of Factor 3 for all-inclusive
rate providers, as discussed above.)
After applying the applicable trims to
a hospital’s CCR as appropriate, we
proposed to calculate a hospital’s
uncompensated care costs as being
equal to Line 30, which is the sum of
Line 23 and Line 29, as follows:
Hospital Uncompensated Care Costs =
Line 30 (Line 23 + Line 29), which is
equal to—
[(Line 1 CCR (as adjusted, if applicable)
× charity care line 20) ¥ (Payments
received for charity care Line 22)]
+
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[(Line 1 CCR (as adjusted, if applicable)
× Non-Medicare and nonreimbursable Bad Debt Line 28)].
We invited public comments on our
proposed trim methodology for FY
2018.
Comment: Many commenters
expressed concern that the proposed
trim methodology would improve
neither the accuracy nor consistency of
uncompensated care data. The
commenters recommended that CMS
further review the trim methodology or
delay its application until an audit of
the Worksheet S–10 is complete.
Several commenters suggested that
high-cost outliers be entirely removed to
avoid skewing the data instead of setting
their CCRs as the statewide average. The
commenters contended that
automatically setting CCRs to the
statewide average would be
‘‘inappropriate,’’ especially when
performed without opportunities for
explanation. One commenter stated that
hospitals that have been identified as
potential outliers should have the
opportunity to explain their data and
correct errors before the trim
methodology is applied, which would
facilitate data validity.
A few commenters requested that the
trimming methodology should not be
finalized until an audit of the data has
been conducted, and that hospitals with
extremely high CCRs should be audited
and an appropriate CCR determined
instead of applying an arbitrary trim to
a statewide average. One commenter
suggested that CMS develop a separate
audit protocol for all-inclusive billers
before application of the trimming
methodology. Another commenter
believed that it would be inappropriate
to assume that reported amounts are
incorrect and thus change State averages
or other DSH calculations, especially
without an auditing process in place.
Others identified ‘‘anomalies’’ in data
that would not be addressed by the
proposed trims, such as a hospital with
uncompensated care that equaled to
four times total hospital charges.
Another commenter requested that
instead of applying the statewide
average CCR, CMS instruct MACs to use
2015 Worksheet S–10 data if the 2014
data were incomplete or unusually high.
As noted above, several commenters
expressed concern over the proposed
trim methodology because hospitals that
are considered ‘‘all-inclusive rate
providers’’ are not required to complete
Worksheet C, Part I, which is used for
reporting the CCR on Line 1 of the
Worksheet S–10. Commenters noted
that, as a result, the proposed trim
methodology inappropriately modifies
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their uncompensated care costs, and
that a high CCR could be accurate if the
hospital’s charges are close to costs, as
is usually the case for all-inclusive rate
hospitals. One commenter suggested
that, instead of applying a trim, CMS
evaluate CCRs on cost reports to identify
misreported, erroneous values and not
penalize hospitals that are accurately
reporting information under a CMSsanctioned methodology.
Response: We appreciate the
additional information provided by the
commenters related to applying trims to
the CCRs. We intend to further explore
which trims are appropriate to apply to
the CCRs on Line 1 of Worksheet S–10,
including whether it is appropriate to
apply a unique trim to certain subsets of
hospitals, such as all-inclusive rate
providers. We note that all-inclusive
rate providers have the ability to
compute and enter their appropriate
CCR on Worksheet S–10, Line 1, by
answering Yes to the question on
Worksheet S–2, Part I, Line 115, and not
have it computed using information
from Worksheet C, Part I. We will give
more consideration to the utilization of
statewide averages in substituting
outlier CCRs, and in future rulemaking,
we intend to consider other approaches
that would ensure validity of the trim
methodology and not penalize hospitals
that use alternative methods of cost
apportionment. However, as we
previously discussed, because allinclusive rate providers have charge
structures that differ from other IPPS
hospitals, we will not use data from the
Worksheet S–10 to determine Factor 3
for these hospitals for FY 2018. Instead,
we will determine Factor 3 for these
hospitals using an average of three
individual Factor 3s, using the Factor 3
calculated using low-income insured
days for FY 2013 twice and the Factor
3 calculated using low-income insured
days for FY 2012 once.
Comment: Many commenters
requested that the cost of graduate
medical education (GME) be included
within the CCR calculation to account
for the costs associated with the training
of interns and residents. One
commenter stated that hospitals charges
are based on ‘‘all costs’’ acquired in the
provision of medical services, which
would ‘‘naturally’’ include GME. The
commenter indicated that exclusion of
costs associated with GME would result
in inaccurate reporting of costs and
lower CCRs.
Several commenters observed that
GME is included in the denominator but
not the numerator of the Worksheet S–
10 CCR and that this discrepancy
should be rectified. One commenter
observed that this inconsistency occurs
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because Line 1 uses data from
Worksheet C, Column 3 (‘‘costs,’’ which
do not include GME) and Worksheet C,
Column 8 (‘‘charges,’’ which do include
GME). The commenter recommended
using the ‘‘costs’’ definition from
Worksheet B, Column 24, Line 118 to
reconcile the discrepancy. One
commenter noted that inclusion of GME
costs in the numerator would ensure
‘‘fairness’’ in the calculation. Another
commenter stated that modification of
the calculation to include GME costs
within the CCR should occur on Line 1
of the Worksheet S–10.
Response: As we have stated
previously in response to this issue, we
believe that the purpose of
uncompensated care payments is to
provide additional payment to hospitals
for treating the uninsured, not for the
costs incurred in training residents. In
addition, because the CCR on Line 1 of
Worksheet S–10 is pulled from
Worksheet C, Part I, and is also used in
other IPPS ratesetting contexts (such as
high-cost outliers and the calculation of
the MS–DRG relative weights) from
which it is appropriate to exclude GME
because GME is paid separately from the
IPPS, we hesitate to adjust the CCRs in
the narrower context of calculating
uncompensated care costs. Therefore,
we continue to believe that it is not
appropriate to modify the calculation of
the CCR on Line 1 of Worksheet S–10
to include GME costs in the numerator.
After consideration of the comments
we received, we are finalizing our
proposal to apply statistical trims to the
CCRs on Worksheet S–10, Line 1 that
are considered anomalies using the
methodology outlined earlier, but are
not applying the statewide average to
all-inclusive rate providers as described
earlier.
• Cost report revisions and Worksheet
S–10 audits. While not directly relevant
to our proposal to use FY 2014
Worksheet S–10 data beginning in FY
2018, in the proposed rule, we noted
that, as part of our ongoing quality
control and data improvement measures
to continue to improve the Worksheet
S–10 data over time, we have made
revisions to the cost report instructions
and developed an audit process.
With respect to the cost reporting
instructions, on November 18, 2016, we
issued Transmittal 10 which updated
the instructions for Form 2552–10.
Specifically, we updated the
instructions in Section 4012 of Chapter
40 of the Provider Reimbursement
Manual, Part II. The instructions clarify
the reporting of charges for charity care.
Transmittal 10 is available for download
at the CMS Web site at: https://
www.cms.gov/Regulations-and-
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Guidance/Guidance/Transmittals/2016Transmittals-Items/R10P240.html.
With respect to the audit process, in
the FY 2017 IPPS/LTCH PPS final rule
(81 FR 56964), we stated that we
intended to provide standardized
instructions to the MACs to guide them
in determining when and how often a
hospital’s Worksheet S–10 should be
reviewed. We indicated that we would
not make the MACs’ review protocol
public, as all CMS desk review and
audit protocols are confidential and are
for CMS and MAC use only. The
instructions for the MACs are still under
development and will be provided to
the MACs as soon as possible. We refer
readers to the FY 2017 IPPS/LTCH PPS
final rule for a complete discussion
concerning the issues that we are
considering in developing the
instructions that will be provided to the
MACs. We note that, in addition to our
stated belief in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19955) that
cost reports beginning in FY 2017 will
be the first cost reports for which the
Worksheet S–10 data will be subject to
a desk review, we expect cost reports
beginning in FY 2014, FY 2015, and FY
2016, to be subject to further scrutiny
after submission. We will continue to
work with our stakeholders to address
their concerns through provider
education and further refinement of the
instructions to the Worksheet S–10, as
appropriate.
Comment: Many commenters
expressed concern about confusing or
unclear instructions in the Worksheet
S–10, especially with regard to the
definition of ‘‘uncompensated care.’’
The commenters expressed a general
concern toward ‘‘inconsistent reporting’’
and ‘‘inadequate and unreliable data’’
abounded as a result of current
Worksheet S–10 instructions. One
commenter requested that CMS clarify
the definition of ‘‘uncompensated care’’
specifically within the general
instructions of the Worksheet S–10.
Another commenter observed that
issues with flawed data may be the
result of inconsistent reporting that
could be ameliorated by clarification of
the Worksheet S–10 instructions, such
as on Lines 20 and 21.
Several commenters expressed
concern that, despite the clarifications
discussed in the FY 2017 IPPS/LTCH
PPS final rule, MACs lacked ‘‘guidance,
instruction, and training’’ for the
‘‘uniform and even application’’ of the
reporting requirements for the
Worksheet S–10. One commenter
recommended that CMS provide
additional guidance and documentation
to MACs and instruct them to accept
amended and/or corrected cost reports.
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Another commenter expressed
discontent that CMS allowed hospitals
to amend data from FY 2014 in late FY
2016 but provided ‘‘no education,’’
guidance, or other ‘‘insight’’ that may
have facilitated accurate and/or
consistent hospital reporting. Many
commenters provided a broad range of
detailed suggestions related to reporting
requirements for specific lines of
Worksheet S–10. Commenters suggested
the following general modifications to
the manner in which uncompensated
care costs are captured on Worksheet S–
10:
• Commenters observed that the
instructions for Worksheet S–10 are
inconsistent with generally accepted
accounting principles (GAAP) and differ
from the accounting practices of the
majority of hospitals. Therefore, the
commenters requested that CMS amend
the cost reporting instructions to require
hospitals to report amounts based on
GAAP. One commenter believed that
using GAAP would make every hospital
be under the same rules. Commenters
also suggested that the Worksheet S–10
instructions be amended to require
hospitals to report the same bad debt
and charity care amounts they report on
their financial statements, which are
GAAP appropriate. In particular, one
commenter asked that CMS clarify
whether the 35 percent residual of
Medicare bad debts recorded as bad
debt expense should be included in the
determination of uncompensated care
costs (currently, based on GAAP, a
hospital will record 100 percent of the
unpaid Medicare deductible and
coinsurance as bad debt; however, only
65 percent is reimbursed by Medicare).
• Commenters noted that because
Worksheet S–10 data is derived from
data reported on the Medicare cost
report, charges and payments for
physician services are currently
excluded. However, the commenters
stated that hospitals provide physician
services to patients with little or no
access to private physicians. They noted
that safety-net hospitals in low-income
communities particularly provide these
services. As a result, several
commenters argued the Worksheet S–10
should include uncompensated care
costs related to employed physician
services.
• Commenters requested clarification
of whether charity care charges should
be reported for inpatient hospital
services, outpatient hospital services, or
both. The commenters requested the
ability to report these charges on
separate lines and to apply separate
CCRs to these separate sets of costs. One
commenter noted that because
‘‘aggregate outpatient CCRs are usually
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higher than aggregate inpatient CCRs,
application of an overall CCR to
uncompensated care charges will
generally underestimate UC costs.’’
• Commenters noted that the
instructions for Line 26 include
Medicare bad debts for services
provided beyond the inpatient and
outpatient setting, and interpreted this
to mean that hospitals should include
non-Medicare bad debts for services
provided in the following settings for
which expenses are included on the
hospital cost report: Skilled nursing
beds (both swing beds and distinct part
facilities); distinct part inpatient
rehabilitation units; distinct part
LTCHs; distinct part psychiatric units;
dialysis centers; CMHCs; RHCs; and
FQHCs. The commenters asked CMS to
confirm in the final rule that this
interpretation is correct. Similarly,
commenters requested that CMS define
any additional distinct part units or
services that are not listed in the
instructions for Line 26 but should be
included in that line when reporting
non-Medicare bad debt.
• Commenters advised requiring
Medicaid DSH payments and Medicaid
supplemental payment information to
be reported on separate lines, and to
offset all of these payments against
Medicaid costs reported on Worksheet
S–10. In addition, according to one
commenter, the current Worksheet S–10
provides an incomplete picture of
Medicaid shortfall and should be
revised to allow hospitals to deduct
intergovernmental transfers, certified
public expenditures, and provider taxes
from their Medicaid revenues.
Specifically, some commenters also
requested separate reporting of a
number of such payments, including
direct payments to hospitals, Medicaid
DSH, and supplementary payments
including upper payment limits,
intergovernmental transfers, certified
government expenditures, provider
taxes, other government payments, and
payments for local or state indigent care.
• One commenter suggested that CMS
integrate payer mix into Worksheet S–
10, as providers with a substantial
commercial payer mix often have
operating margins that help offset
uncompensated care costs. The
commenter recommended that CMS
examine methods to adjust the
uncompensated care amount for payer
mix.
• One commenter noted that CCRs in
Worksheet S–10 are reported with
Reasonable Compensation Equivalency
(RCE) limits applied. The commenter
cited the discussion in the FY 2015
IPPS/LTCH PPS final rule (79 FR
50161), which states that RCE limits
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have no effect on IPPS provider
payments. Therefore, the commenter
believed that if the CCR in Worksheet
S–10 is used, IPPS hospitals’ payments
would be affected by RCE limits, and
RCE disallowances should therefore be
removed from the CCR on Line 1 of
Worksheet S–10.
• Commenters observed that CCRs for
‘‘parts of hospitals’’ such as facilitybased skilled nursing facilities and
inpatient rehabilitation facilities are
very different from the CCRs for acute
care hospitals paid under the IPPS. The
commenters questioned the
appropriateness of including parts of
hospitals in the CCR in Worksheet S–10.
In particular, one commenter noted that
the initial instructions on the Worksheet
S–10 ask hospitals to report costs
‘‘incurred by the hospital for providing
inpatient and outpatient hospital
services.’’ However, later instructions
for Line 20 ask hospitals to report gross
charity care costs for the ‘‘entire
facility,’’ which could lead to IPPS and
OPPS payments to parts of the hospital
that should not have been covered, such
as skilled nursing facilities and
rehabilitation facilities. The commenter
recommended that CMS either use
consistent language or list the subparts
of hospitals that should be included.
Response: Some of the commenters
express concerns and raise questions
that have not been raised before, while
others have been raised in previous
rulemaking. We believe that a number of
these questions and concerns are
addressed by the updated instructions
for the Worksheet S–10 that were issued
in November 2016, which clarify the
reporting of charges for charity care. We
will continue to work with our
stakeholders to address their concerns
through provider education and further
refinement of the instructions to the
Worksheet S–10, as appropriate.
With regard to the comments asking
for clarification of which inpatient and
outpatient services should be included
in the uncompensated care costs
reported on the Worksheet S–10, we
note that the cost report instructions at
Section 4012 of CMS Pub. 15–2, state:
‘‘Worksheet S–10—Hospital
Uncompensated and Indigent Care
Data—Section 112(b) of the Balanced
Budget Refinement Act (BBRA) requires
that short-term acute care hospitals
(§ 1886(d) of the Act) submit cost
reports containing data on the cost
incurred by the hospital for providing
inpatient and outpatient hospital
services for which the hospital is not
compensated’’ (emphasis added). In a
similar vein, the CCR used on
Worksheet S–10, Line 1 is from
Worksheet C, Part I, Line 202. This CCR
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reflects costs and charges of all hospital
inpatient departments and outpatient
department and clinics. Thus,
Worksheet S–10 is designed to capture
uncompensated care costs associated
with the hospital under all of the
hospital’s Medicare provider
agreements, including provider-based
facilities. However, Worksheet S–10 is
not intended to capture uncompensated
care costs related to physician services.
We note that at various points on
Worksheet S–10, the instructions state,
‘‘Include payments for all covered
services except physician or other
professional services’’ (emphasis
added).
Finally, with regard to the comment
that the CCRs on Worksheet S–10 are
reported with the RCE limits applied,
we believe the commenter is mistaken.
Line 1 of Worksheet S–10 instructs
hospitals to compute the CCR by
dividing the costs from Worksheet C,
Part I, Line 202, Column 3, by the
charges on Worksheet C, Part I, Line
202, Column 8. The RCE limits are
applied in Column 4, not in Column 3;
thus, the RCE limits do not affect the
CCR on Line 1 of Worksheet S–10.
H. Medicare-Dependent, Small Rural
Hospital (MDH) Program (§ 412.108)
1. Background for the MDH Program
Section 1886(d)(5)(G) of the Act
provides special payment protections,
under the IPPS, to a Medicaredependent, small rural hospital (MDH).
(For additional information on the MDH
program and the payment methodology,
we refer readers to the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51683
through 51684).) As discussed in section
V.B.1. of the preamble of the FY 2018
IPPS/LTCH PPS proposed rule and this
final rule, the MDH program provisions
at section 1886(d)(5)(G) of the Act will
expire at the end of FY 2017. Beginning
with discharges occurring on or after
October 1, 2017, all hospitals that
previously qualified for MDH status will
be paid based on the Federal rate.
Since the extension of the MDH
program through FY 2012 provided by
section 3124 of the Affordable Care Act,
the MDH program had been extended by
subsequent legislation as follows:
Section 606 of the ATRA (Pub. L. 112–
240) extended the MDH program
through FY 2013 (that is, for discharges
occurring before October 1, 2013).
Section 1106 of the Pathway for SGR
Reform Act of 2013 (Pub. L. 113–67)
extended the MDH program through the
first half of FY 2014 (that is, for
discharges occurring before April 1,
2014). Section 106 of the PAMA (Pub.
L. 113–93) extended the MDH program
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through the first half of FY 2015 (that is,
for discharges occurring before April 1,
2015). Section 205 of the MACRA (Pub.
L. 114–10) extended the MDH program
through FY 2017 (that is, for discharges
occurring before October 1, 2017). For
additional information on the
extensions of the MDH program after FY
2012, we refer readers to the following
Federal Register documents: The FY
2013 IPPS/LTCH PPS final rule (77 FR
53404 through 53405 and 53413 through
53414); the FY 2013 IPPS notice (78 FR
14689); the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50647 through 50649);
the FY 2014 interim final rule with
comment period (79 FR 15025 through
15027); the FY 2014 notice (79 FR 34446
through 34449); the FY 2015 IPPS/LTCH
PPS final rule (79 FR 50022 through
50024); the August 2015 interim final
rule with comment period (80 FR
49596); and the FY 2017 IPPS/LTCH
PPS final rule (81 FR 57054 through
57057).
b. Expiration of the MDH Program
Because section 205 of the MACRA
extended the MDH program through FY
2017 only, beginning October 1, 2017,
the MDH program will no longer be in
effect. Because the MDH program is not
authorized by statute beyond September
30, 2017, beginning October 1, 2017, all
hospitals that previously qualified for
MDH status under section 1886(d)(5)(G)
of the Act will no longer have MDH
status and will be paid based on the
IPPS Federal rate.
When the MDH program was set to
expire at the end of FY 2012, in the FY
2013 IPPS/LTCH PPS final rule (77 FR
53404 through 53405), we revised our
sole community hospital (SCH) policies
to allow MDHs to apply for SCH status
in advance of the expiration of the MDH
program and be paid as such under
certain conditions. We codified these
changes in the regulations at
§§ 412.92(b)(2)(i) and (b)(2)(v).
Specifically, the existing regulations at
§§ 412.92(b)(2)(i) and (b)(2)(v) allow for
an effective date of an approval of SCH
status that is the day following the
expiration date of the MDH program.
We note that these same conditions
apply to MDHs that intend to apply for
SCH status with the expiration of the
MDH program on September 30, 2017.
Therefore, in order for an MDH to
receive SCH status effective October 1,
2017, the MDH must apply for SCH
status at least 30 days before the
expiration of the MDH program; that is,
the MDH must apply for SCH status by
September 1, 2017. The MDH also must
request that, if approved as an SCH, the
SCH status be effective with the
expiration of the MDH program; that is,
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the MDH must request that the SCH
status, if approved, be effective October
1, 2017, immediately after its MDH
status expires with the expiration of the
MDH program on September 30, 2017.
We emphasize that an MDH that applies
for SCH status in anticipation of the
expiration of the MDH program would
not qualify for the October 1, 2017
effective date for SCH status if it does
not apply by the September 1, 2017
deadline. If the MDH does not apply by
the September 1, 2017 deadline, the
hospital would instead be subject to the
usual effective date for SCH
classification; that is, 30 days after the
date of CMS’ written notification of
approval as specified at § 412.92(b)(2)(i).
We note that the regulations
governing the MDH program are found
at § 412.108 and the MDH program is
also cited in the general payment rules
in the regulations at § 412.90. As stated
earlier, under current law, the MDH
program will expire at the end of FY
2017, which is already reflected in
§ 412.108. As such, we did not propose
to make specific amendments to the
regulations at § 412.108 to reflect the
expiration of the MDH program.
However, it has come to our attention
that, with the various extensions of the
MDH program as noted earlier, we
neglected to make conforming changes
to the regulation text at § 412.90.
Therefore, we proposed to revise the
general payment rules under § 412.90 to
reflect the expiration of the MDH
program. We did not receive any public
comments on our proposed conforming
changes to the regulation text at § 412.90
and are finalizing these changes as
proposed. However, we also proposed
that if the MDH program were to be
extended by law, similar to how it was
extended through legislation set forth
above, including most recently through
FY 2017, by the MACRA (Pub. L. 114–
10), we would make conforming
changes to the regulations governing the
MDH program at § 412.108(a)(1) and
(c)(2)(iii) and the general payment rules
at § 412.90(j) to reflect such an
extension of the MDH program. We
stated that these conforming changes
would only be made if the MDH
program were to be extended by statute
beyond September 30, 2017. As of the
time of the development of this final
rule, there has been no change in law to
extend the MDH program beyond FY
2017. Therefore, in this final rule, we
are not making any additional changes
to the regulations governing the MDH
program at § 412.108, and, as stated
above, the revisions we are finalizing to
the general payment rules under
§ 412.90 reflect the current expiration of
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the MDH program on September 30,
2017.
Comment: Several commenters
indicated that hospitals in their States
would experience payment decreases as
a result of the expiration of the MDH
program. One commenter urged CMS to
work with Congress to permanently
extend the MDH program. Another
commenter indicated that it would
continue supporting congressional
efforts to protect the MDH program.
Response: We appreciate the
commenters’ concerns about the
expiration of the MDH program.
However, CMS does not have the
authority under current law to continue
the MDH program beyond the
September 30, 2017 statutory expiration
date. These comments are similar to
comments we received previously, prior
to the statutory extensions of the MDH
program for FYs 2013 and 2014
provided by subsequent legislation, and
discussed in both the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53413
through 53414) and the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50647
through 50649). Therefore, under
current law, beginning October 1, 2017,
all hospitals that previously qualified
for MDH status will no longer have
MDH status.
I. Hospital Readmissions Reduction
Program: Updates and Changes
(§§ 412.150 Through 412.154)
1. Statutory Basis for the Hospital
Readmissions Reduction Program
Section 3025 of the Patient Protection
and Affordable Care Act, as amended by
section 10309 of the Patient Protection
and Affordable Care Act, added section
1886(q) to the Act, which establishes the
‘‘Hospital Readmissions Reduction
Program’’ effective for discharges from
‘‘applicable hospitals’’ beginning on or
after October 1, 2012. Under the
Hospital Readmissions Reduction
Program, payments to applicable
hospitals may be reduced to account for
certain excess readmissions. We refer
readers to section IV.E.1. of the FY 2016
IPPS/LTCH PPS final rule (80 FR 49530
through 49531) for a detailed discussion
and additional information on of the
statutory history of the Hospital
Readmissions Reduction Program.
On December 13, 2016, the 21st
Century Cures Act (Pub. L. 114–255)
was enacted. Section 15002 of Public
Law 114–255 added subparagraphs (D)
and (E) to section 1886(q)(3) of the Act.
These subparagraphs direct the
Secretary to assign hospitals to peer
groups, develop a methodology that
allows for separate comparisons for
hospitals within these groups, and
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allows for changes in the risk
adjustment methodology. Section 15002
of Public Law 114–255 also directs
MedPAC to conduct a review of overall
hospital readmissions and whether such
readmissions are related to any changes
in outpatient and emergency services
furnished. A report on the study is
required to be submitted in the
MedPAC’s Report to Congress no later
than June 2018.
Section 1886(q)(3)(D) of the Act
directs the Secretary to develop a
transitional methodology that accounts
for the percentage of full-benefit dualeligible patients treated by a hospital to
determine a hospital’s payment
adjustment factor. Section
1886(q)(3)(D)(i) of the Act sets forth the
requirement that the Secretary assign
hospitals to groups and apply a
methodology ‘‘that allows for separate
comparison of hospitals within each
such group.’’ This applies to discharges
that occur during and after FY 2019 and
before the application of section
1886(q)(3)(E)(i) of the Act, which allows
the Secretary to take into account the
recommendations in the reports
required by the IMPACT Act (Pub. L.
113–185) related to risk adjustment and
social risk factors. The first of two
reports required in the IMPACT Act was
released in December 2016 (available at:
https://aspe.hhs.gov/system/files/pdf/
253971/ASPESESRTCfull.pdf), and the
second report is required to be
completed by October 2019.
The hospital groups in section
1886(q)(3)(D)(ii) of the Act are described
as being based on their overall
proportion of the inpatients who are
entitled to, or enrolled for, benefits
under Medicare Part A and who are fullbenefit dual-eligible individuals (as
defined in section 1935(c)(6) of the Act).
The Secretary is further required to
consult with MedPAC when defining
groups and may consider analysis done
by MedPAC in preparation for its June
2013 report submitted to Congress.
Section 1886(q)(3)(D)(iii) of the Act
prevents the imposition of additional
reporting requirements in order to carry
out subparagraph (D). Section
1886(q)(3)(D)(iv) of the Act requires that
the estimated total amount of reductions
in payments using the methodology
should equal the estimated total amount
of reductions in payments if
subparagraph (D) did not apply.
Section 1886(q)(3)(E) of the Act
outlines the considerations the
Secretary may take into account with
respect to the risk adjustment
methodology. Section 1886(q)(3)(E)(i) of
the Act allows the Secretary to take into
account studies conducted and
recommendations made by the Secretary
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under section 2(d)(1) of the IMPACT Act
in the application of risk adjustment
methodologies. This does not preclude
the consideration of the use of
groupings of hospitals. The Secretary is
also allowed under section
1886(q)(3)(E)(ii) of the Act to consider
the use of ‘‘V’’ or other ICD-related
codes for removal of a readmission with
respect to discharges occurring after FY
2018. Section 1886(q)(3)(E)(iii) of the
Act outlines the considerations the
Secretary may make in the removal of
certain readmissions. For discharges
occurring after FY 2018, the Secretary
may consider the removal as a
readmission of an admission that is
classified within one or more of the
following: Transplants; end-stage renal
disease; burns, trauma; psychosis; or
substance abuse.
2. Regulatory Background
We refer readers to the following past
final rules for detailed discussions of
the regulatory background and
descriptions of the current policies for
the Hospital Readmissions Reduction
Program: The FY 2012 IPPS/LTCH PPS
final rule (76 FR 51660 through 51676);
the FY 2013 IPPS/LTCH PPS final rule
(77 FR 53374 through 53401); the FY
2014 IPPS/LTCH PPS final rule (78 FR
50649 through 50676); the FY 2015
IPPS/LTCH PPS final rule (79 FR 50024
through 50048); the FY 2016 IPPS/LTCH
PPS final rule (80 FR 49530 through
49543); and the FY 2017 IPPS/LTCH
PPS final rule (81 FR 56973 through
56979). These policies describe the
general framework for the
implementation of the Hospital
Readmissions Reduction Program,
including: (1) The selection of and
measures for the applicable conditions;
(2) the calculation of the excess
readmission ratio, which is used, in
part, to calculate the readmissions
adjustment factor; (3) the current
calculation of the hospital readmission
payment adjustment factor, specifically
addressing the base operating DRG
payment amount, aggregate payments
for excess readmissions, and aggregate
payments for all discharges; (4) the
opportunity for hospitals to review and
submit corrections using a process
similar to what is currently used for
posting results on Hospital Compare; (5)
the adoption of an extraordinary
circumstances exception policy to
address hospitals that experience a
disaster or other extraordinary
circumstance; (6) the clarification that
the public reporting of excess
readmission ratios will be posted on an
annual basis to the Hospital Compare
Web site as soon as is feasible following
the preview period; and (7) the
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specification that the definition of
‘‘applicable hospital’’ does not include
hospitals and hospital units excluded
from the IPPS, such as LTCHs, cancer
hospitals, children’s hospitals, IRFs,
IPFs, CAHs, and hospitals in Puerto
Rico.
We also have codified certain
requirements of the Hospital
Readmissions Reduction Program at 42
CFR 412.152 through 412.154.
CMS strives to put patients first,
ensuring that they are empowered to
make decisions about their own
healthcare along with their clinicians,
using information from data-driven
insights that are increasingly aligned
with meaningful quality measures. We
support technology that reduces burden
and allows clinicians to focus on
providing high-quality health care for
their patients. We also support
innovative approaches to improve
quality, accessibility, and affordability
of care while paying particular attention
to improving clinicians’ and
beneficiaries’ experience when
interacting with CMS programs. We
believe the Hospital Readmissions
Reduction Program in combination with
other efforts across the Department of
Health and Human Services encourages
hospitals to improve health care quality
and value, while giving patients and
providers the tools and information
needed to make the best decisions for
them. We recognize that the Hospital
Readmissions Reduction Program
represents a key component of the way
that we bring quality measurement and
improvement together with payment,
we have taken efforts to review existing
policies to identify how to move the
program forward in the least
burdensome manner possible while
continuing to encourage improvement
in the quality of care provided to
patients.
3. Maintenance of Technical
Specifications for Quality Measures
We refer readers to the FY 2015 IPPS/
LTCH PPS final rule (79 FR 50039) for
a discussion of the maintenance of
technical specifications for quality
measures for the Hospital Readmissions
Reduction Program. Technical
specifications of the readmission
measures are provided on our Web site
in the Measure Methodology Reports at:
https://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html. Additional
resources about the Hospital
Readmissions Reduction Program and
measure technical specifications are on
the QualityNet Web site on the
Resources page at: https://
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4. Policies for the Hospital
Readmissions Reduction Program
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19957 through
19967), we proposed the following
policies for the Hospital Readmissions
Reduction Program: (1) The applicable
time period for FY 2018; (2) the
calculation of aggregate payments for
excess readmissions for FY 2018; (3)
changes to the payment adjustment
factor in accordance with section 15002
of Public Law 114–255 for FY 2019; and
(4) updates to the Extraordinary
Circumstance Exception policy
beginning in FY 2018 as related to
extraordinary circumstances that occur
on or after October 1, 2017. These
proposals are described in more detail
below.
5. Applicable Period for FY 2018
Under section 1886(q)(5)(D) of the
Act, the Secretary has the authority to
specify the applicable period with
respect to a fiscal year under the
Hospital Readmissions Reduction
Program. In the FY 2012 IPPS/LTCH
PPS final rule (76 FR 51671), we
finalized our policy to use 3 years of
claims data to calculate the readmission
measures. In the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53675), we
codified the definition of ‘‘applicable
period’’ in the regulations at 42 CFR
412.152 as the 3-year period from which
data is collected in order to calculate
excess readmissions ratios and
adjustments for the fiscal year, which
includes aggregate payments for excess
readmissions and aggregate payments
for all discharges used in the calculation
of the payment adjustment.
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 56974 through 56975), for
FY 2017, consistent with the definition
specified at § 412.152, we established an
‘‘applicable period’’ for the Hospital
Readmissions Reduction Program to be
the 3-year period from July 1, 2012
through June 30, 2015. In other words,
the excess readmissions ratios and the
payment adjustment (including
aggregate payments for excess
readmissions and aggregate payments
for all discharges) for FY 2017 are
calculated using data from the 3-year
time period of July 1, 2012 through June
30, 2015.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19957), for FY
2018, consistent with the definition
specified at § 412.152, we proposed that
the ‘‘applicable period’’ for the Hospital
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Readmissions Reduction Program would
be the 3-year period from July 1, 2013
through June 30, 2016. In other words,
we proposed that the excess
readmissions ratios and the payment
adjustment (including aggregate
payments for excess readmissions and
aggregate payments for all discharges)
for FY 2018 would be calculated using
data from the 3-year time period of July
1, 2013 through June 30, 2016. We
invited public comment on this
proposal.
Comment: Many commenters
expressed concern about the proposed
Hospital Readmissions Reduction
Program performance period for FY
2018 because it combines data collected
under both ICD–9 and ICD–10.
Commenters requested that CMS
provide further empirical analysis in the
final rule to show that measure
reliability and validity are not
compromised by using two different
coding systems and ensure that the ICD–
10 versions of the measures in the
Hospital Readmissions Reduction
Program are endorsed by the National
Quality Forum (NQF). One commenter
also recommended that CMS analyze
performance differences resulting from
the transition to ICD–10 for all the
measures used in all its public reporting
and pay-for-performance programs to
determine if there are any unintended
biases and measure performance
changes because of the change. One
commenter disagreed with the use of the
three-year performance period for FY
2018 because commenter believes it is
too long and combines data from ICD–
9 and ICD–10. The commenter
suggested that a one-year performance
period would be more appropriate.
Response: The readmission measures
in the Hospital Readmissions Reduction
Program all completed ‘‘maintenance of
endorsement,’’ a periodic evaluation of
measures to assess impact and potential
unintended consequences, in December
2016 and are NQF-endorsed. The NQF
requires developers to submit all ICD–
9 and ICD–10 diagnosis and procedure
codes used to define the measure
cohorts. We identified all ICD–10 codes
that corresponded with ICD–9 codes
used in the measure cohort definitions
using the General Equivalence
Mappings tool (GEMs). The ICD–10
codes identified using GEMs were
reviewed by measure and clinical
experts and made public as a part of the
maintenance of endorsement process.
However, because the ICD–10 code
system was implemented in October
2015, there were insufficient claims
coded with ICD–10 to provide any
testing results to NQF during the
endorsement maintenance process. We
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will submit testing results in claims data
coded with ICD–10 in future cycles of
NQF endorsement maintenance.
In addition to identifying ICD–10
codes used to define the measures’
cohorts using the GEMs tool and
completing a review of those codes by
clinical and measure experts, we also
examined the frequency of the use of
these codes in the first 6-months of ICD–
10 coded claims for Medicare fee-forservice (FFS) patients who were 65
years and older. As a part of calculating
measure results that will be made public
in July 2017, we completed extensive
testing of measure specifications and of
measure performance. For the most
recent measurement period from July
2013 through June 2016, there are 9
months, from October 2015 through
June 2016, of ICD–10 coded claims.
Results of some of this testing is
described in the publicly available 2017
Annual Updates and Specifications
reports for all readmission measures,
including a description of the ICD–10
measure specifications, a description of
measure cohort sizes, the number of
acute care hospitals included in the
measure, risk-standardized readmission
rates in the national sample, risk
variable frequencies and risk model
coefficients, as well as overall model
performance for each year and for the 3year measurement period with the
combined ICD–9 and ICD–10 codes. The
results of these analyses demonstrate
stability in the measure cohort, in the
number of hospitals included in the
measure, in the performance of the
measure risk model, and in trends of
modest reductions in risk-standardized
readmission rates across the country.
We have decided to continue to use
a three-year measurement period rather
than a one-year measurement period
despite the implementation of ICD–10.
We use a 3-year measurement period
because some small and rural hospitals
do not have at least 25 admissions for
Medicare FFS patients who are 65 years
and older for each of the measure
conditions in a single year or even over
the course of two years. The three-year
period allows us to include the
maximum possible number of hospitals
in public reporting.
In addition, we have examined the
average change in risk-standardized
readmission rates at the hospital-level
and the distribution of changes in rates
for all readmission measures comparing
the results of the 2015, 2016, and 2017
reporting periods. We found that
differences in average hospital-level
performance comparing the 2016
performance year, which included only
ICD–9 claims, and the 2017 performance
year, which included 9 months of ICD–
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10 claims, were similar to differences in
performance observed between the 2015
and 2016 performance years. We are
currently evaluating and considering the
feasibility of publicly releasing these
analyses. We believe the results show
that our conversion process is
maintaining a high level of accuracy.
After consideration of the public
comments we received, we are
finalizing as proposed, without
modification, the applicable period of
the 3-year time period of July 1, 2013
through June 30, 2016 to calculate
readmission payment adjustment factor
for FY 2018 under the Hospital
Readmissions Reduction Program.
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6. Calculation of Aggregate Payments for
Excess Readmissions for FY 2018
Section 1886(q)(3)(B) of the Act
specifies the ratio used to calculate the
adjustment factor under the Hospital
Readmissions Reduction Program. It
states that the ratio is equal to 1 minus
the ratio of—(i) the aggregate payments
for excess readmissions and (ii) the
aggregate payments for all discharges.
For a detailed discussion on the
methodology for the calculation of
aggregate payments for excess
readmissions, we refer readers to the FY
2013 IPPS/LTCH PPS final rule (77 FR
53387 through 53397). We also have
codified the definition of ‘‘aggregate
payments for excess readmissions’’ and
‘‘aggregate payments for all discharges,’’
as well as a current methodology for
calculating the numerator of the ratio
(aggregate payments for excess
readmissions) and the denominator of
the ratio (aggregate payments for all
discharges) at 42 CFR 412.152 through
412.154.
The Hospital Readmissions Reduction
Program currently includes the
following six applicable conditions:
Acute myocardial infarction (AMI);
heart failure (HF); pneumonia (PN); total
hip arthroplasty/total knee arthroplasty
(THA/TKA); chronic obstructive
pulmonary disease (COPD); and
Coronary Artery Bypass Graft (CABG)
Surgery.
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 56975 through 56977), we
adopted the methodology to include
CABG in the calculation of the
readmissions payment adjustment for
FY 2017. Specifically, we discussed
how the addition of CABG applicable
conditions would be included in the
calculation of the aggregate payments
for excess readmissions (the numerator
of the readmissions payment
adjustment). We note that this policy
did not alter our established
methodology for calculating aggregate
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payments for all discharges (that is, the
denominator of the ratio).
When calculating the numerator
(aggregate payments for excess
readmissions), we determine the base
operating DRG payments for the
applicable period. To determine the
base operating DRG payment amount for
an individual hospital for such
applicable period for such condition, we
use Medicare inpatient claims from the
MedPAR file with discharge dates that
are within the same applicable period to
calculate the excess readmissions ratio.
We use MedPAR claims data as our data
source for determining aggregate
payments for excess readmissions and
aggregate payments for all discharges, as
this data source is consistent with the
claims data source used in IPPS
rulemaking to determine IPPS rates.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19957 through
19959), for FY 2018, we proposed to use
MedPAR claims with discharge dates
that are on or after July 1, 2013, and no
later than June 30, 2016, consistent with
our historical use of a 3-year applicable
period. Under our established
methodology, we use the update of the
MedPAR file for each Federal fiscal
year, which is updated 6 months after
the end of each Federal fiscal year
within the applicable period, as our data
source (that is, the March updates of the
respective Federal fiscal year MedPAR
files) for the final rules.
In the proposed rule, for FY 2018, we
proposed to determine aggregate
payments for excess readmissions and
aggregate payments for all discharges
using data from MedPAR claims with
discharge dates that are on or after July
1, 2013, and no later than June 30, 2016.
However, we noted that, for the purpose
of modeling the proposed FY 2018
readmissions payment adjustment
factors for the proposed rule, we used
excess readmissions ratios for
applicable hospitals from the FY 2017
Hospital Readmissions Reduction
Program applicable period. For the FY
2018 IPPS/LTCH PPS final rule,
applicable hospitals will have had the
opportunity to review and correct data
from the proposed FY 2018 applicable
period of July 1, 2013 to June 30, 2016,
before they are made public under our
policy regarding the preview and
reporting of hospital-specific
information, which we discussed in the
FY 2013 IPPS/LTCH PPS final rule (77
FR 53374 through 53401).
In the proposed rule, for FY 2018, we
proposed to use MedPAR data from July
1, 2013 through June 30, 2016.
Specifically, for the proposed rule, we
used the following MedPAR files:
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• March 2014 update of the FY 2013
MedPAR file to identify claims within
FY 2013 with discharges dates that are
on or after July 1, 2013;
• March 2015 update of the FY 2014
MedPAR file to identify claims within
FY 2014;
• March 2016 update of the FY 2015
MedPAR file to identify claims within
FY 2015;
• December 2016 update of the FY
2016 MedPAR file to identify claims
within FY 2016 with discharge dates no
later than June 30, 2016.
For the final rule, we proposed to use
the same MedPAR files as listed above
for claims within FY 2013, FY 2014 and
FY 2015, and for claims within FY 2016,
we proposed to use the March 2017
update of the FY 2016 MedPAR file.
For a discussion of how we identified
the applicable conditions to calculate
the aggregate payments for excess
readmissions for FY 2017, we refer
readers to the FY 2017 IPPS/LTCH PPS
final rule (81 FR 56975 through 56977).
Under our current methodology, in
identifying the applicable conditions to
calculate the aggregate payments for
excess readmissions, we apply the same
exclusions to the claims in the MedPAR
file as are applied in the measure
methodology for each of the applicable
conditions. In the proposed rule, for FY
2018, we proposed to continue to apply
the same exclusions to the claims in the
MedPAR file as we applied for FY 2017
for the AMI, HF, PN, THA/TKA, CABG
and COPD applicable conditions. We
refer readers to the FY 2016 IPPS/LTCH
PPS and FY 2017 IPPS/LTCH PPS final
rules (80 FR 49539; 81 FR 56976) for a
list of these exclusions. Updates to these
exclusions will be posted on the
QualityNet Web site at: https://
www.QualityNet.org > HospitalInpatient > Claims-Based Measures >
Readmission Measures > Measure
Methodology.
Furthermore, under our current
methodology we only identify Medicare
FFS claims that meet the criteria
described above for each applicable
condition to calculate the aggregate
payments for excess readmissions (that
is, claims paid for under Medicare Part
C or Medicare Advantage, are not
included in this calculation). This
policy is consistent with the
methodology to calculate excess
readmissions ratios based solely on
admissions and readmissions for
Medicare FFS patients. Therefore,
consistent with our established
methodology, for FY 2018, we proposed
to continue to exclude admissions for
patients enrolled in Medicare
Advantage as identified in the Medicare
Enrollment Database.
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Under our existing policy, we identify
eligible hospitalizations and
readmissions of Medicare patients
discharged from an applicable hospital
having a principal diagnosis for the
measured condition in an applicable
period (76 FR 51669). As described
above, the proposed 3-year applicable
period for FY 2018 of July 1, 2013
through June 30, 2016 includes
discharges occurring in four Federal FYs
(FY 2013, FY 2014, FY 2015, and FY
2016). Diagnoses and procedure codes
for discharges occurring prior to October
1, 2015 were reported under the ICD–9–
CM code set. Effective with discharges
occurring on or after October 1, 2015
(FY 2016), diagnoses and procedure
codes are reported under the ICD–10–
CM and ICD–10–PCS code sets. Thus,
for the proposed FY 2018 applicable
period, the discharge diagnoses for each
applicable condition would be based on
a list of specific ICD–9–CM or ICD–10–
CM and ICD–10–PCS code sets, as
applicable, for that condition.
In the proposed rule, to identify the
discharges for each applicable condition
for FY 2018 to calculate the aggregate
payments for excess readmissions for an
individual hospital, we proposed to
identify each applicable condition,
using, for FY 2013, FY 2014 and FY
2015, the appropriate ICD–9–CM codes,
and for FY 2016, the appropriate ICD–
10–CM and ICD–10–PCS code sets. This
proposal is consistent with our
established policy for identifying the
discharges for each applicable condition
to calculate the aggregate payments for
excess readmissions (76 FR 51673
through 51676). The ICD–9–CM codes
for the AMI, HF, PN, THA/TKA, COPD,
and CABG applicable conditions can be
found on the QualityNet Web site at:
https://www.QualityNet.org > HospitalInpatient > Claims-Based Measures >
Readmission Measures > Measure
Methodology. For a complete list of the
ICD–9–CM codes we proposed to use to
identify the applicable conditions, we
refer readers to the following tables of
the measure methodology reports on the
QualityNet Web site:
• 2016 Measure Updates: AMI, HF,
Pneumonia, COPD, Stroke Readmission
(AMI-Version 8.0, HF-Version 8.0,
Pneumonia-Version 8.0, COPD-Version
4.0, and Stroke-Version 4.0: 2016
Condition-Specific Readmission
Measures Updates and Specifications
Report)—
++ Table D.1.1—ICD–9–CM Codes for
AMI Cohort (page 79).
++ Table D.2.1—ICD–9–CM Codes for
COPD Cohort (page 83).
++ Table D.3.1—ICD–9–CM Codes for
Inclusion in HF Cohort (page 89).
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++ Table D.4.1—ICD–9–CM Codes for
Pneumonia Cohort (page 94).
• 2016 Measure Updates: THA/TKA
and CABG Readmission (THA and/or
TKA-Version 4.0, CABG-Version 2.0:
2016 Procedure-Specific Readmission
Measures Updates and Specifications
Report)—
++ Table D.1.1—ICD–9–CM Codes
Used to Identify Eligible CABG
Procedures (page 49).
++ Table D.2.1—ICD–9–CM Codes
Used to Identify Eligible THA/TKA
Procedures (page 58).
The ICD–10–CM codes for the AMI,
HF, PN, THA/TKA, COPD, and CABG
applicable conditions for the period
from October 1, 2015 to June 30, 2016
can be found on the QualityNet Web site
at: https://www.QualityNet.org >
Hospital-Inpatient > Claims-Based
Measures > Readmission Measures >
Measure Methodology. For a complete
list of the ICD–10–CM codes we are
proposing to use to identify the
applicable conditions, we refer readers
to the following tables of the measure
methodology reports on the QualityNet
Web site:
• 2017 Measure Updates: AMI, HF,
Pneumonia, COPD, Stroke Readmission
(AMI-Version 10.0, HF-Version 10.0,
Pneumonia-Version 10.0, COPD-Version
6.0, and Stroke-Version 6.0: 2017
Condition-Specific Readmission
Measures Updates and Specifications
Report)—
++ Table D.1.1—ICD–10–CM Codes
for AMI Cohort (page 77).
++ Table D.2.1—ICD–10–CM Codes
for COPD Cohort (page 81).
++ Table D.3.1—ICD–10–CM Codes
for Inclusion in HF Cohort (page 87).
++ Table D.4.1—ICD–9–CM Codes for
Pneumonia Cohort (page 93).
• 2016 Measure Updates: THA/TKA
and CABG Readmission (THA and/or
TKA-Version 6.0, CABG-Version 4.0:
2017 Procedure-Specific Readmission
Measures Updates and Specifications
Report)—
++ Table D.1.1—ICD–10–CM Codes
Used to Identify Eligible CABG
Procedures (page 49).
++ Table D.2.1—ICD–10–CM Codes
Used to Identify Eligible THA/TKA
Procedures (page 63).
In summary, for FY 2018, we
proposed to calculate aggregate
payments for excess readmissions, using
MedPAR claims from July 1, 2013
through June 30, 2016, to identify
applicable conditions based on the same
ICD–9–CM codes or ICD–10–CM and
ICD–10–PCS code sets, as applicable,
used to identify the conditions for the
readmissions measures, and to apply the
proposed exclusions for the types of
admissions (as previously discussed).
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We did not propose any changes to our
existing methodology for calculating
‘‘aggregate payments for excess
readmissions’’ for each hospital (the
numerator of the ratio). Specifically, to
calculate aggregate payments for excess
readmissions for each hospital, we
proposed to calculate the base operating
DRG payment amounts for all claims in
the 3-year applicable period for each
applicable condition (AMI, HF, PN,
COPD, THA/TKA, and CABG) based on
the claims we have identified as
described above. Once we have
calculated the base operating DRG
amounts for all the claims for the six
applicable conditions, we proposed to
sum the base operating DRG payments
amounts by each condition, resulting in
six summed amounts, one amount for
each of the six applicable conditions.
We proposed to then multiply the
amount for each condition by the
respective excess readmissions ratio
minus 1 when that excess readmissions
ratio is greater than 1, which indicates
that a hospital has performed, with
respect to readmissions for that
applicable condition, worse than the
average hospital with similar patients.
Each product in this computation
represents the payments for excess
readmissions for that condition. We
proposed to then sum the resulting
products which represent a hospital’s
proposed ‘‘aggregate payments for
excess readmissions’’ (the numerator of
the ratio). Because this calculation is
performed separately for each of the six
conditions, a hospital’s excess
readmissions ratio must be less than or
equal to 1 on each measure to avoid
CMS’ determination that there were
payments made by CMS for excess
readmissions (resulting in a payment
reduction under the Hospital
Readmissions Reduction Program). In
other words, in order to avoid a
payment reduction a hospital’s excess
readmissions ratio must be less than or
equal to 1 on each measure. We note
that we did not propose any changes to
our existing methodology to calculate
‘‘aggregate payments for all discharges’’
(the denominator of the ratio).
Section 1886(q)(3)(A) of the Act
defines the ‘‘adjustment factor’’ for an
applicable hospital for a fiscal year as
equal to the greater of: (i) The ratio
described in subparagraph (B) for the
hospital for the applicable period (as
defined in paragraph (5)(D)) for such
fiscal year; or (ii) the floor adjustment
factor specified in subparagraph (C).
Section 1886(q)(3)(B) of the Act, in
turn, describes the ratio used to
calculate the adjustment factor.
Specifically, it states that the ratio is
equal to 1 minus the ratio of—(i) the
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aggregate payments for excess
readmissions and (ii) the aggregate
payments for all discharges. The
calculation of this ratio is codified at
§ 412.154(c)(1) of the regulations and
the floor adjustment factor is codified at
§ 412.154(c)(2) of the regulations.
Section 1886(q)(3)(C) of the Act
specifies the floor adjustment factor at
0.97 for FY 2015 and subsequent fiscal
years.
Consistent with section 1886(q)(3) of
the Act, codified at § 412.154(c)(2), for
FY 2018, the adjustment factor is either
the greater of the ratio or the floor
adjustment factor of 0.97. Under our
established policy, the ratio is rounded
to the fourth decimal place. In other
words, for FY 2018, a hospital subject to
the Hospital Readmissions Reduction
Program would have an adjustment
factor that is between 1.0 (no reduction)
and 0.9700 (greatest possible reduction).
We did not receive public comments
related to this proposal. Therefore, we
are finalizing as proposed, without
modification, the calculation of
aggregate payments for excess
readmissions for FY 2018.
7. Background and Current Payment
Adjustment Methodology
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a. Background
As described above, section
1886(q)(3)(D) of the Act requires the
Secretary to group hospitals and apply
a methodology that allows for separate
comparisons of hospitals within groups
in determining a hospital’s adjustment
factor for payments applied to
discharges beginning in FY 2019.
b. Current Payment Adjustment
Methodology
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53374 through 53401), we
finalized policies that relate to the
portions of section 1886(q) of the Act
that at that time addressed the
calculation of the hospital readmissions
payment adjustment factor. Section
1886(q)(3)(A) of the Act defines the
‘‘adjustment factor’’ for an applicable
hospital for a fiscal year as equal to the
greater of: (i) The ratio described in
subparagraph (B) for the hospital for the
applicable period (as defined in
paragraph (5)(D)) for such fiscal year; or
(ii) the floor adjustment factor specified
in subparagraph (C). Section
1886(q)(3)(B) of the Act, in turn,
describes the ratio used to calculate the
adjustment factor. Specifically, it states
that the ratio is equal to 1 minus the
ratio of—(i) the aggregate payments for
excess readmissions and (ii) the
aggregate payments for all discharges.
Consistent with section 1886(q)(3)(C)
of the Act, codified at § 412.154(c)(2),
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for FY 2015 and subsequent years, the
adjustment factor is either the greater of
the ratio or the floor adjustment factor
of 0.9700. In other words, a hospital
subject to the Hospital Readmissions
Reduction Program will have an
adjustment factor that is between 1.0000
(no reduction) and 0.9700 (greatest
possible reduction). Under our
established policy, the ratio is rounded
to the fourth decimal place.
8. Provisions for the Payment
Adjustment Methodology for FY 2019:
Methodology for Calculating the
Proportion of Dual-Eligible Patients
a. Background
As described above, section
1886(q)(3)(D) of the Act requires the
Secretary to group hospitals and apply
a methodology that allows for separate
comparisons of hospitals within groups
in determining a hospital’s adjustment
factor for payments of discharges
beginning in FY 2019. Furthermore,
section 1886(q)(3)(D)(ii) of the Act
directs the Secretary to define groups of
hospitals, based on their overall
proportion, of the inpatients who are
entitled to, or enrolled for, benefits
under part A, and who are full-benefit
dual-eligible individuals (as defined in
section 1935(c)(6) of the Act).23 Under
these statutory requirements, hospitals
are grouped based on the proportion or
ratio of full-benefit dual-eligible patients
(numerator) to the hospital’s Medicare
inpatient stays (denominator). The Act
specifies that in defining groups, the
Secretary shall consult the MedPAC and
may consider the analysis done by
MedPAC in preparing the portion of its
report submitted to Congress in June
2013 relating to readmissions.
b. Data Sources Used To Determine Dual
Eligibility
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19960), we
proposed to identify full-benefit dual
status (numerator) using dual eligibility
status data, where the original data
source is the State Medicare
Modernization Act (MMA) file of dual
eligibility, which States submit to CMS
monthly. The State MMA file is
considered the most current and most
23 Section 1935(c)(6)(A) of the Act defines ‘‘fullbenefit dual-eligible individual’’ as, ‘‘for a State for
a month, an individual who—(i) has coverage for
the month for covered part D drugs under a
prescription drug plan under part D of title XVIII,
or under an MA–PD plan under part C of such title;
and (ii) is determined eligible by the State for
medical assistance for full benefits under this title
for such month under section 1902(a)(10)(A) or
1902(a)(10)(C) [of the Act], by reason of section
1902(f) [of the Act], or under any other category of
eligibility for medical assistance for full benefits
under this title, as determined by the Secretary.’’
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accurate source of data for identifying
dual-eligible beneficiaries since it is also
used for operational purposes related to
the administration of Part D benefits.
Under our proposal, an individual
would be counted as a full-benefit dual
patient if the beneficiary was identified
as full-benefit dual status in the State
MMA files for the month he/she was
discharged from the hospital.
We invited public comment on this
proposal.
Comment: Many commenters
supported the preferred approach of
using the State Medicare Modernization
Act (MMA) files as the source to
identify full-benefit dual-eligible
individuals, noting this approach
adheres to the statutory requirement and
does not impose any additional
reporting burden on providers.
Response: We thank commenters for
their support and agree with
commenters.
Comment: A few commenters
expressed support for comparing
hospitals based on their proportion of
patients who are dual-eligible patients.
One commenter believed that this
approach helps hospitals that have a
disproportionate number of dualeligible patients and specifically cited
safety net hospitals as key beneficiaries.
Response: We thank commenters for
their support and agree with
commenters. We proposed to finalize
approaches to implement policy options
that change the payment formula to
reduce the financial burden on safetynet hospitals without disproportionately
increasing the penalty for non-safety-net
hospitals to address stakeholder
concerns and meet the implementation
requirement of Public Law 114–255,
which included grouping hospitals
based on their proportion of dualeligible beneficiaries.
Comment: A few commenters
expressed concern with using the
proportion of dual-eligible beneficiaries
because it is an inappropriate
mechanism for determining
socioeconomic status. One commenter
cautioned that dual-eligible peer groups
exclude several at-risk and
socioeconomically stressed patients that
are not part of the data set. One
commenter suggested that CMS should
use the community distress index for
the community where a hospital is
located or a patient resides. One
commenter expressed concern that dual
eligibility was insufficient to identify
socio-demographic risk. Another
commenter suggested that CMS consider
whether it should continue to use dualeligibility as the adjustment variable,
and whether to move from the current
peer grouping approach to one that
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incorporates one or more socioeconomic
variables into the readmission measures
risk-adjustment models of the Hospital
Readmissions Reduction Program
measures (that is, direct risk adjustment
of the readmission measures). One
commenter cautioned CMS against
stating on Hospital Compare that dual
eligibility denotes poverty.
Response: We thank commenters for
their input and agree that we should be
cautious in not stating on Hospital
Compare that dual-eligibility denotes
poverty. While we agree that many
socioeconomically stressed patients are
not dual eligible and therefore not
accounted for when stratifying hospitals
based on dual proportion, Public Law
114–255 requires that we use the
proportion of dual-eligible beneficiaries
to stratify hospitals into peer groups for
the purpose of determining payments.
Section 15002 of Public Law 114–255
added subparagraphs (D) and (E) to
section 1886(q)(3) of the Act, which
directs the Secretary to assign hospitals
to peer groups, develop a methodology
that allows for separate comparisons for
hospitals within these groups, and
allows for changes in the risk
adjustment methodology. Specifically,
section 1886(q)(3)(D) of the Act directs
the Secretary to develop a transitional
methodology that accounts for the
percentage of full-benefit dual-eligible
patients treated by a hospital to
determine a hospital’s payment
adjustment factor. Section
1886(q)(3)(D)(i) of the Act sets forth the
requirement that the Secretary assign
hospitals to groups and apply a
methodology that allows for separate
comparison of hospitals within each
such group.
Section 1886(q)(3)(E)(i) of the Act
does not preclude the inclusion of
additional risk factors. We will continue
to monitor the impact of accounting for
dual-eligible beneficiaries in the
Hospital Readmissions Reduction
Program and assess the appropriateness
and feasibility of future changes to
include other variables or adjustments.
Comment: One commenter expressed
concern over the impact of risk
adjustment for non-safety net facilities,
arguing that facilities should be
rewarded for outreach to at-risk
populations instead of penalized with
risk adjustment which may not reflect
their actual readmission rates or
patient’s risk for readmissions at the
facility, and which has the potential to
reduce transparency.
Response: As required by Public Law
114–255, we are stratifying hospitals
based on dual-eligible proportion and
modifying the payment adjustment
factor formula to assess a hospital’s
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performance relative to other hospitals
in its peer group. To clarify, we are not
changing the measure methodology for
calculating of the excess readmission
ratios, rather we are stratifying hospitals
based on the proportion of dual-eligible
beneficiaries to set the threshold used to
assess hospital performance. Because
quality assessment is determined based
on a hospital’s performance relative to
all other Hospital Readmissions
Reduction Program eligible hospitals,
and therefore allows for comparison
between peer groups of hospitals, this
approach is transparent. At the same
time, by stratifying hospitals and
determining the payment adjustment
factors based on performance relative to
the peer group median, we can reduce
the penalty for safety-net hospitals,
hence avoiding a reduction in the
resources available to safety-net
hospitals to provide high quality care
for their at-risk patients. Because peer
groups are based on proportion of dualeligible patients served, the same would
also be true for non-safety net facilities
that do outreach to at-risk patients and
thus have a higher proportion of dualeligible patients than other non-safety
net facilities.
We believe the proposed approach
achieves both the goal of holding all
hospitals to a high standard while also
ensuring we are not disproportionally
penalizing hospitals serving an at-risk
population. Section 1886(q)(3)(E)(i) of
the Act allows the Secretary to consider
studies conducted and
recommendations made by the Secretary
under section 2(d)(1) of the IMPACT Act
in the application of risk adjustment
methodologies. We will continue to
monitor the progress and findings of
research the Assistant Secretary for
Planning and Evaluation (ASPE) is
conducting as part of its IMPACT Act
study and the National Quality Forum’s
trial period and will consider their
recommendations. We will continue to
monitor the impact of accounting for
dual-eligible patients in the Hospital
Readmissions Reduction Program and
evaluate if future changes to include
other variables or adjustments are
needed.
Comment: One commenter requested
that CMS develop an adjustment for the
variability in Medicaid eligibility across
states for the calculations of the
proportion of dual-eligible patients,
citing its belief that the variation
distorts the population measure of
poverty that in fact may be
representative of patients under
treatment. The commenter also stated
that Medicare Advantage data should
only be included in the denominator if
it is included in State reporting.
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Another commenter expressed concern
with using quintiles based on the
proportion of Medicare FFS and
Medicare Advantage patients that are
full-benefit, dual-eligible patients
because it does not consider differences
in States’ health care program eligibility
and if a State has expanded Medicaid
under the Patient Protection and
Affordable Care Act.
Response: We acknowledge the
commenter’s concern about using the
proportion of Medicare FFS and
Medicare Advantage patients that are
full-benefit, dual-eligible patients when
there is variability in Medicaid
eligibility across states. However, Public
Law 114–255 requires hospitals be
stratified based on the proportion of
Medicare patients who are eligible for
full-benefit Medicaid. Although
Medicaid eligibility is defined on a
State-by-State basis, it varies much less
across States for the over 65 and people
with disabilities populations, the
population covered under Medicare.24 25
In addition, the Patient Protection and
Affordable Care Act did not expand
Medicaid eligibility to patients enrolled
in Medicare Part A or Part B. Because
the dual proportion is calculated among
Medicare beneficiaries only, there is
much less variability in dual proportion
than if it was calculated as the
percentage of all hospital patients who
were eligible for Medicaid. We will
continue to monitor the impact of
changes to Medicaid eligibility for the
Medicare population and evaluate if
future changes to include other
variables or adjustments are needed.
Comment: Commenters supported the
inclusion of a socioeconomic
adjustment in the readmissions
reduction program but recommended
that the Secretary expand the conditions
excluded from the readmission
measures used in the Hospital
Readmissions Reduction Program.
Commenters also asked CMS to
continue to find ways to adjust for
social risk factors that capture variation
24 For over-65 and people with disabilities
populations in 40 States plus the District of
Columbia, Medicaid eligibility in the Medicare
population is connected to receipt of SSI, which
sets an income standard for eligibility at roughly 75
percent of the Federal Poverty Level (FPL).
However, about one third of States set their
eligibility levels at 100 percent FPL or higher. There
are also ten States, known as 209(b) States, in which
eligibility rules for dually eligible populations can
be set lower than the SSI standards.
25 United States Department of Health and Human
Services Office of the Assistant Secretary for
Planning and Evaluation. ‘‘Social Risk Factors and
Performance Under Medicare’s Value-Based
Purchasing Programs: A Report Required by the
Improving Medicare Post-Acute Care
Transformation (IMPACT) Act of 2014’’.
Washington, DC: December, 2016.
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in the complexity of patients across
hospitals.
Response: We thank the commenters
for their input and plan to investigate
the impact on the readmission measures
and appropriateness of categorizing
additional diagnoses as planned
readmissions as directed by Public Law
114–255. We will also continue to
monitor the work being done by the
Assistant Secretary for Planning and
Evaluation (ASPE) as part of its study
required by the IMPACT Act. The first
of two reports on the study was released
in December of 2016 and the second
report is required to be completed by
October 2019. The study analyzed the
effects of certain social risk factors in
Medicare beneficiaries on quality
measures and measures of resource use
used in one or more of nine Medicare
value-based purchasing programs. The
report also included considerations for
strategies to account for social risk
factors in these programs. We will
continue to consider the analyses and
recommendations from this report.
Comment: Numerous commenters
expressed concern that they were
unable to comment on the proposals
due to the lack of publicly available
data. To evaluate proposals and confirm
estimates, commenters requested that
CMS publicly provide a summary file
providing hospital-level data consistent
with the data used by CMS to derive the
results reported in the tables and
Readmission Proposal Supplemental
files for each of the alternative
approaches providing the data necessary
to duplicate the CMS estimates that are
reported in the tables.
Commenters further requested that
dual-eligible summary files be released
publicly since they reside with the
States. Commenters also requested that
CMS release patient population lists,
quarterly, to identify this population for
improvement activities and to allow for
replication. Commenters asked CMS to
make more data available on the
proposed payment adjustment
methodology to ensure full transparency
on the various aspects of the agency’s
determinations. In addition,
commenters recommended that CMS
prepare a dry-run using this year’s data
so that hospitals can familiarize
themselves with the new methodology.
Commenters also suggested that CMS
include hospital peer group assignments
in future proposed rules, allow for
review and corrections and asked CMS
to continually evaluate its adjustment
approach, and to engage with the field
on ensuring its adjustment approach
keeps up with the science.
Response: We thank commenters for
their input and we agree with the need
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for transparency and providing
stakeholders with data to confirm their
dual proportion assignment. However,
we also have a responsibility to
safeguard patient information and
comply with the federal regulations
governing data. To ensure CMS upholds
data security standards, we established
the CMS Data Request Center through
the Research Data Assistance Center
(ResDAC) to review requests for data. To
obtain the full MBSF data file a request
can be submitted to ResDAC at: https://
www.resdac.org/cms-data/request/cmsdata-request-center. Such a request will
be reviewed and approved based on
ResDAC’s established criteria. We are
considering methods for publicly
releasing this data. We are also
considering different options to provide
hospitals with early individualized
feedback regarding their peer grouping
and payment adjustment.
After consideration of the public
comments we received, we are
finalizing, without modification, our
proposal that an individual would be
counted as a full benefit dual-eligible
patient if the beneficiary was identified
as full-benefit dual status in the State
MMA files for the month he/she was
discharged from the hospital.
In the proposed rule, we considered
two alternative definitions of total
number of Medicare patients
(denominator) that could be used to
calculate each hospital’s proportion of
dual-eligible patients. We proposed to
define the proportion of full-benefit
dual-eligible beneficiaries as the
proportion of dual-eligible patients
among all Medicare FFS and Medicare
Advantage stays. This is our preferred
approach because using the proportion
of dual-eligible patients calculated
among all Medicare FFS and managed
care patients more accurately represents
the proportion of dual-eligible patients
served by the hospital, particularly for
hospitals in States with high managed
care penetration rates. For example,
Hospital A located in Arizona has a high
managed care penetration rate. When
stratified based on the proportion of
dual-eligible patients, calculated among
Medicare FFS and managed care
patients, Hospital A was assigned to the
top quintile of proportion of dualeligible patients and its payment
adjustment calculated based on its ERR
relative to the threshold for the top
quintile. When stratified based on the
proportion of dual-eligible patients
among only Medicare FFS patients,
Hospital A was assigned to the second
quintile and its payment adjustment
calculated relative to the threshold of
the second quintile. Its classification
when managed care patients are
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included more accurately identifies the
social risk of the patients Hospital A
serves, compared to its classification if
only the FFS population is included.
However, because the Hospital
Readmissions Reduction Program
payment adjustment is only applied to
Medicare FFS payments, and is based
on excess readmissions among Medicare
FFS patients only, we included an
alternative to define the proportion of
full-benefit dual-eligible beneficiaries as
only Medicare FFS stays. Under both
approaches, we proposed to use the
MedPAR files, the same data source
used to calculate the payment
adjustment factors, to identify total
hospital stays as this is the best
available claims data that are readily
publicly available. However, in
developing our proposal, we also
considered using other data sources
such as the CMS integrated data
repository (IDR), which may incorporate
managed care claims more consistently
to calculate total hospital stays, but it is
currently not readily available to the
public. We invited stakeholder input on
the most appropriate data source to
identify total hospital stays and whether
such stays should include all Medicare
FFS and Medicare Advantage stays or
only Medicare FFS stays.
We invited public comment on our
preferred proposals and alternative
considerations.
Comment: Many commenters
supported using both Medicare
Advantage and Medicare FFS patients to
determine the total number of Medicare
stays as the denominator because it
accurately represents the proportion of
dual-eligible patients a hospital serves.
One commenter recommended
including Medicaid enrollees under 100
percent of federal poverty level in
addition to dual-eligibility status to
improve accuracy. One commenter
requested that CMS should monitor for
any unintended consequences among
hospitals in states with high managed
care penetration, compared with those
that have low penetration, and modify
the methodology to adjust for future
growth in managed care.
Response: We thank commenters for
their support and we will continue to
monitor the impact of stratifying
hospitals based on the proportion of
full-benefit dual-eligible beneficiaries in
the Hospital Readmissions Reduction
Program and evaluate if future changes
to include other variables or
adjustments are needed.
Comment: Several commenters
recommended stratifying hospitals
based on the share of full-benefit
Medicaid patients among Medicare FFS
patients only and not all FFS and MA
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patients. One commenter stated that the
share of Medicare FFS patients that are
full dual-eligible beneficiaries should be
used because penalties will not apply to
MA readmissions. Another commenter
expressed concerned that because
penalties will not apply to MA
readmissions, MA patients would
distort the risk profiles of hospitals
because their income characteristics
may differ from FFS patients in certain
hospitals.
Response: We thank the commenters
for the input. In selecting a proposal, we
considered calculating the proportion of
dual-eligible patients (dual proportion)
among Medicare FFS and managed care
patients as well as Medicare FFS
patients only. We agree that determining
this proportion among Medicare FFS
beneficiaries instead of all Medicare
beneficiaries more accurately reflects
the incidence of these factors among
patients eligible for inclusion in the
Hospital Readmissions Reduction
Program measures. However, calculating
the dual proportion among all Medicare
FFS and managed care patients more
accurately represents the dual status of
the hospital, particularly for hospitals in
States with high managed care
penetration rates. This approach enables
more accurate and complete risk
profiles for hospitals. There is a strong
relationship between dual proportion
and penalties under both the current
methodology and proposed approaches
whether hospitals are stratified based on
Medicare FFS patients only or based on
both Medicare FFS and managed care
patients. In general, this relationship is
similarly positive; hospitals with higher
dual proportions by either definition
incur larger penalties on average.
However, the relationship between the
penalty share of payments and dual
proportion among FFS and managed
care patients exhibits a slightly stronger
upward trend.
Comment: One commenter supported
using both the Medicare Advantage and
Medicare FFS patients identified
through the CMS Integrated Data
Repository (IDR) to determine the dualeligible population, and supported
calculating the dual proportion among
both MA and FFS beneficiaries because
it provides an accurate representation of
a hospital’s dual-eligible population.
Response: We thank the commenter
for the support of calculating the dual
proportion among both MA and FFS
beneficiaries. Both the IDR and the
Master Beneficiary Summary File
(MBSF) are sourced from the State
Medicare Modernization Act (MMA)
file. Many commenters supported using
data sourced from the State MMA file as
it is considered the most current and
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most accurate source of data for
identifying dual-eligible beneficiaries
since it is also used for operational
purposes related to the administration
of Part D benefits. We will assess the
feasibility of different datasets with dual
status information sourced from the
State MMA files as part of
implementation.
After consideration of the public
comments we received, we are
finalizing, without modification, our
proposal to define the proportion of full
benefit dual-eligible beneficiaries as the
proportion of dual-eligible patients
among all Medicare FFS and Medicare
Advantage stays.
c. Data Period Used To Define Dual
Eligibility
Consistent with the requirement of
the statute, we proposed to group or
stratify hospitals based on the
proportion of full-benefit dual-eligible
patients determined under the proposals
discussed above and proposed to define
the proportion of full-benefit dualeligible beneficiaries as the number of
dual-eligible patients discharged during
the 3-year applicable period under the
Hospital Readmissions Reduction
Program. In the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19960), we
considered two alternatives for the data
period used to define dual eligibility, a
3-year period corresponding to the
performance period, and a 1-year
period, which would be calculated over
the most recent year for which complete
data is available.
While both data periods would
include the most recently available data
to define dual eligibility, our proposal to
use a 3-year period accounts for the
influence of social risk factors on the
excess readmissions ratio (ERR) because
the proportion of dual-eligible patients
is measured over the full period when
they influenced the likelihood of excess
readmissions. However, the most recent
1-year period would capture the most
recent population served by the hospital
and may enable a more accurate
stratification to calibrate the impact of
payment adjustments to the proportion
of dual-eligible patients that the hospital
currently serves.
We invited public comment on our
preferred proposal and alternative
considerations.
Comment: Many commenters
supported using the 3-year data period
because it aligns the adjustment for the
proportion of dual-eligible patients with
the established measurement period.
Commenters stated that using a 3-year
period will guard against the effects of
recent shifts in year-to-year patient
population changes. One commenter
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noted that both the 3-year data period
and the 1-year data period provide
similar information about the current
patient population because both
programs rely on data that will not be
current at the time that payment penalty
adjustment is applied.
Response: We thank commenters for
their support and agree that the
proposed 3-year data period is
appropriate.
Comment: A few commenters
supported the use of the 1-year data
period. Commenters stated that a 1-year
data period would provide the most
recent population served by the
hospitals and enable a more accurate
stratification by proportion of dualeligible patients for payment
adjustments.
Response: While we understand
commenters’ support of using a 1-year
data period, we agree with the many
commenters who supported using the 3year data period because it accounts for
the influence of social risk factors on the
excess readmission ratios (ERR) since
the proportion of dual-eligible patients
is measured over the full period when
they influenced excess readmissions.
We recognize that the 1-year data period
may better represent a hospital’s current
patient population. However, the 3-year
data period corresponds to the
performance period; therefore, it more
accurately reflects the influence of
social risk factors on the ERRs and
payment adjustments. We will continue
to monitor the impact of accounting for
dual-eligible patients in the Hospital
Readmissions Reduction Program and
evaluate if future changes to include
other variables or other adjustments are
needed.
After consideration of the public
comments we received, we are
finalizing the 3-year data period
corresponding to the performance
period as the data period used to define
dual eligibility.
9. Provisions for the Payment
Adjustment Methodology for FY 2019:
Methodology for Assigning Hospitals to
Peer Groups
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19960 through
19961), we considered three alternative
methodologies for assigning hospitals to
peer groups. For the reasons discussed
below, our preferred approach is to
stratify hospitals into quintiles (five
peer groups). However, we also sought
public comment on stratifying hospitals
into two and 10 peer groups.
To understand the impact on payment
adjustments of stratifying hospitals into
different numbers of peer groups, we
conducted an analysis that estimated
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payment adjustments when stratifying
hospitals into 2, 5 (quintiles), or 10
(deciles) peer groups. Two and 10 peer
groups were considered to align with
previous research conducted by
MedPAC and ASPE that assessed
impacts from stratifying hospitals into 2
or 10 groups. MedPAC’s analysis
stratified hospitals into 10 peer groups
when setting the target rate used to
compare hospital performance. ASPE’s
analysis stratified hospitals into 2 and
10 peer groups to calculate payment
adjustments. Our analysis showed that
using five peer groups allows for more
precisely defined peer groups than is
possible with a grouping of two, while
ensuring that the number of hospitals is
sufficient to represent a peer group,
even for measures, like CABG, in which
only a minority of hospitals are subject
to a payment adjustment.
We note, as the number of groupings
increase, hospitals became more similar
within their peer groups with respect to
proportion of dual-eligible patients in
their patient population. Hence,
payment adjustments are more closely
related to the proportion of dual-eligible
patients, and to the possible influence
on the likelihood of readmission
resulting from small variations in
patient populations. We also observed
that increasing the number of peer
groups also increases the likelihood that
hospitals with similar exposure to dualeligible patients will be compared to
different thresholds in the payment
adjustment formula. Deciles cover a
narrow range of dual-eligible patient
proportions in each peer group;
therefore, small differences in
proportion are likely to result in
differences in peer group assignment
and corresponding comparison
thresholds used in the payment
adjustment formula. This problem is
compounded by the small number of
hospitals in deciles. When the number
of hospitals is small, peer group
thresholds or distributions and the
resulting payment adjustments are less
predictable.
Stratifying hospitals into two peer
groups is a simpler method and reduces
the likelihood that similar hospitals are
assigned different payment adjustments.
However, this approach yields peer
groups with a more heterogeneous mix
of hospitals assigned to each group and
weakens the relationship between the
payment adjustment and the hospital’s
patient population. When the impact on
payments of different peer group
definitions was tested using the various
methods of incorporating stratification
into the payment formula, we found a
substantial reduction in penalties
(measured as the share of payment
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adjustments as a percentage of total
payments) to safety-net hospitals,
defined as hospitals in the highest
quintile for disproportionate share
hospital (DSH) patient percentage, from
stratification into quintiles compared to
stratification into two groups.
Furthermore, our analysis found a
similar impact on the share of total
payments borne as payment adjustments
by safety-net hospitals from stratifying
hospitals into quintiles and deciles,
suggesting that the benefit to safety-net
hospitals from increasing the number of
strata would be small. For example,
using the preferred modified payment
formula, proposed below, across the
current set of six conditions, we found
that for safety-net hospitals, payment
adjustment as a proportion of total
payments decreased from a baseline of
0.64 percent to 0.59 percent with two
groups, 0.55 percent with quintiles and
0.54 percent with deciles.
Based on the analysis described
above, we proposed to stratify hospitals
into quintiles (five peer groups) because
it creates peer groups that accurately
reflect the relationship between the
proportion of dual-eligible patients in
the hospital’s population without the
disadvantage of establishing a larger
number of peer groups.
We invited public comment on our
preferred proposal and alternative
considerations.
Comment: Many commenters
supported using quintiles because it
creates peer groups that more accurately
reflect the relationship between the
proportion of dual-eligible patients in
the hospital’s population, while
mitigating the disadvantages of
establishing a larger number of peer
groups. One commenter, using its data,
found that 2 groups did not adequately
differentiate among hospitals and 10
groups resulted in too many
nonmonotonic excess readmission
ratios. However, commenters urged
CMS to be mindful of unintended
consequences and be open to future
changes if issues do rise.
Response: We thank commenters for
their support.
Comment: One commenter stated that,
while using quintiles is reasonable,
there was no compelling reason for
having the groups all have the same
number of hospitals in them. One
commenter suggested that many
hospitals with relatively low
proportions of ‘‘duals’’ could be
grouped together, with the peergrouping done to create several smaller
groups at the high end of the
distribution. Some commenters agreed
that neither 2 nor 10 peer groups are
adequate. However, commenters
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believed that the ideal number of groups
could be improved. Commenters cited
the use of continuous data, the
introduction of additional covariates,
and the use of statistical modeling as
ways to produce a better method of
grouping hospitals. One commenter also
provided an example of a method it
previously used to determine cut points
(that is, performance thresholds or peer
groupings).
Response: As the commenter noted,
the upper part of the distribution is
where the choice of peer groups has the
greatest impact. This means the choice
of the number of peer groups is most
strongly influenced by hospitals with
high dual proportions. Thus, the
benefits of smaller peer groups among
these hospitals were considered in
establishing the number of peer groups.
In our proposal, we considered how
different numbers of peer groups
influenced the yearly variation in peer
group assignment. This is one of the
reasons we proposed quintiles. The
quintile-based approach is based on
larger peer groups, thereby producing
less arbitrary variation and yearly
fluctuation in hospital assignments.
We considered many factors in
developing peer groups to calculate
payment adjustments for the Hospital
Readmissions Reduction Program.
These factors included: (1) The
legislative requirements of Public Law
114–255, such as stratification by the
proportion of dual-eligible beneficiaries
in the patient census, budget neutrality,
and the need for immediate
implementation; (2) constructing peer
groups that are consistent across six
current measures and future additional
measures, and are defined consistently
over time; (3) the intent of the program
to encourage efficient, high quality care;
and (4) the impact of peer group
definitions on the distribution of
payments to hospital groups, such as
safety-net or rural hospitals. The
goodness of fit of the readmission
measure models with hospitals’ dual
proportion is a contributory factor
among these others factors. Preselecting
peer groups of equal size and choosing
the size that best meets these objectives
is transparent and effective. In the
future, more flexible methods for peer
group formation may be considered for
implementation. Any approach must be
evaluated based on multiple criteria
including those described above and
proposed through the rulemaking
process.
We need to consider both hospital
performance on multiple measures and
the program’s impact on the distribution
of payments. The most salient criterion
for evaluating approaches is the impact
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of stratification on the penalty share of
payments in groups defined both by the
stratifying variable and other relevant
hospital characteristics. Preselecting
peer groups of equal size and choosing
the size that best meets these objectives
is transparent and effective. Our use of
cut-point evaluation techniques within
the context described above helps to
establish the relative benefit of choosing
quintile or decile peer groups. In the
future, a more flexible method for peer
group formation may be developed and
considered for implementation.
However, this approach must still be
evaluated based on multiple criteria,
including those described above, and
proposed through the rulemaking
process.
Comment: One commenter
discouraged the use of two peer groups
because it does not adequately
differentiate between hospitals’ payer
mixes and will continue to unfairly
penalize urban safety net hospitals. The
commenter noted the use of two peer
groups would overgeneralize hospital
SDS groupings.
Response: We agree with commenter
that the use of two peer groups does not
allow for meaningful comparison of
hospitals.
Comment: One commenter
recommended CMS use deciles rather
than quintiles because hospitals in the
highest decile of low-income shares
tended to have higher readmissions than
those in the eighth or ninth decile.
Therefore, the commenter believed
deciles would do a better job of
acknowledging the challenges of the
hospitals with the highest share of lowincome patients.
Response: Our analyses found the
relationship between hospital dual
proportion decile and ERR is not
consistent among the six readmission
measures included in the Hospital
Readmissions Reduction Program.
However, the median ERR for the top
decile is higher than that of the ninth
decile for all six measures. When
considering a final policy option, we
assessed the strengths and weaknesses
of both quintiles and deciles. While we
agree that, compared to quintiles,
stratification into deciles more
completely accounts for the challenges
faced by hospitals with the highest
share of dually-eligible patients, both
deciles and quintiles substantially
reduce the share of penalties paid by
safety-net hospitals (defined as the top
DSH quintile), to a level below that paid
by non-safety-net hospitals. The
quintile-based approach is also based on
larger peer groups and produces less
arbitrary variation in hospital
assignments and penalty changes from
year to year. Using deciles causes
hospitals to face more uncertainty in the
standard from year to year.
Comment: One commenter expressed
concern that the individual penalty
amount for hospitals may be increased
in a way that disproportionately shifts
to a small group of outlier providers,
citing its own analysis of the proposed
methodology for quintile assignment.
Response: When considering the
different approaches for adjusting the
payment factor formula, one of our goals
was to avoid disproportionally
increasing the penalty for any hospital.
Compared to other approaches, the use
of the peer group median as the
threshold for payment adjustment
calculation results in smaller changes
for individual hospitals. Our analysis
found the proportion of hospitals
estimated to have an increased penalty
under the proposed approach slightly
exceeds the proportion with decreased
penalties. Because Public Law 114–255
requires total Medicare savings under
the stratified methodology be equivalent
to total Medicare savings under the
current methodology (that is, budget
neutrality), the mean penalty increase
for hospitals with an increased penalty
will be smaller than the mean penalty
decrease for hospitals with a decreased
penalty. The largest penalty increase
projected under the preferred approach
compared to the current methodology is
substantially less than projected by the
commenter, perhaps due to differences
in the peer groups formed by DSH and
dual proportions. We will continue to
monitor the impact of these program
changes on hospital penalties, including
their impact on individual hospitals and
consider changes to mitigate
undesirable effects.
Comment: One commenter
recommended that the peer groups
account for academic status, citing
studies that have shown a strong
correlation between provider academic
status and readmissions rates. In
addition, one commenter recommended
hospital groupings per other features,
with special consideration for
designated safety net hospitals, Level 1
Trauma centers, hospitals affiliated with
schools of medicine and nursing,
hospitals with in-house neonatal and
pediatric intensive care units, and
hospitals with solid organ transplant
programs that include liver
transplantation.
Response: We thank commenters for
their recommendations, and we will
continue to monitor the impact of
accounting for dual-eligible
beneficiaries in the Hospital
Readmissions Reduction Program and
evaluate if future changes to include
other variables or adjustments are
needed.
Comment: One commenter supported
the development of peer groups for the
purposes of payment but disagreed with
accounting for social risk factors for the
purposes of calculating readmission
rates for public reporting.
Response: We will take this
commenter’s input into consideration as
we continue to assess the
appropriateness and feasibility of
publicly and/or confidentially reporting
information related to certain social risk
factors, such as a hospital’s proportion
of dual-eligible beneficiaries. Public
Law 114–255 requires the development
of peer groups based on the number of
dual-eligible patients served by each
hospital for the purposes of scoring
performance. In addition, as we are
required under 1886(q)(6)(A) of the Act,
we will continue to report the
readmission rate data on Hospital
Compare as we always have.
After consideration of the public
comments we received, we are
finalizing our proposal to stratify
hospitals into quintiles.
10. Provisions for the Payment
Adjustment Methodology for FY 2019:
Payment Adjustment Formula
Calculation Methodology
a. Background
As described above, section
1886(q)(3)(D)(iv) of the Act requires the
Secretary to design the methodology to
implement this subparagraph so that the
estimated total amount of Medicare
savings under this subsection (stratified
methodology) equals the estimated total
amount of Medicare savings that would
otherwise occur under this subsection
(current methodology) if this
subparagraph did not apply (that is,
maintain budget neutrality).
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19961 through
19966), we analyzed several
modifications of the payment
adjustment formula to assess payment
reductions based on a hospital’s
performance compared to performance
of other hospitals in its peer group. The
current readmissions payment
adjustment can be written as
26 ‘‘Payment’’ refers to the base operating DRG
payment.
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payment adjustment factor. Our
preferred approach is assessing
performance compared to the peer
group median ERR, rather than the
current threshold of 1.0000, and scaling
hospital payment adjustments by a
neutrality modifier. However, we are
seeking public comment on three
additional approaches—using the mean
ERR plus a neutrality modifier, a budget
neutralizing ERR, and a standardized
ERR plus a neutrality modifier.
where dx is AMI, HF, pneumonia,
COPD, THA/TKA or CABG. In our
analyses, we modified the payment
adjustment formula by replacing the
current threshold ERR of 1.0000
with a peer group specific
threshold.
In adopting a methodology for
achieving budget neutrality, our priority
is to adopt a simplified and well-known
metric that allows us to be more
transparent in our methodology and
reduces the penalty on safety-net
hospitals, while not disproportionality
increasing the penalty to non-safety-net
hospitals. In developing policy options
to implement the budget neutrality
requirement, we analyzed the following
alternatives to evaluate the financial
impacts:
• Using the median ERR for the
hospital’s peer group in place of 1.0000
in the payment adjustment formula and
applying a uniform modifier to maintain
budget neutrality;
• Using the mean ERR for the
hospital’s peer group in place of 1.0000
in the payment adjustment formula and
applying a uniform modifier to maintain
budget neutrality;
• Using the ‘‘budget neutralizing’’
ERR for each peer group in place of
1.0000 in the payment adjustment
formula. The budget neutralizing ERR is
defined as the ERR corresponding to the
percentile (for example, 52nd) of the
peer group distributions that would
maintain budget neutrality for each peer
group; and
• Using a standardized ERR for each
individual hospital’s ERR in place of the
hospital’s current calculated ERR and
applying a uniform modifier to maintain
budget neutrality. Each hospital’s ERR is
transformed to create a distribution of
ERRs within each stratum with the same
mean and standard deviation as the
original mean and standard deviation
across all hospitals.
The payment reduction (1¥P)
resulting from use of the median ERR
for the peer group is scaled by a
neutrality modifier (NMM) to achieve
budget neutrality. To calculate the
neutrality modifier, we estimate total
Medicare savings across all hospitals
under the current method and under the
proposed stratified method, in the
absence of a modifier. We then calculate
a multiplicative factor that, when
applied to each hospital’s adjustment
calculated using the stratified method,
would equate total Medicare savings
from that method to total Medicare
savings under the current method. Total
Medicare savings and the neutrality
modifier will be calculated using the
same payment data. These data will
consist of the most recently available
full year of MedPAR data. For example,
if the payment reduction for a hospital
(1¥P) equals 0.00748 when using the
median threshold, then under the
median plus neutrality modifier method
it would equal NM * 0.00748 = 0.9545
* 0.00748 = 0.00714, where the
neutrality modifier was equal to 0.9545.
Thus, the hospital’s payment
adjustment factor (P) would equal
0.9925 (1¥0.00748) in the absence of
the neutrality modifier, and 0.9929
(1¥0.00714) when the modifier is
added.
(3) Budget Neutralizing ERR
assessed based on the difference
between the hospital’s ERR and the
budget neutralizing ERR. The payment
adjustment formula would be:
b. Proposals
As we stated in the proposed rule, our
preferred approach is using the median
ERR plus a neutrality modifier. We
would use the median ERR for the
hospital’s peer group in place of 1.0000,
which is the approximate mean and
median of the baseline distribution, in
the current payment adjustment
formula. The payment adjustment
formula would then be:
(2) Mean ERR Plus a Neutrality Modifier
We also analyzed the use of the mean
ERR plus a neutrality modifier to
calculate the readmissions adjustment
factor. Just like the median ERR plus
neutrality modifier approach mentioned
above, the mean ERR for the hospital’s
peer group would be used in place of
1.0000 in the payment adjustment
formula. The payment adjustment
formula would then be:
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We also analyzed using a budget
neutralizing ERR in which penalties are
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In the proposed rule, we discussed
four alternative budget neutral
methodologies for calculating the
(1) Median ERR Plus a Neutrality
Modifier
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(4) Standardized ERR Plus a Neutrality
Modifier
We also analyzed using a
standardized ERR in which penalties are
assessed by determining the mean and
where SB (dx) and mB (dx) are the
standard deviation and mean of the
current ERR distribution for a condition
(dx), and Sp (dx) and mp (dx) are the
standard deviation and mean of the peer
group ERR distribution for that dx. The
standardized ERRs has a mean of 1 and
a standard deviation equal to the
standard deviation of ERRs across all
hospitals in the peer group for that
condition. The standardized ERRs are
compared to 1.0000 in the payment
adjustment formula to determine excess
readmissions. The payment reduction
(1¥P) resulting from use of the
standardized ERR is then scaled by a
neutrality modifier (NMS) to achieve
budget neutrality.
c. Analysis
As mentioned above, in adopting a
methodology for achieving budget
neutrality, our priority is to adopt a
simplified and well-known metric that
allows us to be more transparent in our
methodology and reduces the penalty
on safety-net hospitals, while not
disproportionality increasing the
penalty to non-safety-net hospitals. To
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standard deviation of the ERRs across
all hospitals. The payment adjustment
formula would be calculated by
dividing hospitals into strata based on a
hospital’s proportion of dual-eligible
patients. The current ERRs would then
be transformed to create a new
standardized distribution of ERRs
within each stratum with the same
mean and standard deviation as the
original mean and standard deviation
across all hospitals.
assess the expected impact on hospital
payment adjustments resulting from the
changes to the formula, we simulated
hospitals’ readmission adjustment
factors under different stratified
thresholds. Readmissions adjustment
factors were calculated using total base
operating DRG payment amounts for
each hospital as well as total base DRG
payment amounts for each of the six
measure cohorts (AMI, HF, pneumonia,
COPD, CABG, THA/TKA) included in
the FY 2018 program. We used DRG
payment information for the period July
1, 2012 through June 30, 2015.
Furthermore, to estimate the dollar
amount of the penalty and the share of
payments the penalty represents, we
used total base operating DRG payments
among Medicare FFS claims from the
FY 2015 MedPAR data file.
All four methods support the agency’s
efforts to reduce the payment
adjustment for safety-net hospitals. We
proposed to use the median ERR plus a
neutrality modifier because it creates a
standard where a hospital’s ERR is
subject to payment reduction when a
hospital’s performance as measured by
the ERR is worse than that of half the
other hospitals in its peer group. The
median ERR plus neutrality modifier is
preferred to the mean ERR plus
neutrality modifier because the median
represents a consistent standard (that is,
50th percentile) for the hospital’s rank
within its peer group, while the rank
corresponding to the mean changes
between years, cohorts and peer groups.
The median ERR plus neutrality
modifier substantially reduces the
penalty as a share of total payments
(from 0.64 percent to 0.55 percent with
quintile peer groups) and penalty per
discharge (from $157 to $135) for safetynet hospitals while not
disproportionately increasing the
payment reduction amount for nonsafety-net hospitals (from 0.61 percent
to 0.63 percent as share of total
payments). The median ERR plus
neutrality modifier is also preferred
because it achieves more precise budget
neutrality than the budget neutralizing
ERR. Below we show the estimated total
Medicare savings under the current and
stratified methodology used to assess
budget neutrality.
Estimated total
medicare savings
Method
Current methodology .............................................................................................................
Mean plus neutrality modifier (neutrality modifier=1.0135 when using quintiles) .................
Median plus neutrality modifier (neutrality modifier=0.9546 when using quintiles) ..............
Budget neutralizing ERR .......................................................................................................
Standardized ERR plus neutrality modifier (neutrality modifier=0.9710 when using
quintiles) .............................................................................................................................
Difference
between
stratified and
current
methodology
Percentage
difference
between
stratified and
current
methodology
$532,948,318
532,949,006
532,946,272
533,199,304
N/A
688
($2,046)
250,985
N/A
<0.00
<0.00
0.05
532,948,288
($30)
<0.00
When we analyzed the other options,
we found that the mean threshold
permits a higher standard to be set if
hospitals in the peer group have
performance well above the midpoint
but not far below, or a lower standard
if hospitals are more likely to have very
high rates. In our testing, the mean plus
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modifier resulted in lower penalties for
safety-net hospitals (0.52 percent as a
share of total payments compared to
0.55 percent for the median plus
modifier). However, our preferred
approach of the median is based on the
judgment that the standard reflected by
the threshold should not be affected by
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hospitals with unusually strong or weak
performance in the peer group. Like the
median, the budget neutralizing ERR
threshold approach imposes a
consistent rank-based standard across
peer groups. However, this method is
not preferred since it is more complex,
less intuitive and results in greater
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Source: FY 2017 Hospital Readmissions Reduction Program Final Rule Results. Results are based on July 1, 2012, through June 30, 2015,
discharges among subsection (d) and Maryland hospitals only. Although data from all subsection (d) and Maryland hospitals are used in calculations of each hospital’s Excess Readmission Ratio (ERR), this table does not include results for Maryland hospitals. Hospital Characteristics are
based on the FY 2017 final rule Impact File. Hospitals are stratified into quintiles based on the proportion of dual-eligible beneficiaries among
Medicare FFS and managed care patients discharged between July 1, 2012, through June 30, 2015.
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divergence between total payment
adjustments under the stratified and
current methodologies than approaches
using a neutrality modifier (differing
from the current methodology by
approximately 0.05 percent of total
payments when simulated with quintile
peer groups). The median uses the
original distribution of hospital ERR
estimates, based on their relationship to
a national standard, and represents the
most precise possible measures of their
performance under that standard. Using
a standardized ERR within each peer
group compares a hospital’s
performance to other hospitals in the
peer group. In contrast, using the mean
or median threshold adjusts penalties
based on a hospital’s relative
performance within the peer group, but
the performance indicator of the ERR
retains the comparison to the mean
performance of all hospitals across all
peer groups. However, comparing the
ERR to the mean or median for each
peer group is a more straightforward
methodology than re-standardizing
ERRs. The median is preferred to the
standardized ERR because, as with the
budget neutralizing ERR, the median is
less complex and more intuitive. Using
a less complex and well-known metric,
will create a more transparent
methodology since it will be easier for
hospitals and other stakeholders to
replicate the calculation of the median
ERRs.
The impact of the proposed changes
to the payment adjustment formula for
the budget neutral considered methods,
by peer group options, for safety-net and
non-safety-net hospitals is shown in the
table below. The table includes three
penalty metrics: average payment
reduction, total Medicare savings, and
share of payment adjustments as a
percentage of total payments. The
average payment reduction shows the
average reduction in Medicare DRG
payments for safety-net and non-safetynet hospitals. The total Medicare
savings column shows the total
estimated penalties borne by safety-net
and non-safety-net hospitals under each
approach. Because the payment
reduction is applied to hospitals’ base
DRG payments, hospitals with more
discharges will contribute a larger
amount of Medicare savings to the
group total of Medicare savings.
Furthermore, because there are fewer
safety-net than non-safety-net hospitals,
as safety-net is defined as hospitals in
the top quintile of DSH patient
percentage, the total Medicare savings
for non-safety-net hospitals are
inherently much larger than for safetynet hospitals. Therefore, to compare the
financial impact of the program on
hospitals in each group, we calculated
the payment adjustment as a proportion
of DRG payments. Using this metric
allows comparison across the different
methodologies where the total base
operating DRG payments are different
between different groups of hospitals
and is a more accurate indication of the
financial impact on the group. For
example, under the current
methodology, the payment adjustment
as a proportion of all DRG payments
among safety-net hospitals is 0.64
percent.
COMPARISON OF PENALTY METRICS BY THRESHOLD METHODS AND PEER GROUP OPTIONS FOR ALL HOSPITALS, SAFETYNET, AND NON-SAFETY-NET HOSPITALS
Average
payment
reduction
(1¥P) a
(%)
Stratification approach and payment formula methodology
Current methodology:
Safety-net hospitals ........................................................................................................
Non-safety-net hospitals .................................................................................................
Total Medicare
savings
0.62
0.61
$109,142,525
$423,805,793
Payment
adjustment as
a proportion of
all DRG
payments
(%)
0.64
0.61
Approach 1: Two equal peer groups based on the proportion of dual-eligible beneficiaries
Median plus neutrality modifier (neutrality modifier = 0.9558):
Safety-net hospitals ........................................................................................................
Non-safety-net hospitals .................................................................................................
Mean plus neutrality modifier (neutrality modifier = 1.0191):
Safety-net hospitals ........................................................................................................
Non-safety-net hospitals .................................................................................................
Budget neutralizing ERR:
Safety-net hospitals ........................................................................................................
Non-safety-net hospitals .................................................................................................
Standardized ERR plus neutrality modifier (neutrality modifier = 0.9796):
Safety-net hospitals ........................................................................................................
Non-safety-net hospitals .................................................................................................
0.56
0.61
100,205,115
432,741,958
0.59
0.62
0.54
0.61
97,837,278
435,112,491
0.57
0.63
0.55
0.61
98,208,670
435,216,961
0.58
0.63
0.55
0.61
98,468,430
434,478,852
0.58
0.63
0.52
0.62
93,878,536
439,067,736
0.55
0.63
0.49
0.62
89,182,424
443,766,582
0.52
0.64
0.49
0.62
88,510,157
444,689,147
0.52
0.64
0.50
0.62
91,686,964
441,261,324
0.54
0.64
sradovich on DSK3GMQ082PROD with RULES2
Approach 2: Quintiles based on the proportion of dual-eligible beneficiaries
Median plus neutrality modifier (neutrality modifier = 0.9546)
Safety-net hospitals ........................................................................................................
Non-safety-net hospitals .................................................................................................
Mean plus neutrality modifier (neutrality modifier = 1.0135)
Safety-net hospitals ........................................................................................................
Non-safety-net hospitals .................................................................................................
Budget neutralizing ERR
Safety-net hospitals ........................................................................................................
Non-safety-net hospitals .................................................................................................
Standardized ERR plus neutrality modifier (neutrality modifier = 0.9710)
Safety-net hospitals ........................................................................................................
Non-safety-net hospitals .................................................................................................
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38235
COMPARISON OF PENALTY METRICS BY THRESHOLD METHODS AND PEER GROUP OPTIONS FOR ALL HOSPITALS, SAFETYNET, AND NON-SAFETY-NET HOSPITALS—Continued
Average
payment
reduction
(1¥P) a
(%)
Stratification approach and payment formula methodology
Total Medicare
savings
Payment
adjustment as
a proportion of
all DRG
payments
(%)
Approach 3: Deciles based on the proportion of dual-eligible beneficiaries
Median plus neutrality modifier (neutrality modifier = 0.9555)
Safety-net hospitals ........................................................................................................
Non-safety-net hospitals .................................................................................................
Mean plus neutrality modifier (neutrality modifier = 1.0148)
Safety-net hospitals ........................................................................................................
Non-safety-net hospitals .................................................................................................
Budget neutralizing ERR
Safety-net hospitals ........................................................................................................
Non-safety-net hospitals .................................................................................................
Standardized ERR plus neutrality modifier (neutrality modifier = 0.9713)
Safety-net hospitals ........................................................................................................
Non-safety-net hospitals .................................................................................................
0.51
0.62
91,881,047
441,068,999
0.54
0.64
0.48
0.62
87,289,962
445,653,065
0.51
0.64
0.47
0.62
86,671,374
446,299,280
0.51
0.64
0.49
0.62
90,058,433
442,888,696
0.53
0.64
Notes: Results based on July 1, 2012 through June 30, 2015 discharges among subsection (d) and Maryland hospitals only. Although data
from all subsection (d) and Maryland hospitals are used in calculations of each hospital’s ERR, this table does not include results for Maryland
hospitals. Hospitals are stratified based on the proportion of duals calculated among Medicare FFS and managed care patients for the FY 2017
performance period. Safety-net hospitals are defined as hospitals in the top quintile of DSH patient percentage. DSH patient percentage was calculated among all hospitals with a positive DSH value (including hospitals not eligible for DSH payments).
a The payment reduction shows what percentage of DRG payments hospitals will lose as a result of the program. This is slightly different than
the adjustment factor that CMS applies, which is 1 minus the number reported here (that is, ranges from 0.97 to 1).
b Total Medicare savings is estimated by multiplying the payment reduction by total base operating DRG payments from July 1, 2014 through
June 30, 2015.
c The group share of payment adjustments as a percentage of all DRG payments is calculated as the sum of total Medicare savings for the
group of hospitals (that is, safety-net hospitals or non-safety-net hospitals) divided by total base operating DRG payments from July 1, 2014
through June 30, 2015 for the group of hospitals.
Our analysis also assesses the impact
of the proposed changes to the payment
adjustment formula on additional
groups of hospitals. Variation in the
impact of the proposed changes by
hospital characteristics on the share of
payment adjustments as a percentage of
all DRG payments for the FY 2019
Hospital Readmissions Reduction
Program, is shown in the table below.
The table is based on results when
hospitals are stratified into quintiles
based on the proportion of dual-eligible
beneficiaries among Medicare FFS and
managed care patients discharged
between July 1, 2012, and June 30, 2015,
our preferred approaches. The table
shows the average share of payment
adjustments as a percentage of all DRG
payments for each group of hospitals.
The group average is calculated as the
sum of penalties for all hospitals with
that characteristic over the sum of all
DRG payments for those hospitals
between July 1, 2014 and June 30, 2015.
For example, under the current
methodology, the average share of
payment adjustments as a percentage of
all DRG payments for urban hospitals is
0.61 percent. This means that total
penalties for all urban hospitals is 0.61
percent of total payments for urban
hospitals (that is the ratio of total
penalties to total DRG payments is 0.61
percent). This metric allows us to
compare the financial impact of the
different methods for assessing penalties
between hospitals with different
number of beds even though larger
hospitals tend to generate higher total
Medicare savings because their payment
reduction is applied to more DRG
payments. Measuring the financial
impact on hospitals as a proportion of
total DRG payments allows us to
account for differences in the amount of
DRG payments for hospitals when
comparing the financial impact of the
program on different groups of
hospitals, and allows comparison across
the different methodologies between
groups of hospitals with different
numbers of eligible hospitals.
AVERAGE SHARE OF PAYMENT ADJUSTMENTS AS A PERCENTAGE OF ALL DRG PAYMENTS FOR CONSIDERED
APPROACHES FOR THE HOSPITAL READMISSIONS REDUCTION PROGRAM, BY HOSPITAL CHARACTERISTIC
Number of
hospitals
with
characteristic
sradovich on DSK3GMQ082PROD with RULES2
Hospital characteristics
All Hospitals .............................................
Geographic Location:
Urban ................................................
Rural:
Bed size:
1–99 beds .........................................
100–199 beds ...................................
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Current
methodology
(%)
Median plus
neutrality
modifier
(neutrality
modifier =
0.9546)
(%)
Mean plus
neutrality
modifier
(neutrality
modifier =
1.0135)
(%)
Budget
neutralizing
ERR
(%)
Standardized
ERR plus
neutrality
modifier (neutrality modifier
= 0.9710)
(%)
3,096
0.62
0.62
0.62
0.62
2,304
792
0.61
0.65
0.62
0.62
0.62
0.60
0.62
0.60
0.62
0.60
1,113
886
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0.62
0.57
0.70
0.57
0.70
0.56
0.70
0.56
0.70
0.57
0.70
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AVERAGE SHARE OF PAYMENT ADJUSTMENTS AS A PERCENTAGE OF ALL DRG PAYMENTS FOR CONSIDERED
APPROACHES FOR THE HOSPITAL READMISSIONS REDUCTION PROGRAM, BY HOSPITAL CHARACTERISTIC—Continued
Number of
hospitals
with
characteristic
Hospital characteristics
200–299 beds ...................................
300–399 beds ...................................
400–499 ............................................
500 or more beds .............................
By DSH Payment Eligibility:
Not eligible ........................................
DSH payment eligible .......................
By Teaching Status:
Non-teaching .....................................
Teaching ...........................................
Fewer than 100 residents .................
100 or more residents ......................
By Type of Ownership:
Government ......................................
Proprietary ........................................
Voluntary ...........................................
DSH patient percentage:
1st .....................................................
2nd ....................................................
3rd .....................................................
4th .....................................................
5th .....................................................
MCR Percent:
0–24 ..................................................
25–49 ................................................
50 and over .......................................
Region:
New England ....................................
Middle Atlantic ..................................
South Atlantic ....................................
East North Central ............................
East South Central ...........................
West North Central ...........................
West South Central ..........................
Mountain ...........................................
Pacific ...............................................
Current
methodology
(%)
Median plus
neutrality
modifier
(neutrality
modifier =
0.9546)
(%)
Mean plus
neutrality
modifier
(neutrality
modifier =
1.0135)
(%)
Budget
neutralizing
ERR
(%)
Standardized
ERR plus
neutrality
modifier (neutrality modifier
= 0.9710)
(%)
453
278
155
211
0.65
0.64
0.53
0.57
0.66
0.63
0.54
0.57
0.66
0.63
0.54
0.57
0.66
0.63
0.54
0.57
0.66
0.63
0.54
0.56
474
2,622
0.55
0.63
0.61
0.62
0.65
0.61
0.64
0.61
0.64
0.61
2,076
1,020
772
248
0.66
0.59
0.59
0.57
0.67
0.58
0.60
0.55
0.67
0.58
0.60
0.54
0.67
0.58
0.61
0.54
0.67
0.58
0.60
0.55
490
779
1,827
0.54
0.79
0.59
0.53
0.79
0.59
0.53
0.80
0.59
0.53
0.80
0.59
0.53
0.79
0.59
547
635
646
642
626
0.54
0.66
0.60
0.61
0.64
0.60
0.71
0.61
0.60
0.55
0.63
0.72
0.62
0.59
0.52
0.63
0.72
0.62
0.59
0.52
0.63
0.72
0.61
0.59
0.54
410
2,081
590
0.42
0.63
0.72
0.40
0.63
0.73
0.39
0.63
0.74
0.39
0.63
0.74
0.39
0.63
0.74
130
354
512
482
290
252
487
223
366
0.68
0.86
0.74
0.63
0.76
0.39
0.46
0.36
0.42
0.64
0.83
0.76
0.63
0.79
0.41
0.48
0.39
0.37
0.63
0.83
0.78
0.63
0.80
0.41
0.48
0.40
0.34
0.63
0.83
0.78
0.63
0.80
0.41
0.48
0.40
0.34
0.64
0.83
0.77
0.63
0.79
0.41
0.47
0.39
0.36
sradovich on DSK3GMQ082PROD with RULES2
Source: FY 2017 Hospital Readmissions Reduction Program Final Rule Results. Results are based on July 1, 2012, through June 30, 2015,
discharges among subsection (d) and Maryland hospitals only. Although data from all subsection (d) and Maryland hospitals are used in calculations of each hospital’s Excess Readmission Ratio (ERR), this table does not include results for Maryland hospitals. This table only includes results for hospitals who are eligible for a penalty under the program on the basis of having at least 25 eligible discharges for at least one measure. Hospital Characteristics are based on the FY 2017 final rule Impact File. There were 15 hospitals that did not have MCR percentages in the
FY 2017 final rule Impact File. To calculate the payment adjustment as a proportion of total base operating DRG payments, this analysis used
MedPAR data to calculate the total base operating DRG payments from July 1, 2014 through June 30, 2015. The group average share of payment adjustments as a percentage of all DRG payments is calculated as the sum of all Medicare savings for the group of hospitals divided by
total base operating DRG payments for all hospitals in that group.
We invited public comment on our
preferred proposal and alternative
considerations.
Comment: Many commenters
supported using the median ERR plus
neutrality modifier because a
homogenous group of hospitals are
included in each peer group, the
approach is simple and accurate, it is
not skewed by extreme values, and
provides a more robust threshold.
However, one commenter argued that
budget neutrality should be done at the
national level rather than using a
budget-neutralizing ERR at the peer
group level.
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Response: We thank commenters for
their support. We agree that the peer
group median ERR is a strong threshold.
To clarify, the budget neutralizing ERR
is not calculated only among hospitals
in the peer group. The budget
neutralizing ERR is the ERR
corresponding to the percentile within
each peer group’s distribution of ERRs
that will ensure budget neutrality across
all applicable hospitals.
Comment: One commenter asked
CMS to reconsider the budget neutrality
requirement for the payment adjustment
methodology because it disincentivizes
the overall goal of the program.
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Response: While we understand
commenters’ concerns, one of the
requirements of Public Law 114–255 is
to maintain budget neutrality. For this
reason, we have proposed using the
median ERR as the threshold and
scaling payment adjustments by a
neutrality modifier. Many commenters
expressed support for using the median
ERR plus neutrality modifier. We
believe that adopting the median ERR
plus neutrality modifier methodology
meets our priority to adopt a simplified
and well-known metric that allows us to
be more transparent in our methodology
and reduces the penalty on safety-net
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Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
hospitals. We will continue to monitor
the impact of accounting for dualeligible patients in the Hospital
Readmissions Reduction Program and
evaluate if future changes to include
other variables or adjustments are
needed.
Comment: One commenter noted that,
to calculate the difference between each
hospital’s excess readmission ratio and
the quintile average, CMS must divide
the former by the latter and then
subtract 1 rather than simply subtracting
the latter from the former. The
commenter also argued that it was
essential that CMS modify the quintile
medians to ensure monotonicity to
adhere to the intent of the statute.
Response: We considered many
factors in developing peer groups to
calculate payment adjustments for the
Hospital Readmissions Reduction
Program in response to Public Law 114–
255. These factors included: (1) The
legislative requirements of Public Law
114–255 such as stratification by dual
proportion, budget neutrality, and
immediate implementation; (2)
constructing peer groups that were
consistent across six current measures
and future additional measures, and
were defined consistently over time; (3)
the intent of the program to encourage
efficient, high quality care; and (4) the
impact of peer group definitions on the
distribution of payments to hospital
groups, such as safety-net or rural
hospitals.
The modification to the formula
recommended in the proposed rule, to
use the peer group median to assess
hospital performance, meets these
objectives. The proposed approach
transforms the distribution of excess
readmission ratios by subtracting from it
the difference between the median of
the peer group and the overall median.
The commenter’s proposed alternative
modification, of dividing the excess
readmission ratio by the peer group
median, is consistent with the
formulation of the payment adjustment
as the proportion by which the
hospital’s readmission rate exceeds a
standard rate multiplied by the cost of
admissions. However, we do not agree
that the formula modification must be
performed in this way to be consistent
with the requirements of the legislation
and our objectives. Though
monotonicity is desirable, the proposed
approach, preselecting peer groups of
equal size and choosing the size that
best meets the objectives above with an
unmodified median, is transparent and
effective.
Comment: One commenter
recommended that CMS delay
implementing the payment adjustment
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methodology based on proportion of
dual-eligible patients while better
measures are developed.
Response: We thank the commenter
for its recommendation. However,
Public Law 114–255 requires the
implementation of these changes to
apply to discharges that occur during
and after FY 2019. Public Law 114–255
added section 1886(q)(3)(D) to the Act,
which directs the Secretary to develop
a transitional methodology that
accounts for the percentage of fullbenefit dual-eligible patients treated by
a hospital to determine a hospital’s
payment adjustment factor. Section
1886(q)(3)(D)(i) of the Act sets forth the
requirement that the Secretary assign
hospitals to groups and apply a
methodology that allows for separate
comparison of hospitals within each
such group. This applies to discharges
that occur during and after FY 2019,
until and unless the system is revised
under the authority of section
1886(q)(3)(E)(i) of the Act.
After consideration of the public
comments we received, we are
finalizing, without modification, our
proposal to use the median ERR plus
neutrality modifier.
11. Accounting for Social Risk Factors
in the Hospital Readmissions Reduction
Program
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19966 through
19967), we discussed the accounting for
social risk factors in the Hospital
Readmissions Reduction Program.
Although the program has made steps to
account for social risk factors in this
year’s rule, we understand that social
risk factors such as income, education,
race and ethnicity, employment,
disability, community resources, and
social support (certain factors of which
are also sometimes referred to as
socioeconomic status (SES) factors or
socio-demographic status (SDS) factors)
play a major role in health. One of our
core objectives is to improve beneficiary
outcomes, including reducing health
disparities, and we want to ensure that
all beneficiaries, including those with
social risk factors, receive high quality
care. In addition, we seek to ensure that
the quality of care furnished by
providers and suppliers is assessed as
fairly as possible under our programs
while ensuring that beneficiaries have
adequate access to excellent care.
We have been reviewing reports
prepared by the Office of the Assistant
Secretary for Planning and Evaluation
(ASPE) 27 and the National Academies
27 https://aspe.hhs.gov/pdf-report/reportcongress-social-risk-factors-and-performance-
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38237
of Sciences, Engineering, and Medicine
on the issue of accounting for social risk
factors in CMS’ quality measurement
and payment programs, and considering
options on how to address the issue in
these programs. On December 21, 2016,
ASPE submitted a report to Congress on
a study it was required to conduct under
section 2(d) of the Improving Medicare
Post-Acute Care Transformation
(IMPACT) Act of 2014. The study
analyzed the effects of certain social risk
factors in Medicare beneficiaries on
quality measures and measures of
resource use used in one or more of nine
Medicare value-based purchasing
programs, including the Hospital
Readmissions Reduction Program.28 The
report also included considerations for
strategies to account for social risk
factors in these programs. In a January
10, 2017 report released by the National
Academies of Sciences, Engineering,
and Medicine, that body provided
various potential methods for measuring
and accounting for social risk factors,
including stratified public reporting.29
As noted in the FY 2017 IPPS/LTCH
PPS final rule, the NQF undertook a 2year trial period in which certain new
measures, measures undergoing
maintenance review, and measures
endorsed with the condition that they
enter the trial period were assessed to
determine whether risk adjustment for
selected social risk factors is appropriate
for these measures. This trial entailed
temporarily allowing inclusion of social
risk factors in the risk-adjustment
approach for these measures. We await
the recommendations of the NQF trial
on risk adjustment for quality measures.
As we continue to consider the
analyses and recommendations from
these reports and await the results of the
NQF trial on risk adjustment for quality
measures, we are continuing to work
with stakeholders in this process. As we
have previously indicated, we are
concerned about holding providers to
different standards for the outcomes of
their patients with social risk factors
because we do not want to mask
potential disparities or minimize
incentives to improve the outcomes for
disadvantaged populations. Keeping
this concern in mind, while we sought
input on this topic previously, we
continue to seek public comment on
under-medicares-value-based-purchasingprograms.
28 https://aspe.hhs.gov/pdf-report/reportcongress-social-risk-factors-and-performanceunder-medicares-value-based-purchasingprograms.
29 National Academies of Sciences, Engineering,
and Medicine. 2017. Accounting for social risk
factors in Medicare payment. Washington, DC: The
National Academies Press.
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whether we should account for
additional social risk factors in the
Hospital Readmissions Reduction
Program and, if so, what method or
combination of methods, in addition to
the method of stratification based on
proportion of dual-eligible beneficiaries
in the facility that we are finalizing in
this rule, would be most appropriate for
accounting for social risk factors. We
believe that the path forward should
incentivize improvements in health
outcomes for disadvantaged populations
while ensuring that beneficiaries have
access to excellent care. Examples of
methods include: Confidential reporting
of stratified measure rates to providers;
public reporting of stratified measure
rates; risk adjustment of a particular
measure as appropriate based on data
and evidence; developing readmission
measures or statistical approaches that
are suitable for the reporting of
performance on readmissions; providing
financial incentives for achievement of
low readmission rates for beneficiaries
with social risk factors; and using a
hospital-wide readmissions measure.
While we consider whether and to what
extent we currently have statutory
authority to implement one or more of
the above-described methods, in the FY
2018 IPPS/LTCH PPS proposed rule (82
FR 19966), we sought comments on
whether any of these methods should be
considered, and if so, which of these
methods or combination of methods
would best account for social risk
factors in the Hospital Readmissions
Reduction Program.
In addition, in the proposed rule, we
sought public comment on which social
risk factors might be most appropriate
for stratifying measure scores and/or
potential risk adjustment of a particular
measure. Examples of social risk factors
include, but are not limited to, dual
eligibility/low-income subsidy, race and
ethnicity, and geographic area of
residence. We also sought comments on
which of these factors, including current
data sources where this information
would be available, could be used alone
or in combination, and whether other
data should be collected to better
capture the effects of social risk. We will
take commenters’ input into
consideration as we continue to assess
the appropriateness and feasibility of
accounting for social risk factors in the
Hospital Readmissions Reduction
Program. We note that any such changes
would be proposed through future
notice-and-comment rulemaking.
We look forward to working with
stakeholders as we consider the issue of
accounting for social risk factors and
reducing health disparities in CMS
programs. Of note, implementing any of
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the above methods would be taken into
consideration in the context of how this
and other CMS programs operate (for
example, data submission methods,
availability of data, statistical
considerations relating to reliability of
data calculations, among others);
therefore, we also welcomed comment
on operational considerations. CMS is
committed to ensuring that its
beneficiaries have access to and receive
excellent care, and that the quality of
care furnished by providers and
suppliers is assessed fairly in CMS
programs.
Comment: Numerous commenters
supported adjusting for social risk
factors and recommended that any
methodology support equitable care
delivery while not disproportionately
penalizing certain hospitals.
Commenters cited the importance of
transparency in risk factors related to
any risk adjustment methodology to
meet both aims and discourages the use
of unadjusted data in public reporting
and pay-for-performance. Commenters
agreed with CMS’ approach to stratify
hospitals into peer groups and
recommended that CMS consider
additional social risk factors in addition
to the peer grouping requirements using
dual-eligibility data required by Public
Law 114–255. Commenters
recommended that CMS closely
examine the considerations provided by
National Academy of Medicine (NAM)
for risk adjustment, which recommend
four domains of risk indicators: Income,
education, and dual eligibility; race,
ethnicity, language, and nativity;
marital/partnership status and living
alone; and neighborhood deprivation,
urbanicity, and housing.
Commenters also recommended that
CMS study the relationship between a
hospital’s readmission rates and the
surrounding area’s Health Professional
Shortage Area (HPSA), Type II Diabetes,
hypertension, arthritis, heart disease
and depression to determine if these
factors should be accounted for.
Commenters also suggested focusing on:
Continuing refinement of performance
scoring and measurements to end any
bias to major teaching providers;
continuing development of appropriate
peer groups; develop and apply
appropriate socio-demographic status
adjustments to all the quality risk
programs; and ensuring efficiency in
data reporting. Commenters requested
that CMS lay out a longer-term effort for
testing and refining additional variables
when accounting for social risk factors
due to the wide range of variables that
impact a person’s health outcomes. A
few commenters suggested that CMS use
census data on poverty rates and
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education levels of patients in a
hospital’s service area, two key
indicators of population health per
Healthy People 2020, to adjust a
hospital’s measure score.
Some commenters recommended the
use of confidential patient-reported data
as self-reports offer a reasonably valid
estimate of differences in utilization of
health care between socioeconomic
groups. Commenters requested that
CMS consider providing hospitals with
confidential reports of performance on
accountability measures stratified by
dual-eligible status or other nationally
available data elements. Once hospitals
have had sufficient opportunity to
review and understand their
performance on these stratified
measures, CMS should work with
stakeholders to publicly report this data
in an appropriate fashion. Commenters
further recommend the implementation
of demonstration projects to encourage
hospitals to collect data on social risk
factors through their electronic health
records (EHR).
Some commenters recommended that
CMS start with standard patient
admission information and use the
information from NQF and other
sources to gather additional data,
provide appropriate metrics, risk
models, and risk adjustment strategies.
One commenter suggested that CMS
should consider concurrently quality
and disparities using a two-stage
reimbursement strategy because it can
mitigate unintended consequences
while reducing disparities and
improving quality.
A few commenters recommended that
CMS not use social risk factors to adjust
quality measures and recommended that
CMS first evaluate and learn from the
use of peer groups before additional
adjustment to either the program or
program measures. Commenters noted
that adjusting for social risk factors does
not address the underlying disparities
that are often associated with poor
health outcomes and would mask
potential disparities or minimize
incentives to improve the outcomes for
disadvantaged populations.
Commenters expressed concern
regarding the potential use of a hospitalwide readmission measure to account
for social risk factors, citing the
uncertainty that CMS has the legal
authority to do so and government
reports indicating that it would increase
penalties for all hospitals and increase
the disparity between safety-net and
other hospitals. Commenters stated that
if CMS incorporated the hospital-wide
readmission measure in the Hospital
Readmissions Reduction Program, it
would need to remove the existing six
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measures and do it in a budget-neutral
manner.
One commenter believed that the
readmission measures used in the
Hospital Readmissions Reduction
Program should be risk adjusted for
social risk factors that are associated
with higher readmission rates. The
commenter recommended CMS
undertake analysis that would directly
measure those factors and make
appropriate risk adjustments as part of
the measure calculation.
Response: We thank commenters for
the extensive responses to our request
for public comments on whether we
should account for social risk factors in
the Hospital Readmissions Reduction
Program, and if so, what method or
combination of methods would be most
appropriate for accounting for social
risk factors. We recognize that social
risk factors impact health, and one of
our core objectives is to improve
beneficiary outcomes including
reducing health disparities. In addition,
we seek to ensure that the quality of
care furnished by providers and
suppliers is assessed as fairly as
possible under our programs while
ensuring that beneficiaries receive high
quality care. To this end, we have
closely reviewed reports by the Office of
the Assistant Secretary for Planning and
Evaluation (ASPE) and the National
Academies of Sciences, Engineering,
and Medicine on the issue of accounting
for social risk factors in CMS’ valuebased purchasing and quality reporting
programs. We also await the
recommendations of the recently
concluded NQF trial on risk adjustment
for quality measures. As we have
previously stated, we are concerned
about holding providers to different
standards for the outcomes of their
patients with social risk factors, because
we do not want to mask potential
disparities or minimize incentives to
improve the outcomes for disadvantaged
populations.
Commenters were generally
supportive of how the Hospital
Readmissions Reduction Program is
adopting a methodology for accounting
for dual-eligible patients. However,
commenters also stated concerns such
as the need to: Continue refinement of
performance scoring and measurements
to end any bias to major teaching
providers; continue development of
appropriate peer groups; and work to
develop and apply appropriate sociodemographic status adjustments. Some
recommendations, such as the use of a
hospital-wide readmission measure,
would require a statutory change. We
will consider all suggestions as we
continue to assess each measure and the
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overall program. We intend to explore
options including but not limited to
measure stratification by social risk
factors in a consistent manner across
programs, informed by considerations of
stratification methods described in
section IX.A.13. of the preamble of this
final rule. We thank commenters for this
important feedback and will continue to
consider options to account for social
risk factors that would allow us to view
disparities and potentially incentivize
improvement in care for patients and
beneficiaries. We will also consider
providing feedback to providers on
outcomes for individuals with social
risk factors in confidential reports.
12. Extraordinary Circumstance
Exception (ECE) Policy
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19967), we noted
that many of our quality reporting and
value-based purchasing programs share
a common process for requesting an
exception from program reporting due
to an extraordinary circumstance not
within a provider’s control. The
Hospital IQR, the Hospital OQR, the
IPFQR, the Ambulatory Surgical Center
Quality Reporting (ASCQR), and the
PCHQR Programs, as well as the HAC
Reduction Program, and the Hospital
Readmissions Reduction Program, share
common processes for ECE requests. In
reviewing the policies for these
programs, we recognized that there are
five areas in which these programs have
variance regarding ECE requests. These
are: (1) Allowing the facilities or
hospitals to submit a form signed by the
facility’s or hospital’s CEO versus CEO
or designated personnel; (2) requiring
the form be submitted within 30 days
following the date that the extraordinary
circumstance occurred versus within 90
days following the date the
extraordinary circumstance occurred;
(3) inconsistency regarding specification
of a timeline for us to provide our
formal response notifying the facility or
hospital of our decision; (4)
inconsistency regarding specification of
our authority to grant ECEs due to CMS
data system issues; and (5) referring to
the program as ‘‘extraordinary
extensions/exemptions’’ versus as
‘‘extraordinary circumstances
exceptions.’’ We believe addressing
these five areas, as appropriate, can
improve administrative efficiencies for
affected facilities or hospitals.
In the FY 2016 IPPS/LTCH PPS final
rule (80 FR 49542 through 49543), we
adopted an ECE policy for the Hospital
Readmissions Reduction Program
beginning in FY 2016. This policy was
similar to the ECE policy for the
Hospital IQR Program, as finalized in
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the FY 2012 IPPS/LTCH PPS final rule
(76 FR 51651), modified in the FY 2014
IPPS/LTCH PPS final rule (78 FR 50836)
(designation of a non-CEO hospital
contact), and further modified in the FY
2015 IPPS/LTCH PPS final rule (79 FR
50277) (amended 42 CFR 412.140(c)(2)
to refer to ‘‘extension or exemption’’
instead of the former ‘‘extension or
waiver’’).
We proposed to update these policies
by: (1) Allowing the facility to submit a
form signed by the facility’s CEO or
designated personnel; (2) clarifying that
we will strive to provide our formal
response notifying the facility of our
decision within 90 days of receipt of the
facility’s request; and (3) allowing CMS
to have the authority to grant ECEs due
to CMS data system issues which affect
data submission. These proposed
policies generally align with policies in
the Hospital IQR Program (76 FR 51651
through 51652), (78 FR 50836 through
50837), and (81 FR 57181 through
57182), the Hospital OQR Program (77
FR 68489 and 81 FR 79795), as well as
other quality reporting programs. We
proposed that these policies would
apply beginning in FY 2018 as related
to extraordinary circumstances that
occur on or after October 1, 2017.
We note that there may be
circumstances in which it is not feasible
for a facility’s CEO to sign the ECE
request form. In these circumstances, we
believe that facilities affected by such
circumstances should be able to submit
ECE forms regardless of the CEO’s
availability to sign. This proposed
change would allow hospitals to
designate an appropriate, non-CEO,
contact at its discretion. This individual
would be responsible for the
submission, and would be the one
signing the form. Therefore, we
proposed to accept ECE forms which
have been signed by designated
personnel.
We also believe that it is important for
facilities to receive timely feedback
regarding the status of ECE requests. We
strive to complete our review of each
ECE request as quickly as possible.
However, we recognize that the number
of requests we receive, and the
complexity of the information provided
impacts the actual timeframe to make
ECE determinations. To improve
transparency of our process, we believe
it is appropriate to clarify that we will
strive to complete our review of each
request within 90 days of receipt.
Although we do not anticipate this
situation will happen on a regular basis,
there may be times where CMS
experiences issues with its data systems
that directly affects facilities’ abilities to
submit data. In these cases, we believe
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it would be inequitable to require
facilities to report. Therefore, we
proposed to allow CMS to grant ECEs to
facilities if we determine that a systemic
problem with one of our data collection
systems directly affected the ability of
the facilities to submit data. If we make
the determination to grant ECEs, we
proposed to communicate this decision
through routine communication
channels.
We invited public comment on these
proposed modifications to the
Extraordinary Circumstance Exception
policy.
Comment: Commenters supported the
proposals to modify the extraordinary
circumstances exceptions (ECE) policies
to align across CMS quality reporting
and value-based purchasing programs.
Response: We thank commenters for
their support.
Comment: A few commenters noted
that there currently is no ECE policy for
the Indian Health Service or Triballyoperated programs, although tribal
programs have requested an exception
from CMS in previous fiscal years.
Commenters requested an ECE
specifically for IHS and tribal healthcare
programs.
Response: We appreciate the
commenters’ concern. However, we note
that section 1886(q)(5)(C) of the Act
defines applicable hospitals and
requires all subsection (d) hospitals to
be included in the Hospital
Readmissions Reduction Program. The
ECE policy was not designed to allow a
hospital to seek exclusion from the
Hospital Readmissions Reduction on
Program in its entirety, but to provide
relief for a hospital whose ability to
accurately collect quality measure data
and/or to report those data in a timely
manner has been negatively impacted as
a direct result of experiencing a
significant disaster or other
extraordinary circumstance beyond the
control of the hospital.
After consideration of the public
comments we received, we are
finalizing, without modification, our
proposal to update our extraordinary
circumstances exception policies to
align with other quality reporting
programs.
13. Timeline for Public Reporting of
Excess Readmission Ratios on Hospital
Compare for the FY 2018 Payment
Determination
Section 1886(q)(6) of the Act requires
the Secretary to make information
available to the public regarding
readmission rates of each subsection (d)
hospital under the program, and states
that such information shall be posted on
the Hospital Compare Internet Web site
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in an easily understandable format.
Accordingly, in the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53401), we
indicated that public reporting for
excess readmission ratios could be
available on the Hospital Compare Web
site as early as mid-October. In the FY
2017 IPPS/LTCH PPS final rule (81 FR
56978 through 56979), we clarified that
public reporting of excess readmission
ratios will be posted on an annual basis
to the Hospital Compare Web site as
soon as is feasible following the review
period. This may occur as early as
October, but it could occur later for a
particular year in order to streamline
reporting and align with other hospital
quality reporting and performance
programs.
J. Hospital Value-Based Purchasing
(VBP) Program: Policy Changes
1. Background
a. Statutory Background and Overview
of Past Program Years
Section 1886(o) of the Act, as added
by section 3001(a)(1) of the Affordable
Care Act, requires the Secretary to
establish a hospital value-based
purchasing program (the Hospital VBP
Program) under which value-based
incentive payments are made in a fiscal
year (FY) to hospitals that meet
performance standards established for a
performance period for such fiscal year.
Both the performance standards and the
performance period for a fiscal year are
to be established by the Secretary.
For more of the statutory background
and descriptions of our current policies
for the Hospital VBP Program, we refer
readers to the Hospital Inpatient VBP
Program final rule (76 FR 26490 through
26547); the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51653 through 51660);
the CY 2012 OPPS/ASC final rule with
comment period (76 FR 74527 through
74547); the FY 2013 IPPS/LTCH PPS
final rule (77 FR 53567 through 53614);
the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50676 through 50707); the CY
2014 OPPS/ASC final rule (78 FR 75120
through 75121); the FY 2015 IPPS/LTCH
PPS final rule (79 FR 50048 through
50087); the FY 2016 IPPS/LTCH PPS
final rule with comment period (80 FR
49544 through 49570); the FY 2017
IPPS/LTCH PPS final rule (81 FR 56979
through 57011); and the CY 2017 OPPS/
ASC final rule with comment period (81
FR 79855 through 79862).
We also have codified certain
requirements for the Hospital VBP
Program at 42 CFR 412.160 through
412.167.
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b. FY 2018 Program Year Payment
Details
Section 1886(o)(7)(B) of the Act
instructs the Secretary to reduce the
base operating DRG payment amount for
a hospital for each discharge in a fiscal
year by an applicable percent. Under
section 1886(o)(7)(A) of the Act, the sum
total of these reductions in a fiscal year
must equal the total amount available
for value-based incentive payments for
all eligible hospitals for the fiscal year,
as estimated by the Secretary. We
finalized details on how we would
implement these provisions in the FY
2013 IPPS/LTCH PPS final rule (77 FR
53571 through 53573) and refer readers
to that rule for further details. Under
section 1886(o)(7)(C)(iv) of the Act, the
applicable percent for the FY 2018
program year is 2.00 percent. Using the
methodology we adopted in the FY 2013
IPPS/LTCH PPS final rule (77 FR 53571
through 53573), we estimate that the
total amount available for value-based
incentive payments for FY 2018 is
approximately $1.9 billion, based on the
March 2017 update of the FY 2016
MedPAR file.
As finalized in the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53573
through 53576), we will utilize a linear
exchange function to translate this
estimated amount available into a valuebased incentive payment percentage for
each hospital, based on its Total
Performance Score (TPS). We will then
calculate a value-based incentive
payment adjustment factor that will be
applied to the base operating DRG
payment amount for each discharge
occurring in FY 2018, on a per-claim
basis. We published proxy value-based
incentive payment adjustment factors in
Table 16 associated with the FY 2018
IPPS/LTCH PPS proposed rule (which is
available via the Internet on the CMS
Web site). The proxy factors are based
on the TPS from the FY 2017 program
year.
These FY 2017 performance scores are
the most recently available performance
scores hospitals have been given the
opportunity to review and correct. The
updated slope of the linear exchange
function used to calculate those proxy
value-based incentive payment
adjustment factors is 3.0693696034.
This slope, along with the estimated
amount available for value-based
incentive payments has been updated
based on the March 2017 update of the
FY 2016 MedPAR file, and is published
with this final rule in Table 16A (which
is available via the Internet on the CMS
Web site).
After hospitals have been given an
opportunity to review and correct their
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actual TPSs for FY 2018, we will add
Table 16B (which will be available via
the Internet on the CMS Web site) to
display the actual value-based incentive
payment adjustment factors, exchange
function slope, and estimated amount
available for the FY 2018 program year.
We expect Table 16B will be posted on
the CMS Web site in the fall of 2017.
We strive to put patients first,
ensuring they are empowered to make
decisions about their own healthcare
along with their clinicians using
information from data-driven insights
that are increasingly aligned with
meaningful quality measures. We
support technology that reduces burden
and allows clinicians to focus on
providing high-quality healthcare for
their patients. We also support
innovative approaches to improve
quality, accessibility, and affordability
of care while paying particular attention
to improving clinicians’ and
beneficiaries’ experience when
interacting with our programs. In
combination with other efforts across
the Department of Health and Human
Services, we believe the Hospital VBP
Program helps to incentivize hospitals
to improve healthcare quality and value,
while giving patients and providers the
tools and information needed to make
the best decisions for them. We
recognize that the Hospital VBP
Program represents a key component of
the way that we bring quality
measurement and improvement together
with payment, we have taken efforts to
review existing policies to identify how
to move the program forward in the
least burdensome manner possible
while continuing to incentivize
improvement in the quality of care
provided to patients.
2. Accounting for Social Risk Factors in
the Hospital VBP Program
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19968 through
19969), we discussed accounting for
social risk factors in the Hospital VBP
Program. We understand that social risk
factors such as income, education, race
and ethnicity, employment, disability,
community resources, and social
support (certain factors of which are
also sometimes referred to as
socioeconomic status (SES) factors or
socio-demographic status (SDS) factors)
play a major role in health. One of our
core objectives is to improve beneficiary
outcomes, including reducing health
disparities, and we want to ensure that
all beneficiaries, including those with
social risk factors, receive high quality
care. In addition, we seek to ensure that
the quality of care furnished by
providers and suppliers is assessed as
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fairly as possible under our programs
while ensuring that beneficiaries have
adequate access to excellent care.
We have been reviewing reports
prepared by the Office of the Assistant
Secretary for Planning and Evaluation
(ASPE) 30 and the National Academies
of Sciences, Engineering, and Medicine
on the issue of accounting for social risk
factors in CMS’ value-based purchasing
and quality reporting programs, and
considering options on how to address
the issue in these programs. On
December 21, 2016, ASPE submitted a
Report to Congress on a study it was
required to conduct under section 2(d)
of the Improving Medicare Post Acute
Care Transformation (IMPACT) Act of
2014. The study analyzed the effects of
certain social risk factors in Medicare
beneficiaries on quality measures and
measures of resource use used in one or
more of nine Medicare value-based
purchasing programs, including the
Hospital VBP Program.31 The report also
included considerations for strategies to
account for social risk factors in these
programs. In a January 10, 2017 report
released by the National Academies of
Sciences, Engineering, and Medicine,
that body provided various potential
methods for measuring and accounting
for social risk factors, including
stratified public reporting.32
In the ASPE report noted above, there
is an analysis of and focus on the
Medicare Spending Per Beneficiary
(MSPB) measure, which was adopted by
the Hospital VBP Program beginning
with the FY 2015 program year.33 We
note that the MSPB measure is currently
undergoing endorsement review for
NQF, as part of the 2-year
socioeconomic trial period described
below.34 ASPE’s December 2016 Report
to Congress did not include an analysis
30 https://aspe.hhs.gov/pdf-report/reportcongress-social-risk-factors-and-performanceunder-medicares-value-based-purchasingprograms.
31 https://aspe.hhs.gov/pdf-report/reportcongress-social-risk-factors-and-performanceunder-medicares-value-based-purchasingprograms.
32 National Academies of Sciences, Engineering,
and Medicine. 2017. Accounting for social risk
factors in Medicare payment. Washington, DC: The
National Academies Press.
33 Office of the Assistant Secretary for Planning
and Evaluation. 2016. Report to Congress: Social
Risk Factors and Performance Under Medicare’s
Value-Based Purchasing Programs; Chapter 7: The
Hospital Value-Based Purchasing Program (p. 141–
176). Available at: https://aspe.hhs.gov/pdf-report/
report-congress-social-risk-factors-andperformance-under-medicares-value-basedpurchasing-programs.
34 Medicare Spending Per Beneficiary (MSPB)—
Hospital. See Section 2b.4.5 in National Quality
Forum—Measure Testing. Accessed 2/21/17 from:
https://www.qualityforum.org/
ProjectMeasures.aspx?projectID=83458.
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38241
of the effect of social risk factors on
hospital performance on any conditionspecific payment measures that are
currently adopted for the Hospital VBP
Program beginning with the FY 2021
program year (Hospital-Level, RiskStandardized Payment Associated with
a 30-Day Episode-of-Care for Acute
Myocardial Infarction (AMI Payment)
measure and Hospital-Level, RiskStandardized Payment Associated with
a 30-Day Episode-of-Care for Heart
Failure (HF Payment) measure) (81 FR
56986 through 56990 and 81 FR 56990
through 56992, respectively). We look
forward to ASPE’s continued analyses
in this area, such as the role of frailty
and disability in explaining variation in
hospital episode spending among
Medicare beneficiaries.
As noted in the FY 2017 IPPS/LTCH
PPS final rule, the NQF undertook a 2year trial period in which certain new
measures, measures undergoing
maintenance review, and measures
endorsed with the condition that they
enter the trial period were assessed to
determine whether risk adjustment for
selected social risk factors is appropriate
for these measures. This trial entailed
temporarily allowing inclusion of social
risk factors in the risk-adjustment
approach for these measures. We await
the recommendations of the NQF trial
on risk adjustment for quality measures.
We note that the AMI Payment and
HF Payment measures adopted in the
FY 2017 IPPS/LTCH PPS final rule (81
FR 56987 through 56990 and 81 FR
56990 through 56992, respectively), as
well as the Hospital-Level, RiskStandardized Payment Associated with
a 30-Day Episode-of-Care for Pneumonia
(PN Payment) measure (prior to the
expansion of the measure cohort),
recently underwent successful NQF reendorsement following enrollment in
the NQF’s trial. Based on its review of
these measures during the trial, the NQF
re-endorsed these measures without
modifications to their risk adjustment
methodologies for social risk factors. We
are finalizing our proposal to adopt the
PN Payment measure beginning with
the FY 2022 program year for the
Hospital VBP Program (we refer readers
to section V.J.4.a. of the preamble of this
final rule), and we intend to submit the
measure with the proposed expanded
measure cohort for NQF review during
the measure’s next re-endorsement
review.
As we continue to consider the
analyses and recommendations from
these reports and await the results of the
NQF trial on risk adjustment for quality
measures, we are continuing to work
with stakeholders in this process. As we
have previously communicated, we are
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concerned about holding providers to
different standards for the outcomes of
their patients with social risk factors
because we do not want to mask
potential disparities or minimize
incentives to improve the outcomes for
disadvantaged populations. Keeping
this concern in mind, while we sought
input on this topic previously, we
continue to seek public comment on
whether we should account for social
risk factors in the Hospital VBP
Program, and if so, what method or
combination of methods would be most
appropriate for accounting for social
risk factors. Examples of methods
include: Adjustment of the payment
adjustment methodology under the
Hospital VBP Program; adjustment of
provider performance scores (for
instance, stratifying providers based on
the proportion of their patients who are
dual eligible); confidential reporting of
stratified measure rates to providers;
public reporting of stratified measure
rates; risk adjustment of a particular
measure as appropriate based on data
and evidence; and redesigning payment
incentives (for instance, rewarding
improvement for providers caring for
patients with social risk factors or
incentivizing providers to achieve
health equity).
We note that in section V.I.9. of the
preamble of this final rule, we discuss
considerations for stratifying hospitals
into peer groups for purposes of
assessing payment adjustments under
the Hospital Readmissions Reduction
Program, as required under the 21st
Century Cures Act. We refer readers to
that section for a detailed discussion of
these alternatives; while this discussion
and corresponding proposal are specific
to the Hospital Readmissions Reduction
Program, they reflect the level of
analysis we would undertake when
evaluating methods and combinations of
methods for accounting for social risk
factors in CMS’ other value-based
purchasing programs, such as the
Hospital VBP Program. While we
consider whether and to what extent we
currently have statutory authority to
implement one or more of the abovedescribed methods, in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19969), we sought comments on
whether any of these methods should be
considered, and if so, which of these
methods or combination of methods
would best account for social risk
factors in the Hospital VBP Program.
In addition, in the proposed rule, we
sought public comment on which social
risk factors might be most appropriate
for stratifying measure scores and/or
potential risk adjustment of a particular
measure. Examples of social risk factors
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include, but are not limited to, dual
eligibility/low-income subsidy, race and
ethnicity, and geographic area of
residence. We also sought comments on
which of these factors, including current
data sources where this information
would be available, could be used alone
or in combination, and whether other
data should be collected to better
capture the effects of social risk. We also
welcomed comment on operational
considerations. Of note, implementing
any of the above methods would be
taken into consideration in the context
of how this and other CMS programs
operate (for example, data submission
methods, availability of data, statistical
considerations relating to reliability of
data calculations, among others).
We received extensive comments in
response to our request for public
comment on whether we should
account for social risk factors in the
Hospital VBP Program, and if so, what
method or combination of methods
would be most appropriate for
accounting for social risk factors.
Comment: Commenters were
generally supportive of accounting for
social risk factors at the domain and
measure level for the Hospital VBP
Program in order to avoid penalizing
hospitals for factors beyond their
control or issues with the measures
themselves. These commenters further
stated that because social risk factors
influence health outcomes, failure to
appropriately risk-adjust for these
factors in outcome measures could
result in inadvertent penalties for
hospitals who treat large populations of
socially at-risk patients, and unintended
consequences, such as reduced access to
care for complex patients, due to
provider concern that treating high-risk
patients could negatively affect their
performance rating. Commenters
specifically recommended that CMS
look to risk-adjust for sociodemographic and socioeconomic
factors—such as income, education,
race, payer type, patient travel distance,
homelessness, and language
proficiency—as well as functional status
and frailty. However, commenters also
stated concerns that changing Medicare
payment policies to risk adjust or
stratify measure rates for social risk
factors would not address the
underlying disparities that are often
associated with poor health outcomes,
would mask potential disparities or
minimize incentives to improve the
outcomes for disadvantaged
populations, and may create perverse
incentives for poor performers to
continue with the status quo and for
high performers to retreat from their
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efforts to address disparities in high
social risk factor populations.
Response: We appreciate all the
comments and interest in this topic. As
we have previously stated, we are
concerned about holding providers to
different standards for the outcomes of
their patients with social risk factors,
because we do not want to mask
potential disparities or minimize
incentives to improve outcomes for
disadvantaged populations. We believe
that the path forward should incentivize
improvements in health outcomes for
disadvantaged populations while
ensuring that beneficiaries have access
to excellent care. We intend to consider
all suggestions as we continue to assess
each measure and the overall program.
We appreciate that some commenters
recommended risk adjustment as a
strategy to account for social risk
factors, while others stated a concern
that risk adjustment could minimize
incentives and reduce efforts to address
disparities for patients with social risk
factors. We intend to conduct further
analyses on the impact of strategies such
as measure-level risk adjustment and
stratifying performance scoring to
account for social risk factors including
the options suggested by commenters. In
addition, we appreciate the
recommendations from the commenters
about consideration of specific social
risk factor variables and will work to
determine the feasibility of collecting
these patient-level variables. As we
consider the feasibility of collecting
patient-level data and the impact of
strategies to account for social risk
factors through further analysis, we will
continue to evaluate the reporting
burden on providers. Future proposals
would be made after further research
and continued stakeholder engagement.
3. Retention and Removal of Quality
Measures for the FY 2019 Program Year
a. Retention of Previously Adopted
Hospital VBP Program Measures
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53592), we finalized a policy
to retain measures from prior program
years for each successive program year,
unless otherwise proposed and
finalized. In the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19970), we
did not propose any changes to this
policy.
b. Removal of the PSI 90 Measure
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 56979 through 56981), we
finalized our proposal to shorten the
performance period for the current 35
35 The ‘‘current’’ PSI 90 measure refers to the
version of the PSI 90 measure previously finalized
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PSI 90 measure for the FY 2018 program
year due to concerns associated with
combining measure performance data
that use both ICD–9 and ICD–10 data in
calculating performance scores under
the measure. In that final rule, we
explained our system requires an ICD–
10 risk-adjusted version of the AHRQ
PSI software 36 in order to calculate
scores using ICD–10 codes, and AHRQ
needs a full year of nationally
representative ICD–10 coded data before
it can complete development of riskadjusted models based on a national
reference population for this software.
This means the AHRQ PSI software will
not be available for us to calculate
scores until late CY 2017. More
importantly, we noted an ICD–10
version of the current PSI 90 measure is
not being developed (81 FR 56980), nor
will ICD–10 AHRQ PSI software be
available to calculate performance
scores for the FY 2019 program year (81
FR 56981). As a result, we will not be
able to calculate performance scores for
the current PSI 90 measure for the FY
2019 program year because these scores
would include ICD–10 data. Based on
these concerns, in the FY 2017 IPPS/
LTCH PPS final rule (81 FR 56981), we
signaled our intent to propose to remove
the current PSI 90 measure from the
Hospital VBP Program beginning with
the FY 2019 program year. In the FY
2018 IPPS/LTCH PPS proposed rule (82
FR 19970), we proposed to remove the
current PSI 90 measure from the
Hospital VBP Program beginning with
the FY 2019 program year.
We invited public comment on this
proposal. We also refer readers to
section V.J.4.b. of the preamble of this
final rule where we discuss our
proposal to adopt the modified version
of the PSI 90 measure for the Hospital
VBP Program beginning with the FY
2023 program year.
Comment: The vast majority of
commenters supported CMS’ proposal
to remove the PSI 90 measure from the
Hospital VBP Program beginning with
the FY 2019 program year.
Response: We thank the commenters
for their support.
Comment: Two commenters
supported the removal of PSI 90 from
the Hospital VBP Program measure set,
but recommended CMS remove the
measure immediately and permanently,
including the FY 2018 program year. A
for use in the Hospital VBP Program in the FY 2013
IPPS/LTCH PPS final rule (78 FR 50694).
36 The AHRQ PSI Software is the software used
to calculate PSIs and the composite measure. More
information is available at: https://
www.qualityindicators.ahrq.gov/Downloads/
Resources/Publications/2015/Empirical_Methods_
2015.pdf.
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few commenters noted the measure is
unreliable and lacks appropriate
exclusions based on patient social risk
factors. One commenter stated that only
15 months of data will be available for
the FY 2018 performance period,
questioned the measure’s reliability, and
stated that the measure is flawed.
Another commenter expressed concern
that continued use of the current PSI 90
measure during the FY 2018 program
year while the HAC Reduction Program
implements the modified PSI 90
measure would create confusion and
misalignment across the programs.
Response: While we understand
commenters’ concerns, we previously
decided to retain the currently adopted
version of the PSI 90 measure for the FY
2018 program year because we had the
option to shorten the performance
period so that performance standards
can be calculated using the ICD–9
AHRQ PSI software (81 FR 56981). We
also continue to believe that this
measure meets the program goal of
providing important information on
hospital performance on patient safety
and adverse events. In addition, the PSI
90 measure was developed using a
scientifically rigorous process that
involved the input of technical experts
and stakeholders. Further, AHRQ has
supported a series of validation studies,
based on detailed abstraction of medical
records, that have informed AHRQ’s PSI
development process, including making
further refinements to indicators and
working with others to improve coding
practices. We refer commenters to the
AHRQ PSI Development zip file and
AHRQ Composite Measures Workgroup
document available at: https://
www.qualityindicators.ahrq.gov/
modules/psi_resources.aspx. We
therefore believe that the PSI 90
measure in its current form is reliable,
valid, and appropriate to retain in the
Hospital VBP Program for the FY 2018
program year because it encourages
robust hospital attention to patient
safety. We further believe that a 15month performance period is
sufficiently reliable, particularly in light
of the case minimum of three cases for
any of the underlying PSI 90 indicators
as finalized in the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53609). Because
we believe the measure is sufficiently
reliable with 15 months of data, we do
not believe we need to suspend or
remove the measure or extend the
measure’s performance period for the
FY 2018 program year.
Comment: A few commenters did not
support the removal of PSI 90, stating
that retaining consistency in measures
over time enables hospitals to focus on
improvement and CMS should not
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allow a 3-year lapse in public reporting
of a critical safety measure. One
commenter expressed particular
concern that removing the current PSI
90 measure will result in a
redistribution of the Safety domain
score across the NHSN measures, which
the commenter believed are of limited
value because they allow hospitals to
use different surveillance methods and
have inadequate risk adjustment.
Commenters therefore urged CMS to
look more broadly for opportunities to
accelerate the inclusion of the proposed
Patient Safety and Adverse Events
(Composite) measure into the Hospital
VBP Program, such as suspending the
current PSI 90 measure for one year and
phasing in a 24-month performance
period beginning in FY 2020, or
continuing to include the current PSI 90
measure rather than waiting for the new
measures to become available to ensure
that surgical complications remain a key
component of the Hospital VBP
Program.
Response: We thank the commenters
for their recommendations, but note
that, as discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19970),
we will be unable to calculate measure
scores for the current PSI 90 measure in
the FY 2019 program year because ICD–
10 AHRQ PSI software for the currently
adopted measure will not be available.
This lack of measure calculation
software also precludes us from
suspending the measure for one year
and re-instituting the measure in FY
2020 using only ICD–10 data, because
we will not be able to calculate measure
scores.
Furthermore, due to certain statutory
requirements in the Hospital VBP
Program, we are unable to adopt the
proposed Patient Safety and Adverse
Events (Composite) measure earlier than
proposed. Section 1886(o)(2)(A) of the
Act requires the Hospital VBP Program
to select measures that have been
specified for the Hospital IQR Program.
In addition, section 1886(o)(2)(C)(i) of
the Act requires the Hospital VBP
Program to refrain from beginning the
performance period for a new measure
until data on the measure have been
posted on Hospital Compare for at least
one year. The Hospital IQR Program
finalized adoption of the modified PSI
90 measure (also known as the Patient
Safety and Adverse Events (Composite)
measure) in the FY 2017 IPPS/LTCH
PPS final rule (81 FR 57133), and we are
required to wait one full year after data
has been posted before that measure’s
performance period may begin in the
Hospital VBP Program. Because measure
data for the Patient Safety and Adverse
Events (Composite) measure has not
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been posted on Hospital Compare, we
are unable to adopt the measure for the
FY 2019 program year. However, as
discussed the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19973 through
19974), we proposed to adopt the
Patient Safety and Adverse Events
(Composite) measure beginning with the
FY 2023 program year, which was the
soonest program year possible under the
Hospital VBP Program’s statutory
authority.
After consideration of the public
comments we received, we are
finalizing our proposal to remove the
current PSI 90 measure from the
Hospital VBP Program beginning with
the FY 2019 program year.
c. Summary of Previously Adopted
Measures and Finalized Measure for
Removal for the FY 2019 and FY 2020
Program Years
In summary, for the FY 2019 and FY
2020 program years, we have finalized
the following measure set, which no
longer includes the current PSI 90
measure, as we are finalizing our
proposal to remove the measure from
the Hospital VBP Program beginning
with the FY 2019 program year:
PREVIOUSLY ADOPTED MEASURES AND FINALIZED MEASURE FOR REMOVAL FOR THE FY 2019 AND FY 2020 PROGRAM
YEARS
Measure short name
Domain/measure name
NQF #
Person and Community Engagement Domain *
HCAHPS ....................
Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS)** ...............................
(including Care Transition Measure) ...........................................................................................................
0166
(0228)
Clinical Care Domain
MORT–30–AMI ..........
MORT–30–HF ...........
MORT–30–PN ...........
THA/TKA ...................
Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Acute Myocardial Infarction (AMI) Hospitalization.
Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Heart Failure (HF)
Hospitalization.
Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Pneumonia Hospitalization.
Hospital-Level Risk-Standardized Complication Rate (RSCR) Following Elective Primary Total Hip
Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA).
0230
0229
0468
1550
Safety Domain
CAUTI ........................
CLABSI ......................
Colon and Abdominal
Hysterectomy SSI.
MRSA Bacteremia .....
CDI ............................
PC–01 ........................
National Healthcare Safety Network (NHSN) Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure.
National Healthcare Safety Network (NHSN) Central Line-Associated Bloodstream Infection (CLABSI)
Outcome Measure.
American College of Surgeons—Centers for Disease Control and Prevention (ACS–CDC) Harmonized
Procedure Specific Surgical Site Infection (SSI) Outcome Measure.
National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Methicillin-resistant
Staphylococcus aureus (MRSA) Bacteremia Outcome Measure.
National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Clostridium difficile
Infection (CDI) Outcome Measure.
Elective Delivery ..........................................................................................................................................
0138
0139
0753
1716
1717
0469
Efficiency and Cost Reduction Domain
MSPB ........................
Payment-Standardized Medicare Spending Per Beneficiary (MSPB) ........................................................
2158
* In section IV.H.3.b. of the preamble of the FY 2017 IPPS/LTCH PPS final rule (81 FR 56984), we renamed this domain from Patient- and
Caregiver-Centered Experience of Care/Care Coordination domain to Person and Community Engagement domain beginning with the FY 2019
program year.
** In section XIX.B.3. of the preamble of the CY 2017 OPPS/ASC final rule with comment period (81 FR 79855 through 79862), we finalized
the removal of the Pain Management dimension from the Hospital VBP Program beginning with the FY 2018 program year.
sradovich on DSK3GMQ082PROD with RULES2
4. New Measures for the FY 2022
Program Year, FY 2023 Program Year,
and Subsequent Years
We consider measures for adoption
based on the statutory requirements,
including specification under the
Hospital IQR Program, posting dates on
the Hospital Compare Web site, and our
priorities for quality improvement as
outlined in the current CMS Quality
Strategy, available at: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/QualityInitiativesGenInfo/
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CMS-Quality-Strategy.html. Due to the
time necessary to adopt measures, we
often adopt policies for the Hospital
VBP Program well in advance of the
program year for which they will be
applicable.
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a. New Measure for the FY 2022
Program Year and Subsequent Years:
Hospital-Level, Risk-Standardized
Payment Associated With a 30-Day
Episode-of-Care for Pneumonia (PN
Payment)
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19971 through
19973), we proposed a new measure for
the FY 2022 program year and
subsequent years:
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Hospital-Level, Risk-Standardized
Payment Associated With a 30-Day
Episode-of-Care for Pneumonia (PN
Payment).
(1) Measure Proposal
Hospital-Level, Risk-Standardized
Payment Associated with a 30-Day
Episode-of-Care for Pneumonia (PN
Payment) is a measure assessing
hospital risk-standardized payment
associated with a 30-day episode-of-care
for pneumonia. We adopted this
measure in the Hospital IQR Program in
the FY 2015 IPPS/LTCH PPS final rule
(79 FR 50227 through 50231), and we
adopted an updated version of the
measure, with an expanded cohort and
modified risk-adjustment model, in the
FY 2017 IPPS/LTCH PPS final rule (81
FR 57125 through 57128). For purposes
of describing this measure, the ‘‘cohort’’
is the set of hospitalizations, or ‘‘index
admissions,’’ that meet all of the
measure’s inclusion and exclusion
criteria and, thus, are used to calculate
the total payments Medicare makes on
behalf of these Medicare beneficiaries
for a 30-day episode-of-care. The cohort
for the expanded version of the PN
Payment measure includes Medicare
FFS patients aged 65 or older with: (1)
A principal hospital discharge diagnosis
of pneumonia, including not only viral
or bacterial pneumonia but also
aspiration pneumonia; or (2) a principal
discharge diagnosis of sepsis (but not
severe sepsis) with a secondary
diagnosis of pneumonia (including viral
or bacterial pneumonia and aspiration
pneumonia) coded as present on
admission. The measure calculates
payments for these patients over a 30day episode-of-care, beginning with the
index admission, using administrative
claims data. In general, the measure
uses the same approach to riskadjustment as 30-day outcome measures
previously adopted for the Hospital VBP
Program, including the 30-day PN
mortality measure, MORT–30–PN.
Initial measure data collected under the
Hospital IQR Program for the expanded
PN Payment cohort and modified riskadjustment model will be posted on
Hospital Compare in July 2017, and the
full measure specifications are available
at: https://www.cms.gov/Medicare/
Quality-Initiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html.
Promoting high-value care is an
essential part of our mission to provide
better health care for individuals, better
health for populations, and lower costs
for health care. Our aim is to encourage
higher value care where there is the
most opportunity for improvement, the
greatest number of patients to benefit
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from improvements, and the largest
sample size to ensure reliability.
Pneumonia is one of the leading causes
of hospitalization for Americans aged 65
and over,37 and pneumonia patients
incur roughly $10.2 billion in aggregate
health care costs.38 There is evidence of
variation in payments at hospitals for
pneumonia patients in the proposed PN
Payment measure; median 30-day riskstandardized payment among Medicare
FFS patients aged 65 or older
hospitalized for pneumonia was $15,988
and ranged from $9,193 to $26,546 for
the July 2011 through June 2014
reporting period in the Hospital IQR
Program.39 This variation in payment
suggests there is opportunity for
improvement. We believe it is important
to adopt the PN Payment measure for
the Hospital VBP Program because
variation in payment may reflect
differences in care decision-making and
resource utilization (for example,
treatment, supplies, or services) for
patients with pneumonia both during
hospitalization and immediately postdischarge. The PN Payment measure
specifically addresses the NQS priority
and CMS Quality Strategy goal to make
quality care more affordable.
We recognize high or low payments to
hospitals are difficult to interpret in
isolation. Some high payment hospitals
may produce better clinical outcomes
when compared with low payment
hospitals, while other high payment
hospitals may not produce better
outcomes. For this reason, payment
measure results viewed in isolation are
not necessarily an indication of quality.
However, by viewing such information
along with quality measure results,
consumers, payers, and providers would
be able to better assess the value of care.
In order to incentivize innovation that
promotes high-quality care at high
value, it is important to examine
measures of payment and patient
outcomes concurrently. The proposed
PN Payment measure is intended to be
paired with the MORT–30–PN measure
37 Lindenauer PK, Lagu T, Shieh M, Pekow PS,
Rothberg MB. Association of diagnostic coding with
trends in hospitalizations and mortality of patients
with pneumonia, 2003–2009. JAMA.
2012;307(13):1405–1413.
38 Pfuntner, A (Truven Health Analytics), Wier,
LM (Truven Health Analytics), Steiner, C (AHRQ).
Costs for Hospital Stays in the United States, 2010.
HCUP Statistical Brief #146. January 2013. Agency
for Healthcare Research and Quality, Rockville, MD.
Available at: https://www.hcup-us.ahrq.gov/reports/
statbriefs/sb146.pdf.
39 2016 Reevaluation and Re-Specifications
Report of the Hospital-Level 30-Day RiskStandardized Pneumonia Payment Measure. AMI,
HF, PN Payment Updates (zip file). Available at:
https://www.cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/
HospitalQualityInits/Measure-Methodology.html.
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38245
in the Hospital VBP Program,40 thereby
directly linking payment to quality by
the alignment of comparable
populations and risk-adjustment
methodologies to facilitate the
assessment of efficiency and value of
care. We believe adopting the PN
Payment measure will create stronger
incentives for appropriately reducing
practice pattern variation to achieve the
aim of lowering the cost of care and
creating better coordinated care for
Medicare beneficiaries.
We proposed to adopt the PN
Payment measure beginning with the FY
2022 program year. The PN Payment
measure would be added to the
Efficiency and Cost Reduction domain.
The proposed measure fulfills all of the
statutory requirements for the Hospital
VBP Program based on our adoption of
the measure in the Hospital IQR
Program, and our anticipated posting of
measure data for the refined PN
Payment measure, with the expanded
cohort and modified risk-adjustment
model, on Hospital Compare beginning
July 2017, which would be at least one
year before the beginning of the
proposed performance period of August
1, 2018. We refer readers to sections
V.J.5.c.(3) through V.J.5.c.(5) of the
preamble of this final rule where we
discussed our proposed baseline periods
and performance periods for this
measure if adopted for the Hospital VBP
Program.
The proposed PN Payment measure
(MUC15–378) was reviewed by the MAP
in December 2015 and did not receive
support for adoption into the Hospital
VBP Program.41 The result of the MAP
vote was 31 percent support, 15 percent
conditional support, and 54 percent do
not support. The MAP’s decision of ‘‘do
not support’’ for the proposed PN
Payment measure was based on
concerns that the measure may overlap
with and thereby double count services
that are already captured in the MSPB
measure. In addition, some MAP
members expressed a desire to have
more experience with the measure in
the Hospital IQR Program to understand
40 The Hospital VBP Program first adopted the
MORT–30–PN measure for the FY 2014 program
year in the Hospital Inpatient Value-Based
Purchasing Program final rule (76 FR 26497 through
26511). We subsequently expanded the measure
cohort beginning with the FY 2021 program year in
the FY 2017 IPPS/LTCH PPS final rule (81 FR
56994 through 56996).
41 ‘‘2016 Spreadsheet of Final Recommendations
to HHS and CMS’’ available at: https://
www.qualityforum.org/
ProjectMaterials.aspx?projectID=75367 and
‘‘Process and Approach for MAP Pre-Rulemaking
Deliberations’’ found at: https://
www.qualityforum.org/Publications/2016/02/
Process_and_Approach_for_MAP_Pre-Rulemaking_
Deliberations.aspx.
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whether there may be unintended
consequences or a need to adjust for
social risk factors. We note some MAP
members expressed support for the
proposed PN Payment measure and
other condition-specific payment
measures, expressing that the increased
granularity provided by conditionspecific payment measures will provide
valuable feedback to hospitals for
targeted improvement.
With respect to MAP stakeholder
concerns that treatment- or conditionspecific payment measures may overlap
and double count services, we note that
the proposed PN Payment measure
addresses a topic of critical importance
to quality improvement in the inpatient
hospital setting. As discussed above, we
selected the PN Payment measure
because we believe it is appropriate to
provide stronger incentives for hospitals
to provide high-value and efficient care,
especially for a high-volume condition
such as pneumonia. We acknowledge
that hospitals that do not perform well
on the PN Payment measure may also
perform poorly on the MSPB measure
and potentially receive a lower
incentive payment, depending upon
their performance on other measures.
However, because admissions for
pneumonia make up only a part of all
admissions included in the MSPB
measure, a hospital’s results on the
MSPB measure may not be the same as
their result on the PN Payment measure.
In other words, a hospital’s results for
one measure are not deterministic of its
results of the other, so we cannot state
conclusively that if a hospital performs
well (or poorly) on one measure, that
they will also perform well (or poorly)
on the second measure. Hospitals would
perform differently on the MSPB and
PN Payment measures because these
measures evaluate performance on
different metrics. For example, some
hospitals with poorer results on the
MSPB measure may have better results
on the PN Payment measure allowing
them to improve their overall score. In
addition, the overlap between the MSPB
and PN Payment measures may result in
some hospitals receiving an increased
benefit by performing well on both
measures. Furthermore, if a hospital
does not perform as well on the MSPB
measure relative to other hospitals but
performs very well with respect to its
pneumonia patients on the proposed PN
Payment measure, that hospital would
have the opportunity to earn a higher
score in the Efficiency and Cost
Reduction domain.
Regarding MAP stakeholder concerns
for the need to adjust for social risk
factors, we note the proposed PN
Payment measure already incorporates a
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risk-adjustment methodology that
accounts for age and comorbidities. We
understand the important role social
risk factors play in the care of patients,
routinely monitor the impact of social
risk factors on hospitals’ results on our
measures, and will continue to do so. In
addition, as discussed in section V.J.3.
of the preamble of this final rule, the
original PN Payment measure using the
previous measure cohort (Hospital-level,
risk-standardized payment associated
with a 30-day episode-of-care for
pneumonia (NQF #2579)), as well as the
AMI Payment and HF Payment
measures adopted in the FY 2017 IPPS/
LTCH PPS final rule (81 FR 56987
through 56990 and 81 FR 56990 through
56992, respectively), which use the
same measurement methodology as the
proposed PN Payment measure, recently
underwent successful NQF reendorsement following enrollment in
the NQF’s trial. The NQF re-endorsed
these measures without requesting
modifications to their risk adjustment
methodologies for adjustment by social
risk factors. The proposed PN Payment
measure includes an updated riskadjustment model that accounts for
patient comorbidities, and we intend to
submit to NQF that risk adjustment
model as part of the overall proposed
PN Payment measure specifications
during the next Cost and Resource Use
project.
As noted above, some MAP members
expressed support for the proposed PN
Payment measure and other conditionspecific payment measures, agreeing the
increased granularity provided by
condition-specific payment measures
will provide valuable feedback to
hospitals for targeted improvement. In
addition, a NQF-commissioned white
paper also supports the position that
cost or payment measures should be
interpreted in the context of quality
measures and that measures which link
cost and quality are the preferred
method of assessing hospital
efficiency.42 The PN Payment measure,
which directly pairs with the MORT–
30–PN measure in the Hospital VBP
Program, follows this recommended
approach. Based on our analysis of the
issues surrounding condition-specific
payment measures, we believe the
benefits of adopting the PN Payment
measure outweigh any potential risks;
however, we also remain committed to
monitoring for unintended
consequences.
We invited public comment on this
proposal.
42 Ryan AM, Tompkins CP. Efficiency and Value
in Healthcare: Linking Cost and Quality Measures.
Washington, DC: NQF; 2014.
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Comment: A number of commenters
supported the addition of the PN
Payment measure. A few commenters
supported adoption of the PN Payment
measure because pneumonia is one of
the leading causes of hospitalization for
Americans aged 65 and over, and these
hospitalizations result in high aggregate
costs for patients. Two commenters
expressed particular support for the
measure’s inclusion of patients with a
principal diagnosis of aspiration
pneumonia, or a principal diagnosis of
sepsis with a secondary diagnosis of
pneumonia, because including these
patients addresses stakeholder concerns
regarding variation in coding of
pneumonia as a principal diagnosis in
order to avoid patients being captured
by the pneumonia episode of care
measure. Two other commenters noted
the measure’s alignment with the
National Quality Strategy, and that
tracking of this measure will enable
identification of outlier performers in
managing pneumonia and thereby spur
incorporation of evidence-based
practices for monitoring and managing
pneumonia patients. One commenter
expressed support for CMS’ intention to
focus more strongly on cost as an
element of value in the Hospital VBP
Program.
Response: We thank the commenters
for their support.
Comment: One commenter expressed
support for CMS’ goals in proposing to
adopt the PN Payment measure, but
urged CMS to carefully consider the risk
adjustments used in this measure
because not all pneumonia diagnoses
are comparable and factors outside the
control of hospitals, such as geographic
location, can impact the disease.
Another commenter strongly
recommended that CMS not include the
PN Payment measure in the Hospital
VBP Program because the expansion of
the PN Payment measure cohort to
include patients with a principal
discharge diagnosis of aspiration
pneumonia or sepsis with a secondary
diagnosis of pneumonia coded as
present on admission could make
hospitals that care for complex patients
look worse unless there is appropriate
risk adjustment for social risk factors.
Response: We appreciate the
commenters’ concerns that different
types of pneumonia, such as community
acquired pneumonia and aspiration
pneumonia, have different causes and
associated risks (for example, recurrent
aspiration due to other comorbidities).
While the pathological causes of
aspiration pneumonia are slightly
different from the causes of community
acquired pneumonia, in routine clinical
practice, evidence shows it can be very
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challenging for physicians to
differentiate aspiration syndromes,
including pneumonitis and pneumonia,
from other types of pneumonia included
in the measure.43 44 This is reflected in
the tremendous variation across
hospitals in the use of aspiration
pneumonia diagnosis codes. This
variation suggests that hospitals are not
consistently distinguishing between
these conditions as distinct subtypes
regardless of patients’ comorbid
conditions. Furthermore, we note that
the treatment of patients hospitalized
for pneumonia, aspiration pneumonia,
or sepsis due to pneumonia is very
similar and involves treatment with
antibiotics, IV fluids, and symptom
management.45 In addition, although
some patients with aspiration
pneumonia, such as medically frail
patients, have a higher predicted
mortality risk (that is, are more
complex), many of the associated
comorbidities are captured in the PN
Payment measure’s risk-adjustment
methodology.
With respect to geographic variation,
the incidence of fungal and
mycobacterial infections are strongly
associated with a patient’s area of
residence, and these infections would
be expected to have different outcomes
than typical bacterial and viral
pneumonias, including higher levels of
spending. They also involve different
treatments than those provided to
patients with typical bacterial and viral
pneumonia. These considerations justify
their continued exclusion from the
pneumonia outcome measures.
Although similar arguments might be
applied to the different bacterial
pathogens included in the pneumonia
measure, most treatment of pneumonia
remains empiric, and it is unusual to
identify a specific etiologic agent. For
this reason, we do not believe that is
appropriate to include the specific
bacterial pathogen in risk-adjustment
models.
The risk adjustment model adequately
accounts for the varying severity and
comorbidities of patients across the
modified cohort; therefore, we believe
that hospitals will not be unfairly
penalized for treating sicker patients.
Expanding the measure cohort ensures
that the measure is clinically
comprehensive. Moreover, the treatment
43 Lanspa MJ, Jones BE, Brown SM, Dean NC.
Mortality, morbidity, and disease severity of
patients with aspiration pneumonia. J Hosp Med.
2013 Feb;8(2):83–90. doi: 10.1002/jhm.1996. Epub
2012 Nov 26.
44 Marik PE. Aspiration pneumonitis and
aspiration pneumonia. N Engl J Med. 2001 Mar
1;344(9):665–71.
45 Ibid.
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of patients hospitalized for pneumonia,
aspiration pneumonia, or sepsis due to
pneumonia is very similar and involves
treatment with antibiotics, IV fluids,
and symptom management. In addition,
although some patients with aspiration
pneumonia, such as medically frail
patients, have a higher predicted
mortality risk, many of the associated
comorbidities are captured in the
MORT–30–PN (updated cohort)
measure’s risk-adjustment methodology.
Of note, due to the increased number of
patients that are included in the
expanded cohort, we reselected riskadjustment variables to ensure that the
measure does not bias hospital
performance as well as accounts for the
differences in risk among the subgroup
of patients. For example, the risk model
includes clinical history of stroke, as
well as conditions associated with
frailty, such as neuromuscular disease,
and dementia. The full PN Payment
measure specifications are available at:
https://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html.
Comment: Many commenters did not
support adoption of the PN Payment
measure because it will overlap with the
MSPB measure in the Efficiency and
Cost Reduction domain. A large subset
of these commenters did not support
adoption of the PN Payment measure
because the MAP did not support this
measure for inclusion in the Hospital
VBP Program, and stated their belief
that CMS has not addressed the MAP’s
concerns of double-counting and
overlap with services already captured
by the MSPB measure, which could
potentially penalize hospitals twice for
the same episode. A number of
commenters urged CMS to reconcile this
overlap before adopting the PN Payment
measure by removing episodes of
pneumonia payment from the MSPB
measure calculation. One commenter
expressed concern that the overlap
between the MSPB and proposed PN
Payment measures may send mixed
signals to hospitals about their resource
use performance. One commenter also
noted that it will be possible for
hospitals to score well on the MSPB
measure, but poorly on the conditionspecific payment measures, even though
the measures will capture many of the
same services.
Response: While we acknowledge that
there may be some overlap between the
MSPB and condition-specific payment
measures, including the PN Payment
measure, we believe that the conditionspecific measures are of critical
importance to improving efficiency of
care. We selected the PN Payment
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measure for the Hospital VBP Program
because pneumonia is one of the leading
causes of hospitalization for Americans
aged 65 and over,46 and pneumonia
patients incur roughly $10 billion in
aggregate health care costs.47 Including
condition-specific measures alongside
the MSPB measure provides hospitals
with actionable feedback that will better
equip them to implement targeted
improvements, in comparison to an
overall payment measure alone.
Moreover, these condition-specific
measures will allow consumers,
providers, and payers to make a more
fully informed assessment of value of
care.
As we noted in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19972),
because admissions for pneumonia
make up only a part of all admissions
included in the MSPB measure, a
hospital’s results on the MSPB measure
may not be the same as their result on
the PN Payment measure, and hospitals
would perform differently on the MSPB
and PN Payment measures because
these measures evaluate performance on
different metrics. In other words, a
hospital’s results for one measure are
not deterministic of its results of the
other, so we cannot state conclusively
that if a hospital performs well (or
poorly) on one measure, that they will
also perform well (or poorly) on the
second measure. We believe that even if
some services were double counted,
hospitals that offer quality service and
maintain better results on the MSPB and
condition-specific payment measures
relative to other hospitals in the
Hospital VBP Program could receive an
increased benefit by performing well on
both quality measures and payment
measures. Furthermore, because
hospitals would have bigger financial
incentives, they would strive to perform
better, which would lead to better
quality.
In addition, we note that the PN
Payment measure already incorporates a
risk-adjustment methodology that
accounts for age and comorbidities,
discussed in more detail below. We
understand the important role social
risk factors play in the care of patients,
routinely monitor the impact of social
46 Lindenauer PK, Lagu T, Shieh M, Pekow PS,
Rothberg MB. Association of diagnostic coding with
trends in hospitalizations and mortality of patients
with pneumonia, 2003–2009. JAMA.
2012;307(13):1405–1413.
47 Pfuntner, A (Truven Health Analytics), Wier,
LM (Truven Health Analytics), Steiner, C (AHRQ).
Costs for Hospital Stays in the United States, 2010.
HCUP Statistical Brief #146. January 2013. Agency
for Healthcare Research and Quality, Rockville, MD.
Available at: https://www.hcup-us.ahrq.gov/reports/
statbriefs/sb146.pdf.
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risk factors on hospitals’ results on our
measures, and will continue to do so.
Comment: A number of commenters
did not support adoption of the PN
Payment measure because the measure
is not risk-adjusted to account for sociodemographic status factors. Some of
these commenters expressed further
concern that the measure is not riskadjusted to account for socioeconomic
status factors. One commenter stated
that previous testing of the measure
should have included additional social
risk factors, such as community
characteristics. One commenter stated
that it is premature to adopt the PN
Payment measure without the NQF SDS
trial results. Another commenter
acknowledged the PN Payment measure
was reviewed as part of the NQF’s SDS
trial and NQF’s evaluation indicated
that SDS adjustment was not necessary,
but recommended that CMS continue to
examine the impact of socioeconomic
factors on measure performance under
the PN Payment measure and
incorporate adjustments as needed. A
third commenter encouraged CMS to
continue to engage with stakeholders
regarding the inclusion of social risk
factors for the PN Payment measure,
noting that specific risk factors often
lead to worse outcomes, so providing
care may cost more and make it more
difficult for hospitals to achieve high
performance on quality measures.
Response: We acknowledge
commenters’ concerns that the proposed
PN Payment measure is not properly
risk-adjusted and we understand the
important role that socio-demographic
status plays in the care of patients;
however, we continue to believe the PN
Payment measure’s risk-adjustment
methodology is appropriate and reliable.
As we noted in the FY 2018 IPPS/LTCH
PPS proposed rule, the proposed
measure already incorporates a riskadjustment methodology that accounts
for age and comorbidities and we intend
to submit to NQF that risk adjustment
model as part of the overall proposed
PN Payment measure specifications
during the next Cost and Resource Use
project. We also continue to have
concerns about holding hospitals to
different standards for the outcomes of
their patients of diverse sociodemographic status because we do not
want to mask potential disparities or
minimize incentives to improve the
outcomes of disadvantaged populations.
In addition, as discussed in section
V.J.3. of the preamble of this final rule,
the original PN Payment measure using
the previous measure cohort (Hospitallevel, risk-standardized payment
associated with a 30-day episode-of-care
for pneumonia (NQF #2579)), as well as
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the AMI Payment and HF Payment
measures adopted in the FY 2017 IPPS/
LTCH PPS final rule (81 FR 56987
through 56990 and 81 FR 56990 through
56992, respectively), which use the
same measurement methodology as the
proposed PN Payment measure, recently
underwent successful NQF reendorsement following enrollment in
the NQF’s trial. The NQF 2-year trial
period allowed for the temporary
inclusion of socio-demographic factors
in the risk-adjustment approach for
some performance measures. This trial
period considered the analyses and
interpretations as well as performance
scores with and without sociodemographic factors in the riskadjustment model. NQF’s evaluation
indicated that SDS adjustment was not
necessary for this measure. We routinely
monitor the impact of sociodemographic status on hospitals’ results
on our measures and, as noted in
section V.J.2. of the preamble of this
final rule where we discuss accounting
for social risk factors in the Hospital
VBP Program, we will conduct further
research and continue engaging
stakeholders as we assess the
appropriateness of any specific
strategies such as measure-level risk
adjustment or stratified performance
scoring.
We also thank commenters for their
recommendation that we engage with
stakeholders regarding risk adjustments
for the PN Payment measure, and note
we routinely solicit public comment on
our payment measures and other
measures under development. For
current and future opportunities, we
encourage the commenter to visit the
CMS Quality Measures Public Comment
page at: https://www.cms.gov/Medicare/
Quality-Initiatives-Patient-AssessmentInstruments/MMS/CallforPublic
Comment.html. In addition, there are
opportunities for stakeholders to serve
on Technical Expert Panels and provide
technical input to CMS and the measure
contractors on the development,
selection, and maintenance of measures.
We refer the commenter to the following
Web site for more information: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/MMS/Technical
ExpertPanels.html.
Comment: Some commenters did not
support the addition of conditionspecific payment measures because the
commenters believed the measures
inappropriately assign costs to the
hospitals. A few commenters noted that
variations in Medicare payments are
due primarily to readmission rates and
post-acute care. One commenter further
noted that post-acute care use varies due
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to wide-ranging differences in local
market availability of these services and
patterns of care, which are not within
the hospital’s control. Two commenters
recommended that CMS work with the
hospital community to develop and
implement efficiency metrics of
spending that hospitals directly
influence because the current and
proposed condition-specific payment
measures include physician spending
and preferences, which are beyond the
control of the hospital. One commenter
recommended limiting inclusion of
payments used in the calculation of the
measures to only payment directly
related to the condition-specific index
admission, because the commenter
believed this would be a more accurate
proxy for factors within a hospital’s
control than all spending over a 30-day
period.
Response: We continue to believe that
hospitals that provide quality inpatient
care and conduct appropriate discharge
planning can work with providers and
suppliers in coordinating efficient
follow-up care. When examining
variation in payments, consideration of
the episode-of-care triggered by
admissions is meaningful for several
reasons. First, hospitalizations represent
a brief period of a patient’s illness that
require ongoing management post
discharge, and decisions made at the
admitting hospital affect payments for
care in the immediate post discharge
period. Second, attributing payments for
a continuous episode-of-care to
admitting hospitals may reveal practice
variations in the full care of the patient’s
illness that can result in increased
payments. Third, a 30-day preset
window provides a standard
observation period by which to compare
all hospitals. Lastly, we note the PN
Payment measure is intended to be
paired with the MORT–30–PN measure
to capture payments for Medicare feefor-service patients age 65 and older
across all care settings, services, and
supplies (that is, inpatient, outpatient,
skilled nursing facility, home health,
hospice, physician/clinical laboratory/
ambulance services, durable medical
equipment, prosthetics/orthotics, and
supplies).
We thank commenters for the
recommendations and note that we have
developed, and will continue to
develop, efficiency measures in
consultation with clinical and
measurement experts, key stakeholders
(including the hospital and patient
communities), and the public. We
disagree with commenters that all
payment measures should be limited to
only payments directly related to the
index admission because, as noted
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above, we continue to believe that
inclusion of payments on a broad range
of services incentivizes quality care and
care coordination. The intensity of
services needed for patients after an
inpatient stay may be the result of
quality failures during the stay that led
to poor clinical outcomes.
Comment: A few commenters did not
support adoption of the proposed PN
Payment measure due to concerns about
the measure’s validity and reliability.
One commenter asserted that because
not all hospitals will have sufficient
volume to be scored on each conditionspecific payment measure, the statistical
reliability of those measures’ scores will
likely be lower than the MSPB measure
and, as a result, provide a less useful
picture of hospital performance.
Another commenter recommended that
CMS not adopt the PN Payment measure
because the measure’s population is too
small to be stable, reliable, or
meaningful for many smaller facilities.
A third commenter cautioned against
implementation of the PN Payment
measure without conclusive evidence
that the measure is clinically and
statistically fair and meaningful. One
commenter recommended that if CMS
chooses to finalize the PN Payment
measure, it use the years leading up to
FY 2022 to ensure the validity of the
measure and resolve MAP stakeholder
concerns about incorporating social risk
factors into the measure to improve
quality of care while not unduly
penalizing essential hospitals.
Response: We disagree with the
commenter that hospitals will not be
able to report statistically reliable
information on the condition-specific
payment measures because, as
discussed in section V.J.7.c.(5) below,
hospitals must report a minimum
number of 25 cases to receive a payment
measure score. We believe the case
minimum will ensure that each
hospital’s payment measure rate is
sufficiently reliable to generate a score
that meaningfully distinguishes hospital
performance on the measures. We also
disagree with the commenter’s assertion
that the statistical reliability of the
condition-specific payment measures is
likely to be weaker than the MSPB
measure. The statistical model that we
use to calculate the payment measures
allows for the inclusion of hospitals
with relatively few cases by taking into
account the uncertainty associated with
sample size. In addition, we note the PN
Payment measure uses longer baseline
and performance periods than the MSPB
measure (three years instead of a single
year) in order to increase the measure’s
sample size and ensure sufficiently
reliable measure results.
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Comment: A number of commenters
expressed concern that the PN Payment
measure, without a linkage to a quality
measure, is purely focused on payment
for pneumonia episodes of care and
therefore does not reflect
appropriateness of care. A few
commenters expressed concern that the
PN Payment measure is not an indicator
of value because it does not capture the
quality of care provided and is not
paired with measures that do so. Other
commenters expressed concern about
the inclusion of additional payment
measures in the Hospital VBP Program
and stated their belief that conditionspecific payment measures themselves
do not provide insight into where
improvements need to be made in the
delivery of care across the continuum of
care. Three commenters further stated
these measures do not give beneficiaries
a sense of their financial obligation. A
few commenters agreed with CMS’
stated intent to interpret the conditionspecific payment measures alongside
corresponding quality measures, but
asserted that adopting the payment and
quality measures separately instead of
directly linking the information from
each measure will not provide an
assessment of value. One commenter
acknowledged CMS’ intent to link the
PN Payment and MORT–30–PN
measures, but stated there are outcomes
other than mortality relevant to
understanding the quality and cost of
care that pneumonia patients receive in
the hospital.
Response: We disagree with the
commenters who believed that the PN
Payment measure, and conditionspecific payment measures more
generally, will not provide hospitals
with actionable data for quality
improvement efforts. By adopting
condition-specific payment measures
and viewing results alongside quality
measure results, we believe that
consumers, payers, and providers will
be able to better assess the overall value
of care provided at a hospital. We also
believe that adopting condition-specific
payment measures for the Hospital VBP
Program that are directly paired with
clinical outcome measures, aligned by
comparable populations, performance
periods, or risk-adjustment
methodologies, helps move toward
achievement of this goal. We also
believe that adopting condition-specific
payment measures (for example, the
MORT–30–PN measure) will create
stronger incentives for appropriately
reducing practice pattern variation to
achieve the aim of lowering the cost of
care and creating better coordinated care
for Medicare beneficiaries.
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Comment: Two commenters
expressed concern that the PN Payment
measure’s focus on reducing cost will
not necessarily lead to or provide
measurable proof of improved patient
care and outcomes. One commenter
expressed concern that focusing on costeffectiveness will overshadow patients’
needs during a care episode. One
commenter expressed concern that
measures focusing solely on the cost of
care without consideration of overall
quality create incentives for hospitals to
cut costs without consideration of
patients’ unique needs. The commenter
recommended that CMS work with
hospitals and other stakeholders to
ensure that existing and future episodebased measures align with the objectives
of creating efficiency and economy in
the Medicare program and to
appropriately tailor measures in the
Hospital VBP Program to support these
objectives.
Response: We understand
commenter’s concern that conditionspecific payment measures, viewed in
isolation, may create an incentive for
hospitals to focus on reducing costs
without accounting for potential
impacts on the quality of care provided.
We also agree the PN Payment measure
as a standalone measure is not designed
to assess improvements in patient care
or outcomes. However, we note that the
Hospital VBP Program explicitly
proposed to adopt the PN Payment
measure for interpretation alongside the
previously finalized MORT–30–PN
measure, thereby linking the conditionspecific payment measure with a
measure of quality of care. We believe
that adding the PN Payment measure,
paired with the MORT–30–PN measure,
will provide actionable feedback to
hospitals on the overall value of their
services to beneficiaries. In addition, we
note that the Hospital VBP Program
scoring methodology takes into account
both quality and cost of care by
weighting the quality domains at 75
percent of a hospital’s TPS and the
Efficiency and Cost Reduction domain
at 25 percent of a hospital’s TPS. We
thank commenters for the
recommendations and note that we have
developed, and will continue to
develop, efficiency measures in
consultation with clinical and
measurement experts, key stakeholders
(including the hospital community), and
the public.
Comment: A few commenters strongly
recommended that CMS not include the
PN Payment measure because hospital
performance on the measure will not be
publicly reported until after the public
comment period for the FY 2018 IPPS/
LTCH PPS proposed rule has ended.
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Commenters noted that publicly
reporting measures provides
transparency on provider performance,
allows hospitals to gain experience
submitting data for the measure, and
allows time to identify errors,
unintended consequences, or other
concerns with the measure
methodology. One commenter asserted
that stakeholders are unable to provide
sufficient feedback on the PN Payment
measure without access to publicly
reported data on this measure. One
commenter stated that all measures
should be publicly reported under the
Hospital IQR Program for one year
before being considered for inclusion in
the Hospital VBP Program.
Response: While we understand
stakeholders’ desire to see performance
data from the PN Payment measure
before deciding whether to adopt this
measure for the Hospital VBP Program,
we note that, as discussed in the FY
2018 IPPS/LTCH PPS proposed rule, the
measure has undergone extensive
testing and has been determined to be
both reliable and valid. Furthermore, we
note that the proposed adoption of this
measure before its public reporting on
Hospital Compare did not preclude
hospitals from submitting questions and
comments on the measure to CMS.
Publicly reported PN Payment measure
data became available on July 26, 2017,
and we encourage hospitals, providers,
patients, and other stakeholders to
review these data. We further note the
PN Payment measure is not proposed
for implementation in the Hospital VBP
Program until the FY 2022 program year
with a performance period of August 1,
2018 through June 30, 2020; we believe
the time period before implementation
provides hospitals with sufficient time
to become familiar with the measure’s
specifications and reporting
requirements before performance on the
PN Payment measure is reflected in
hospitals’ TPSs.
We further disagree that, absent
publicly reported performance data,
hospitals lack sufficient information to
comment on the proposed adoption of
the PN Payment measure. In proposing
to adopt this measure, CMS provided a
full description of the measure’s
specifications and its development
history, explained how the proposal
satisfied the requirements of the statute,
and provided links to additional sources
of in-depth information regarding the
detailed specifications for this measure.
In addition, performance data for the PN
Payment measure using the original
cohort has been publicly available for
hospitals’ review on Hospital Compare
since July 2015. We therefore believe
commenters had sufficient information
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to use in reviewing the PN Payment
measure, allowing them to comment
meaningfully on its proposed adoption.
Comment: One commenter did not
support CMS’ proposal to adopt the PN
Payment measure because the
commenter believed CMS lacks a
mechanism to provide claims data to
hospitals in a timely manner for use in
performance improvement activities
under the condition-specific payment
measure. The commenter further stated
that risk-standardized measures are
difficult to track using hospitals’
internal data due to a lack of insight into
care and payments provided outside of
the hospital. Another commenter
requested that CMS make the claims
data for the measure available to
hospitals on a more timely basis to
allow hospitals to review the current
spending per episode and make the
necessary changes in improving
processes.
Response: We acknowledge the
commenter’s concern that hospitals’
internal data only include care provided
at their hospital and the payments made
on behalf of the patient for that care,
whereas the PN Payment measure is
designed to capture the full spectrum of
care provided during and for 30 days
following the index hospitalization. We
therefore provide confidential, hospitalspecific reports to each hospital on this
and other claims-based outcome
measures, which for the payment
measures provides hospitals with
additional information about care their
patients received following discharge.
The type of follow-up care patients
receive is often influenced by the
discharging hospital (for example,
discharge to a skilled nursing facility or
provision of home health care) which
will then impact the cost of care for the
30 days captured by the measure.
We recognize that there is a delay in
reporting the claims data because this
measure reports hospitals’ results on a
yearly basis, but we believe using the
available annual data would enable
hospitals to improve their performance
year-over-year. We note that we
previously addressed this concern in the
FY 2013 IPPS/LTCH PPS final rule (77
FR 53380) in the context of the Hospital
Readmissions Reduction Program. In
addition, we note that the Hospital VBP
Program uses a 90 day ‘‘run-out’’ period
following the last date of discharge used
in the performance period for purposes
of calculating claims-based measure
rates (77 FR 53579 through 53580). This
‘‘run-out’’ period balances our desire to
provide hospitals with timely quality
data for the purpose of quality
improvement and the need to have as
complete a data set as possible for
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measure calculations. After we run the
data and create the data extract for
purposes of calculating the measure rate
for a claims-based measure, it takes
several months to incorporate other data
needed to complete the rate calculation;
generate and check the rate calculations;
and program, populate, and deliver the
confidential reports and accompanying
data to hospitals. As a result, we cannot
provide the PN Payment hospitalspecific reports earlier than the spring
following the end of the performance
period.
Comment: One commenter
recommended that instead of adding the
PN Payment measure to the Hospital
VBP Program now, CMS should first
examine methods of pairing cost and
payment measures so that they signal
value to beneficiaries.
Response: We believe that adding the
PN Payment measure now will provide
actionable feedback to hospitals on the
overall value of their services to
pneumonia patients as both payment
data and mortality data would be made
available through the Hospital VBP
Program. We note that we solicited
comments on methods of accounting for
value of care in the Hospital VBP
Program scoring methodology in the FY
2017 IPPS/LTCH PPS proposed rule (81
FR 25105 through 25106), and discussed
comments received in the FY 2017
IPPS/LTCH PPS final rule (81 FR 56993
through 56994). We are continuing to
evaluate the feasibility of incorporating
condition- or procedure-specific
assessments of value in the Hospital
VBP Program scoring methodology. We
also note currently for public reporting
purposes our Hospital Compare Web
site shows individual hospital’s results
for the payment (AMI, HF, and PN
Payment) measures and corresponding
mortality measures together to assess
the value of care.48
Comment: One commenter
recommended that CMS develop a plan
for incorporating additional measures of
efficiency and either focus on conditionspecific payment measures or global
efficiency measures, without
overlapping.
Response: We thank the commenter
for this recommendation, and will take
this into consideration in future years of
the program.
(2) Scoring Methodology for the PN
Payment Measure
We proposed to calculate the PN
Payment measure using the same
methodology we use to score the MSPB
measure and, as finalized in the FY
48 https://www.medicare.gov/hospitalcompare/
Data/Value-of-care.html.
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2017 IPPS/LTCH PPS final rule (81 FR
56992 through 56993), the AMI Payment
and HF Payment measures so that all
measures in the Efficiency and Cost
Reduction domain are scored in the
same manner. We note for these
measures that lower values represent
better performance.
For achievement points, we proposed
to calculate a spending ratio of PN
spending for each hospital to the
median PN spending across all hospitals
during the performance period. We
would then use each hospital’s PN
spending ratio to calculate between 0
and 10 achievement points. We
proposed to set the achievement
threshold at the median PN spending
ratio across all hospitals during the
performance period. Because lower
values represent better performance
under the proposed PN Payment
measure, we proposed to set the
benchmark at the mean of the lowest
decile of the PN spending ratios during
the performance period. Therefore, if a
hospital’s individual PN spending ratio
falls above the achievement threshold,
the hospital would score 0 achievement
points on the measure. If a hospital’s
individual PN spending ratio falls at or
below the benchmark, the hospital
would score the maximum 10
achievement points on the measure. If a
hospital’s individual PN spending ratio
falls at or below the achievement
threshold but above the benchmark, the
hospital would score between 1 and 9
points according to the following
formula:
[9 * ((achievement
threshold¥Hospital’s performance
period ratio)/(achievement
threshold¥benchmark))] + 0.5
For improvement points, we proposed
to calculate a spending ratio of PN
spending for each hospital to the
median PN spending across all hospitals
during the performance period. We
would then use each hospital’s PN
spending ratio to calculate between 0
and 9 improvement points by
comparing each hospital’s ratio to its
own performance during the baseline
period. Again, because lower values
represent better performance under the
proposed PN Payment measure, we
proposed to set the benchmark as the
mean of the lowest decile of PN
spending ratios across all hospitals.
Therefore, if a hospital’s PN spending
ratio is equal to or higher than its
baseline period ratio, the hospital would
score 0 improvement points on the
measure. If a hospital’s score on the
measure during the performance period
is less than its baseline period score but
above the benchmark, the hospital
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would receive a score of 0 to 9
according to the following formula:
[10 * ((Hospital baseline period
ratio¥Hospital performance period
ratio)/(Hospital baseline period
ratio¥benchmark))]¥0.5
We note that if a hospital scores at or
below the benchmark on the
achievement scoring methodology, that
hospital will receive the maximum 10
points for this measure. As a result, the
hospital would not receive an
improvement score for this measure.
For more information about the
proposed scoring methodology for the
proposed PN Payment measure, we refer
readers to section IV.B.3.b. of the
preamble of the FY 2012 IPPS/LTCH
PPS final rule (76 FR 51654 through
51656) where we discuss the MSPB
measure’s identical scoring
methodology in detail.
We invited public comment on the
proposed scoring methodology for the
proposed PN Payment measure.
We did not receive any public
comments specific to the proposed
scoring methodology for the proposed
PN Payment measure. After considering
all of the comments received regarding
the proposed adoption of the PN
Payment measure in the Hospital VBP
Program as discussed above, we are
finalizing our proposal to adopt the PN
Payment measure beginning with the FY
2022 program year as proposed.
b. New Measure for the FY 2023
Program Year and Subsequent Years:
Patient Safety and Adverse Events
(Composite) (NQF #0531)
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19973 through
19974), we proposed a new measure for
the FY 2023 program year and
subsequent years: Patient Safety and
Adverse Events (Composite) (NQF
#0531).
The current PSI 90 measure
previously adopted for the Hospital VBP
Program underwent NQF maintenance
review and re-endorsement in 2015,
leading to several substantive measure
changes.49 Due to statutory
requirements in the Hospital VBP
Program,50 we were unable to adopt the
49 National Quality Forum QPS Measure
Description for ‘‘Patient Safety for Selected
Indicators (modified version of PSI 90) (Composite
Measure)’’ found at: https://www.qualityforum.org/
QPS/MeasureDetails.aspx?standardID=321&print=
0&entityTypeID=3; and PSI 90 Fact Sheet found at:
https://www.qualityindicators.ahrq.gov/News/
PSI90_Factsheet_FAQ_v2.pdf (we note that this fact
sheet is written from an all-payer perspective, and
is therefore not limited to the measure as used in
the Medicare FFS population).
50 First, section 1886(o)(2)(A) of the Act requires
the Hospital VBP Program to select measures that
have been specified for the Hospital IQR Program.
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newly re-endorsed version of the PSI 90
measure in the FY 2017 IPPS/LTCH PPS
final rule (81 FR 56981), but stated our
intent to propose to adopt the modified
version of the PSI 90 measure in future
rulemaking. In section V.J.3.b. of the
preamble of this final rule, we discuss
our proposal to remove the current PSI
90 measure from the Hospital VBP
Program beginning with the FY 2019
program year due to the operational
constraints associated with calculating
measure scores for the current measure
for FY 2019 and subsequent years.
Because of the priority of improving
patient safety and reducing adverse
events during inpatient stays, and with
substantive refinements made to the
measure in response to feedback as
further described below, in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19973 through 19974), we proposed to
adopt a modified version of the current
PSI 90 measure, entitled Patient Safety
and Adverse Events (Composite) (NQF
#0531), for the Hospital VBP Program
for the FY 2023 program year and
subsequent years.
The Hospital IQR Program adopted
this measure in the FY 2017 IPPS/LTCH
PPS final rule (81 FR 57128 through
57133),51 beginning with the FY 2018
payment determination, and we intend
to publicly report initial measure data
on the measure on Hospital Compare in
the fall of 2017. The full measure
specifications are available at: https://
www.qualityindicators.ahrq.gov/
Modules/PSI_TechSpec_ICD09_
v60.aspx.
The Patient Safety and Adverse
Events (Composite) measure is a
weighted average of the reliabilityadjusted, indirectly standardized,
observed-to-expected ratios for the
following 10 individual PSI component
indicators:
• PSI 03 Pressure Ulcer Rate;
• PSI 06 Iatrogenic Pneumothorax
Rate;
• PSI 08 In-Hospital Fall with Hip
Fracture Rate; 52
• PSI 09 Perioperative Hemorrhage or
Hematoma Rate; *
Second, section 1886(o)(2)(C)(i) of the Act requires
the Hospital VBP Program to refrain from beginning
the performance period for a new measure until
data on the measure have been posted on Hospital
Compare for at least one year. Finally, section
1886(o)(3)(C) of the Act requires that the Hospital
VBP Program establish performance standards for
each measure not later than 60 days prior to the
beginning of the performance period.
51 We note that the HAC Reduction Program also
adopted this measure in the FY 2017 IPPS/LTCH
PPS final rule (81 FR 57013 through 57030).
52 Previously titled ‘‘Postoperative Hip Fracture’’
prior to v6.0.
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• PSI 10 Postoperative Acute Kidney
Injury Requiring Dialysis Rate;* 53
• PSI 11 Postoperative Respiratory
Failure Rate; *
• PSI 12 Perioperative Pulmonary
Embolism (PE) or Deep Vein
Thrombosis (DVT) Rate;
• PSI 13 Postoperative Sepsis Rate;
• PSI 14 Postoperative Wound
Dehiscence Rate; and
• PSI 15 Unrecognized
Abdominopelvic Accidental Puncture/
Laceration Rate.54 55
(* Denotes new component for the Patient
Safety and Adverse Events (Composite)
measure)
The Patient Safety and Adverse
Events (Composite) measure no longer
includes PSI 07 Central Venous
Catheter-Related Blood Stream Infection
Rate, because of potential overlap with
the CLABSI measure (NQF #0139),
which has been included in the Hospital
VBP Program since the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53597
through 53598).
The measure is calculated using
administrative claims data. Like the
previously adopted PSI 90 measure,
under the Patient Safety and Adverse
Events (Composite) measure, the
predicted value for each case is
computed using a Generalized
Estimating Equation hierarchical
modeling approach that adjusts for
demographic and clinical
characteristics. The expected rate for
each of the indicators is computed as
the sum of the predicted value for each
case divided by the number of cases for
the unit of analysis of interest (that is,
the hospital). The risk-adjusted rate for
each of the indicators is computed using
indirect standardization as the observed
rate divided by the expected rate,
multiplied by the reference population
rate.56
As stated above, the previously
adopted eight-indicator version of the
PSI 90 measure underwent an extended
NQF maintenance re-endorsement in
the 2014 NQF Patient Safety Committee.
In its final report, the NQF Patient
Safety Committee deferred their final
decision for the PSI 90 measure until
the following measure evaluation
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53 Previously
titled ‘‘Postoperative Physiologic
and Metabolic Derangement’’ prior to v6.0.
54 Previously titled ‘‘Accidental Puncture or
Laceration Rate’’ prior to v6.0.
55 Available at: https://www.qualityforum.org/
QPS/0531.
56 For more information regarding the Patient
Safety and Adverse Events (Composite) measure’s
risk adjustment methodology, we refer readers to:
https://www.qualityindicators.ahrq.gov/Downloads/
Resources/Publications/2015/Empirical_Methods_
2015.pdf.
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cycle.57 Following this report, AHRQ
worked to address many of the NQF
stakeholders’ concerns about the PSI 90
measure, and subsequently completed
NQF maintenance re-review and
received re-endorsement on December
10, 2015. As a result of this process, the
current PSI 90 measure’s NQF
maintenance re-endorsement led to
several changes to the measure,
specifically: A change to the measure
name; the addition of three indicators;
the removal of one indicator; the respecification of two indicators; and a
revision to the weighting of component
indicators.58 For more information on
the proposed Patient Safety and Adverse
Events (Composite) measure and
component indicators, we refer readers
to the AHRQ Quality Indicators Web
site available at:
www.qualityindicators.ahrq.gov.
We continue to believe the PSI 90
measure is an important measure of
patient safety, addressing the NQS
priority and CMS Quality Strategy goal
to make care safer, and that these
modifications help broaden and
strengthen the measure. We expect
inclusion of the Patient Safety and
Adverse Events (Composite) measure in
the Hospital VBP Program will
encourage improvement in patient
safety over the long-term for all
hospitals. Conditions such as
perioperative hemorrhage, postoperative
respiratory failure, pressure ulcers, and
other complications or conditions that
arise after a patient was admitted to the
hospital for the treatment of another
condition are often preventable, and
cost Medicare and the private sector
billions of dollars each year and take a
significant toll on patients and families.
In most cases, hospitals can prevent
these conditions when they follow
protocols, procedures, and evidencebased guidelines. We anticipate the
Patient Safety and Adverse Events
(Composite) measure will provide
actionable information and specific
direction for prevention of patient safety
events, because hospitals can track and
monitor individual PSI rates and
develop targeted improvements to
patient safety using this measure data.59
We proposed to adopt the Patient
Safety and Adverse Events (Composite)
measure for the Hospital VBP Program
beginning with the FY 2023 program
year because we believe the measure
would continue to create strong
incentives for hospitals to ensure that
patients are not harmed by the medical
care they receive, which is a critical
consideration in quality improvement.
We also proposed that the measure
would be added to the Safety domain,
like the previously adopted PSI 90
measure that we proposed to remove in
section V.J.3.b. of the preamble of the
proposed rule. The Patient Safety and
Adverse Events (Composite) measure
fulfills all statutory requirements for the
Hospital VBP Program based on our
adoption of that measure in the Hospital
IQR Program and the anticipated
posting of measure data on Hospital
Compare at least 1 year prior to the start
of the proposed measure performance
period. The Patient Safety and Adverse
Events (Composite) measure (MUC15–
604) was included on the ‘‘List of
Measures Under Consideration for
December 1, 2015’’ 60 and received
support from the MAP, which noted the
importance of safety measures for the
Hospital VBP Program.61 Therefore, we
proposed to add the Patient Safety and
Adverse Events (Composite) measure to
the Safety domain for the FY 2023
program year and subsequent years.
We invited public comment on this
proposal.
Comment: A number of commenters
supported CMS’ proposal to adopt the
Patient Safety and Adverse Events
(Composite) measure because it was
updated using the NQF maintenance reendorsement process; the measure
aligns with CMS’ priority to improve
patient safety and reduce adverse events
during patient stays; and the measure is
used in other programs and adopting it
for the Hospital VBP Program would
align quality measures across programs.
Some commenters strongly supported
adoption of the Patient Safety and
Adverse Events (Composite) measure,
but expressed concern that the Hospital
VBP Program will lack a patient safety
composite measure between the FY
57 National Quality Forum. NQF-Endorsed
Measures for Patient Safety, Final Report. Available
at: https://www.qualityforum.org/Publications/2015/
01/NQF-Endorsed_Measures_for_Patient_Safety,_
Final_Report.aspx.
58 National Quality Forum QPS Measure
Description for ‘‘Patient Safety for Selected
Indicators (modified version of PSI 90) (Composite
Measure)’’ found at: https://www.qualityforum.org/
QPS/MeasureDetails.aspx?standardID=321&print=
0&entityTypeID=3.
59 For further guidance on PSI monitoring and
strategies for applying quality improvements to PSI
data, we refer readers to the Toolkit for Using the
AHRQ quality indicators available at: https://
www.ahrq.gov/professionals/systems/hospital/
qitoolkit/.
60 ‘‘List of Measures Under Consideration for
December 1, 2015.’’ Available at: https://
www.qualityforum.org/ProjectMaterials.aspx?
projectID=75367.
61 National Quality Forum, Measure Applications
Partnership, ‘‘MAP 2016 Considerations for
Implementing Measures in Federal Programs:
Hospitals’’ Final Report, (February 2016). Available
at: https://www.qualityforum.org/Publications/2016/
02/MAP_2016_Considerations_for_Implementing_
Measures_in_Federal_Programs_-_Hospitals.aspx.
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2019 and FY 2023 program years.
Commenter urged CMS to look for
opportunities to advance use of this
measure in the Hospital VBP Program
prior to the FY 2023 program year, or
look to include other available measures
to ensure that surgical complications
remain a key component of the Hospital
VBP Program.
Response: We thank the commenters
for their support. As discussed in
section V.J.3.b. of the preamble of this
final rule, above, we will be unable to
calculate measure scores for the current
PSI 90 measure in the FY 2019 program
year or a subsequent year because ICD–
10 AHRQ PSI software for the currently
adopted measure will not be available.
Furthermore, due to certain statutory
requirements in the Hospital VBP
Program, we are unable to adopt the
proposed Patient Safety and Adverse
Events (Composite) measure earlier than
the FY 2023 program year. Section
1886(o)(2)(A) of the Act requires the
Hospital VBP Program to select
measures that have been specified for
the Hospital IQR Program. In addition,
section 1886(o)(2)(C)(i) of the Act
requires the Hospital VBP Program to
refrain from beginning the performance
period for a new measure until data on
the measure have been posted on
Hospital Compare for at least one year.
The Hospital IQR Program finalized
adoption of the modified PSI 90
measure (also known as the Patient
Safety and Adverse Events (Composite)
measure) in the FY 2017 IPPS/LTCH
PPS final rule (81 FR 57133), and we are
required to wait one full year after data
has been posted before that measure’s
performance period may begin in the
Hospital VBP Program. Because measure
data for the Patient Safety and Adverse
Events (Composite) measure has not
been posted on Hospital Compare, and
because AHRQ requires sufficient time
to develop the ICD–10 AHRQ PSI
software for a given year, we are unable
to adopt the measure before the FY 2023
program year.
We agree with commenters that
surgical complications remain a key
concern to address within our quality
programs, including the Hospital VBP
Program, and note that the NHSN
measures will continue in the Safety
domain of the Hospital VBP Program.
We note that information on hospital
performance on the Patient Safety and
Adverse Events (Composite) measure
will be publicly available through the
Hospital IQR Program beginning in the
fall of 2017. In addition, the HAC
Reduction Program, which is not subject
to the same statutory requirements as
the Hospital VBP Program, will use this
measure beginning with the FY 2018
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program year. We believe earlier
inclusion of this measure in the HAC
Reduction Program will help incentivize
hospitals to reduce patient safety events
until the measure can be implemented
in the Hospital VBP Program.
Comment: Many commenters strongly
recommended that CMS not include the
Patient Safety and Adverse Events
(Composite) measure because hospital
performance on the measure will not be
publicly reported until after the
comment period has ended. A number
of these commenters noted that publicly
reporting measures: Provides
transparency on provider performance;
allows hospitals to gain experience
submitting data and become familiar
with the measure’s refinements and use
of ICD–10 codes; allows time to identify
errors and unintended consequences;
and informs CMS and the measure
developer of any implementation
concerns. Some commenters further
asserted that all measures should be
publicly reported under the Hospital
IQR Program for one year before being
considered for inclusion in the Hospital
VBP Program. One commenter asserted
that stakeholders are unable to provide
sufficient feedback on the proposed
Patient Safety and Adverse Events
measure without access to publicly
reported measure data from the Hospital
IQR Program. For these reasons,
commenters urged CMS to postpone
finalizing this measure for the Hospital
VBP Program until stakeholders have
sufficient data to review this measure to
determine the appropriateness of the
Patient Safety and Adverse Events
(Composite) measure in the Hospital
VBP Program.
Response: While we understand
stakeholders’ desire to see performance
data from the Patient Safety and
Adverse Events (Composite) measure
before commenting on whether this
measure should be adopted for the
Hospital VBP Program, we note that, as
discussed in the FY 2018 IPPS/LTCH
PPS proposed rule, the measure has
undergone extensive testing and found
to be both reliable and valid.
Furthermore, we note that adoption of
this measure before its public reporting
on Hospital Compare does not preclude
hospitals from submitting questions and
comments on the measure to CMS.
Publicly reported Patient Safety and
Adverse Events (Composite) measure
data will be available in the fall of 2017,
and we encourage hospitals, providers,
patients, and other stakeholders to
review these data and contact CMS with
any questions regarding their measure
scores. We further note the Patient
Safety and Adverse Events (Composite)
measure is being finalized for
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implementation in the Hospital VBP
Program for the FY 2023 program year
with a performance period of July 1,
2019 through June 30, 2021; we believe
the time period before implementation
provides hospitals with sufficient time
to become familiar with the measure’s
specifications and reporting
requirements before performance on the
Patient Safety and Adverse Events
(Composite) measure is reflected in
hospitals’ TPSs.
We further disagree that, absent
publicly reported performance data,
hospitals lack sufficient information to
sufficiently comment on the proposed
adoption of the Patient Safety and
Adverse Events (Composite) measure. In
proposing to adopt this measure, CMS
provided a full description of the
measure’s specifications and its
development history, explained the
satisfaction of all statutorily-required
actions, and provided links to
additional sources of in-depth
information regarding the detailed
specifications for this measure. In
addition, seven of the ten Patient Safety
and Adverse Event (Composite)
component indicators were also
included in the previously adopted PSI
90 measure. We therefore believe
commenters had ample information to
use in reviewing the Patient Safety and
Adverse Events (Composite) measure,
allowing them to comment
meaningfully on its proposed adoption.
Comment: A number of commenters
did not support CMS’ proposal to adopt
the Patient Safety and Adverse Events
(Composite) measure because the
measure is subject to reliability and
accuracy concerns; commenters believe
the measure will not provide accurate,
meaningful, actionable data on hospital
safety performance; and commenters
believe the measure is not sufficiently
risk-adjusted for patient characteristics.
Two commenters asserted that the
proposed Patient Safety and Adverse
Events (Composite) measure is flawed,
stating that, according to the developer,
the measure was not meant to be used
in pay-for-performance programs. One
commenter expressed concern regarding
CMS’ proposal to use a composite
measure of patient safety, because the
commenter believes composite
measures limit the ability of a hospital
to identify the specific component of the
composite measure causing them to fall
out of compliance. Another commenter
believed it was likely that the PSI 90
measure will undergo additional
updates before the FY 2023 program
year, which would render this measure
proposal outdated before the measure’s
implementation.
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Response: We disagree with
commenters that the Patient Safety and
Adverse Events (Composite) measure
has not demonstrated that it is an
accurate, reliable, and valid indicator of
quality and safety of care that is
adequately risk-adjusted. Over the past
decade, AHRQ has supported a series of
validation studies based on detailed
abstraction of medical records.62 These
studies informed AHRQ’s PSI
development process, including further
refinements to the indicators, working
with others to improve coding practices,
and retirement of a few indicators.
Furthermore, many of these claimsbased indicators have been endorsed by
the NQF, which includes a review
process that assesses reliability and
validity.63 We note that NQF endorsed
the Patient Safety and Adverse Events
(Composite) measure (NQF #0531),
including the risk-adjustment
methodology of the component
indicators, as reliable and valid.
Further, we believe this measure does
provide actionable information and
specific direction for prevention of
patient safety events, because hospitals
can track and monitor individual PSI
rates and develop targeted
improvements to improve patient safety.
For further guidance on PSI monitoring
and strategies for applying quality
improvements to PSI data, we refer
readers to the Toolkit for Using the
AHRQ quality indicators available at:
https://www.ahrq.gov/professionals/
systems/hospital/qitoolkit/.
While we do not anticipate any
further updates to the Patient Safety and
Adverse Events (Composite) measure at
this time, we acknowledge that the
measure may undergo additional
updates in the future as part of measure
maintenance. Depending on the nature
of these updates and their applicability
to the Hospital VBP Program’s aims, we
will determine how best to address
them in future years of the program.
Comment: Several commenters did
not support adoption of the Patient
Safety and Adverse Events (Composite)
measure because it is susceptible to
surveillance bias; measures components
that occur infrequently or may not be
preventable through evidence-based
62 AHRQ, ‘‘AHRQ PSI Development,’’ available at:
https://www.qualityindicators.ahrq.gov/Modules/
psi_resources.aspx. AHRQ, ‘‘Quality Indicator
Measure Development, Implementation,
Maintenance, and Retirement,’’ available at: https://
www.qualityindicators.ahrq.gov/Downloads/
Resources/Publications/2011/QI_Measure_
Development_Implementation_Maintenance_
Retirement_Full_5-3-11.pdf.
63 https://www.qualityforum.org/Publications/
2013/10/Review_and_Update_of_Guidance_for_
Evaluating_Evidence_and_Measure_Testing_-_
Technical_Report.aspx.
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practices; lacks appropriate and
necessary exclusions associated
primarily with large academic centers;
and is based on administrative claims
data that does not fully reflect a
patient’s history, course of care, and
clinical risk factors and therefore
impacts the measure’s ability to draw
meaningful conclusions about hospital
performance on safety issues. Some
commenters also believe that it may
disproportionately impact teaching
hospitals because they tend to have
robust infection control programs and
are therefore more likely to identify
patient safety events.
Response: While we acknowledge
commenters’ concerns, administrative
claims data are valid for quality
measurement and significantly less
burdensome on hospitals for quality
reporting. We note that there are
previously conducted studies that
validate the relationship between
administrative claims data and medical
records.64 These studies demonstrate
that administrative claims data can
provide sufficient clinical information
to assess patient safety. We refer readers
to the FY 2015 IPPS/LTCH PPS final
rule (79 FR 50091) for a further
discussion of this issue in the context of
the HAC Reduction Program.
We also acknowledge commenters’
concern regarding the impact of
surveillance bias, but note that there is
little evidence that hospitals that may
have a less robust surveillance program
or underreport diagnoses for the PSI 90
indicators. Further, the measure exhibits
a high degree of sensitivity (true
positives, or the proportion of positives
that are correctively identified as such)
with respect to indicator diagnoses
among hospitals. In addition, we note
that many teaching hospitals do as well
or better on the measure than nonteaching hospitals, and many of the
patient safety indicator components are
preventable through evidence-based
practices. We have previously addressed
commenters’ concerns regarding the use
of administrative claims, coding issues,
and the impact on academic hospitals.
We refer readers to the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50684) and
the FY 2015 IPPS/LTCH PPS final rule
(79 FR 50064) for this discussion.
Comment: One commenter expressed
particular concern about the
vulnerability of PSI 12 (Perioperative PE
or DVT Rate) to surveillance bias,
because hospitals with more
64 Zrelak PA, Romano PS, Tancredi DJ, Geppert JJ,
Utter GH. Validity of the AHRQ Patient Safety
Indicator for Postoperative Physiologic and
Metabolic Derangement based on a national sample
of medical records. Medical Care 2013; 51(9):806–
11.
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sophisticated tools to identify and track
venous thromboembolism (VTE) show
higher rates of VTE and may therefore
be penalized for doing a better job at
detection. Commenter stated that
performance on PSI 12 may reflect
differences in VTE imaging use rather
than differences in the quality of care,
and the inclusion of PSI 12 in the
Patient Safety and Adverse Events
(Composite) measure could unfairly
penalize hospitals with increased
vigilance in VTE detection.
Response: CMS and AHRQ recognize
the commenter’s concerns about
surveillance bias for PSI 12, and note
this issue was addressed in the NQF
Patient Safety Steering Committee in
2015. Several research teams have
examined DVT and PE rates and
surveillance bias.65 However, studies
have not specifically examined whether
the observed rates reflect
underdiagnosis of DVT or PE at lowtesting hospitals, or the underlying true
incidence of symptomatic DVT or PE,
and there is no evidence currently
available to support the hypothesis that
increased vigilance in DVT or PE
detection is desirable from the
perspective of patients and their
families. Thus, while we acknowledge
commenter’s concerns regarding
surveillance bias, we believe the PSI 12
is an important component indicator of
the Patient Safety and Adverse Events
(Composite) measure because it
encourages hospitals not only to prevent
DVT or PE, but also to appropriately
assess a patient’s risk for DVT and PE
to prevent over-diagnosis and
underdiagnosis.
Comment: Several commenters
expressed concern that the timing and
operational difficulties associated with
procuring the AHRQ software hospitals
need in order to calculate their own
scores makes it impossible for hospitals
to use this measure for internal quality
improvement activities. Two
commenters recommended that CMS
delay adoption of the Patient Safety and
Adverse Events (Composite) measure
until the measure and associated
software have been developed and
validated in order to provide hospitals
time to acquire the AHRQ software
required to assess hospital performance
on an ongoing basis and inform
intervention strategies.
65 Bilimoria Y, Chun J. Ju MH, et al. Evaluation
of surveillance bias and the validity of venous
thromboembolism quality measure. JAMA.
2013;310(14):1482–1489; Holcomb CN, DeRussy A,
Richman JS, Hawn MT. Association between
inpatient surveillance and venous
thromboembolism rates after hospital discharge.
JAMA Surg. 2015;150(6):520–527.
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Response: We appreciate commenters’
commitment to continuous monitoring
of performance. We understand that it is
imperative for hospitals to monitor
performance in an ongoing manner, and
we are working with AHRQ to have the
risk-adjusted software available as soon
as possible. For more information on the
release plan for ICD–10 risk adjusted
software, we refer commenters to the
AHRQ Quality Indicators Software page
available at: https://www.quality
indicators.ahrq.gov/Software/
Default.aspx.
Comment: Two commenters did not
support CMS’ proposal to adopt the
Patient Safety and Adverse Events
(Composite) measure beginning with the
FY 2023 program year because this
measure has already been adopted for
the HAC Reduction Program, and
adopting this measure for Hospital VBP
would result in double counting of
measure scores across programs.
Response: While we acknowledge that
there is some overlap in quality
measures between the Hospital VBP
Program and the HAC Reduction
Program, we note that these measures
cover topics of critical importance to
quality improvement and patient safety
in the inpatient hospital setting. We
selected these quality measures because
we believe that hospital acquired
condition measures comprise some of
the most critical patient safety areas.
These measures track infections and
adverse events that could cause
significant health risks to Medicare
beneficiaries, and we believe it is
appropriate to provide incentives for
hospitals to avoid them under more
than one program.
We further stress that the HAC
Reduction Program and the Hospital
VBP Program are separate programs
with different purposes and policy
goals. The HAC Reduction Program
reduces payments to hospitals for excess
hospital acquired conditions to increase
patient safety in hospitals. On the other
hand, the Hospital VBP Program is an
incentive program that redistributes a
portion of the Medicare payments made
to hospitals based on their performance
on a variety of measures, including
safety measures, in order to provide a
more holistic assessment of hospitals’
quality of care. Accordingly, we believe
that the critical importance of these
measures to patient safety warrants their
inclusion in both programs. We will, in
the future, continue to monitor the HAC
Reduction Program and Hospital VBP
Program and analyze the impact of our
measures selection, including any
unintended consequences with having a
measure in more than one program, and
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will revise the measure set in one or
both programs if needed.
Comment: A few commenters did not
support adoption of the Patient Safety
and Adverse Events (Composite)
measure because the first performance
periods for the Patient Safety and
Adverse Event (Composite) measure
data that involve the use of ICD–10–CM
data in the Hospital IQR Program did
not end until June 30, 2017, and
hospitals will see initial performance
scores once CMS performs those
calculations for FY 2019. Commenters
noted the transition from ICD–9–CM to
ICD–10–CM resulted in a number of
issues with the previous PSI 90
measure, and therefore recommended
CMS delay finalizing adoption of the
measure in order to allow hospitals time
to review their performance data and
identify any issues with the Patient
Safety and Adverse Events (Composite)
measure’s specifications.
Response: We thank the commenter
for their recommendation, but note that
one of the factors in our decision to
delay the use of ICD–10 claims data for
this measure in the Hospital IQR
Program until the FY 2019 payment
determination was to allow for the
necessary time for AHRQ to create a
risk-adjusted software version. While
we are not aware that the transition to
ICD–10–CM/PCS codes has currently
caused inaccuracies in PSI reporting
and evaluation, we are actively
monitoring for any potential issues
related to ICD–10 conversion. We note
that all measure specifications for the
Patient Safety and Adverse Events
(Composite) measure have been
translated to and updated for
corresponding ICD–10 code
specifications; these changes for ICD–
10–CM/PCS conversion of AHRQ’s
patient safety indicators are available at:
https://www.qualityindicators.ahrq.gov/
FAQs_Support/FAQ_QI.aspx#.
We further note that AHRQ welcomes
input from the user community on the
AHRQ PSI ICD–10–CM/PCS software.
Please provide suggestions and
comments directly to: QISupport@
ahrq.hhs.gov.
Comment: One commenter requested
additional information about how
performance for selected indicators
under the Patient Safety and Adverse
Events (Composite) measure will be
assessed for conditions where a
hospital’s expected rate of a given safety
event is less than 1.0. A second
commenter strongly recommended CMS
revisit the scoring methodology for the
Patient Safety and Adverse Events
(Composite) measure because hospitals
that have been effective in driving down
infection rates to below 1.0 are, in effect,
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38255
penalized by the measure not being
scored, rather than being rewarded for
their work.
Response: The Patient Safety and
Adverse Events (Composite) measure
does not use minimum criteria as
described in commenters’ comments;
we therefore interpret commenters’
reference to expected rates of safety
events less than 1.0 to refer to the
minimum precision criteria for the
NHSN HAI measures, that is, at least
one predicted infection for a reporting
period for the measure result to be
reported. We would note the Patient
Safety and Adverse Events (Composite)
measure requires that hospitals have a
minimum of three eligible cases on any
one underlying indicator during the
baseline period in order to receive an
improvement score and three eligible
cases on any one underlying indicator
during performance period in order to
receive an improvement or achievement
score. For the purposes of the Patient
Safety and Adverse Events (Composite)
measure, a case is ‘‘eligible’’ for a given
indicator if it meets the criterion for
inclusion in the indicator measure
population. This minimum number of
cases is based on AHRQ’s methodology
for scoring performance on the Patient
Safety and Adverse Events (Composite)
measure. Under this methodology, all
hospitals that meet the case minimum
will be scored based on their
performance on this measure, and those
that do not meet the case minimum will
not receive a score for that component
indicator. In addition, a hospital will be
eligible to receive a score on the Patient
Safety and Adverse Events (Composite)
measure if they meet the case minimum
criteria for at least one component
indicator. We note that this case
minimum applies to all hospitals,
including those that experience zero
numerator events during the
performance period. Therefore, a
hospital that meets the case minimum
for a given component indicator but
experiences zero numerator events will
still receive a score on that component
indicator.
Comment: Two commenters
recommended that CMS consider
replacing the current PSI 90 measure
with objective, clinical outcome
measures from the CDC’s National
Healthcare Safety Network.
Response: We thank the commenters
for their recommendation, and we will
take this into consideration in the
future. We note that the Hospital VBP
Program has adopted a number of
NHSN-based measures in previous
years, including the CLABSI, CAUTI,
CDI, Colon and the Abdominal
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Hysterectomy SSI, and MRSA
Bacteremia measures.
Comment: A few commenters urged
CMS to remove PSI 03 (Pressure Ulcer
Rate) from the Patient Safety and
Adverse Events (Composite) measure
because pressure ulcers are complex
and may not be appropriately captured
under the composite measure. In the
alternative, commenters recommended
that CMS adopt the Percent of Residents
or Patients with Pressure Ulcers that are
New or Worsened (NQF #0678) measure
for the Hospital VBP Program.
Response: We thank the commenters
for their recommendation; however, we
believe it is appropriate to use the PSI
03 indicator in the Patient Safety and
Adverse Events (Composite) measure for
the Hospital VBP Program because none
of the measures previously adopted for
the program capture pressure ulcer or
injury data. The recommended measure,
Percent of Residents or Patients with
Pressure Ulcers that are New or
Worsened (NQF #0678), is not currently
specified for use in the acute, inpatient
hospital setting of care.66 In addition,
this measure is also collected via chart
abstraction, and we believe the
additional reporting burden on hospitals
for this measure currently outweighs the
benefit of collecting this data in the
inpatient hospital setting when the PSI
03 indicator in the Patient Safety and
Adverse Events (Composite) measure is
available for use and hospitals are
familiar with this indicator.
Furthermore, due to the statutory
requirements of the Hospital VBP
Program, we are unable to adopt the
recommended measure at this time.
However, if the same or similar measure
that is specified for the acute, inpatient
hospital setting becomes available, we
will consider the measure for future
program years.
After consideration of the public
comments we received, we are
finalizing our proposal to adopt the
Patient Safety and Adverse Events
(Composite) measure beginning with the
FY 2023 program year.
sradovich on DSK3GMQ082PROD with RULES2
a. Background
Section 1886(o)(4) of the Act requires
the Secretary to establish a performance
period for the Hospital VBP Program
that begins and ends prior to the
beginning of such fiscal year. We refer
66 National Quality Forum. ‘‘0678: Percent of
Residents or Patients with Pressure Ulcers That Are
New or Worsened (Short-Stay).’’ Available at:
https://www.qualityforum.org/QPS/QPSTool.aspx
after searching ‘‘0678.’’
23:27 Aug 11, 2017
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b. Person and Community Engagement
Domain
Since the FY 2015 program year, we
have adopted a 12-month baseline
period and 12-month performance
period for measures in the Person and
Community Engagement domain
(previously referred to as the Patientand Caregiver-Centered Experience of
Care/Care Coordination domain) (77 FR
53598; 78 FR 50692; 79 FR 50072; 80 FR
49561). In the FY 2017 IPPS/LTCH PPS
final rule (81 FR 56998), we finalized
our proposal to adopt a 12-month
performance period for the Person and
Community Engagement domain that
runs on the calendar year two years
prior to the applicable program year and
a 12-month baseline period that runs on
the calendar year four years prior to the
applicable program year, for the FY
2019 program year and subsequent
years.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19974 through
19775), we did not propose any changes
to these policies.
c. Efficiency and Cost Reduction
Domain
(1) MSPB Measure
5. Previously Adopted and Newly
Finalized Baseline and Performance
Periods
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readers to the FY 2016 IPPS/LTCH PPS
final rule (80 FR 49561 through 49562)
for the baseline and performance
periods for the Clinical Care, Person and
Community Engagement, Safety, and
Efficiency and Cost Reduction domains
that we have adopted for the FY 2018
program year. We refer readers to the FY
2017 IPPS/LTCH PPS final rule (81 FR
56998 through 57003) for additional
baseline and performance periods that
we have adopted for the FY 2018, FY
2019, FY 2020, FY 2021 and FY 2022
program years. Although in past
rulemaking we have proposed and
adopted a new baseline and
performance period for each program
year for each measure in each final rule,
in the FY 2017 IPPS/LTCH PPS final
rule, we finalized a schedule for all
future baseline and performance
periods.
Since the FY 2016 program year, we
have adopted a 12-month baseline
period and 12-month performance
period for the MSPB measure in the
Efficiency and Cost Reduction domain
(78 FR 50692; 79 FR 50072; 80 FR
49562). In the FY 2017 IPPS/LTCH PPS
final rule, we finalized our proposal to
adopt a 12-month performance period
for the MSPB measure that runs on the
calendar year two years prior to the
applicable program year and a 12-month
baseline period that runs on the
calendar year four years prior to the
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applicable program year for the FY 2019
program year and subsequent years (81
FR 56998).
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19775), we did not
propose any changes to these policies.
(2) AMI Payment and HF Payment
Measures
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 56999), we adopted a 24month performance period and a 36month baseline period for the AMI
Payment and HF Payment measures for
the FY 2021 program year. We did so in
order to adopt the measures as early as
feasible into the Hospital VBP Program,
and stated our belief that using a 24month performance period rather than a
36-month performance period for the
first program year of these measures
would still enable us to accurately
assess the quality of care provided by
hospitals and would not substantially
change a hospital’s performance on the
measure (81 FR 56998 through 56999).
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19975), we did not
propose any changes to the length of
these performance or baseline periods
for the FY 2021 program year.
In the FY 2017 IPPS/LTCH PPS final
rule, we also adopted a 36-month
performance period and 36-month
baseline period for the AMI Payment
and HF Payment measures for the FY
2022 program year (81 FR 57000). In the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 19975), we did not propose any
changes to the length of these
performance or baseline periods for the
FY 2022 program year.
For the FY 2023 program year and
subsequent years, we proposed it would
be appropriate to use a 36-month
performance period and 36-month
baseline period for the AMI Payment
and HF Payment measures as we have
adopted for the FY 2022 program year.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19975), for
the FY 2023 program year and
subsequent years, we proposed to adopt
a 36-month performance period that
runs from July 1st five years prior to the
applicable fiscal program year to June
30th two years prior to the applicable
fiscal program year. We also proposed to
adopt a 36-month baseline period that
runs from July 1, 10 years prior to the
applicable fiscal program year, to June
30, 7 years prior to the applicable fiscal
program year.
We invited public comment on these
proposals.
Comment: One commenter supported
CMS’ proposal to adopt 36-month
performance and baseline periods for
the AMI and HF Payment measures.
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Response: We thank the commenter
for their support.
Comment: Two commenters urged
CMS to reevaluate the length of time
between the baseline period,
performance period, and payment
implications of the AMI and HF
Payment measures because commenters
believed using a baseline period that
begins 10 years prior to the program
year would fail to provide relevant data
to CMS on hospital performance.
Response: We use a three-year period
of index admissions for the PN Payment
measure in order to increase the number
of cases per hospital used for measure
calculation, which improves the
precision of each hospital’s measure
rate. As a result, the baseline and
performance periods cover a much
longer period of time than used in other
measures, and are further in time from
the payment impacts for a given
program year. Although this approach
utilizes older data, it also identifies
more variation in hospital performance
and still allows for improvement from
one year of reporting to the next. We
decided to use the proposed timeframe
because it balances the need for the
most recent claims and sufficient time
to process the claims data and calculate
the measures to meet the program’s
timelines.
After consideration of the public
comments we received, we are
finalizing the baseline and performance
periods for the AMI and HF Payment
measures as proposed.
(3) PN Payment Measure in the FY 2022
Program Year
As discussed in section V.J.4.a. of the
preamble of this final rule, in the FY
2018 IPPS/LTCH PPS proposed rule (82
FR 19971 through 19973), we proposed
a new PN Payment measure for the FY
2022 program year and subsequent
years. In order to adopt this measure as
early as feasible into the Hospital VBP
Program, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19975
through 19976), we proposed to adopt a
36-month baseline period and a 23month performance period. We
proposed to adopt a 23-month
performance period because we
anticipate that the refined measure will
not be posted on Hospital Compare for
one year until July 2017. Therefore, for
the FY 2022 program year, we proposed
to adopt a 23-month performance period
that runs from August 1, 2018 to June
30, 2020 and a baseline period that runs
from July 1, 2013 to June 30, 2016.
We believe that using a 23-month
performance period for the proposed PN
Payment measure, rather than a 36month performance period, in the FY
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2022 program year would accurately
assess the quality of care provided by
hospitals and would not substantially
change hospitals’ performance on the
measure. To determine the viability of
using a 23-month performance period to
calculate the proposed PN Payment
measure’s scores, we compared the
measure score reliability for a 24-month
and 36-month performance period. We
calculated the Intraclass Correlation
Coefficient (ICC) to determine the extent
to which assessment of a hospital using
different but randomly selected subsets
of patients produces similar measures of
hospital performance.67 We calculated
the risk-standardized payment (RSP)
using a random split-sample of a 36month performance period (we used
July 1, 2013 through June 30, 2016) and
a random split-sample of a 24-month
performance period (we used July 1,
2013 through June 30, 2015).
For both the 36-month and 24-month
performance period, we obtained two
RSPs for each hospital, using an entirely
distinct set of patients from the same
time period. If the RSPs for both the 36month and 24-month performance
periods agree, we can demonstrate that
the measure assesses the quality of the
hospital rather than the types of patients
treated. To calculate agreement between
these measure subsets, we calculated
the ICC (2,1) 68 for both the 36-month
and 24-month performance periods.
For the proposed PN Payment
measure, there were 1,170,762 index
admissions and 3,242 hospitals that met
the minimum case threshold for
reporting a measure result (at least 25
cases) in the 36-month performance
period. There were 787,817 index
admissions and 3,218 hospitals that met
the minimum case threshold for
reporting a measure result in the 24month performance period.
For the 36-month performance period,
the ICC for the two independent
assessments of each hospital was 0.868.
For the 24-month performance period,
the ICC for the two independent
assessments of each hospital was 0.834.
Therefore, the data subsets showcase
‘‘substantial’’ agreement of hospital
performance, and we can demonstrate
that, even with a shortened performance
period, the proposed PN Payment
measure assesses the quality of care
provided at a hospital rather than the
67 Shrout P, Fleiss J. Intraclass Correlations: Uses
in Assessing Rater Reliability. Psychol. Bull. Mar
1979;86(2):420–428.
68 Shrout P, Fleiss J. Intraclass Correlations: Uses
in Assessing Rater Reliability. Psychol. Bull. Mar
1979;86(2):420–428.
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38257
types of patients that these hospitals
treat.69
To assess whether using fewer than 36
months of data change the performance
in the same hospital, we compared the
percent change in a hospital’s
predicted/expected (P/E) ratio using 24
months of data. For hospitals that met
the minimum case threshold in the 24month performance period, the median
percent change was 0.11 percent (with
an interquartile range of ¥1.5 percent to
0.07 percent). These results suggest
minimal difference in same-hospital
performance when using a 24-month
measurement period. Based on these
analyses, we are confident that using a
23-month performance period will
result in reliable measure scores because
our analysis demonstrates strong
reliability at 24 months and we believe
the change in available data due to a one
month difference in the performance
period is insufficient to substantially
impact the measure’s reliability.
In summary, based on the analysis
described above, we are confident that
using a 23-month performance period,
rather than 36-month performance
period, for the initial performance
period for this measure would
accurately assess the quality of care
provided by that hospital and would not
substantially change the hospital’s
performance on that measure.
We invited public comment on these
proposals.
Comment: One commenter requested
that CMS consider reducing the
performance period for the PN Payment
measure from three years to one year.
Response: As noted above, our goal is
to use a three-year period of index
admissions for the PN Payment measure
in order to increase the number of cases
per hospital used for measure
calculation, which improves the
precision of each hospital’s measure
rate. Although this approach utilizes
older data, it also identifies more
variation in hospital performance and
still allows for improvement from one
year of reporting to the next.
Comment: One commenter
recommended that, if CMS finalizes
adoption of the PN Payment measure,
CMS delay implementation of the
measure until a 36-month performance
period can be adopted for this measure
because the commenter believes that
having a performance period that is
different from the performance period
used for other condition-specific
measures is confusing for providers and
patients.
69 Landis J, Joch G. The Measurement of Observer
Agreement for Categorical Data. Biometrics. Mar
1997;33(1):159–174.
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Response: We continue to believe that
the 23-month performance period for
the FY 2022 program year and 35-month
performance period for the FY 2023
program year are sufficiently reliable to
accurately assess the resource use by
hospitals and would not substantially
change hospitals’ performance on the
measure. We note that the PN Payment
measure will only have an abbreviated
performance period in the FY 2022 and
FY 2023 program years, the first two
years this measure is in the program, but
we are adopting a 36-month
performance period for the FY 2024
program year and subsequent years, as
detailed in the next section below.
After consideration of the public
comments we received, we are
finalizing the baseline and performance
periods for the PN Payment measure for
the FY 2022 program year as proposed.
(4) PN Payment Measure in the FY 2023
Program Year
We have stated in past rules that we
would strive to adopt 36-month
performance periods and baseline
periods when possible to accommodate
the time needed to process measure data
and to ensure that we collect enough
measure data for reliable performance
scoring for all mortality measures (78 FR
50074; 79 FR 50057; and 80 FR 49588).
While we cannot adopt a 36-month
performance period for the FY 2023
program year because we anticipate that
the refined measure will not be posted
on Hospital Compare for 1 year until
July 2017, we could lengthen the PN
Payment measure performance period
from 23 months to 35 months. As
demonstrated above, our analysis of the
proposed PN Payment measure
indicates that the measure would
produce reliable measure scores using
24 months of data as well as 36 months
of data. As such, we are confident they
will also be reliable when calculated
using 35 months of data for the
performance period for the FY 2023
program year. Therefore, for the FY
2023 program year, in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19776), we proposed to adopt a 35month performance period that runs
from August 1, 2018 to June 30, 2021
and a 36-month baseline period that
runs from July 1, 2013 to June 30, 2016.
We invited public comment on these
proposals. We did not receive public
comments on the proposed baseline and
performance periods for the PN
Payment measure for the FY 2023
program year and subsequent years. We
are finalizing the baseline and
performance periods for the PN
Payment measure for the FY 2023
program year as proposed.
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(5) PN Payment Measure in the FY 2024
Program Year and Subsequent Years
For the FY 2024 program year and
subsequent years, we believe it would
be appropriate to use a 36-month
performance period and 36-month
baseline period for the PN Payment
measure. Therefore, in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19976), for the FY 2024 program year
and subsequent years, we proposed to
adopt a 36-month baseline period and a
36-month performance period for the
proposed PN Payment measure.
Specifically, we proposed to adopt a 36month performance period that runs
from July 1, 5 years prior to the
applicable fiscal program year, to June
30, 2 years prior to the applicable fiscal
program year and a 36-month baseline
period that runs from July 1, 10 years
prior to the applicable fiscal program
year, to June 30, 7 years prior to the
applicable fiscal program year.
We invited public comment on these
proposals. We did not receive public
comments on the proposed baseline and
performance periods for the PN
Payment measure for the FY 2024
program year and subsequent years. We
are finalizing the baseline and
performance periods for FY 2024 and
subsequent years as proposed.
d. Safety Domain
(1) Previously Adopted Measures in the
Safety Domain
Since the FY 2016 program year, we
have adopted a 12-month baseline
period and 12-month performance
period for all measures in the Safety
domain, with the exception of the PSI
90 measure (78 FR 50692; 79 FR 50071;
80 FR 49562). In the FY 2017 IPPS/
LTCH PPS final rule, we finalized our
proposal to adopt a performance period
for all measures in the Safety domain—
with the exception of the PSI 90
measure, as discussed in more detail
below—that runs on the calendar year 2
years prior to the applicable program
year and a baseline period that runs on
the calendar year 4 years prior to the
applicable program year for the FY 2019
program year and subsequent program
years (81 FR 57000).
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19976), we did not
propose any changes to these policies.
(2) Patient Safety and Adverse Events
(Composite) Measure in the FY 2023
Program Year
As discussed above in section V.J.3.b.
of the preamble of this final rule, In the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 19970), we proposed to remove
the currently adopted PSI 90 measure
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beginning with the FY 2019 program
year, and in section V.J.4.b. of the
preamble of this final rule, we discuss
our proposal to adopt the Patient Safety
and Adverse Events (Composite)
measure beginning with the FY 2023
program year. In order to adopt the
Patient Safety and Adverse Events
(Composite) measure as early as feasible
into the Hospital VBP Program, we
proposed to adopt a 21-month baseline
period and 24-month performance
period for the measure for the FY 2023
program year. Specifically, we proposed
to adopt a performance period that runs
from July 1, 2019 to June 30, 2021, and
a baseline period that runs from October
1, 2015 to June 30, 2017. The 21-month
baseline period would only apply to the
FY 2023 program year and would only
use ICD–10 data.
Prior to deciding to propose an
abbreviated baseline period for the FY
2023 program year, we took several
factors into consideration, including the
recommendations of the measure
steward, the feasibility of using a
combination of ICD–9 and ICD–10 data
without the availability of the
appropriate measure software,
minimizing provider burden, program
implementation timelines, and the
reliability of using a shortened baseline
period. We believe using a 21-month
baseline period for the Patient Safety
and Adverse Events (Composite)
measure for the FY 2023 program year
best serves the need to provide
important information on hospital
patient safety and adverse events by
allowing sufficient time to process the
claims data and calculate measure
scores, while minimizing the reporting
burden and program disruption. We also
believe that measure scores would
continue to be reliable for the above
proposed baseline period because the
NQF, which re-endorsed the modified
version of the measure that we
proposed, found it to be reliable using
12 months of data.70
We invited public comment on these
proposals. We did not receive public
comments on the proposed baseline and
performance periods for the Patient
Safety and Adverse Events (Composite)
measure for the FY 2023 program year.
We are finalizing the baseline and
performance period as proposed.
(3) Patient Safety and Adverse Events
(Composite) Measure in the FY 2024
Program Year and Subsequent Years
For the FY 2024 program year and
subsequent years, in the FY 2018 IPPS/
70 ‘‘Patient Safety 2015 Final Report’’ is available
at: https://www.qualityforum.org/Publications/2016/
02/Patient_Safety_2015_Final_Report.aspx.
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LTCH PPS proposed rule (82 FR 19976),
we proposed to lengthen the Patient
Safety and Adverse Events (Composite)
measure baseline period to 24 months
and continue to adopt a 24-month
performance period because we believe
the measure is most reliable with a 24month baseline period. For the FY 2024
program year, the baseline period would
run from July 1, 2016 to June 30, 2018.
Therefore, we proposed to adopt a
performance period that runs from July
1, 4 years prior to the applicable fiscal
program year, to June 0, 2 years prior to
the applicable fiscal program year, and
a baseline period that runs from July 1,
8 years prior to the applicable program
year, to June 30, 6 years prior to the
applicable program year.
We invited public comment on these
proposals. We did not receive public
comments on the proposed baseline and
performance periods for the Patient
Safety and Adverse Events (Composite)
measure for the FY 2024 program year
and subsequent years. We are finalizing
the baseline and performance periods
for the FY 2024 program year and
subsequent years as proposed.
e. Clinical Care Domain
(1) Previously Adopted Measures in the
Clinical Care Domain
For the FY 2019, FY 2020, and FY
2021 program years, we adopted a 36month baseline period and 36-month
performance period for measures in the
Clinical Care domain (78 FR 50692
through 50694; 79 FR 50073; 80 FR
49563).71 In the FY 2017 IPPS/LTCH
PPS final rule (81 FR 57000), we
finalized our proposal to adopt a 36month performance period and 36month baseline period for the FY 2022
program year for each of the previously
finalized measures in the Clinical Care
domain—that is, the MORT–30–AMI,
MORT–30–HF, MORT–30–COPD, THA/
TKA, and MORT–30–CABG measures.
38259
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19977), we
proposed to adopt a 36-month
performance period and 36-month
baseline period for these measures for
the FY 2023 program year and
subsequent years.
Specifically, for the mortality
measures (MORT–30–AMI, MORT–30–
HF, MORT–30–COPD, and MORT–30–
CABG), the performance period would
run for 36 months from July 1, 5 years
prior to the applicable fiscal program
year, to June 30, 2 years prior to the
applicable fiscal program year, and the
baseline period would run for 36
months from July 1, 10 years prior to the
applicable fiscal program year, to June
30, 7 years prior to the applicable fiscal
program year. For the THA/TKA
measure, the performance period would
run for 36 months from April 1, 5 years
prior to the applicable fiscal program
year, to March 31, 2 years prior to the
applicable fiscal program year, and the
baseline period would run for 36
months from April 1, 10 years prior to
the applicable fiscal program year, to
March 31, 7 years prior to the applicable
fiscal program year.
We invited public comment on these
proposals. We did not receive any
public comments on these proposals; we
are finalizing our proposals to set the
baseline and performance periods for
the MORT–30–AMI, MORT–30–HF,
MORT–30–COPD, THA/TKA, and
MORT–30–CABG measures for FY 2023
program year and subsequent years as
proposed.
same final rule, we adopted a 34-month
performance period and 36-month
baseline period for the MORT–30–PN
(updated cohort) measure for the FY
2022 program year. In the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19977), we did not propose any changes
to the length of these performance or
baseline periods for the FY 2021 and FY
2022 program years.
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57001), we also stated our
intent to lengthen the MORT–30–PN
(updated cohort) measure performance
period to a full 36-month performance
period beginning in July, instead of
September. Therefore, in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19977), we proposed to adopt a 36month performance period that would
run from July 1, 5 years prior to the
applicable fiscal program year, to June
30, 2 years prior to the applicable fiscal
program year, and a 36-month baseline
period that would run from July 1, 10
years prior to the applicable fiscal
program year, to June 30, 7 years prior
to the applicable fiscal program year for
the MORT–30–PN (updated cohort)
measure for the FY 2023 program year
and subsequent years.
We invited public comment on these
proposals. We did not receive any
public comments on this proposal; we
are finalizing our proposal to set the
baseline and performance periods for
the MORT–30–PN (updated cohort)
measure for the FY 2023 program year
and subsequent years as proposed.
(2) MORT–30–PN (Updated Cohort)
Measure
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57001), we adopted a 22month performance period for the
MORT–30–PN (updated cohort)
measure and a 36-month baseline period
for the FY 2021 program year. In the
f. Summary of Previously Adopted and
Newly Finalized Baseline and
Performance Periods for the FY 2019
Through FY 2023 Program Years
The tables below summarize the
baseline and performance periods that
we have previously adopted and are
finalizing in this final rule.
PREVIOUSLY ADOPTED BASELINE AND PERFORMANCE PERIODS FOR THE FY 2019 PROGRAM YEAR
Baseline period
Person and Community Engagement:
• HCAHPS Survey ..........................................................
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Domain
• January 1, 2015–December 31, 2015
• January
2017.
• July 1, 2009–June 30, 2012 ..............
• July 1, 2014–June 30, 2017.
• July 1, 2010–June 30, 2013 ..............
• January 1, 2015–June 30, 2017.
• January 1, 2015–December 31, 2015
• January
2017.
Clinical Care:
• Mortality (MORT–30–AMI, MORT–30–HF, MORT–
30–PN).
• THA/TKA ......................................................................
Safety:*
• PC–01 and NHSN measures (CAUTI, CLABSI, SSI,
CDI, MRSA).
Efficiency and Cost Reduction:
71 The THA/TKA measure was added for the FY
2019 program year with a 36-month baseline period
and a 24-month performance period (79 FR 50072),
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but we have since adopted 36-month baseline and
performance periods for the FY 2021 program year
(80 FR 49563). We intend to continue having 36-
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Performance period
1,
1,
2017–December
2017–December
31,
31,
month baseline periods and 36-month performance
periods in the future for all measures in the Clinical
Care domain.
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PREVIOUSLY ADOPTED BASELINE AND PERFORMANCE PERIODS FOR THE FY 2019 PROGRAM YEAR—Continued
Domain
Baseline period
• MSPB ...........................................................................
• January 1, 2015–December 31, 2015
Performance period
• January
2017.
1,
2017–December
31,
* In section V.J.3.b. of the preamble of this final rule, we discuss our decision to finalize the removal of the current PSI 90 measure beginning
with the FY 2019 program year. As a result, the previously finalized performance and baseline periods for this measure were not included in this
table.
PREVIOUSLY ADOPTED BASELINE AND PERFORMANCE PERIODS FOR THE FY 2020 PROGRAM YEAR
Domain
Baseline period
Person and Community Engagement:
• HCAHPS Survey ....................................
Clinical Care:
• Mortality (MORT–30–AMI, MORT–30–
HF, MORT–30–PN).
• THA/TKA .................................................
Safety: *
• PC–01 and NHSN measures (CAUTI,
CLABSI, SSI, CDI, MRSA).
Efficiency and Cost Reduction:
• MSPB ......................................................
Performance period
• January 1, 2016–December
31, 2016.
• January 1, 2018–December 31, 2018.
• July 1, 2010–June 30, 2013
• July 1, 2015–June 30, 2018.
• July 1, 2010–June 30, 2013
• July 1, 2015–June 30, 2018.
• January 1, 2016–December
31, 2016.
• January 1, 2018–December 31, 2018.
• January 1, 2016–December
31, 2016.
• January 1, 2018–December 31, 2018.
* In section V.J.3.b. of the preamble of this final rule, we discuss our decision to finalize the removal of the current PSI 90 measure beginning
with the FY 2019 program year. As a result, the previously finalized performance and baseline periods for this measure were not included in this
table.
PREVIOUSLY ADOPTED BASELINE AND PERFORMANCE PERIODS FOR THE FY 2021 PROGRAM YEAR
Domain
Baseline period
Performance period
• January 1, 2017–December 31, 2017
Person and Community Engagement:
• HCAHPS Survey.
Clinical Care:
• Mortality (MORT–30–AMI, MORT–30–HF, MORT–
30–COPD).
• MORT–30–PN (updated cohort) ..................................
• THA/TKA ......................................................................
Safety: *
• PC–01 and NHSN measures (CAUTI, CLABSI, SSI,
CDI, MRSA).
Efficiency and Cost Reduction:
• MSPB ...........................................................................
• Payment (AMI Payment and HF Payment) .................
• January
2019.
• July 1, 2011–June 30, 2014 ..............
• July 1, 2016–June 30, 2019.
• July 1, 2012–June 30, 2015 ..............
• April 1, 2011–March 31, 2014 ...........
• September 1, 2017–June 30, 2019.
• April 1, 2016–March 31, 2019.
• January 1, 2017–December 31, 2017
• January
2019.
2019–December
31,
• January 1, 2017–December 31, 2017
• January 1, 2019–December
2019.
• July 1, 2017–June 30, 2019.
31,
• July 1, 2012–June 30, 2015 ..............
1,
1,
2019–December
31,
* In section V.J.3.b. of the preamble of this final rule, we discuss our decision to finalize the removal of the current PSI 90 measure beginning
with the FY 2019 program year. As a result, the previously finalized performance and baseline periods for this measure were not included in this
table.
PREVIOUSLY ADOPTED AND NEWLY FINALIZED BASELINE AND PERFORMANCE PERIODS FOR THE FY 2022 PROGRAM YEAR
Baseline period
Person and Community Engagement:
• HCAHPS Survey ..........................................................
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Domain
• January 1, 2018–December 31, 2018
• January
2020.
• July 1, 2012–June 30, 2015 ..............
• July 1, 2017–June 30, 2020.
• July 1, 2012–June 30, 2015 ..............
• April 1, 2012–March 31, 2015 ...........
• September 1, 2017–June 30, 2020.
• April 1, 2017–March 31, 2020.
• January 1, 2018–December 31, 2018
• January
2020.
2020–December
31,
• January 1, 2018–December 31, 2018
• January 1, 2020–December
2020.
• July 1, 2017–June 30, 2020.
31,
Clinical Care:
• Mortality (MORT–30–AMI, MORT–30–HF, MORT–
30–COPD, MORT–30–CABG).
• MORT–30–PN (updated cohort) ..................................
• THA/TKA ......................................................................
Safety: *
• PC–01 and NHSN measures (CAUTI, CLABSI, SSI,
CDI, MRSA).
Efficiency and Cost Reduction:
• MSPB ...........................................................................
• Payment (AMI Payment, HF Payment) ........................
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• July 1, 2012–June 30, 2015 ..............
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PREVIOUSLY ADOPTED AND NEWLY FINALIZED BASELINE AND PERFORMANCE PERIODS FOR THE FY 2022 PROGRAM
YEAR—Continued
Domain
Baseline period
• PN Payment * * .............................................................
Performance period
• July 1, 2013–June 30, 2016 ..............
• August 1, 2018–June 30, 2020.
* In section V.J.3.b. of the preamble of this final rule, we discuss our decision to finalize the removal of the current PSI 90 measure beginning
with the FY 2019 program year. As a result, the previously finalized performance and baseline periods for this measure are not included in this
table.
** In section V.J.4.a. of the preamble of this final rule, we discuss our decision to adopt the PN Payment measure beginning with the FY 2022
program year.
PREVIOUSLY ADOPTED AND NEWLY FINALIZED BASELINE AND PERFORMANCE PERIODS FOR THE FY 2023 PROGRAM YEAR
Domain
Baseline period
Person and Community Engagement:
• HCAHPS Survey ....................................
Clinical Care:
• Mortality (MORT-30–AMI, MORT–30–
HF,
MORT–30–COPD,
MORT–30–
CABG, MORT-30–PN (updated cohort).
• THA/TKA .................................................
Safety:
• PC–01 and NHSN measures (CAUTI,
CLABSI, SSI, CDI, MRSA).
• Patient Safety and Adverse Events
(Composite) *.
Efficiency and Cost Reduction:
• MSPB ......................................................
• Payment (AMI Payment, HF Payment) ..
• PN Payment * * .......................................
Performance period
• January 1, 2019–December
31, 2019.
• January 1, 2021–December 31, 2021.
• July 1, 2013–June 30, 2016
• April 1,
2016.
• July 1, 2018–June 30, 2021.
31,
• April 1, 2018–March 31, 2021.
• January 1, 2019–December
31, 2019.
• October 1, 2015–June 30,
2017.
• January 1, 2021–December 31, 2021.
• January 1, 2019–December
31, 2019.
• July 1, 2013–June 30, 2016
• July 1, 2013–June 30, 2016
• January 1, 2021–December 31, 2021.
2013–March
• July 1, 2019–June 30, 2021.
• July 1, 2018–June 30, 2021.
• August 1, 2018–June 30, 2021.
* In section V.J.4.b. of the preamble of this final rule, we discuss our decision to adopt the Patient Safety and Adverse Events (Composite)
measure beginning with the FY 2023 program year.
** In section V.J.4.a. of the preamble of this final rule, we discuss our decision to adopt the PN Payment measure beginning with the FY 2022
program year.
6. Performance Standards for the
Hospital VBP Program
sradovich on DSK3GMQ082PROD with RULES2
a. Background
Section 1886(o)(3)(A) of the Act
requires the Secretary to establish
performance standards for the measures
selected under the Hospital VBP
Program for a performance period for
the applicable fiscal year. The
performance standards must include
levels of achievement and improvement,
as required by section 1886(o)(3)(B) of
the Act, and must be established no
later than 60 days before the beginning
of the performance period for the fiscal
year involved, as required by section
1886(o)(3)(C) of the Act. We refer
readers to the Hospital Inpatient VBP
Program final rule (76 FR 26511 through
26513) for further discussion of
achievement and improvement
standards under the Hospital VBP
Program.
In addition, when establishing the
performance standards, section
1886(o)(3)(D) of the Act requires the
Secretary to consider appropriate
factors, such as: (1) Practical experience
with the measures, including whether a
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significant proportion of hospitals failed
to meet the performance standard
during previous performance periods;
(2) historical performance standards; (3)
improvement rates; and (4) the
opportunity for continued
improvement.
We refer readers to the FY 2013, FY
2014, and FY 2015 IPPS/LTCH PPS final
rules (77 FR 53604 through 53605; 78
FR 50694 through 50698; and 79 FR
50077 through 50079, respectively) for a
more detailed discussion of the general
scoring methodology used in the
Hospital VBP Program.
We note that the performance
standards for the following measures are
calculated with lower values
representing better performance:
• The NHSN measures (the CLABSI,
CAUTI, CDI, Colon and the Abdominal
Hysterectomy SSI, and MRSA
Bacteremia measures);
• The THA/TKA measure;
• The PC–01 measure;
• The MSPB measure;
• The HF, AMI, and PN Payment
measures; and
• The Patient Safety and Adverse
Events (Composite) measure.
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This distinction is made in contrast to
other measures for which higher values
indicate better performance.72 As
discussed further in the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50684), the
performance standards for the Colon
and Abdominal Hysterectomy SSI
measure are computed separately for
each procedure stratum, and we first
award achievement and improvement
points to each stratum separately, then
compute a weighted average of the
points awarded to each stratum by
predicted infections.
b. Previously Adopted and Newly
Finalized Performance Standards for the
FY 2020 Program Year
In accordance with our finalized
methodology for calculating
performance standards (discussed more
fully in the Hospital Inpatient VBP
Program final rule (76 FR 26511 through
26513)), in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19979 through
19980), we proposed to adopt additional
72 We note that the mortality measures in the
Hospital VBP Program use survival rates rather than
mortality rates; as a result, higher values indicate
better performance on these measures.
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performance standards for the FY 2020
program year. We noted that the
numerical values for the performance
standards displayed in the proposed
rule represented estimates based on the
most recently available data, and we
stated our intention to update the
numerical values in this FY 2018 IPPS/
LTCH PPS final rule. We noted further
that the MSPB measure’s performance
standards are based on performance
period data; therefore, we are unable to
provide numerical equivalents for the
standards at this time.
We invited public comment on the
proposed performance standards. We
did not receive any public comments on
the proposed performance standards for
the FY 2020 program year. We are
adopting the performance standards
listed in the table below. These
performance standards have been
updated from the FY 2018 IPPS/LTCH
PPS proposed rule and represent the
most recently available data.
PREVIOUSLY ADOPTED AND NEWLY FINALIZED PERFORMANCE STANDARDS FOR THE FY 2020 PROGRAM YEAR: SAFETY,
CLINICAL CARE, AND EFFICIENCY AND COST REDUCTION DOMAINS #
Measure short name
Achievement threshold
Benchmark
Safety Domain ♦
CAUTI *† .............................................................
CLABSI *† ...........................................................
CDI *† .................................................................
MRSA Bacteremia *† ..........................................
Colon and Abdominal Hysterectomy SSI *† .......
PC–01 * ...............................................................
0.828 ................................................................
0.784 ................................................................
0.852 ................................................................
0.815 ................................................................
• 0.781 .............................................................
• 0.722 .............................................................
0.000000 ..........................................................
0.000.
0.000.
0.091.
0.000.
• 0.000.
• 0.000.
0.000000.
Clinical Care Domain
MORT–30–AMI ± ................................................
MORT–30–HF ± ..................................................
MORT–30–PN ± ..................................................
THA/TKA *± .........................................................
0.853715
0.881090
0.882266
0.032229
..........................................................
..........................................................
..........................................................
..........................................................
0.875869.
0.906068.
0.909532.
0.023178.
Efficiency and Cost Reduction Domain
MSPB *± .............................................................
Median Medicare Spending Per Beneficiary
ratio across all hospitals during the performance period.
Mean of the lowest decile Medicare Spending
Per Beneficiary ratios across all hospitals
during the performance period.
# In section V.J.3.b. of the preamble of this final rule, we are removing the current PSI 90 measure beginning with the FY 2019 program year.
As a result, the previously finalized performance standards for this measure are not included in this table.
♦ The performance standards displayed in this table for the Safety domain measures are updated using four quarters of CY 2016 data in this
final rule.
† In section III.F.2.e. of preamble of the FY 2016 IPPS/LTCH PPS final rule (80 FR 49554 thorough 49555), we finalized our proposal to use
the CDC’s new standard population data to calculate performance standards for the NHSN measures beginning with the FY 2019 program year.
We refer readers to that final rule for additional information regarding the NHSN measures’ standard population data. In addition, we note that a
technical update was released for these measures for the FY 2019 program year in order to ensure that hospitals have the correct performance
standards for the applicable performance period.
* Lower values represent better performance.
± Previously adopted performance standards.
sradovich on DSK3GMQ082PROD with RULES2
In the CY 2017 OPPS/ASC final rule
with comment period (81 FR 79857), we
discussed how the removal of the Pain
Management dimension of the HCAHPS
Survey, beginning with the FY 2018
program year, affects the scoring of the
Person and Community Engagement
domain. The eight dimensions of the
HCAHPS measure are calculated to
generate the HCAHPS Base Score. For
each of the eight dimensions,
Achievement Points (0–10 points) and
Improvement Points (0–9 points) are
calculated, the larger of which is then
summed across the eight dimensions to
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create the HCAHPS Base Score (0–80
points). Each of the eight dimensions is
of equal weight, thus the HCAHPS Base
Score ranges from 0 to 80 points.
HCAHPS Consistency Points are then
calculated, which range from 0 to 20
points. The Consistency Points take into
consideration the scores of all eight
Person and Community Engagement
dimensions; as noted above, the Pain
Management dimension is not included
in the scoring of this Domain. The final
element of the scoring formula is the
summation of the HCAHPS Base Score
and the HCAHPS Consistency Points,
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which results in the Person and
Community Engagement Domain score
that ranges from 0 to 100 points.
We invited public comment on the
proposed performance standards for the
eight HCAHPS survey dimensions. We
did not receive any public comments on
these proposed performance standards,
and are adopting the performance
standards listed in the table below.
These HCAHPS survey dimension
performance standards have been
updated from the FY 2018 IPPS/LTCH
PPS proposed rule and represent the
most recently available data.
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38263
NEWLY FINALIZED PERFORMANCE STANDARDS FOR THE FY 2020 PROGRAM YEAR: PERSON AND COMMUNITY
ENGAGEMENT DOMAIN *±
Achievement
threshold
(percent)
Floor
(percent)
HCAHPS survey dimension
Communication with Nurses ............................................................................................
Communication with Doctors ...........................................................................................
Responsiveness of Hospital Staff ....................................................................................
Communication about Medicines ....................................................................................
Hospital Cleanliness & Quietness ...................................................................................
Discharge Information ......................................................................................................
Care Transition ................................................................................................................
Overall Rating of Hospital ................................................................................................
51.80
50.67
35.74
26.16
41.92
66.72
20.33
32.47
79.08
80.41
65.07
63.30
65.72
87.44
51.14
71.59
Benchmark
(percent)
87.12
88.44
80.14
73.86
79.42
92.11
62.50
85.12
* We renamed this domain from Patient- and Caregiver-Centered Experience of Care/Care Coordination domain to Person and Community Engagement domain beginning with the FY 2019 program year, as discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56984).
± The performance standards displayed in this table were calculated using four quarters of CY 2016 data in this final rule.
c. Previously Adopted Performance
Standards for Certain Measures for the
FY 2021 Program Year
As discussed above, we have adopted
certain measures for the Clinical Care
and Efficiency and Cost Reduction
domains for future program years in
order to ensure that we can adopt
baseline and performance periods of
sufficient length for performance
scoring purposes. In the FY 2016 IPPS/
LTCH PPS final rule (80 FR 49567), we
adopted performance standards for the
FY 2021 program year for the Clinical
Care domain measures (THA/TKA,
MORT–30–HF, MORT–30–AMI, and
MORT–30–COPD). In the FY 2017 IPPS/
LTCH PPS final rule (81 FR 57008), we
adopted performance standards for the
MORT–30–PN (updated cohort)
measure (81 FR 57008) and the AMI
Payment and HF Payment measures for
the FY 2021 program year. We note that
the performance standards for the
MSPB, AMI Payment, and HF Payment
measures are based on performance
period data; therefore, we are unable to
provide numerical equivalents for the
standards at this time. The previously
adopted performance standards for
these measures are set out in the table
below.
PREVIOUSLY ADOPTED PERFORMANCE STANDARDS FOR THE FY 2021 PROGRAM YEAR
Measure short name
Achievement threshold
Benchmark
Clinical Care Domain
MORT–30–AMI ± ................................................
MORT–30–HF± ..................................................
MORT–30–PN (updated cohort)† .......................
MORT–30–COPD± .............................................
THA/TKA*± .........................................................
0.860355
0.883803
0.836122
0.923253
0.031157
..........................................................
..........................................................
..........................................................
..........................................................
..........................................................
0.879714.
0.906144.
0.870506.
0.938664.
0.022418.
Efficiency and Cost Reduction Domain
MSPB *± .............................................................
AMI Payment *± ..................................................
HF Payment *± ....................................................
Median Medicare Spending Per Beneficiary
ratio across all hospitals during the performance period.
Median Hospital-Level, Risk-Standardized
Payment Associated with a 30-Day Episode-of-Care across all hospitals during the
performance period.
Median Hospital-Level, Risk-Standardized
Payment Associated with a 30-Day Episode-of-Care across all hospitals during the
performance period.
Mean of the lowest decile Medicare Spending
Per Beneficiary ratios across all hospitals
during the performance period.
Mean of the lowest decile Hospital-Level,
Risk-Standardized Payment Associated with
a 30-Day Episode-of-Care across all hospitals during the performance period.
Mean of the lowest decile Hospital-Level,
Risk-Standardized Payment Associated with
a 30-Day Episode-of-Care across all hospitals during the performance period.
sradovich on DSK3GMQ082PROD with RULES2
± Previously adopted performance standards.
* Lower values represent better performance.
† After publication of the FY 2017 IPPS/LTCH PPS final rule, we determined there was a display error in the performance standards for this
measure. We have since undertaken a technical update for these performance standards in order to ensure that hospitals have the correct performance standards for the applicable performance period. The corrected performance standards are displayed here.
d. Previously Adopted and Newly
Finalized Performance Standards for
Certain Measures for the FY 2022
Program Year
As discussed above, we have adopted
certain measures for the Clinical Care
and Efficiency and Cost Reduction
domains for future program years in
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order to ensure that we can adopt
baseline and performance periods of
sufficient length for performance
scoring purposes. In the FY 2017 IPPS/
LTCH PPS final rule (81 FR 57009), we
adopted performance standards for the
FY 2022 program year for the Clinical
Care domain measures (THA/TKA,
MORT–30–HF, MORT–30–AMI,
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MORT–30–PN (updated cohort),
MORT–30–COPD, and MORT–30–
CABG) and the Efficiency and Cost
Reduction domain measures (AMI
Payment and HF Payment). In section
V.J.4.a. of the preamble of the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19971 through 19973), we proposed to
add one measure, the PN Payment
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measure, beginning with the FY 2022
program year. We note that the
performance standards for the MSPB,
AMI Payment, HF Payment, and PN
Payment measures are based on
performance period data; therefore, we
are unable to provide numerical
equivalents for the standards at this
time.
We invited public comment on the
proposed performance standards for
certain measures for the FY 2022
program year. We did not receive any
public comments on the proposed PN
Payment measure performance
standards for the FY 2022 program year
and are are adopting the performance
standards listed in the table below. The
previously adopted and newly finalized
performance standards for these
measures are set out in the table below.
The table below is up-to-date and
represents the most recently available
data.
PREVIOUSLY ADOPTED AND NEWLY FINALIZED PERFORMANCE STANDARDS FOR THE FY 2022 PROGRAM YEAR
Measure short name
Achievement threshold
Benchmark
Clinical Care Domain
MORT–30–AMI ±
.................................................
MORT–30–HF ± ..................................................
MORT–30–PN (updated cohort) ± ......................
MORT–30–COPD ± .............................................
MORT–30–CABG ± .............................................
THA/TKA * ± ........................................................
0.861793
0.879869
0.836122
0.920058
0.968210
0.029833
..........................................................
..........................................................
..........................................................
..........................................................
..........................................................
..........................................................
0.881305.
0.903608.
0.870506.
0.936962.
0.979000.
0.021493.
Efficiency and Cost Reduction Domain
MSPB * ± .............................................................
AMI Payment * ± ..................................................
HF Payment * ± ...................................................
PN Payment *# ....................................................
Median Medicare Spending Per Beneficiary
ratio across all hospitals during the performance period.
Median Hospital-Level, Risk-Standardized
Payment Associated with a 30-Day Episode-of-Care across all hospitals during the
performance period.
Median Hospital-Level, Risk-Standardized
Payment Associated with a 30-Day Episode-of-Care across all hospitals during the
performance period.
Median Hospital-Level, Risk-Standardized
Payment Associated with a 30-Day Episode-of-Care across all hospitals during the
performance period.
Mean of the lowest decile Medicare Spending
Per Beneficiary ratios across all hospitals
during the performance period.
Mean of the lowest decile Hospital-Level,
Risk-Standardized Payment Associated with
a 30-Day Episode-of-Care across all hospitals during the performance period.
Mean of the lowest decile Hospital-Level,
Risk-Standardized Payment Associated with
a 30-Day Episode-of-Care across all hospitals during the performance period.
Mean of the lowest decile Hospital-Level,
Risk-Standardized Payment Associated with
a 30-Day Episode-of-Care across all hospitals during the performance period.
± Previously
adopted performance standards.
publication of the FY 2017 IPPS/LTCH PPS final rule, we determined there was a display error in the performance standards for this
measure. Specifically, the Achievement Threshold and Benchmark values, while accurate, were presented in the wrong categories. We have corrected this issue in the table above, and the correct performance standards are displayed here.
* Lower values represent better performance.
# Scored the same as the MSPB, AMI Payment, and HF Payment measures, as discussed in section V.J.4.a.(2) of the preamble of this final
rule.
sradovich on DSK3GMQ082PROD with RULES2
† After
e. Performance Standards for Certain
Measures for the FY 2023 Program Year
As discussed above, we have adopted
certain measures for the Clinical Care
and Efficiency and Cost Reduction
domains for future program years in
order to ensure that we can adopt
baseline and performance periods of
sufficient length for performance
scoring purposes. In the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19982
through 19983), we proposed the
following performance standards for the
FY 2023 program year for the Clinical
Care domain measures (THA/TKA,
MORT–30–AMI, MORT–30–HF,
MORT–30–PN (updated cohort),
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MORT–30–COPD, and MORT–30–
CABG) and for the Efficiency and Cost
Reduction domain measures (MSPB,
AMI Payment, HF Payment, and the
proposed PN Payment measure).
Although we are finalizing our proposal
to adopt the Patient Safety and Adverse
Events (Composite) measure beginning
with the FY 2023 program year, we do
not currently have data available to
calculate the performance standards; we
therefore intend to propose the FY 2023
performance standards for this measure
in next year’s rulemaking. We note that
the performance standards for the
MSPB, AMI Payment, HF Payment, and
PN Payment measures are based on
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performance period data; therefore, we
are unable to provide numerical
equivalents for the standards at this
time. These newly proposed
performance standards for these
measures are set out in the table below.
We invited public comment on the
proposed performance standards for
certain measures for the FY 2023
program year. We did not receive any
public comments on the proposed
performance standards for the FY 2023
program year, and are adopting the
performance standards listed below.
The table below is up-to-date and
represents the most recently available
data.
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38265
NEWLY FINALIZED PERFORMANCE STANDARDS FOR THE FY 2023 PROGRAM YEAR
Measure short name
Achievement threshold
Benchmark
Clinical Care Domain
MORT–30–AMI ...................................................
MORT–30–HF ....................................................
MORT–30–PN (updated cohort) ........................
MORT–30–COPD ...............................................
MORT–30–CABG ...............................................
THA/TKA * ..........................................................
0.866548
0.881939
0.840138
0.919769
0.968747
0.027428
..........................................................
..........................................................
..........................................................
..........................................................
..........................................................
..........................................................
0.885499.
0.906798.
0.871741.
0.936349.
0.979620.
0.019779.
Efficiency and Cost Reduction Domain
MSPB * ...............................................................
AMI Payment *# ..................................................
HF Payment *# ....................................................
PN Payment *# ....................................................
Median Medicare Spending Per Beneficiary
ratio across all hospitals during the performance period.
Median Hospital-Level, Risk-Standardized
Payment Associated with a 30-Day Episode-of-Care across all hospitals during the
performance period.
Median Hospital-Level, Risk-Standardized
Payment Associated with a 30-Day Episode-of-Care across all hospitals during the
performance period.
Median Hospital-Level, Risk-Standardized
Payment Associated with a 30-Day Episode-of-Care across all hospitals during the
performance period.
Mean of the lowest decile Medicare Spending
Per Beneficiary ratios across all hospitals
during the performance period.
Mean of the lowest decile Hospital-Level,
Risk-Standardized Payment Associated with
a 30-Day Episode-of-Care across all hospitals during the performance period.
Mean of the lowest decile Hospital-Level,
Risk-Standardized Payment Associated with
a 30-Day Episode-of-Care across all hospitals during the performance period.
Mean of the lowest decile Hospital-Level,
Risk-Standardized Payment Associated with
a 30-Day Episode-of-Care across all hospitals during the performance period.
* Lower values represent better performance.
# Scored the same as the MSPB, AMI Payment, and HF Payment measures, as discussed in section V.J.4.a.(2) of the preamble of this final
rule.
7. Scoring Methodology and Data
Requirements for the FY 2019 Program
Year and Subsequent Years
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a. Domain Weighting for the FY 2020
Program Year and Subsequent Years for
Hospitals That Receive a Score on All
Domains
In the FY 2016 IPPS/LTCH PPS final
rule (80 FR 49568 through 49570), we
adopted equal weight of 25 percent for
each of the four domains in the FY 2018
program year for hospitals that receive
a score in all domains. In the FY 2017
IPPS/LTCH PPS final rule (81 FR 57009
through 57010), for the FY 2019
program year, we retained this domain
weighting. In the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19983), we
did not propose any changes to the
domain weights for the FY 2018 and FY
2019 program years.
For the FY 2020 program year and
subsequent years, we proposed to retain
this same domain weighting for
hospitals receiving a score on all four
domains. The previously adopted
domain weighting is summarized in the
table below.
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proportion of expense which is outside
the influence or control of the hospital,
and is not risk adjusted for clinical or
social factors, for market resources, or
for patient preference and decisionmaking and is, therefore, not
Weight
Domain
appropriate for inpatient care. In
(percent)
addition, the commenter stated that
Safety ..........................................
25 because Medicare has very few 30-day
Clinical Care ...............................
25 episode payments benchmarked, this
Efficiency and Cost Reduction ...
25 domain may not reflect performance on
Person and Community EngageMedicare populations. The commenter
ment * ......................................
25
therefore recommended CMS reduce the
* We renamed this domain from Patient- and weight of the Efficiency and Cost
Caregiver-Centered Experience of Care/Care Reduction domain as a whole and
Coordination domain to Person and Community Engagement domain beginning with the should focus on the episode payments
FY 2019 program year, as discussed in sec- which are most reliably manageable and
tion IV.H.3.b. of the FY 2017 IPPS/LTCH PPS suitable for influence and improvement
final rule (81 FR 56984).
by actions taken in the inpatient setting.
We invited public comment on this
Response: As we stated in the FY
proposal.
2014 IPPS/LTCH PPS final rule (79 FR
Comment: A few commenters
50048 through 50087), we believe we
recommended that CMS remove the
have appropriately balanced our desire
Efficiency and Cost Reduction domain
to provide strong incentives for
from the Hospital VBP Program because hospitals to consider both the cost and
commenters believe the domain is
the quality of the care that they provide
poorly defined and its only current
to Medicare beneficiaries by weighting
measure, the MSPB measure, cannot be
the Efficiency and Cost Reduction
meaningfully interpreted. In the
domain at 25 percent of the TPS while
alternative, commenters recommended
the quality-focused domains encompass
that CMS reduce the weighting of the
75 percent of the TPS. We note that
Efficiency and Cost Reduction domain
section 1886(o)(2)(B)(ii) of the Act
until the measures finalized for that
requires that the Hospital VBP Program
domain are further defined and tested.
include efficiency measures, including
One commenter stated that the MSPB measures of Medicare spending per
measure contains a substantial
beneficiary. We continue to believe the
DOMAIN WEIGHTS FOR THE FY 2019
PROGRAM YEAR AND SUBSEQUENT
YEARS FOR HOSPITALS RECEIVING A
SCORE ON ALL DOMAINS
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sradovich on DSK3GMQ082PROD with RULES2
Efficiency and Cost Reduction domain
merits a significant portion of the TPS
in order to ensure that hospitals monitor
the costs of the care they provide to
Medicare beneficiaries during the
inpatient hospitalization and are
involved in the coordination of
beneficiaries’ care immediately prior to
a hospitalization and post-discharge. We
believe based on the current Hospital
VBP Program measure set that the
Efficiency and Cost Reduction domain
is appropriately weighted, and despite
not directly addressing patient
outcomes, this domain encourages
hospitals to assess cost in conjunction
with quality of care. We also believe
that hospitals can effect change through
the measures in each of the four
domains in the Hospital VBP Program.
After consideration of the public
comments we received, we are
finalizing our proposal to retain the
equal weight of 25 percent for each of
the four domains in the FY 2020
program year and subsequent years for
hospitals that receive a score in all
domains.
b. Domain Weighting for the FY 2019
Program Year and Subsequent Years for
Hospitals Receiving Scores on Fewer
Than Four Domains
For the FY 2017 program year and
subsequent years, we adopted a policy
that hospitals must receive domain
scores on at least three of four quality
domains in order to receive a TPS, and
hospitals with sufficient data on only
three domains will have their TPSs
proportionately reweighted (79 FR
50084 through 50085). In the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19983), we did not propose any changes
to these domain weights for the FY 2019
program year or subsequent years.
For a hospital to receive a TPS for the
FY 2019 program year and subsequent
years:
• Hospitals must report a minimum
number of 100 completed HCAHPS
surveys for a hospital to receive a
Person and Community Engagement
domain score.
• Hospitals must receive a minimum
of one measure score within the
Efficiency and Cost Reduction domain.
• Hospitals must receive a minimum
of two measure scores within the
Clinical Care domain.
• Hospitals must receive a minimum
of two measure scores within the Safety
domain.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19983 through
19984), we proposed two changes to our
domain scoring policies for the FY 2019
program year and subsequent years. We
proposed to change the minimum
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number of measures scores a hospital
must receive to receive a score on the
Safety domain from three measures to
two measures. Second, we proposed
that hospitals must receive a minimum
of one measure score within the
Efficiency and Cost Reduction domain
to receive a domain score rather than
requiring that hospitals meet the
requirements to receive a MSPB
measure score.
The proposed change to the Safety
domain minimum number of measure
scores was based on our proposal to
remove the current PSI 90 measure from
the Hospital VBP Program beginning
with the FY 2019 program year. Based
on our analyses, removing this measure
but maintaining the requirement that a
hospital receive three measure scores in
order to receive a Safety domain score
would have a significant impact on the
number of hospitals eligible to receive a
Safety domain score. Therefore, in order
to include the greatest number of
hospitals in the Hospital VBP Program
possible while ensuring the need for
TPSs to be sufficiently reliable, we
proposed to reduce the minimum
number of required measure scores
within the Safety domain from three
measures to two.
In addition, we note that we did not
propose to reduce the number of
measures a hospital must receive a score
on in order to receive an Efficiency and
Cost Reduction domain score. Under the
current program requirements (79 FR
50086), a hospital must be eligible to
receive a score on the MSPB measure in
order to receive a score for this domain.
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 56987 through 56990 and 81
FR 56990 through 56992), we adopted
two condition-specific payment
measures, the AMI Payment and HF
Payment measures, beginning with the
FY 2021 program year, and as discussed
in section V.J.4.a. of the preamble of this
final rule in the FY 2018 IPPS/LTCH
PPS proposed rule, we proposed to
adopt one additional condition-specific
payment measure, the PN Payment
measure. We therefore proposed to
require that hospitals must be eligible to
receive a score on at least one measure
within the Efficiency and Cost
Reduction domain, rather than on the
MSPB measure specifically, to reflect
this expansion of the domain’s measure
set.
We believe these proposed changes
reflect the evolution of the Hospital VBP
Program measure set, and we continue
to believe that these requirements
appropriately balance our desire to
enable as many hospitals as possible to
participate in the Hospital VBP Program
and the need for TPSs to be sufficiently
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reliable to provide meaningful
distinctions between hospitals’
performance on quality measures.
We invited public comment on these
proposals.
Comment: A few commenters
supported CMS’ proposal to reduce the
number of measures for which a
hospital must have a score to receive a
Safety domain score from three
measures to two.
Response: We thank the commenters
for their support.
After consideration of the public
comments we received, we are
finalizing our proposals to: Reduce the
number of measures for which a
hospital must have a score to receive a
Safety domain score from three
measures to two; and that hospitals
must be eligible to receive a score on at
least one measure within the Efficiency
and Cost Reduction domain as
proposed.
c. Minimum Numbers of Cases for
Hospital VBP Program Measures for the
FY 2019 Program Year and Subsequent
Years
(1) Background
Section 1886(o)(1)(C)(ii)(IV) of the Act
requires the Secretary to exclude for the
fiscal year hospitals that do not report
a minimum number (as determined by
the Secretary) of cases for the measures
that apply to the hospital for the
performance period for the fiscal year.
Under section 1886(o)(1)(C)(iii) of the
Act, in determining the minimum
number of reported cases for a given
measure, the Secretary must conduct an
independent analysis of what minimum
numbers would be appropriate. For
additional discussion of the previously
finalized minimum numbers of cases for
measures under the Hospital VBP
Program, we refer readers to the
Hospital Inpatient VBP Program final
rule (76 FR 26527 through 26531); the
CY 2012 OPPS/ASC final rule (76 FR
74532 through 74534); the FY 2013
IPPS/LTCH PPS final rule (77 FR 53608
through 53609); the FY 2015 IPPS/LTCH
PPS final rule (79 FR 50085); the FY
2016 IPPS/LTCH PPS final rule (80 FR
49570); and the FY 2017 IPPS/LTCH
PPS final rule (81 FR 57011).
(2) Person and Community Engagement
Domain
In the Hospital Inpatient VBP Program
final rule (76 FR 26527 through 26531),
we adopted a minimum number of 100
completed HCAHPS Surveys for a
hospital to receive a score on the
HCAHPS measure.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19984), we did not
propose any changes to this policy.
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(3) Clinical Care Domain
In the CY 2012 OPPS/ASC final rule
with comment period (76 FR 74532
through 74534), we adopted a minimum
number of 10 cases for the MORT–30–
AMI, MORT–30–HF, and MORT–30–PN
measures beginning with the FY 2014
program year. In the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53608
through 53609), we adopted a new
minimum number of 25 cases for the
MORT–30–AMI, MORT–30–HF, and
MORT–30–PN measures for the FY 2015
program year. We adopted the same 25case minimum for the MORT–30–COPD
measure in the FY 2016 IPPS/LTCH PPS
final rule (80 FR 49570), and for the
MORT–30–CABG, MORT–30–PN
(updated cohort), and THA/TKA
measures in the FY 2017 IPPS/LTCH
PPS final rule (81 FR 57011).
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19984), we did not
propose any changes to these policies.
sradovich on DSK3GMQ082PROD with RULES2
(4) Safety Domain
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53608 through 53609), we
adopted a minimum of one predicted
infection for NHSN-based surveillance
measures (that is, the CAUTI, CLABSI,
CDI, MRSA, and SSI measures) based on
CDC’s minimum case criteria. In the FY
2015 IPPS/LTCH PPS final rule (79 FR
50085), we adopted this case minimum
for the NHSN-based surveillance
measures FY 2016 Hospital VBP
Program and subsequent years. In the
FY 2012 IPPS/LTCH PPS final rule (76
FR 26530), we adopted a minimum of
10 cases for the PC–01 measure.73
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19984), beginning
with the FY 2023 program year, we
proposed that hospitals must report a
minimum of three eligible cases on any
one underlying indicator during the
baseline period in order to receive an
improvement score and three eligible
cases on any one underlying indicator
during performance period in order to
receive an achievement score on the
Patient Safety and Adverse Events
(Composite) measure. For the purposes
of the Patient Safety and Adverse Events
(Composite) measure, a case is
‘‘eligible’’ for a given indicator if it
meets the criterion for inclusion in the
73 We note that the PC–01 measure was
previously included in the Clinical Care—Process
domain. In the FY 2016 IPPS/LTCH PPS final rule
(80 FR 49553 through 49554), we re-categorized this
measure as a Safety domain measure beginning
with the FY 2018 program year.
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indicator measure population. This
minimum number of cases is based on
AHRQ’s methodology for scoring
performance on the Patient Safety and
Adverse Events (Composite) measure.
We note that these proposed minimum
data requirements for the Patient Safety
and Adverse Events (Composite)
measure are the same as those
previously finalized for the current PSI
90 measure.
We invited public comment on our
proposal regarding the minimum
number of cases for the Patient Safety
and Adverse Events (Composite)
measure.
We did not receive any public
comments on our proposal regarding the
minimum number of cases for the
Patient Safety and Adverse Events
(Composite) measure, and are finalizing
our proposal that hospitals must report
a minimum of three eligible cases on
any one underlying indicator during the
baseline period in order to receive an
improvement score and three eligible
cases on any one underlying indicator
during performance period in order to
receive an achievement score on the
Patient Safety and Adverse Events
(Composite) measure.
(5) Efficiency and Cost Reduction
Domain
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53609 through 53610), we
adopted a minimum of 25 cases in order
to receive a score for the MSPB measure.
In the FY 2015 IPPS/LTCH PPS final
rule (79 FR 50085 through 50086), we
retained the same MSPB measure case
minimum for the FY 2016 program year
and subsequent years.
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 56987 through 56990 and 81
FR 56990 through 56992, respectively),
we adopted the AMI Payment and HF
Payment measures in the Efficiency and
Cost Reduction domain for the FY 2021
program year and subsequent years. In
section V.J.4.a. of the preamble of this
final rule, we discuss our decision to
adopt the PN Payment measure in the
Efficiency and Cost Reduction domain
for the FY 2022 program year and
subsequent years. For these conditionspecific payment measures (namely, the
AMI Payment, HF Payment, and PN
Payment measures), in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19984 through 19985), we proposed that
hospitals must report a minimum
number of 25 cases per measure in order
to receive a measure score for the FY
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38267
2021 program year, FY 2022 program
year, and subsequent years. We believe
this minimum number of cases is
appropriate because it balances our
interest in allowing the maximum
possible number of hospitals the
opportunity to receive a score on the
measure and maintaining sufficiently
reliable scores. As we noted in the FY
2017 IPPS/LTCH PPS final rule (81 FR
56992), we expect this case minimum
will ensure that each hospital’s payment
measure rate is sufficiently reliable to
generate a score that meaningfully
distinguishes hospital performance on
the measures. In addition, the statistical
model that CMS uses to calculate the
payment measures allows for the
inclusion of hospitals with relatively
few cases by taking into account the
uncertainty associated with sample size.
We invited public comment on our
proposal regarding the minimum
number of cases for the AMI, HF, and
PN Payment measures.
Comment: One commenter stated that
requiring only 25 cases to calculate
condition-specific payment measure
scores for the AMI, HF, and PN Payment
measures is insufficient for stable,
reliable, and meaningful performance
metrics.
Response: We disagree with the
commenter that hospitals will not be
able to report statistically reliable
information on the PN Payment measure
because we believe the case minimum
will ensure that each hospital’s payment
measure rate is sufficiently reliable to
generate a score that meaningfully
distinguishes hospital performance on
the measures. The statistical model that
we use to calculate the payment
measures allows for the inclusion of
hospitals with relatively few cases by
taking into account the uncertainty
associated with sample size.
After consideration of the public
comments we received, we are
finalizing our proposal that hospitals
must report a minimum number of 25
cases per measure in order to receive a
measure score on the condition-specific
payment measures as proposed.
(6) Summary of Previously Adopted and
Newly Finalized Minimum Numbers of
Cases for the FY 2019 Program Year and
Subsequent Years
The previously adopted and newly
finalized minimum numbers of cases for
these measures are set forth in the table
below.
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PREVIOUSLY ADOPTED AND NEWLY FINALIZED MINIMUM CASE NUMBER REQUIREMENTS FOR THE FY 2019 PROGRAM
YEAR AND SUBSEQUENT YEARS
Measure short name
Minimum number of cases
Person and Community Engagement Domain
HCAHPS ......................................................................
Hospitals must report a minimum number of 100 completed HCAHPS surveys.
Clinical Care Domain
MORT–30–AMI ............................................................
MORT–30–HF ..............................................................
MORT–30–PN (updated cohort) ..................................
MORT–30–COPD ........................................................
MORT–30–CABG ........................................................
THA/TKA ......................................................................
Hospitals
Hospitals
Hospitals
Hospitals
Hospitals
Hospitals
must
must
must
must
must
must
report
report
report
report
report
report
a
a
a
a
a
a
minimum
minimum
minimum
minimum
minimum
minimum
number
number
number
number
number
number
of
of
of
of
of
of
25
25
25
25
25
25
cases.
cases.
cases.
cases.
cases.
cases.
Safety Domain
CAUTI ..........................................................................
CLABSI ........................................................................
Colon and Abdominal Hysterectomy SSI ....................
MRSA Bacteremia .......................................................
CDI ...............................................................................
Patient Safety and Adverse Events (Composite)# ......
PC–01 ..........................................................................
Hospitals
Hospitals
Hospitals
Hospitals
Hospitals
Hospitals
Hospitals
have
have
have
have
have
must
must
a minimum of 1.000 predicted infections as calculated by the CDC.
a minimum of 1.000 predicted infections as calculated by the CDC.
a minimum of 1.000 predicted infections as calculated by the CDC.
a minimum of 1.000 predicted infections as calculated by the CDC.
a minimum of 1.000 predicted infections as calculated by the CDC.
report a minimum of three eligible cases on any one underlying indicator.
report a minimum of 10 cases.
Efficiency and Cost Reduction Domain
MSPB ...........................................................................
AMI Payment ...............................................................
HF Payment .................................................................
PN Payment * ...............................................................
Hospitals
Hospitals
Hospitals
Hospitals
must
must
must
must
report
report
report
report
a
a
a
a
minimum
minimum
minimum
minimum
number
number
number
number
of
of
of
of
25
25
25
25
cases.
cases.
cases.
cases.
# In section V.J.3.b. of the preamble of this final rule, we are finalizing our proposal to remove the current PSI 90 measure beginning with the
FY 2019 program year. In section V.J.4.b. of the preamble of this final rule, we are finalizing our proposal to adopt the Patient Safety and Adverse Events (Composite) measure beginning with the FY 2023 program year.
* In section V.J.4.a. of the preamble of this final rule, we are finalizing our proposal to adopt the PN Payment measure beginning with the FY
2022 program year.
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d. Weighting Measures Within the
Efficiency and Cost Reduction Domain
In the FY 2012 IPPS/LTCH PPS final
rule (76 FR 51618 through 51627), we
adopted the MSPB measure for the
Hospital VBP Program beginning with
the FY 2015 program year. MSPB is the
only cost measure in the Hospital VBP
Program through the FY 2020 program
year; as a result, hospitals’ Efficiency
and Cost Reduction domain scores are
currently based solely on their MSPB
measure scores. In the FY 2017 IPPS/
LTCH PPS final rule, we adopted two
condition-specific cost measures, the
AMI Payment and HF Payment
measures, beginning with the FY 2021
program year (81 FR 56987 through
56990 and 81 FR 56990 through 56992,
respectively). In addition, as discussed
in section V.J.4.a. of the preamble of this
final rule, we are finalizing our proposal
to adopt an additional conditionspecific cost measure, the PN Payment
measure, beginning with the FY 2022
program year. Based on this evolution of
the Hospital VBP Program measure set,
we believe it is appropriate to address
measure score weighting within the
Efficiency and Cost Reduction domain.
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In determining how to weight
measures in the Efficiency and Cost
Reduction domain, we took into
consideration hospitals’ experience with
the measures and the measures’ ability
to incentivize greater coordination
among hospitals, physicians, and
providers of post-acute care services to
optimize the value of care they provide
to Medicare beneficiaries. Therefore, in
the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 19985 through 19986), we
proposed to weight the measures within
the Efficiency and Cost Reduction
domain such that the MSPB measure
comprises 50 percent of a hospital’s
domain score and the other conditionspecific payment measures, weighed
equally, comprise the remaining 50
percent of a hospital’s domain score,
beginning with the FY 2021 program
year and for subsequent years. We
further proposed that:
• If a hospital meets the case
minimum to receive a score on the
MSPB measure but does not meet the
minimum number of cases for any other
measures in the Efficiency and Cost
Reduction domain, its domain score
will be based solely on its MSPB score;
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• If a hospital does not meet the case
minimum to receive a score on the
MSPB measure but meets the minimum
number of cases for any other measure
or measures within the Efficiency and
Cost Reduction domain, its domain
score will be based on its scores on the
other payment measures, weighted
equally (that is, the MSPB measure’s
weight will be redistributed equally
among the Efficiency and Cost
Reduction domain measures for which
the hospital is eligible receive a score);
and
• If a hospital meets the case
minimum to receive a score on the
MSPB measure and one or more other
measures within the Efficiency and Cost
Reduction domain, but not all measures
within this domain, the hospital’s MSPB
measure score will comprise 50 percent
of its domain score and the remaining
50 percent will be divided equally
among the measures for which the
hospital is eligible to receive a score.
Under our proposed weighting
scheme, a hospital’s MSPB measure
score could constitute between 12.5
percent and 25 percent of the hospital’s
TPS. We believe the proposed weighting
is appropriate because the MSPB
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measure is an overall spending measure
and is therefore more broadly applicable
than the condition-specific payment
measures. In addition, hospitals have
the most familiarity with this measure
because it has been in the program the
longest. We also considered proposing
to weight all measures within the
Efficiency and Cost Reduction domain
equally. However, we determined this
weighting may not reflect the broader
applicability of the MSPB measure and
its importance in ensuring that hospitals
monitor the overall costs of care they
provide to a larger subset of Medicare
beneficiaries during an inpatient
hospitalization and are involved in the
coordination of beneficiaries’ care
immediately prior to hospitalization and
post-discharge.
We invited public comment on these
proposals.
Comment: Some commenters
supported CMS’ proposal to reweight
the Efficiency and Cost Reduction
domain to reflect the adoption of
additional condition-specific payment
measures. One commenter specifically
supported CMS’ proposal to reweight
the Efficiency and Cost Reduction
domain because these measures
encourage providers to consider the
resource use implications of their
hospital and specialist referral patterns.
Response: We thank the commenters
for their support.
Comment: A few commenters
recommended that CMS weight all
measures within the Efficiency and Cost
Reduction domain equally, because
these commenters believe doing so
would enable hospitals to more easily
improve performance in this domain by
targeting cost reduction for specific
conditions. One commenter noted the
other measure domains in the Hospital
VBP Program weight all measures
equally within a given domain, and
therefore recommended that CMS
weight all measures within the
Efficiency and Cost Reduction domain
equally.
Response: While we acknowledge the
commenter’s concerns regarding the
disproportionate weighting of the MSPB
measure, we believe the fundamental
differences between this measure and
condition-specific payment measures
justify weighting the MSPB measure
higher in the Efficiency and Cost
Reduction domain. The MSPB measure
is an overall spending measure that has
been in the Hospital VBP Program for
many years. In addition, we note this
weighting allocation actually reduces
the total weight of the MSPB measure in
hospitals’ TPSs from 25 percent to 12.5
percent, depending upon whether the
hospital is eligible to receive a score on
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one of the condition-specific payment
measures.
Comment: Many commenters
recommended that CMS not finalize its
proposal to weight the MSPB measure at
50 percent of the Efficiency and Cost
Reduction domain, noting that the
measure double-counts payments
captured in the condition-specific
measures in the domain, the measure’s
comprehensiveness makes it difficult for
hospitals to improve, and the recent
ASPE report that noted deficiencies in
the measure’s current risk adjustment
which may penalize providers for
medical risk beyond the provider’s
control. Two commenters recommended
that the MSPB measure should be
removed from the program starting FY
2021, stating that reliance on conditionspecific measures will ensure that
payments are not double-counted and
will make it easier for providers to
implement targeted strategies to
improve performance. At a minimum,
commenters requested that the measure
be equally weighted with the other
episode of care payment measures.
Response: We thank the commenters
for their recommendations. However,
we note that section 1886(o)(2)(B)(ii) of
the Act requires that the Hospital VBP
Program ‘‘include efficiency measures,
including measures of ‘Medicare
spending per beneficiary.’ ’’ While we
agree the condition-specific payment
measures will provide hospitals with
important data on payments associated
with an episode of care, we continue to
believe the MSPB measure also provides
hospitals with valuable information
because this measure captures resource
use data for a wide range of services
provided in the inpatient hospital
setting. We will continue to consider
other future measures for the Efficiency
and Cost Reduction domain, and
encourage commenters to submit any
fully developed measures for
consideration for the Measures Under
Consideration List as part of the prerulemaking process (details available at:
https://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/QualityMeasures/Pre-RuleMaking.html).
Comment: One commenter stated that
weighting the HF and PN Payment
measures together at 50 percent of the
Efficiency and Cost Reduction domain
in the FY 2021 program year gives these
measures a significantly
disproportionate weight in the overall
calculation compared to other measures.
Response: We interpret commenter’s
reference to PN Payment in the FY 2021
program year to mean the AMI Payment
measure finalized for that year alongside
the HF Payment measure. While we
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38269
recognize this proposed weighting
results in the condition-specific
payment measures represent between
12.5 percent and 6.25 percent, we
believe this weight is appropriate for the
condition-specific payment measures.
The condition-specific payment
measures, paired with their
corresponding quality measures, are
intended to serve as a larger assessment
of value of care provided at a hospital.
We therefore believe it is important to
weight the measures in a manner that
incentivizes hospitals to strive for
continued improvement in this area.
Comment: One commenter
recommended weighting the conditionspecific payment measures at 20 percent
of the Efficiency and Cost Reduction
domain in order to mitigate the overlap
between these measures and the MSPB
measure, and to reduce the possibility of
this overlap leading to mixed signals for
hospitals regarding their resource use.
Response: We interpret commenter’s
recommendation to mean weighting the
three condition-specific payment
measures, combined, at 20 percent of
the Efficiency and Cost Reduction
domain, which represents 25 percent of
a hospital’s TPS. Assuming this
position, under this recommendation, if
a hospital were eligible to receive a
score on all three condition-specific
payment measures, these three measures
would only represent five percent of the
hospital’s TPS. We believe weighting
the condition-specific payments
measures at 20 percent of the Efficiency
and Cost Reduction domain does not
afford the measures sufficient weight to
drive an increased focus on the value of
care provided at hospitals. However, we
will continue to monitor the impact of
weighting the measures within the
Efficiency and Cost Reduction domain
for unintended consequences.
After consideration of the public
comments we received, we are
finalizing our proposal to weight the
measures within the Efficiency and Cost
Reduction domain such that the MSPB
measure comprises 50 percent of a
hospital’s domain score and the other
condition-specific payment measures,
weighed equally, comprise the
remaining 50 percent of a hospital’s
domain score, beginning with the FY
2021 program year.
K. Changes to the Hospital-Acquired
Condition (HAC) Reduction Program
1. Background
We refer readers to section V.I.1.a. of
the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50707 through 50708) for a
general overview of the HAC Reduction
Program. For a detailed discussion of
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the statutory basis of the HAC
Reduction Program, we refer readers to
section V.I.2. of the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50708 through
50709). For a further description of our
previously finalized policies for the
HAC Reduction Program, we refer
readers to the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50707 through 50729),
the FY 2015 IPPS/LTCH PPS final rule
(79 FR 50087 through 50104), the FY
2016 IPPS/LTCH PPS final rule (80 FR
49570 through 49581), and the FY 2017
IPPS/LTCH PPS final rule (81 FR 57011
through 57026). These policies describe
the general framework for
implementation of the HAC Reduction
Program, including: (a) The relevant
definitions applicable to the program;
(b) the payment adjustment under the
program; (c) the measure selection
process and conditions for the program,
including a risk-adjustment and scoring
methodology; (d) performance scoring;
(e) the process for making hospitalspecific performance information
available to the public, including the
opportunity for a hospital to review the
information and submit corrections; and
(f) limitation of administrative and
judicial review.
We also have codified certain
requirements of the HAC Reduction
Program at 42 CFR 412.170 through
412.172.
2. Implementation of the HAC
Reduction Program for FY 2018
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50717), we finalized the
following Centers for Disease Control
and Prevention (CDC) National
Healthcare Safety Network (NHSN)
measures for Domain 2 for use in the FY
2015 program and subsequent years:
CLABSI, CAUTI, Colon and Abdominal
Hysterectomy SSI, MRSA Bacteremia,
and CDI. In the FY 2017 IPPS/LTCH
PPS final rule (81 FR 57020), we
finalized the use of the Patient Safety
and Adverse Events Composite (PSI 90)
measure for use in the FY 2018 program
and subsequent years for Domain 1.
CMS strives to put patients first,
ensuring they are empowered to make
decisions about their own healthcare
along with their clinicians using
information from data-driven insights
that are increasingly aligned with
meaningful quality measures. We
support technology that reduces burden
and allows clinicians to focus on
providing high-quality healthcare for
their patients. We also support
innovative approaches to improve
quality, accessibility, and affordability
of care while paying particular attention
to improving clinicians’ and
beneficiaries’ experience when
interacting with CMS programs. In
combination with other efforts across
the Department of Health and Human
Services, we believe the HAC Reduction
Program helps to encourage hospitals to
improve healthcare quality and value,
while giving patients and providers the
tools and information needed to make
the best decisions for themselves. We
recognize that the HAC Reduction
Program represents a key component of
the way that we bring quality
measurement and improvement together
with payment, we have taken efforts to
review existing policies to identify how
to move the program forward in the
least burdensome manner possible
while continuing to promote
improvement in the quality of care
provided to patients. These previously
finalized measures are shown in the
table below.
HAC REDUCTION PROGRAM MEASURES FOR FY 2018
Short name
Measure name
NQF #
Domain 1
PSI 90 ......................................
Patient Safety and Adverse Events Composite ............................................................................
0531
Domain 2
CAUTI ......................................
CDI ...........................................
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CLABSI ....................................
Colon and Abdominal
Hysterectomy SSI.
MRSA Bacteremia ...................
NHSN Catheter-associated Urinary Tract Infection (CAUTI) Outcome Measure ........................
NHSN Facility-wide Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome
Measure.
NHSN Central Line-Associated Bloodstream Infection (CLABSI) Outcome Measure .................
American College of Surgeons—Centers for Disease Control and Prevention (ACS–CDC)
Harmonized Procedure Specific Surgical Site Infection (SSI) Outcome Measure.
NHSN Facility-wide Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus
(MRSA) Bacteremia Outcome Measure.
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57022), we finalized a 15month performance period from July 1,
2014 through September 30, 2015, for
the Domain 1 measure (PSI 90 Patient
Safety and Adverse Events Composite)
and a 24-month performance period
from January 1, 2015 through December
31, 2016 (CYs 2015 and 2016) for
Domain 2 measures (CLABSI, CAUTI,
Colon and Abdominal Hysterectomy
SSI, MRSA Bacteremia, and CDI) for the
FY 2018 HAC Reduction Program. We
anticipate we will be able to provide
hospitals with their confidential
hospital-specific reports and discharge
level information used in the
calculation of their FY 2018 Total HAC
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0138
1717
0139
0753
1716
Score in late summer 2017 via the
QualityNet Secure Portal.74 In order to
access their hospital-specific reports,
hospitals must register for a QualityNet
Secure Portal account.
We did not make any changes to the
review and correction policies for FY
2017. Hospitals have a period of 30 days
after the information is posted to the
QualityNet Secure Portal to review and
submit corrections for the calculation of
their HAC Reduction Program measure
scores, domain scores, and Total HAC
Score for the fiscal year. As we have
noted on the QualityNet Web site,75 the
review and corrections process does not
allow hospitals to submit additional
corrections related to the underlying
claims data for the PSI 90 Composite, or
to add new claims to the data extract
used to calculate the results. In
addition, under the Hospital IQR
Program, hospitals have an opportunity
to submit, review, and correct the chartabstracted information used to calculate
the CLABSI, CAUTI, Surgical Site
Infection (SSI), MRSA, and CDI
healthcare-associated infection (HAI)
74 Available at: https://www.qualitynet.org/dcs/
ContentServer?c=Page&pagename=QnetPublic
%2FPage%2FQnetBasic&cid=1228773343598.
75 Available at: https://www.qualitynet.org/dcs/
ContentServer?c=Page&pagename=QnetPublic
%2FPage%2FQnetTier3&cid=1228774298609.
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measures. The HAC Reduction
Program’s review and corrections
process does not allow hospitals to
correct: (1) Reported number of HAIs,
(2) Standardized Infection Ratios (SIRs),
or (3) reported central-line days, urinary
catheter days, surgical procedures
performed, or patient days. For further
information related to the review and
correction process we refer readers to
the 2014 IPPS/LTCH PPS final rule (78
FR 50725 through 50728).
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50726), we stated that the
HAC Reduction Program would use the
same process as the Hospital IQR
Program for hospitals to review and
correct data for chart-abstracted
measures in Domain 2. Under this
process, hospitals can review and
correct data they submit on all Hospital
IQR Program chart-abstracted measures,
whether or not the measures were
adopted as a measure for the HAC
Reduction Program. In that rule, we
stated that under the Hospital IQR
Program, hospitals had an opportunity
to submit, review, and correct any of the
chart-abstracted information for the full
41⁄2 months following the last discharge
date in a calendar quarter. To align with
the Hospital IQR Program, we are
clarifying the language used for
reporting requirements for chartabstracted measures. We note that
NHSN requires that data be submitted
on a monthly basis and CDC strongly
encourages healthcare facilities to enter
each month’s data within 30 days of the
end of the month in which it is
collected so it has the greatest impact on
infection prevention activities.
However, for purposes of fulfilling
CMS quality measurement reporting
requirements, each facility’s data must
be entered into NHSN no later than 41⁄2
months after the end of the reporting
quarter. We further note that NHSN data
are reported based on when the event
occurred, as opposed to when the
patient was discharged. For data
submitted for SSIs, facilities should
include SSIs that are associated with
procedures that were performed during
the reporting time period. We refer
readers to CDC Web site for additional
resources and data submission
requirements, which can be found at:
https://www.cdc.gov/nhsn/cms/
index.html.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19986 through
19990), for the HAC Reduction Program,
we: (1) Proposed to specify the dates of
the time period used to calculate
hospital performance for the FY 2020
HAC Reduction Program; (2) requested
comment on additional measures for
potential future adoption; (3) requested
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comment on social risk factors; (4)
requested comment on accounting for
disability and medical complexity in the
CDC NHSN measures in Domain 2; and
(5) proposed to update the
Extraordinary Circumstance Exception
policy beginning in FY 2018 as related
to extraordinary circumstances that
occur on or after October 1, 2017. These
proposals are described in more detail
below.
3. Data Collection Time Periods for the
FY 2020 HAC Reduction Program
Section 1886(p)(4) of the Act gives the
Secretary the statutory authority to
determine the ‘‘applicable period’’
during which data are collected for the
HAC Reduction Program. In the FY 2014
IPPS/LTCH PPS final rule (78 FR
50717), we finalized and codified at 42
CFR 412.170 that we would use a 24month data collection period of
performance data to calculate the Total
HAC Score. In the FY 2017 IPPS/LTCH
PPS final rule (81 FR 57020), we
finalized a truncated data collection
period for Domain 1, shorter than the
previous 24-month data collection
period for calculating the Total HAC
Score for the FY 2018 and FY 2019 HAC
Reduction Programs, to accommodate
the transition to the ICD–10
classification system. We also changed
the definition of ‘‘applicable period,’’ in
42 CFR 412.170, to reflect this change.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19987), for the FY
2020 program, we proposed to return to
a 24-month data collection period for
the calculation of HAC Reduction
Program measure results. We believe
that using 24 months of data for both
domains balances the needs of the
program against the data-collection
processes utilized by hospitals, and
allows for sufficient time to process the
claims data and calculate the measure
results. The 24-month data collection
period allows time to complete the
complex calculation process for the
measures, to perform comprehensive
quality assurance to enhance the
accuracy of measure results, and to
disseminate confidential reports on
hospital-level results to individual
hospitals. For the Domain 1 measure
(Patient Safety and Adverse Events
Composite), we proposed to use the 24month period from July 1, 2016 through
June 30, 2018. The claims for all
Medicare Fee-for-Service beneficiaries
discharged during this period would be
included in the calculations of measure
results for Domain 1 for the FY 2020
program. For the CDC NHSN measures
in Domain 2 (CLABSI, CAUTI, Colon
and Abdominal Hysterectomy SSI,
MRSA Bacteremia, and CDI), we
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38271
proposed to use data from CYs 2017 and
2018, that is January 1, 2017–December
31, 2018, for the FY 2020 program.
Comment: Some commenters
supported returning to a 24-month data
collection period for all measures.
However, a few commenters
recommended adoption of a 12-month
data collection period. These
commenters stated that a shorter
performance would provide hospitals
with more timely information to
develop quality improvement
initiatives.
Response: We thank commenters for
their support and we understand that
reliable data is a critical component of
accurately assessing hospital
performance. We believe the 24-month
data collection period supports our
continued goal to minimize provider
burden and incentivize high-quality
care. As we noted in the 2014 IPPS/
LTCH PPS final rule (78 FR 50717), we
adopted the 24-month data collection
period based on recommendations from
AHRQ, the measure developer. An
analysis of the recalibrated PSIs show
that most PSIs included in the PSI 90
composite have at least moderate
reliability, on average, using a 24-month
time period. We continue to believe that
the 24-month data collection period
provides hospitals and the public the
most reliable data available.
After consideration of the public
comments we received, we are
finalizing the Fiscal Year 2020 data
collection period as proposed.
4. Request for Comments on Additional
Measures for Potential Future Adoption
In the FY 2017 IPPS/LTCH PPS
proposed rule (81 FR 25123), we
welcomed public comment and
suggestions for additional HAC
Reduction Program measures. We
believe that our continued efforts to
reduce HACs are vital to improving
patients’ quality of care and reducing
complications and mortality, while
simultaneously decreasing costs. The
reduction of HACs is an important
marker of quality of care and has a
positive impact on both patient
outcomes and cost of care. Our goal for
the HAC Reduction Program is to
heighten the awareness of HACs and
reduce the number of incidences that
occur.
As part of our ongoing efforts to
evaluate and strengthen the HAC
Reduction Program, we are conducting
a review of patient safety measures to
include in Domain 1. We seek to adopt
outcomes-focused patient-safety
measures with an emphasis on topic
areas including, but not limited to: Falls
with injury, adverse drug events (ADEs),
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glycemic events and ventilator
associated events (VAEs). NQF
identified these as gap areas for the HAC
Reduction Program.76
We note that falls are frequent in the
inpatient setting. An estimated 700,000
to 1 million inpatients fall each year in
U.S. hospitals.77 These falls can result
in further health care complications for
patients and add costs by increasing the
need for expensive imaging, like head
computed-tomography scans.78 Risk
assessment is the primary tool for
preventing falls 79 and research has
indicated that inpatient fall prevention
programs with patient education
components are effective in reducing
fall rates.80
ADEs are a frequent and preventable
occurrence among hospital inpatients.
They pose serious threats to patient
safety and can result in prolonged
hospitalization, increased morbidity and
higher health care costs.81
Glycemic events, a common
occurrence among inpatients, are
associated with a greater risk of negative
health outcomes.82 Many guidelines
exist to support glycemic control in
hospitalized patients. The most
common guideline recommendations
include documenting diabetes
diagnoses, obtaining a hemoglobin A1C
on admission, use of the ‘‘basal-bolus’’
method for insulin delivery,
discontinuation of noninsulin agents for
non-ICU patients with type 2 diabetes,
and use of standardized order sets.83
76 The National Quality Forum. NQF: MAP
hospital Workgroup—materials. October 18, 2016
https://www.qualityforum.org/Project
Materials.aspx?projectID=75369.
77 Sonnad, S.S., S. Mascioli, J. Cunningham, and
J. Goldsack. ‘‘Do Patients Accurately Perceive their
Fall Risk?’’ Nursing, vol. 44, no. 11, 2014, pp. 58–
62.
78 Fields, J., T. Alturkistani, N. Kumar, A. Kanuri,
D.N. Salem, S. Munn, and D. Blazey-Martin.
‘‘Prevalence and cost of imaging in inpatient falls:
the rising cost of falling.’’ ClinicoEconomics and
Outcomes Research, vol. 7, 2015, pp. 281–286.
79 Callis, N. ‘‘Falls Prevention: Identification of
Predictive Fall Risk Factors.’’ Applied Nursing
Research, vol. 29, 2016, pp. 53–58.
80 Lee, D.A., E. Pritchard, F. McDermott, and T.
P. Haines. ‘‘Falls Prevention Education for Older
Adults during and After Hospitalization: A
Systematic Review and Meta-Analysis.’’ Health
Education Journal, vol. 73, no. 5, 2014, pp. 530–
544.
81 Martins, A.C., F. Giordani, and S. Rozenfeld.
‘‘Adverse Drug Events among Adult Inpatients: A
Meta-Analysis of Observational Studies.’’ Journal of
Clinical Pharmacy and Therapeutics, vol. 39, no. 6,
2014, pp. 609–620.
82 Kilpatrick, C.R., M.B. Elliott, E. Pratt, S.J.
Schafers, M.C. Blackburn, K. Heard, J.B. Mcgill, M.
Thoelke, and G.S. Tobin. ‘‘Prevention of Inpatient
Hypoglycemia with a Real-Time Informatics Alert.’’
Journal of Hospital Medicine, vol. 9, no. 10, 2014,
pp. 621–626.
83 Maynard, G., K. Kulasa, P. Ramos, D. Childers,
B. Clay, M. Sebasky, E. Fink, A. Field, M. Renvall,
P.S. Juang, C. Choe, D. Pearson, B. Serences, and
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Mechanically ventilated patients are
at greater risk for VAEs, which can
result in morbidity and death.84 VAEs
include ventilator associated
pneumonia (VAP) and preventable
adverse events, such as pulmonary
edema and acute respiratory distress
syndrome. VAP continues to rank
among the most common HACs.
Effective prevention strategies for VAP
include early removal of invasive
devices and strict infection control and
prevention efforts to target these highrisk groups.85
Our overarching purpose is to support
the National Quality Strategy’s goals of
better health care for individuals, better
health for populations, and lower costs
for health care.86 To the extent
practicable, HAC Reduction Program
measures should be nationally endorsed
by a multi-stakeholder organization.
Measures should be aligned with best
practices among other payers and the
needs of the end users of the measures.
Measures should consider widely
accepted criteria established in medical
literature.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19987 through
19988), we welcomed public comment
and suggestions on these measure areas,
as well as additional outcome-based
patient-safety measures that will help
achieve the program goals.
Comment: Many commenters
recommended that CMS emphasize
measures of patient safety by adopting
outcomes-focused measures which
include falls and injury, adverse drug
effects, glycemic events, and ventilator
associated events (VAEs). Commenters
noted that future inclusion of these
measures supports the National Quality
Strategy three-part aim of better health
for individuals, better health for
populations, and lower costs for health.
Commenters also recommended that
CMS concentrate on patient-focused
measures that increase quality, reduce
harm, and provide opportunities for
payers and consumers to be prudent
purchasers of clinical services.
Specifically, commenters recommended
that measures reflect clinical reality by
S. Lohnes. ‘‘Impact of a hypoglycemia reduction
bundle and a systems approach to inpatient
glycemic management.’’ Endocrine Practice, vol. 21,
no. 4, 2015, pp. 355–367.
84 Resetar, E., K.M. McMullen, A.J. Russo, J.A.
Doherty, K.A. Gase, and K.F. Woeltje. Development,
‘‘Implementation and Use of Electronic
Surveillance for Ventilator Associated Events (VAE)
in Adults.’’ AMIA Annual Symposium Proceedings,
2014, pp. 1010–1017.
85 Mendoza, C., and S. Patel. ‘‘Antimicrobial
Therapy for Hospital-Acquired Pneumonia.’’ U.S.
Pharmacist, vol. 41, no. 7, 2016, pp. HS11–15.
86 About the National Quality Strategy, https://
www.ahrq.gov/workingforquality/about.htm#aims.
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accurately measuring the intended
target, be usable by providers who can
use the data to implement evidencebased practices to improve care, align
with one another using standardized
definitions, and represent only the most
important health priorities.
Some commenters stated that
measures should be integrated in
interoperable EHRs, allowing for more
comprehensive measurement and
requiring no extra reporting effort. In
addition, commenters recommended
that CMS utilize measures that were
fully tested and received NQF
endorsement. Commenters believed that
NQF endorsement was the most
prominent standard which confirmed
that measures reflected evidence-based
care, were feasible to collect and report
in a specific care setting, were clearly
defined and usable, and met the highest
standard of reliability and validity.
Commenters further requested that
CMS avoid measure overlap with the
Hospital VBP Program. Commenters
requested that any new measure should
also be included in the Hospital IQR
Program and reported on Hospital
Compare for one year and approved by
the MAP before the measure is
proposed.
Some commenters expressed concern
that hospitals and other providers were
required to report on hundreds of
measures and recommended against the
addition of any new measures. These
commenters did not support the
addition of VAE measures, noting a lack
of data on VAEs’ responsiveness to
quality improvement initiatives. These
commenters also expressed concern
with measures that focused on ADE and
glycemic events unless appropriate
clinical data could be efficiently
collected and reliance on administrative
data could be avoided.
One commenter believed it would be
prudent to delay the adoption of such
measures until more interventional
studies were published to bolster the
evidence base and better inform
healthcare providers how best to reduce
VAEs. This commenter noted that the
number of published papers that
delineate risk factors (for example,
sedation, fluids, high tidal volumes,
acid suppression) and effective ways to
reduce VAEs (for example, spontaneous
awakening trials, spontaneous breathing
trials, conservative fluid management)
were growing, but the subject is not
mature at this point.
Some commenters believed that
adding more HAI measures could serve
to dilute the focus on improvement
efforts. Commenters noted that when
additional measures were added,
facilities were not able to prioritize the
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infection-related events that were most
relevant to the population served and
services provided in their facilities.
Commenters requested that CMS:
Commit to the minimum number of
measures needed to evaluate healthcare
quality, outcomes, and value; use
measures that are naturally derived from
the delivery of patient care; align with
nationally endorsed, evidence-based
measures; focus on measures that target
the most vital aspects of care, are usable,
tailored to the patient population, and
that offer opportunities to directly and
positively impact patient outcomes; and
collaborate with key healthcare
stakeholders, including patients, payers,
regulators, and providers, to coordinate
efforts.
One commenter recommended two
NQF-endorsed measures of glycemic
control, Glycemic Control—
Hypoglycemia (NQF #2363) and
Glycemic Control—Hyperglycemia
(NQF #2362). This commenter noted
that hypoglycemia and hyperglycemia
occur frequently in the inpatient setting,
have a negative impact on patient
outcomes, and increase costs. This
commenter encouraged CMS to consider
adding these measures because: Studies
have identified that the bundling of
specific therapies is effective at
preventing glycemic events; protocols to
reduce the risk of glycemic events have
been identified, documented, and are
available for implementation by
hospitals; and credible data are
available to assess the rate of
hypoglycemia and hyperglycemia
among hospitalized patients.
Some commenters recommended that
CMS consider the addition of a
Medication Safety Domain (Domain 3).
To construct this domain, commenters
suggested two measures which address
sources of medication errors and related
adverse events: Medication
Reconciliation: Unintentional
Medication Discrepancies (NQF #2456)
and the Computerized Provider Order
Entry (CPOE) Evaluation Tool.
Medication Reconciliation:
Unintentional Medication Discrepancies
(NQF #2456) measures the rate of
unintentional medication discrepancies
per patient and is currently in use in the
MARQUIS Multi-Center Medication
Reconciliation Quality Improvement
Study funded by AHRQ. The measure
calls for a licensed pharmacist to create
a gold standard preadmission
medication list (PAML) for a sample of
twenty-five adult inpatients per quarter;
the PAML is compared to the
medication list at admission and to the
medication list upon discharge.
Hospitals report the number of
unintentional medication discrepancies
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identified between the PAML and the
admission and discharge orders,
resulting in a rate of unintentional
medication discrepancies per patient.
The Computerized Provider Order Entry
(CPOE) Evaluation Tool, funded by
AHRQ, is designed to test the ability of
inpatient CPOE systems to alert
prescribers to common, serious
medication errors. In addition, the Tool
is designed to help hospitals improve
their use of clinical decision support to
reduce adverse drug events and improve
medication safety.
Noting a measures gap in maternity
care, one commenter recommended the
addition of two maternity safety
measures: Cesarean Birth (PC–02) (NQF
#0471), developed by The Joint
Commission, and Unexpected Newborn
Complications (NQF #0716), developed
by the California Maternal Quality Care
Collaborative. The commenter noted
that cesarean births result in increased
neonatal and maternal morbidities when
compared to vaginal deliveries which,
in turn, leads to increased cost of care.
The Unexpected Newborn
Complications measure was initially
endorsed by NQF in 2011 and was
recently revised to incorporate several
improvements to the measure.
One commenter recommended that
CMS adopt the Percent of Residents or
Patients with Pressure Ulcers That Are
New or Worsened (NQF #0678)
measure. This commenter noted that
pressure ulcers/injuries exact a
significant clinical and financial toll;
pressure ulcers result in pain, delayed
recovery, prolonged hospital stays,
increased risk of sepsis, and even death.
The commenter also noted published
international guidelines for the
prevention and treatment of pressure
ulcers/injuries that specify emerging
therapies as part of pressure ulcer/injury
prevention. The commenter further
noted that CMS has implemented this
measure in the LTCH QRP, and it had
been vetted by the NQF.
Finally, the commenter stated their
belief that using this measure would
add consistency across sites of care and
would advance the CMS goal of
harmonizing key measures across the
continuum of care.
One commenter requested that CMS
put a process or system in place to
account for patient safety among
children. Another commenter
recommended CMS explore a measure
for the use of antipsychotics for patients
with dementia.
Response: We appreciate the
commenters’ input. Improving patient
safety is the primary objective of the
HAC Reduction Program. When
considering measures for inclusion in
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the program, we assess measures that
are currently available, risk-adjusted,
and reflective of hospital performance.
Endorsement by the NQF and input
from the Measures Application
Partnership (MAP) are also considered.
Section 1886(p)(3) of the Act defines
‘‘hospital acquired conditions’’ and does
not require that each measure we adopt
for the HAC Reduction Program be
endorsed by a national consensus
building entity, or the NQF specifically.
Under this provision, the Secretary has
further authority to adopt non-NQFendorsed measures. While we strive to
adopt NQF-endorsed measures when
possible, we believe consensus among
affected parties can be achieved in other
ways, including through the measure
development process, stakeholder input
via the TEP, broad acceptance and use
of the measure, and public comments.
We will take commenters’ feedback into
consideration for future measure
selection and rulemaking.
5. Accounting for Social Risk Factors in
the HAC Reduction Program
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19988 through
19989), we discussed the issue of
accounting for social risk factors in the
HAC Reduction Program. We
understand that social risk factors such
as income, education, race and
ethnicity, employment, disability,
community resources, and social
support (certain factors of which are
also sometimes referred to as
socioeconomic status (SES) factors or
socio-demographic status (SDS) factors)
play a major role in health. One of our
core objectives is to improve beneficiary
outcomes, including reducing health
disparities, and we want to ensure that
all beneficiaries, including those with
social risk factors, receive high quality
care. In addition, we seek to ensure that
the quality of care furnished by
providers and suppliers is assessed as
fairly as possible under our programs
while ensuring that beneficiaries have
adequate access to excellent care.
We have been reviewing reports
prepared by the Office of the Assistant
Secretary for Planning and Evaluation
(ASPE) 87 and the National Academies
of Sciences, Engineering, and Medicine
on the issue of accounting for social risk
factors in CMS’ quality measurement
and payment programs, and considering
options on how to address the issue in
these programs. On December 21, 2016,
ASPE submitted a report to Congress on
87 https://aspe.hhs.gov/pdf-report/reportcongress-social-risk-factors-and-performanceunder-medicares-value-based-purchasingprograms.
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a study it was required to conduct under
section 2(d) of the Improving Medicare
Post-Acute Care Transformation
(IMPACT) Act of 2014. The study
analyzed the effects of certain social risk
factors in Medicare beneficiaries on
quality measures and measures of
resource use used in one or more of nine
Medicare value-based purchasing
programs, including the HAC Reduction
Program.88 The report also included
considerations for strategies to account
for social risk factors in these programs.
In a January 10, 2017 report released by
the National Academies of Sciences,
Engineering, and Medicine, that body
provided various potential methods for
measuring and accounting for social risk
factors, including stratified public
reporting.89
As noted in the FY 2017 IPPS/LTCH
PPS final rule, the NQF undertook a 2year trial period in which certain new
measures, measures undergoing
maintenance review, and measures
endorsed with the condition that they
enter the trial period were assessed to
determine whether risk-adjustment for
selected social risk factors was
appropriate for these measures. This
trial entailed temporarily allowing
inclusion of social risk factors in the
risk-adjustment approach for these
measures. The trial has concluded, and
NQF will issue recommendations
regarding the future inclusion of social
risk factors in risk-adjustment for these
quality measures, and we will closely
review its findings.
We note that measures in the HAC
Reduction Program, generally, represent
never events,90 and are often
preventable conditions like central line
associated bloodstream infections,
catheter associated urinary tract
infections, and other complications or
conditions that arise after a patient was
88 https://aspe.hhs.gov/pdf-report/reportcongress-social-risk-factors-and-performanceunder-medicares-value-based-purchasingprograms.
89 National Academies of Sciences, Engineering,
and Medicine. 2017. Accounting for social risk
factors in Medicare payment. Washington, DC: The
National Academies Press.
90 The term ‘‘Never Event’’ was first introduced in
2001 by Ken Kizer, MD, former CEO of the National
Quality Forum (NQF), in reference to particularly
shocking medical errors (such as wrong-site
surgery) that should never occur. Over time, the list
has been expanded to signify adverse events that
are unambiguous (clearly identifiable and
measurable), serious (resulting in death or
significant disability), and usually preventable. The
NQF initially defined 27 such events in 2002. The
list has been revised since then, most recently in
2011, and now consists of 29 events grouped into
6 categories: Surgical, product or device, patient
protection, care management, environmental,
radiologic, and criminal. Never Events, https://
psnet.ahrq.gov/primers/primer/3/never-events,
accessed on February 22, 2017.
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admitted to the hospital for the
treatment of another condition. We
believe these events should not be
influenced by social risk factors;
instead, they are risk-adjusted for factors
listed in specifications for the AHRQ
and CDC developed measures.
Currently, risk factors such as the
patient’s age, gender, comorbidities, and
complications are considered in the
calculation of the measure rates so that
they account for the clinical differences
in the patients served by hospitals. Our
measures continually undergo
maintenance to determine the need for
updated specifications, and to monitor
for trends and any relevant riskadjustment changes needed for the
measures. We remind readers that,
beginning for payments made in FY
2018, we adopted the modified PSI 90:
Patient Safety and Adverse Events
Composite (NQF #0531); the composite
was revised to reflect the relative
importance and harm associated with
each component indicator, and to
provide a more reliable and valid signal
of patient safety events (81 FR 57020).
We also adopted a continuous scoring
approach in the HAC Reduction
Program that brings our scoring domains
into alignment with each other,
essentially eliminates ties in Total HAC
scores, reduces effects on outliers, and
enhances the ability to distinguish
among hospitals of varying quality (81
FR 57025).
As we continue to consider the
analyses and recommendations from
these reports and await the results of the
NQF trial on risk-adjustment for quality
measures, we are continuing to work
with stakeholders in this process. As we
have previously communicated, we are
concerned about holding providers to
different standards for the outcomes of
their patients with social risk factors
because we do not want to mask
potential disparities or minimize
incentives to improve the outcomes for
disadvantaged populations. Keeping
this concern in mind, we continue to
seek public comment on whether we
should account for social risk factors in
the HAC Reduction Program and, if so,
what method or combination of
methods would be most appropriate for
accounting for social risk factors.
Examples of methods include:
Adjustment of the payment adjustment
methodology under the HAC Reduction
Program; adjustment of provider
performance scores (for instance,
stratifying providers based on the
proportion of their patients who are
dual eligible); confidential reporting of
stratified measure rates to providers;
public reporting of stratified measure
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rates; risk-adjustment of a particular
measure as appropriate based on data
and evidence; and redesigning payment
incentives (for instance, rewarding
improvement for providers caring for
patients with social risk factors or
incentivizing providers to achieve
health equity).
We note that in section V.I.9. of the
preamble of this final rule, we discuss
considerations for stratifying hospitals
into peer groups for purposes of
assessing payment adjustments under
the Hospital Readmissions Reduction
Program, as required under the 21st
Century Cures Act. We refer readers to
that section for a detailed discussion of
these alternatives; while this discussion
and corresponding proposal are specific
to the Hospital Readmissions Reduction
Program, they reflect the level of
analysis we would undertake when
evaluating methods and combinations of
methods for accounting for social risk
factors in CMS’ other value-based
purchasing programs, such as the HAC
Reduction Program. In the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19989), we sought comment on whether
any of these methods should be
considered, and if so, which of these
methods or combination of methods
would best account for social risk
factors in the HAC Reduction Program.
In addition, in the proposed rule, we
sought public comment on which social
risk factors might be most appropriate
for stratifying measure scores and/or
potential risk-adjustment of a particular
measure. Examples of social risk factors
include, but are not limited to, dual
eligibility/low-income subsidy, race and
ethnicity, and geographic area of
residence. We also sought comments on
which of these factors, including current
data sources where this information
would be available, could be used alone
or in combination, and whether other
data should be collected to better
capture the effects of social risk. We will
take commenters’ input into
consideration as we continue to assess
the appropriateness and feasibility of
accounting for social risk factors in the
HAC Reduction Program. We note that
any such changes would be proposed
through future notice-and-comment
rulemaking.
We look forward to working with
stakeholders as we consider the issue of
accounting for social risk factors and
reducing health disparities in CMS
programs. Of note, implementing any of
the above methods would be taken into
consideration in the context of how this
and other CMS programs operate (for
example, data submission methods,
availability of data, statistical
considerations relating to reliability of
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data calculations, among others), so we
also welcomed comment on operational
considerations. CMS is committed to
ensuring its beneficiaries have access to
and receive excellent care, and the
quality of care furnished by providers
and suppliers is assessed fairly in CMS
programs.
Comment: Many commenters
expressed concern that hospitals caring
for large numbers of disadvantaged
patients are more likely to receive
penalties in the value-based programs.
Commenters suggested that the lack of
adjustment for social factors can worsen
health care disparities because the
penalties divert resources away from
hospitals and other providers treating
large proportions of vulnerable patients.
Commenters recommended sociodemographic factors should be included
in the HAC Reduction Program’s riskadjustment methodology to ensure the
measures accurately reflect quality
outcomes within a hospital’s control.
Commenters suggested that social and
economic conditions within the patient
population influence the health of the
patients when they arrive to the hospital
and impact whether patients acquire
HACs.
Other commenters supported the
inclusion of factors such as:
Socioeconomic position (for example
dual eligible status, income, and
education); race, ethnicity and cultural
context; gender; social relationships (for
example marital status); residential and
community context (for example,
housing, walkability, transportation
options, and proximity to services); and
health literacy. Commenters further
recommended that CMS stratify
hospitals into peer groups so that
hospitals are compared to others with a
similar patient mix or grouping such as
bed size. Commenters further
recommended that, in addition to
adjusting payments based on social risk
factors, CMS should adjust the measures
for public reporting. Commenters noted
that failure to adjust measures for public
reporting provides an inadequate
picture to consumers about provider
quality.
Commenters also recommended that
CMS examine the National Academies
of Sciences, Engineering, and Medicine
report for examples of currently
available data that could be included in
measure risk-adjustment. Some
commenters recommended CMS closely
examine the considerations provided by
National Association of Medicine
(NAM) for risk-adjustment. NAM
recommended four domains of risk
indicators: Income, education, and dual
eligibility; race, ethnicity, language, and
nativity; marital/partnership status and
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living alone; and neighborhood
deprivation, urbanicity, and housing.
NAM found community-level elements
that providers are not able to change can
indicate risk unrelated to quality of care;
this finding is also being reported in the
growing body of research on
socioeconomic risk-adjustment.
Commenters recommended that CMS
work closely with the relevant medical
societies with the goal of incorporating
appropriate social risk factors into
quality measures as soon as possible.
Some commenters recommended that
CMS consider the use of confidential
patient-reported data because these offer
a reasonably valid estimate of
differences in utilization of health care
between socioeconomic groups.
Commenters requested that CMS
consider providing hospitals with
confidential reports of performance on
accountability measures stratified by
dual eligible status or other nationally
available data elements. Once hospitals
have had sufficient opportunity to
review and understand their
performance on these stratified
measures, the commenters suggested
that CMS work with stakeholders to
publicly report this data in an
appropriate fashion. Commenters
further recommended the
implementation of demonstration
projects to encourage hospitals to collect
data on social risk factors through their
electronic health records (EHR).
Commenters noted that where
meaningful and comprehensive
neighborhood level socio-demographic
data currently exists, CMS should
encourage empirical tests of quality
metrics adjusted for those factors to
assess the impact of those adjustments
on local provider performance metrics.
Commenters further recommended
including functional status (activities of
daily living, instrumental activities of
daily living, and mobility) as a riskadjustment variable to accurately assess
patients across settings.
In addition, commenters specifically
suggested that CMS stratify hospitals
into peer groups so that hospitals would
be compared to others with a similar
patient mix or grouping, such as number
of patient beds.
Some commenters did not support
changing payment policies to risk-adjust
for social risk factors. Commenters
noted that this approach would not
address the underlying disparities often
associated with poor health outcomes.
Instead, these commenters maintained,
it would mask potential disparities or
minimize incentives to improve the
outcomes for disadvantaged
populations. Commenters suggested that
adjusting for socioeconomic and socio-
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demographic risk factors would create
perverse incentives for poor performers
to continue with the status quo and for
high performers to retreat from their
efforts to address disparities in high
socioeconomic status populations.
There was also a concern that riskadjusting for social risk factors would
not address the underlying disparities
often associated with poor health
outcomes and could mask potential
disparities.
Commenters suggested that it was
unacceptable for patients with social
risk factors to experience never events,
or a higher incidence of other serious
events assessed by patient safety
measures. Commenters stated that safe
care should be a consistent and
universal expectation for all patients.
Commenters noted this position has also
been taken by the NQF; patient safety
measures were not included in the twoyear trial period. Commenters
recommended that CMS continue to
collect a variety of data that could be
analyzed over a 2-year period to
establish a baseline that identifies how
social risk factors impact populations
and appropriately weigh those factors
when measuring HACs.
Response: We appreciate the
recommendations from the commenters
about consideration of socioeconomic
position; race, ethnicity and cultural
context; gender; social relationships;
residential and community context; and
health literacy and will work to
determine the feasibility of collecting
these patient-level variables. We also
will consider whether we should stratify
hospitals into peer groups so that
hospitals are compared to others with a
similar patient mix or grouping such as
number of beds.
We intend to explore options
including, but not limited to, measure
stratification by social risk factors in a
consistent manner across programs,
informed by considerations of
stratification methods described in
section IX.A.13. of the preamble of this
final rule. We thank the commenters for
this important feedback and will
continue to consider options to account
for social risk factors that would allow
us to view disparities and potentially
incentivize improvement in care for
patients and beneficiaries. We also will
consider providing feedback to
providers on outcomes for individuals
with social risk factors in confidential
reports. As we consider the feasibility of
collecting patient-level data and the
impact of strategies to account for social
risk factors through further analysis, we
will continue to evaluate the reporting
burden on providers. We also will
consider the concerns commenters
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raised about masking disparities
associated with adjusting for social risk
factors. Future proposals would be
made after further research and
continued stakeholder engagement.
We thank the commenters, and we
will consider their views as we develop
further policy regarding social risk
factors in the HAC Reduction Program.
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6. Request for Comments on Inclusion of
Disability and Medical Complexity for
CDC NHSN Measures
The intent of the HAC Reduction
Program is to encourage all hospitals to
reduce the incidence of HACs. We
continue to believe that there is room
for improvement in the incidence of
HACs, regardless of the institution or
hospital. The measures adopted in the
HAC Reduction Program, which are
risk-adjusted to account for the different
patient populations that hospitals
service, target important quality
improvement areas. In its IMPACT Act
report,91 ASPE suggested payment
strategies to improve the HAC
Reduction Program. ASPE noted that it
is well-proven that higher levels of
medical risk are associated with a
higher risk for many (although not all)
patient safety events, particularly
infections.92 For example, diabetes is
associated with roughly 70 percent
higher odds of surgical site infections
and diabetes, pulmonary disease, renal
failure, and exposure to nursing homes
are associated with a higher risk of
MRSA.93 Many of the same medical
factors also confer a higher risk of C.
diff. infection, as well as CAUTI and
CLABSI.94
ASPE suggested that patient-level
clinical data from the CDC healthcareassociated infection (HAI) measures
should be examined and considered for
additional risk-adjustment.95 ASPE also
noted that the clinical risk-adjustment
of the patient safety and hospitalacquired infection measures should be
improved to ensure the measures
adequately adjust for differences in
patients’ clinical risk, so that fair
comparisons for hospital accountability
and performance assessment can be
made to hold providers to the same fair
standard.96 ASPE recommended
additional analyses for measure
91 ASPE, ‘‘Report to Congress: Social Risk Factors
and Performance Under Medicare’s Value-Based
Purchasing Programs.’’ 21 Dec 2016. Available at:
https://aspe.hhs.gov/pdf-report/report-congresssocial-risk-factors-and-performance-undermedicares-value-based-purchasing-programs.
92 Ibid. 102.
93 Ibid. 102.
94 Ibid. 102.
95 Ibid. 135.
96 Ibid. 136.
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developers such as AHRQ and CDC to
determine whether adjusting key
components of the patient safety or HAI
measures (for example frailty, functional
limitations, prior hospitalizations or
nursing home residence, or other
markers of immune system deficiencies
or unmeasured medical complexity)
may better account for susceptibility to
infection and patient safety events.97
Based on ASPE’s analysis and
considerations, in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19899),
we requested stakeholder feedback on
risk-adjusting the CDC NHSN measures
for disability or medical complexity.
Although we did not propose any
specific changes to the measures in the
proposed rule, we will consider all
comments as a guide to potential future
action.
Comment: Many commenters
supported the adjustment of the CDC
NHSN measures to account for patient
medical complexity. Commenters
agreed that patients with certain
medical conditions (for example,
diabetes, pulmonary disease, adrenal
failure) are at higher risk for infection,
and that frailty and functional
limitations are risk factors for some
patient safety events. Commenters noted
the complex linkages between
socioeconomic factors and performance
in the HAC Reduction Program; the
program’s measures, healthcareassociated infections (HAIs), and serious
safety events largely reflect actions
within a hospital’s control. This
contrasts with other outcome measures
such as readmissions, cost or patient
experience, where socioeconomic
factors like poverty and access issues
can affect outcomes. Commenters agreed
with the findings of the ASPE report
that patient disability and complexity
have a significant impact on patient
outcomes, and may not be adequately
captured in the current measures.
Commenters encouraged CMS to work
with CDC on gathering additional data
on medical complexity for further
evaluation as part of improved riskadjustment as well as being able to trend
the risks associated with infections for
use in prevention strategies.
Commenters recommended that any
adjustments to the CDC NHSN measures
should come directly from CDC based
on their experience, testing, and
feasibility of accurately obtaining the
additional data.
One commenter recommended that
CMS examine whether there are any
broader community environmental
factors that may impact a patient’s risk
for infections or other complications.
97 Ibid.
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For example, poorer communities can
have environmental pollution, reduced
access to resources to manage chronic
conditions, and food deserts that impact
nutrition. One commenter suggested
that exposure to nursing homes
increased the risk for infection, and
urged CMS to consider this as a factor.
Another commenter recommended that
CMS adopt risk factors that can be
extracted from EHRs or claims data
rather than chart abstraction.
Response: We thank the commenters
and we will consider their views as we
develop further policy regarding riskadjusting the CDC NHSN measures for
disability or medical complexity in the
HAC Reduction Program. We also
appreciate the suggestion to examine
whether broader community
environmental factors have a differential
bearing on the healthcare-associated
infection (HAI) outcome measures.
While community environmental factors
are a plausible contributor to differential
risks for HAIs, we are not aware of
empirical data that establishes an
association or associations. We will
continue to partner with CDC to analyze
whether we should include additional
patient risk factors, preexisting or
coexisting conditions, community
environmental exposures or healthcare
exposures to the CDC NHSN measures.
7. Extraordinary Circumstance
Exception (ECE) Policy for the HAC
Reduction Program
Many of our quality reporting and
value-based purchasing programs share
a common process for requesting an
exception from program reporting due
to an extraordinary circumstance not
within a provider’s control. The
Hospital IQR, Hospital OQR, IPFQR,
ASCQR, and PCHQR Programs, as well
as the Hospital Readmissions Reduction
Program, share common processes for
Extraordinary Circumstance Exception
(ECE) requests. In reviewing the policies
for these programs, we recognized that
there are five areas in which these
programs have variance regarding ECE
requests. These are: (1) Allowing the
facilities or hospitals to submit a form
signed by the facility’s or hospital’s CEO
versus CEO or designated personnel; (2)
requiring the form be submitted within
30 days following the date that the
extraordinary circumstance occurred
versus within 90 days following the date
the extraordinary circumstance
occurred; (3) inconsistency regarding
specification of a timeline for us to
provide our formal response notifying
the facility or hospital of our decision;
(4) inconsistency regarding specification
of our authority to grant ECEs due to
CMS data system issues; and (5)
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referring to the program as
‘‘extraordinary extensions/exemptions’’
versus as ‘‘extraordinary circumstances
exceptions.’’ We believe addressing
these five areas, as appropriate, can
improve administrative efficiencies for
affected facilities or hospitals.
In the FY 2016 IPPS/LTCH PPS final
rule (80 FR 49579 through 49581), we
adopted an ECE policy for the HAC
Reduction Program beginning in FY
2016. This policy was similar to the ECE
policy for the Hospital IQR Program, as
finalized in the FY 2012 IPPS/LTCH
PPS final rule (76 FR 51651), modified
in the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50836) (designation of a
non-CEO hospital contact), and further
modified in the FY 2015 IPPS/LTCH
PPS final rule (79 FR 50277) (amended
42 CFR 412.140(c)(2) to refer to
‘‘extension or exemption’’ instead of the
former ‘‘extension or waiver’’). In
section IX.A.15. of the preamble of this
final rule, we discuss our proposal to
amend the Hospital IQR Program
regulations at 42 CFR 412.140(c)(2) to
refer to ‘‘extraordinary circumstances
exceptions’’ and we will continue to use
this nomenclature for the HAC
Reduction Program.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19990), we
proposed to modify the ECE policy for
the HAC Reduction Program by: (1)
Allowing the facility to submit a form
signed by the facility’s CEO or
designated personnel; (2) specifying that
we will strive to provide our formal
response notifying the facility of our
decision within 90 days of receipt of the
facility’s request; and (3) specifying that
CMS may grant ECEs due to CMS data
system issues which affect data
submission. These proposed
modifications generally align with
policies in the Hospital IQR Program (76
FR 51651 through 51652; 78 FR 50836
through 50837; and 81 FR 57181
through 57182), the Hospital OQR
Program (77 FR 68489 and 81 FR
79795), as well as other quality
reporting programs. We proposed that
these modifications would apply
beginning in FY 2018 as related to
extraordinary circumstances that occur
on or after October 1, 2017.
We note that there may be
circumstances in which it is not feasible
for a facility’s CEO to sign the ECE
request form. In these circumstances, we
believe that facilities affected by such
circumstances should be able to submit
ECE forms regardless of the CEO’s
availability to sign. Therefore, the first
proposed modification would allow any
hospital to designate an appropriate,
non-CEO, contact at its discretion. This
individual would be responsible for the
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submission, and would be the one
signing the form. We would accept ECE
forms which have been signed by
designated personnel.
We also believe that it is important for
facilities to receive timely feedback
regarding the status of ECE requests. We
strive to complete our review of each
ECE request as quickly as possible.
However, we recognize that the number
of requests we receive, and the
complexity of the information provided
impacts the actual timeframe to make
ECE determinations. To improve
transparency of our process, we believe
it is appropriate to clarify that we will
strive to provide our response within 90
days of receipt.
Although we do not anticipate this
situation will happen on a regular basis,
there may be times where CMS
experiences issues with its data systems
that directly affects facilities’ abilities to
submit data. In these cases, we believe
it would be inequitable to require
facilities to report. Therefore, we
proposed to allow CMS to grant ECEs to
facilities if we determine that a systemic
problem with one of our data collection
systems directly affected the ability of
the facilities to submit data. If we make
the determination to grant ECEs, we
proposed to communicate this decision
through routine communication
channels.
We invited public comment on these
proposed modifications to the HAC
Reduction Program’s ECE policy.
Comment: Commenters supported the
proposals to modify the extraordinary
circumstances exceptions (ECE) policies
to align across CMS quality reporting
and value-based purchasing programs.
One commenter recommended CMS
communicate to other agencies when
transmission or submission of data to
CMS is affected so deadlines imposed
by those agencies can be adjusted. One
commenter further recommended that if
dual eligible hospitals or providers are
submitting eCQMs and Attestation data
through the CMS portal, CMS work with
and instruct State Medicaid agencies to
accept the data from CMS regardless of
deadlines or time frames, if reasonable.
In addition, some commenters
recommended a definition that includes
circumstances of a health-related nature
that make it more difficult to provide
patient care, such as disease outbreaks,
epidemics, drug or vaccine shortages.
Response: We appreciate the
commenters’ recommendations and we
will take them into consideration as we
determine operational decisions. As we
discussed in the 2016 IPPS/LTCH PPS
final rule (80 FR 49581), based on our
experience with the Hospital VBP
Program and the Hospital IQR Program,
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we anticipate providing exemptions to
only a small number of hospitals where
the ability to accurately or timely
submits claims has been directly
impacted as a direct result of
experiencing a significant disaster or
other extraordinary circumstance
beyond the control of the hospital. We
do not intend to modify the criteria for
an extraordinary circumstance
exception at this time.
Comment: A few commenters noted
that there is currently no ECE policy for
Indian Health Service or Triballyoperated programs, although tribal
programs have requested an exception
from CMS in previous fiscal years.
Commenters requested an ECE
specifically for IHS and tribal healthcare
programs.
Response: We appreciate the
commenters’ concern; however, we note
that sections 1886(p)(2)(A) and (B) of
the Act defines applicable hospitals and
requires all subsection (d) hospitals to
be included in the HAC Reduction
Program. The ECE policy was not
designed to allow a category of hospital
to seek exclusion from the HAC
Reduction Program in its entirety, but to
provide relief for a hospital whose
ability to accurately collect quality
measure data and/or to report those data
in a timely manner has been negatively
impacted as a direct result of
experiencing a significant disaster or
other extraordinary circumstance
beyond the control of the hospital.
After consideration of the public
comments we received we are finalizing
the modifications to the Extraordinary
Circumstances Exception (ECE) policy
as proposed.
8. Maintenance of Technical
Specifications for Quality Measures
Technical specifications for Patient
Safety and Adverse Events Composite
Measure in Domain 1 can be found at
AHRQ’s Web site at: https://
qualityindicators.ahrq.gov/Modules/
PSI_TechSpec.aspx. Technical
specifications for the CDC NHSN HAI
measures in Domain 2 can be found at
CDC’s NHSN Web site at: https://
www.cdc.gov/nhsn/acute-care-hospital/
index.html. Both Web sites provide
measure updates and other information
necessary to guide hospitals
participating in the collection of HAC
Reduction Program data.
In the FY 2015 IPPS/LTCH PPS final
rule (79 FR 50100), we described a
policy under which we use a
subregulatory process to make
nonsubstantive updates to measures
used for the HAC Reduction Program. In
the FY 2018 IPPS/LTCH PPS proposed
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rule (82 FR 19989), we did not propose
any changes to this policy at this time.
L. Rural Community Hospital
Demonstration Program
1. Introduction
The Rural Community Hospital
Demonstration was originally
authorized for a 5-year period by section
410A of the Medicare Prescription Drug,
Improvement, and Modernization Act of
2003 (MMA) (Pub. L. 108–173), and
extended for another 5-year period by
sections 3123 and 10313 of the
Affordable Care Act (Pub. L. 111–148).
Subsequently, section 15003 of the 21st
Century Cures Act (Pub. L. 114–255),
enacted December 13, 2016, amended
section 410A of Public Law 108–173 to
require a 10-year extension period (in
place of the 5-year extension required
by the Affordable Care Act, as further
discussed below). Section 15003 also
requires that no later than 120 days after
enactment of Public Law 114–255 the
Secretary must issue a solicitation for
applications to select additional
hospitals to participate in the
demonstration program for the second 5
years of the 10-year extension period so
long as the maximum number of 30
hospitals stipulated by the Affordable
Care Act is not exceeded. In this final
rule, we provide a summary of the
previous legislative provisions and their
implementation; a description of the
provisions of section 15003 of Public
Law 114–255; our proposals and final
policies for implementation; and our
proposals and finalized policies for
budget neutrality, including a
discussion of the budget neutrality
methodology used in previous final
rules, the budget neutrality
methodology for the extension period
authorized by section 15003 of Public
Law 114–255, and the reconciliation of
actual and estimated costs of the
demonstration for previous years (2011,
2012, and 2013).
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2. Background
Section 410A(a) of Public Law 108–
173 required the Secretary to establish
a demonstration program to test the
feasibility and advisability of
establishing ‘‘rural community’’
hospitals to furnish covered inpatient
hospital services to Medicare
beneficiaries. The demonstration pays
rural community hospitals under a
reasonable cost-based methodology for
Medicare payment purposes for covered
inpatient hospital services furnished to
Medicare beneficiaries. A rural
community hospital, as defined in
section 410A(f)(1), is a hospital that—
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• Is located in a rural area (as defined
in section 1886(d)(2)(D) of the Act) or is
treated as being located in a rural area
under section 1886(d)(8)(E) of the Act;
• Has fewer than 51 beds (excluding
beds in a distinct part psychiatric or
rehabilitation unit) as reported in its
most recent cost report;
• Provides 24-hour emergency care
services; and
• Is not designated or eligible for
designation as a CAH under section
1820 of the Act.
Section 410A(a)(4) of Public Law 108–
173 specified that the Secretary was to
select for participation no more than 15
rural community hospitals in rural areas
of States that the Secretary identified as
having low population densities. Using
2002 data from the U.S. Census Bureau,
we identified the 10 States with the
lowest population density in which
rural community hospitals were to be
located in order to participate in the
demonstration: Alaska, Idaho, Montana,
Nebraska, Nevada, New Mexico, North
Dakota, South Dakota, Utah, and
Wyoming (Source: U.S. Census Bureau,
Statistical Abstract of the United States:
2003).
CMS originally solicited applicants
for the demonstration in May 2004; 13
hospitals began participation with cost
reporting periods beginning on or after
October 1, 2004. In 2005, 4 of these 13
hospitals withdrew from the
demonstration program and converted
to CAH status. This left 9 hospitals
participating at that time. In 2008, we
announced a solicitation for up to 6
additional hospitals to participate in the
demonstration program. Four additional
hospitals were selected to participate
under this solicitation. These 4
additional hospitals began under the
demonstration payment methodology
with the hospitals’ first cost reporting
period starting on or after July 1, 2008.
At that time, 13 hospitals were
participating in the demonstration.
Five hospitals (3 of the hospitals were
among the 13 hospitals that were
original participants in the
demonstration program and 2 of the
hospitals were among the 4 hospitals
that began the demonstration program
in 2008) withdrew from the
demonstration program during CYs
2009 and 2010. In CY 2011, one hospital
that was among the original set of
hospitals that participated in the
demonstration withdrew from the
demonstration. These actions left 7 of
the originally participating hospitals
(that is, hospitals that were selected to
participate in either 2004 or 2008)
participating in the demonstration
program as of June 1, 2011.
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Sections 3123 and 10313 of the
Affordable Care Act (Pub. L. 111–148)
amended section 410A of Public Law
108–173, changing the Rural
Community Hospital Demonstration
Program in several ways. First, the
Secretary was required to conduct the
demonstration program for an
additional 5-year period, to begin on the
date immediately following the last day
of the initial 5-year period. Further, the
Affordable Care Act required, in the
case of a rural community hospital
participating in the demonstration
program as of the last day of the initial
5-year period, the Secretary to provide
for the continued participation of such
rural community hospital in the
demonstration program during the 5year extension period, unless the
hospital made an election to
discontinue participation.
In addition, the Affordable Care Act
required that, during the 5-year
extension period, the Secretary shall
expand the number of States with low
population densities determined by the
Secretary to 20. Further, the Secretary
was required to use the same criteria
and data that the Secretary used to
determine the States for purposes of the
initial 5-year period. The Affordable
Care Act also allowed not more than 30
rural community hospitals in such
States to participate in the
demonstration program during the 5year extension period.
We published a solicitation for
applications for additional participants
in the Rural Community Hospital
Demonstration program in the Federal
Register on August 30, 2010 (75 FR
52960). The 20 States with the lowest
population density that were eligible for
the demonstration program were:
Alaska, Arizona, Arkansas, Colorado,
Idaho, Iowa, Kansas, Maine, Minnesota,
Mississippi, Montana, Nebraska,
Nevada, New Mexico, North Dakota,
Oklahoma, Oregon, South Dakota, Utah,
and Wyoming (Source: U.S. Census
Bureau, Statistical Abstract of the
United States: 2003). Sixteen new
hospitals began participation in the
demonstration with the first cost
reporting period beginning on or after
April 1, 2011.
In addition to the 7 hospitals that
were selected in either 2004 or 2008, the
new selection led to a total of 23
hospitals in the demonstration. During
CY 2013, one additional hospital among
the set selected in 2011 withdrew from
the demonstration, which left 22
hospitals participating in the
demonstration, effective July 1, 2013, all
of which continued their participation
through December 2014. Starting from
that date and extending through the end
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of FY 2015, the 7 ‘‘originally
participating’’ hospitals, that is,
hospitals that were selected in either
2004 or 2008, ended on a rolling basis
their scheduled 5-year periods of
performance authorized by the
Affordable Care Act (referred to
hereafter as ‘‘Cohort 1’’ hospitals).
Likewise, the participation period for
the 14 hospitals that entered the
demonstration following the mandate of
the Affordable Care Act and that were
still participating (referred to as ‘‘Cohort
2’’ hospitals) ended their scheduled
periods of performance on a rolling
basis according to the end dates of the
hospitals’ cost report periods,
respectively, from April 30, 2016
through December 31, 2016. (One
hospital among the Cohort 2 hospitals
closed in October 2015.)
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3. Provisions of the 21st Century Cures
Act (Pub. L. 114–255) and Proposals and
Finalized Policies for Implementation
a. Statutory Provisions
As stated earlier, section 15003 of
Public Law 114–255 further amended
section 410A of Public Law 108–173 to
require the Secretary to conduct the
Rural Community Hospital
Demonstration for a 10-year extension
period (in place of the 5-year extension
period required by the Affordable Care
Act), beginning on the date immediately
following the last day of the initial 5year period under section 410A(a)(5) of
Public Law 108–173. Thus, the
Secretary is required to conduct the
demonstration for an additional 5-year
period. Specifically, section 15003 of
Public Law 114–255 amended section
410A(g)(4) of Public Law 108–173 to
require that, for hospitals participating
in the demonstration as of the last day
of the initial 5-year period, the Secretary
shall provide for continued
participation of such rural community
hospitals in the demonstration during
the 10-year extension period, unless the
hospital makes an election, in such form
and manner as the Secretary may
specify, to discontinue participation. In
addition, section 15003 of Public Law
114–255 amended section 410A(g)(4)(B)
(Pub. L. 108–173) to provide that in
calculating the amount of payment
under the demonstration program to the
rural community hospital for covered
inpatient hospital services furnished by
the hospital during each 5-year period
of such 10 year extension period, the
amount of payment (for the first cost
reporting period) is the reasonable costs
of providing such services for
discharges occurring in the first cost
reporting period beginning on or after
the first day of each applicable 5-year
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period in the 10-year extension period.
Furthermore, section 15003 of Public
Law 114–255 added subsection (g)(5) to
section 410A of Public Law 108–173 to
require that, during the second 5 years
of the 10-year extension period, the
Secretary shall apply the provisions of
section 410A(g)(4) of Public Law 108–
173 to rural community hospitals that
are not described in subsection (g)(4)
but that were participating in the
demonstration as of December 30, 2014,
in a similar manner as such provisions
apply to hospitals described in
subsection (g)(4). We interpret this as
providing for participation in and
payment under the demonstration
during the second 5 years of the 10-year
extension period for hospitals that are
not described in section 410A(g)(4) of
Public Law 108–173 (as amended) but
that were participating in the
demonstration as of December 30, 2014,
in a similar manner as such extension
and payment applies to hospitals
described in section 410A(g)(4) of
Public Law 108–173 (as amended),
unless a hospital makes an election, in
such form and manner as the Secretary
may specify, to discontinue
participation.
In addition, section 15003 of Public
Law 114–255 amended section 410A of
Public Law 108–173 to add paragraph
(g)(6)(A) which requires that, no later
than 120 days after enactment of
paragraph (g)(6), the Secretary shall
issue a solicitation for applications to
select additional rural community
hospitals located in any State to
participate in the demonstration
program for the second 5 years of the
10-year extension period, without
exceeding the maximum number of
hospitals (that is, 30) permitted under
section 410A(g)(3) of Public Law 108–
173 (which was added by the Affordable
Care Act). Section 15003 also amended
section 410A of Public Law 108–173 to
add paragraph (g)(6)(B) which provides
that, in determining which hospitals
submitting an application pursuant to
this solicitation are to be selected for
participation in the demonstration, the
Secretary shall give priority to rural
community hospitals located in one of
the 20 States with the lowest population
densities, as determined using the 2015
Statistical Abstract of the United States.
In addition, in determining which
among the hospitals submitting an
application pursuant to this solicitation
are to be selected for participation in the
demonstration, section 410A(g)(6)(B)
specifies that the Secretary may
consider closures of hospitals located in
rural areas in the State in which an
applicant hospital is located during the
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5-year period immediately preceding
the date of enactment of section
410A(g)(6) of Public Law 108–173, as
well as the population density of the
State in which the rural community
hospital is located.
b. Terms of Continuation for Previously
Participating Hospitals
As discussed earlier, section 15003 of
Public Law 114–255 (the 21st Century
Cures Act) amended section 410A of
Public Law 108–173 to provide for a 10year extension of the demonstration (in
place of the 5-year extension required
by the Affordable Care Act) beginning
on the date immediately following the
last day of the initial 5-year period
under section 410A(a)(5) of Public Law
108–173. Thus, section 15003 of Public
Law 114–255 requires an additional 5year extension of the demonstration
beyond the extension required by the
Affordable Care Act. Given the timing of
the enactment of Public Law 114–255,
for most of the previously participating
hospitals, there is a gap between the end
date of each hospital’s participation in
the first 5-year extension period and
enactment of Public Law 114–255 on
December 13, 2016. For these hospitals,
this gap is for a period of between 2 to
23 months. Section 15003 of Public Law
114–255 does not address how the
second 5 years of the 10-year extension
is to be implemented in the event of a
gap between the end of the first 5 years
of the 10-year extension period for a
participating hospital and the enactment
of Public Law 114–255 authorizing the
second 5 years of the 10-year extension
period. As discussed in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
19992), given this gap and the lack of
specific direction in the statute
regarding how to implement the
extension in this situation for these
previously participating hospitals, and
the mandate under section 15003 of
Public Law 114–255 to issue a
solicitation for additional participants
for the second 5 years of the 10-year
extension, we considered how to
implement the second 5 years of the 10year extension period. In the FY 2018
IPPS/LTCH PPS proposed rule, for each
previously participating hospital that
decides to participate in the second 5
years of the 10-year extension period,
we proposed that the start date for the
period of performance under the second
5-year extension period would be the
start of the first cost reporting period on
or after October 1, 2017 following upon
the announcement of the selection of
the additional hospitals for the
demonstration. In this manner, we
proposed to align the periods of
performance for the previously
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participating hospitals that decide to
participate in the second 5-year
extension period with the periods of
performance for the additional hospitals
authorized by section 15003 of Public
Law 114–255. In the FY 2018 IPPS/
LTCH PPS proposed rule, we stated that
we believe the approach we proposed
above is consistent with section 410A of
Public Law 108–173, as amended by
Public Law 114–255. We also stated that
aligning, to the extent possible, the
periods of performance of the
previously participating hospitals with
those of those newly selected under the
demonstration was reasonable, given the
need for time to carry out demonstration
administration activities, evaluation
considerations, and the necessity for the
calculation of budget neutrality offset
amounts.
We invited public comments on the
proposed approach discussed earlier for
implementing the second 5-year period
of the 10-year extension required under
section 15003 of Public Law 114–255 for
the previously participating hospitals.
In addition, we invited public
comments on alternative approaches
under the statute for implementing the
extension, particularly with respect to
the commencement of the second 5-year
period of the extension for previously
participating hospitals.
We described an alternative approach
according to which each previously
participating hospital would begin the
second 5 years of the 10-year extension
period and the cost-based payment
methodology under section 410A of
Public Law 108–173 (as amended by
section 15003 of Pub. L. 114–255), on
the date immediately after the date the
period of performance under the first 5year extension period ended. For
example, for a hospital whose 5-year
period of performance authorized by the
Affordable Care Act ended June 30,
2015, the extension period under
section 15003 of Public Law 114–255
would be effective July 1, 2015, and it
would extend through June 30, 2020.
Likewise, for a hospital whose 5-year
period of performance ended June 30,
2016, the extension period under
section 15003 of Public Law 114–255
would be effective July 1, 2016, and it
would extend through June 30, 2021.
The methodology we considered for
calculating the budget neutrality offset
amount under this alternative approach
is described in section V.L.4.d. of the
preamble of the proposed rule. We
stated that this alternative approach
would also be consistent with the
language of section 410A of Public Law
108–173 (as amended), and, unlike the
proposed approach, would not provide
for a gap in the reasonable cost payment
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methodology between the end of the
first and start of the second 5-year
periods of the 10-year extension period.
We also sought public comments on this
alternative approach to implementing
the extension to the demonstration
under section 15003 of Public Law 114–
255 and the corresponding alternative
budget neutrality calculation described
in section V.L.4.d. of the preamble of
the proposed rule.
Comment: Several commenters
expressed concern about our proposed
approach, stating that section 15003 of
Public Law 114–255, which authorizes
the second 5-year extension, changes
the language in Public Law 111–148
from 5 years to 10 years, beginning on
the date immediately following the last
day of the initial 5-year period, and that
thus the alternative approach should be
implemented so as to apply the costbased payment methodology
continuously for the previously
participating hospitals. The commenters
added that adopting our proposed
approach would create financial
hardship for some of the previously
participating hospitals. They noted that,
in certain cases, these hospitals play a
vital role in providing health services in
remote communities, and that the gap in
applying the cost-based payment under
our proposed approach would
jeopardize access to essential health
care services.
Response: We believe that our
proposed approach to align the periods
of participation for all participating
hospitals for the second 5-year
extension period is consistent with the
statute and reasonable, given the gap
between the end of the first 5-year
extension period for previously
participating hospitals and the
enactment of Public Law 114–255
authorizing the second 5-year extension
period. Nevertheless, we acknowledge
that we have administered this
demonstration program for the previous
5-year periods, as authorized by section
410A of Public Law 108–173 and
sections 3123 and 10313 of Public Law
111–148, respectively, by aligning the
period of participation for each of the
hospitals with the start of the first cost
report year upon selection to the
demonstration program. Considering
this previous experience for the
demonstration program, we believe that
implementing the periods of
performance for the second 5-year
extension period in accordance with the
alternative approach would also be
consistent with the language of the
authorizing statutes and reasonable.
We have considered the concerns
expressed about the negative impact
that our proposed approach of a gap in
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the cost-based payment methodology
would have on the ability of the
previously participating hospitals to
provide essential health care services.
We believe these are important concerns
to balance against any considerations
under the proposed approach in
undertaking the administrative,
evaluation, and budget neutrality
functions for the demonstration.
Therefore, we are finalizing the
alternative approach with regard to the
effective date for the application of the
demonstration payment methodology
for those previously participating
hospitals that choose to participate in
the second 5-year extension period.
Thus, each previously participating
hospital would begin the second 5 years
of the 10-year extension period and the
cost-based payment methodology under
section 410A of Public Law 108–173 (as
amended by section 15003 of Pub. L.
114–255) on the date immediately after
the date the period of performance
under the first 5-year extension period
ended.
c. Solicitation for Additional
Participants
We stated in the FY 2018 IPPS/LTCH
PPS proposed rule that, as required
under section 15003 of Public Law 114–
255, we would issue a solicitation for
additional hospitals to participate in the
demonstration. We released this
solicitation on April 17, 2017, with
applications due May 17, 2017. Among
other things, the solicitation asked
hospitals to describe challenges
experienced with the current method of
Medicare payment, the impact of rural
hospital closures within the State or
surrounding area, and a strategy for
financial viability and improving the
health care of the population.
Section 15003 of Public Law 114–255,
adding section 410A(g)(6)(B) to Public
Law 108–173, provides that, in
determining which rural community
hospitals that submitted an application
pursuant to the solicitation under
section 410A(g)(6)(A) to select for
participation in the demonstration
program, the Secretary shall give
priority to rural community hospitals
located in one of the 20 States with the
lowest population densities (as
determined by the Secretary using the
2015 Statistical Abstract of the United
States). We note that the U.S. Census
Bureau ceased publishing the Statistical
Abstract of the United States in 2011,
and that in the years since then,
ProQuest, LLC, a private vendor, has
produced a volume intended to serve
the same function as a comprehensive
collection of national statistics,
compiling data from different sources
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including published reports from the
Census Bureau. Thus, we used ProQuest
Statistical Abstract of the United States,
2015 in determining which States to
give priority in selecting additional
participants for the demonstration. We
believe that, in the absence of a volume
produced by the Census Bureau, using
this compendium is consistent with the
intent of the statute, and is appropriate
for the purpose of designating States to
which priority is to be given under
section 410A(g)(6)(B)(i) of Public Law
108–173.
In the FY 2018 IPPS/LTCH PPS
proposed rule, we noted that the table
in this compendium presenting
information on State population density
includes separate sets of statistics for
2010 and 2013. Both data sources are
available on the Census Bureau Web
site. The source for the 2010 statistics is
‘‘2010 Census Briefs, Population
Distribution and Change: 2000 to 2010,
March 2011’’ (https://www.census.gov/
prod/cen2010/briefs/c2010br-01.pdf);
the source for 2013 is ‘‘Annual
Estimates of the Population for the
United States, Regions, States, and
Puerto Rico: April 1, 2010 to July 1,
2013’’ (https://www.census.gov/popest/
data/state/totals/2013/).
Consistent with our policy for the
previous solicitations, we chose the
more recent data source to identify the
20 States to which priority is to be
given. These States are: Alaska, Arizona,
Arkansas, Colorado, Idaho, Iowa,
Kansas, Maine, Mississippi, Montana,
Nebraska, Nevada, New Mexico, North
Dakota, Oklahoma, Oregon, South
Dakota, Utah, Vermont, and Wyoming.
We noted that section
410A(g)(6)(B)(ii)(II) of Public Law 108–
173 as added by section 15003 of Public
Law 114–255 also states that, in
selecting additional participants, the
Secretary may consider the population
density of the State in which the rural
community hospital is located. We are
doing so because the demonstration may
have differing effects for health care
services and populations depending on
State population density. In addition, as
permitted by section 410A(g)(6)(B)(ii)(I)
of Public Law 108–173, in selecting
additional participants under this
solicitation, we will consider the impact
of closures of hospitals located in rural
areas in the State in which the hospital
is located during the 5-year period
immediately preceding December 13,
2016. We believe that this consideration
is reasonable, given the possibility that
enhanced Medicare payment through
the demonstration may increase access
to health care services for populations
thus affected by hospital closures.
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We stated that our goal was to finalize
this selection by June 2017, in time to
include in the FY 2018 IPPS/LTCH PPS
final rule an estimate of the costs of the
demonstration during FY 2018 and the
resulting budget neutrality offset
amount for these newly participating
hospitals (referred to as ‘‘Cohort 3’’
hospitals), as well as for those hospitals
among the previously participating
hospitals that decide to participate in
the extension period (Cohorts 1 and 2
hospitals). Upon announcing the
selection of new participants, we
indicated that we would confirm the
start dates for the periods of
performance for these newly selected
hospitals and for previously
participating hospitals. We stated that in
accordance with the proposed
implementation approach discussed in
section V.L.3.b. of the preamble of the
FY 2018 IPPS/LTCH PPS proposed rule,
if the selection were to be announced by
June 2017, we would expect that we
would determine the periods of
performance for all of the participating
hospitals to begin with the first cost
reporting period on or after October 1,
2017, and we would include an estimate
of the costs for the demonstration for FY
2018 for Cohorts 1, 2, and 3 hospitals in
the FY 2018 IPPS/LTCH PPS final rule.
We stated, on the other hand, that if
final selection of the Cohort 3 hospitals
were not to occur by June 2017, under
our proposed approach, we would not
be able to include an estimate of the
costs of the demonstration or an
estimate of the budget neutrality offset
amount for FY 2018 for either these
Cohort 3 hospitals or the previously
participating Cohorts 1 and 2 hospitals
in the FY 2018 IPPS/LTCH PPS final
rule. Considering that periods of
performance for the Cohorts 1 and 2
hospitals would not be determined until
after the selection of the Cohort 3
hospitals, we would not know precisely
when the periods of performance would
begin for the Cohorts 1 and 2 hospitals,
or to what extent they would overlap
with the 12 months in FY 2018 until the
Cohort 3 hospitals were selected.
Therefore, if the announcement of the
final selection of the Cohort 3 hospitals
were not to occur by June 2017, we
would not be able to include an estimate
of the demonstration costs or budget
neutrality offset amount for FY 2018 for
the Cohorts 1 and 2 hospitals in the FY
2018 IPPS/LTCH PPS final rule. As a
result, if the announcement of the final
selection of the Cohort 3 hospitals were
not to occur by June 2017, we would
specify the dates on which all
participating hospitals would start in
the second 5 years of the 10-year
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extension period at the time the
selection was announced in accordance
with our proposal. We proposed that if
the selection of the Cohort 3 hospitals
was not announced in June 2017, we
would include the estimated costs of the
demonstration for all participating
hospitals for FY 2018 in the budget
neutrality offset amount to be calculated
in the FY 2019 IPPS/LTCH PPS
proposed and final rules.
Comment: One commenter supported
CMS’ goal of aligning performance
periods across all of the hospitals
participating in the demonstration
program. However, the commenter
recommended that CMS achieve this
end by implementing a retroactive
reimbursement policy for the hospitals
newly entering the demonstration
program as well, so that all hospitals
participating in the second 5-year
extension period are subject to the
demonstration payment methodology
for the gap period occurring between the
end of the first 5 years of the 10-year
extension period and the enactment of
Public Law 114–255 authorizing the
second 5 years of the 10-year extension
period.
Response: We appreciate the
commenter’s support and
recommendation. As of the time of the
publication of this final rule, we have
not finalized the selection of additional
participants (Cohort 3 hospitals) to
participate in the demonstration. Once
we announce selections, we will also
announce the start dates for the 5-year
extension period for the additional
hospitals selected (Cohort 3). In
addition, for the previously
participating Cohorts 1 and 2 hospitals,
as discussed in section V.L.3.b. of the
preamble of this final rule, we are not
finalizing the proposed approach under
which the start date for the period of
performance under the second 5-year
extension period would be the start of
the first cost reporting period on or after
October 1, 2017, following upon the
announcement of the selection of the
additional hospitals for the
demonstration. We are finalizing the
alternative approach, under which the
start date of each previously
participating Cohort 1 and 2 hospital for
the second 5 years of the 10-year
extension period would be the date
immediately after the date the period of
performance under the first 5-year
extension period ended. We will
confirm the start dates for these
hospitals after verifying which among
them will continue to participate in the
second 5-year extension period.
Inasmuch as the selection of the
Cohort 3 hospitals was not announced
in June 2017, we are finalizing our
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proposal to include the estimated costs
of the demonstration for all
participating hospitals (Cohorts 1, 2,
and 3) for FY 2018 in the budget
neutrality offset amount to be calculated
in the FY 2019 IPPS/LTCH PPS
proposed and final rules. We refer
readers to section V.L.4.d. of the
preamble of this final rule for a
discussion of our finalized calculation
methodology for the budget neutrality
offset amount for FY 2018.
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4. Budget Neutrality
a. Statutory Budget Neutrality
Requirement
Section 410A(c)(2) of Public Law 108–
173 requires that, in conducting the
demonstration program under this
section, the Secretary shall ensure that
the aggregate payments made by the
Secretary do not exceed the amount
which the Secretary would have paid if
the demonstration program under this
section was not implemented. This
requirement is commonly referred to as
‘‘budget neutrality.’’ Generally, when
we implement a demonstration program
on a budget neutral basis, the
demonstration program is budget
neutral on its own terms; in other
words, the aggregate payments to the
participating hospitals do not exceed
the amount that would be paid to those
same hospitals in the absence of the
demonstration program. Typically, this
form of budget neutrality is viable
when, by changing payments or aligning
incentives to improve overall efficiency,
or both, a demonstration program may
reduce the use of some services or
eliminate the need for others, resulting
in reduced expenditures for the
demonstration program’s participants.
These reduced expenditures offset
increased payments elsewhere under
the demonstration program, thus
ensuring that the demonstration
program as a whole is budget neutral or
yields savings. However, the small scale
of this demonstration program, in
conjunction with the payment
methodology, makes it extremely
unlikely that this demonstration
program could be held to budget
neutrality under the methodology
normally used to calculate it—that is,
cost-based payments to participating
small rural hospitals are likely to
increase Medicare outlays without
producing any offsetting reduction in
Medicare expenditures elsewhere. In
addition, a rural community hospital’s
participation in this demonstration
program would be unlikely to yield
benefits to the participants if budget
neutrality were to be implemented by
reducing other payments for these same
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hospitals. Therefore, in the 12 IPPS final
rules spanning the period from FY 2005
through FY 2016, we adjusted the
national inpatient PPS rates by an
amount sufficient to account for the
added costs of this demonstration
program, thus applying budget
neutrality across the payment system as
a whole rather than merely across the
participants in the demonstration
program. (In the FY 2017 IPPS/LTCH
PPS final rule (81 FR 57034), we
described a different methodology
which we specify below.) As we
discussed in the FYs 2005 through 2017
IPPS final rules (69 FR 49183; 70 FR
47462; 71 FR 48100; 72 FR 47392; 73 FR
48670; 74 FR 43922, 75 FR 50343, 76 FR
51698, 77 FR 53449, 78 FR 50740, 77 FR
50145; 80 FR 49585; and 81 FR 57034,
respectively), we believe that the
language of the statutory budget
neutrality requirements permits the
agency to implement the budget
neutrality provision in this manner.
b. Methodology Used In Previous Final
Rules
We generally incorporated two
components into the budget neutrality
offset amounts identified in the final
IPPS rules in previous years. First, we
estimated the costs of the demonstration
for the upcoming fiscal year, generally
determined from historical, ‘‘as
submitted’’ cost reports for the hospitals
participating in that year. Update factors
representing nationwide trends in cost
and volume increases were incorporated
into these estimates, as specified in the
methodology described in the final rule
for each fiscal year. Second, as finalized
cost reports became available, we
determined the amount by which the
actual costs of the demonstration for an
earlier, given year differed from the
estimated costs for the demonstration
set forth in the final IPPS rule for the
corresponding fiscal year, and we
incorporated that amount into the
budget neutrality offset amount for the
upcoming fiscal year. If the actual costs
for the demonstration for the earlier
fiscal year exceeded the estimated costs
of the demonstration identified in the
final rule for that year, this difference
was added to the estimated costs of the
demonstration for the upcoming fiscal
year when determining the budget
neutrality adjustment for the upcoming
fiscal year. Conversely, if the estimated
costs of the demonstration set forth in
the final rule for a prior fiscal year
exceeded the actual costs of the
demonstration for that year, this
difference was subtracted from the
estimated cost of the demonstration for
the upcoming fiscal year when
determining the budget neutrality
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adjustment for the upcoming fiscal year.
(We note that we have calculated this
difference for FYs 2005 through 2010
between the actual costs of the
demonstration as determined from
finalized cost reports once available,
and estimated costs of the
demonstration as identified in the
applicable IPPS final rules for these
years.)
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57036), we finalized a
different methodology as compared to
previous years for analyzing the costs
attributable to the demonstration for FY
2017. We noted in the FY 2017 IPPS/
LTCH PPS final rule that, in accordance
with the extension mandated by the
Affordable Care Act, the demonstration
would have substantially phased out by
the beginning of FY 2017. In addition to
the 7 originally participating hospitals
(Cohort 1 hospitals) having ended their
scheduled period of performance in the
5-year extension period prior to the start
of FY 2016, we noted that the
participation periods for the 14
hospitals that entered the demonstration
following the extension mandated by
the Affordable Care Act (Cohort 2
hospitals) that were still participating
were to end on a rolling basis according
to the end dates of the hospitals’ cost
report periods, respectively, from April
30, 2016 through December 31, 2016.
(As noted earlier, 1 hospital among the
Cohort 2 hospitals closed in October
2015.) Of these 14 hospitals, 10 ended
participation on or before September 30,
2016, leaving 4 hospitals participating
for the last 3 months of CY 2016 (that
is, the first 3 months of FY 2017). We
stated that, given the small number of
participating hospitals and the limited
time of participation for such hospitals
during FY 2017, a revised methodology
was appropriate for determining the
costs of the demonstration during this
period. We noted that, for the 4
hospitals that would end their
participation in the demonstration
effective December 31, 2016, the
financial experience of the last 3 months
of the calendar year (that is, the first 3
months of FY 2017) would be included
in the finalized cost reports for FY 2016.
We stated that examining the finalized
cost reports for FY 2016 for these
hospitals would lead to a more accurate
and administratively feasible
calculation of budget neutrality for the
demonstration in FY 2017 than
conducting an estimate of the costs of
the demonstration for this 3-month
period based on ‘‘as submitted cost
reports’’ (as would occur according to
the budget neutrality methodology used
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prior to the FY 2017 IPPS/LTCH PPS
final rule).
Thus, in the FY 2017 IPPS/LTCH PPS
final rule (81 FR 57037), we finalized
the proposal to forego the process of
estimating the costs attributable to the
demonstration for FY 2017, and to
instead calculate the costs of the
demonstration and the resulting budget
neutrality adjustment factor for the
demonstration for FY 2017 once the
finalized cost reports for cost reporting
periods beginning in FY 2016 became
available.
c. Budget Neutrality Methodology for
Extension Period Authorized by the 21st
Century Cures Act (Pub. L. 114–255)
For the implementation approach that
we proposed in section V.L.3.b. of the
preamble of the FY 2018 IPPS/LTCH
PPS proposed rule, we proposed that a
budget neutrality offset methodology
similar to previous years (prior to FY
2017) would be applied to the periods
of performance under the second 5 years
of the 10-year extension period
authorized by section 15003 of Public
Law 114–255. With the potential
exception of the demonstration costs for
FY 2018 as discussed below, for the
periods of performance under the
second 5 years of the 10-year extension
period, an estimate of the costs of the
demonstration, generally determined
from historical, ‘‘as submitted’’ cost
reports for the participating hospitals
and the appropriate update factors,
would be incorporated into a budget
neutrality offset amount to be applied to
the national IPPS rates for the upcoming
fiscal year. We proposed that we would
implement this adjustment through the
corresponding proposed and final IPPS
rules. In addition, we proposed that we
would include as a second component
to the budget neutrality offset amount,
the amount by which the actual costs of
the demonstration for an earlier, given
year (as determined from finalized cost
reports when available) differed from
the estimated costs for the
demonstration set forth in the final IPPS
rule for the corresponding fiscal year.
Regarding demonstration costs
specifically for FY 2018, as described in
section V.L.3.c. of the preamble of the
FY 2018 IPPS/LTCH PPS proposed rule,
we proposed that if the selection of
additional hospitals pursuant to section
410A(g)(6) of Public Law 108–173 (as
added by section 15003 of Pub. L. 114–
255) were to be announced by June
2017, we would include in this FY 2018
IPPS/LTCH PPS final rule an estimate of
the costs of the demonstration for FY
2018 and the resulting estimated budget
neutrality offset amount for the newly
selected hospitals (Cohort 3 hospitals)
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and for the previously participating
hospitals (Cohorts 1 and 2 hospitals). As
discussed earlier, if the final selection of
the additional hospitals were not to
occur by June 2017, we stated in the
proposed rule that we would not be able
to include an estimate of the costs of the
demonstration for any participating
hospitals or an estimated budget
neutrality adjustment for FY 2018 in the
FY 2018 IPPS/LTCH PPS final rule. In
that situation, we proposed to include
the estimated costs of the demonstration
for FY 2018 for all participating
hospitals (Cohorts 1, 2 and 3 hospitals)
in the budget neutrality offset
adjustment in the FY 2019 IPPS/LTCH
PPS proposed and final rules. The
budget neutrality offset adjustment for
the FY 2019 IPPS/LTCH PPS proposed
and final rules would also include the
estimated costs of the demonstration for
FY 2019 for all participating hospitals
based on historical, ‘‘as submitted’’ cost
reports and the appropriate update
factors.
Under our proposed implementation
approach for the second 5-year
extension period as described in section
V.L.3.b. of the preamble of the FY 2018
IPPS/LTCH PPS proposed rule, if the
selection of the new hospitals were to be
announced by June 2017, we stated that
we would continue to use the general
methodology finalized in previous final
rules (prior to FY 2017) to calculate the
estimated budget neutrality adjustment
factor to be applied to the FY 2018
national IPPS rates. (We noted that the
same general methodology would be
used if the announcement of the
selection of additional hospitals did not
occur by June 2017, and thus the budget
neutrality offset amount reflecting the
costs of the demonstration for hospitals
participating in FY 2018 would be
applied to the national IPPS rates for FY
2019.)
We did not receive any public
comments on this issue.
Consistent with the approach adopted
in the FY 2016 IPPS/LTCH PPS final
rule, in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19996), we
proposed a specific calculation to
account for the fact that the periods of
performance for the participating
hospitals would start at different points
of time during FY 2018. That is, we
proposed to prorate estimated
reasonable cost amounts and amounts
that would be paid without the
demonstration for FY 2018 according to
the fraction of the number of months
that the hospital would be participating
out of the 12 months within FY 2018.
For example, if a hospital would be
starting this second 5-year period of the
10-year extension period on January 1,
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2018, we would multiply the estimated
cost and payment amounts, derived as
described below, by a factor of 0.75. (In
this discussion of how the overall
calculations are conducted, this factor is
referred to as ‘‘the hospital-specific
prorating factor’’.) Our proposed
methodology for calculating the budget
neutrality offset amount proceeds in
several steps, as set forth below:
Step 1: For each of the participating
hospitals, we proposed to identify the
reasonable cost amount calculated
under the reasonable cost methodology
for covered inpatient hospital services,
as indicated on the ‘‘as submitted’’ cost
report for the most recent cost reporting
period available. (We stated that we
expected that, for most of the hospitals,
these ‘‘as submitted’’ cost reports would
be those with cost report period end
dates in CY 2015. In the solicitation for
additional participants, we requested
that applicants submit cost report
information from the most recent year
available. For the selected additional
hospitals (that is, Cohort 3), we stated
that we would be using the submitted
information for the calculation of the
budget neutrality offset amount for FY
2018.) We stated that we believed the
most recent available cost reports to be
an accurate predictor of the costs of the
demonstration in FY 2018 because they
would give us a recent picture of the
participating hospitals’ costs.
Because section 410A of Public Law
108–173 stipulates swing-bed services
are to be included among the covered
inpatient hospital services for which the
demonstration payment methodology
applies, we proposed to include the cost
of these services, as reported on the cost
reports for the hospitals that provide
swing-bed services, in estimating the
total reasonable cost amount for covered
inpatient hospital services under the
demonstration. Similar to what is stated
above, we proposed to use the most
recently available ‘‘as submitted’’ cost
reports for this calculation.
For each hospital, we proposed to
sum the two above-referenced amounts,
and then multiply this sum by the
hospital-specific prorating factor
(described above), to obtain an
unadjusted hospital-specific amount,
calculated for each hospital prior to
applying adjustments for increases in
cost or volume, as described below. (In
the discussion below, we refer to this
amount as the ‘‘unadjusted hospitalspecific amount’’.) We proposed to sum
these unadjusted hospital-specific
amounts for all participating hospitals
to obtain an unadjusted total estimated
reasonable cost amount for covered
inpatient hospital services (for all
participating hospitals) to which update
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factors representing increases in costs
and volume would be applied.
Accordingly, we proposed to multiply
this sum (that is, the unadjusted total
estimated reasonable cost amount for
covered inpatient hospital services for
all participating hospitals) by the FY
2016, FY 2017, and final FY 2018 IPPS
market basket percentage increases,
which are formulated by the CMS Office
of the Actuary. We proposed to use the
market basket percentage increases for
these particular years because we expect
that most of the ‘‘as submitted’’ cost
reports that would be used in
determining the unadjusted hospitalspecific amounts will end in FY 2015.
If a majority of these ‘‘as submitted’’
cost reports end in FY 2016, we stated
that we would apply only the FY 2017
and final FY 2018 market basket
percentage increases. We recognized
that applying the set of FY 2016, FY
2017, and FY 2018 market basket
percentage increases to a sum that may
include information from ‘‘as
submitted’’ cost reports ending in FY
2016 (or, conversely, applying these
update factors for FY 2017 and FY 2018
to a sum that may include information
from ‘‘as submitted’’ cost reports ending
in FY 2015) might appear to reduce the
precision of the estimate. However, we
stated that we believed that the
potential margin of error in estimating
the total costs for the demonstration
hospitals inherent in using a uniform set
of update factors would be justifiable for
purposes of streamlining and applying a
consistent calculation method for all
participating hospitals. In addition, we
noted that, as in previous years, we
proposed to reconcile the actual costs of
the demonstration as determined from
finalized cost reports when available
with the estimate of the costs of the
demonstration in FY 2018 as included
in the budget neutrality offset amount,
which would ultimately address any
potential error in estimating the costs of
the demonstration for FY 2018, thereby
enhancing the accuracy of the
calculation.
In the proposed rule, we stated that
the current estimate of the FY 2018 IPPS
market basket percentage increase
provided by the CMS Office of the
Actuary is specified in section V.B.1. of
the preamble of the proposed rule. We
also proposed to then multiply the
product of the unadjusted total
estimated reasonable cost amount for all
participating hospitals and the market
basket percentage increases applicable
to the years involved by a 3-percent
annual volume adjustment for each of
FYs 2016 through 2018 (or only FYs
2017 and 2018, in accordance with the
discussion above). The result would be
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the general total estimated FY 2018
reasonable cost amount for covered
inpatient hospital services for all
participating hospitals.
We proposed to apply the IPPS
market basket percentage increases
applicable for FYs 2016 through 2018
(or FYs 2017 and 2018, in accordance
with the discussion above) to the
applicable total estimated reasonable
cost amount described above to model
the estimated FY 2018 reasonable cost
amount under the demonstration. We
proposed to use the IPPS market basket
percentage increases because we believe
that these update factors appropriately
indicate the trend of increase in
inpatient hospital operating costs under
the reasonable cost methodology for the
years involved. The 3-percent annual
volume adjustment was stipulated by
the CMS Office of the Actuary and was
proposed because it is intended to
accurately reflect the tendency of
hospitals’ inpatient caseloads to
increase. We acknowledged the
possibility that inpatient caseloads for
small hospitals may fluctuate, and thus
proposed to incorporate into the
estimate of demonstration costs a factor
to allow for a potential increase in
inpatient hospital services.
Step 2: For each of the participating
hospitals, we proposed to identify the
general estimated amount that would
otherwise be paid in FY 2018 under
applicable Medicare payment
methodologies for covered inpatient
hospital services (as indicated on the
same set of ‘‘as submitted’’ cost reports
as in Step 1) if the demonstration was
not implemented. Similarly, as in Step
1, for the hospitals that provide swingbed services, we proposed to identify
the estimated amount that generally
would otherwise be paid for these
services (using the same ‘‘as submitted’’
cost reports as in Step 1) and include it
in estimating the total FY 2018 general
amount that would otherwise be paid
for covered inpatient hospital services
without the demonstration. Similar to
Step 1, we proposed to multiply this
sum for each participating hospital by
the hospital-specific prorating factor.
We then proposed to add together the
resulting amounts for all participating
hospitals to obtain an estimate of the
amount that would otherwise be paid
for covered inpatient hospital services
for all participating hospitals without
the demonstration, to which update
factors representing increases in costs
and volume would be applied.
Accordingly, we proposed to then
multiply this amount by the FYs 2016
through 2018 (or only FYs 2017 and
2018, in accordance with the discussion
above) IPPS applicable percentage
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increases, depending on whether the
majority of the ‘‘as submitted’’ cost
reports end in FY 2015 or FY 2016, as
discussed in Step 1. This methodology
differs from Step 1, in which we
proposed to apply the market basket
percentage increases to the sum of the
hospitals’ applicable total estimated
reasonable cost amount for covered
inpatient hospital services. We stated
that we believed that the IPPS
applicable percentage increases are
appropriate factors to update the
estimated amounts that generally would
otherwise be paid without the
demonstration. This is because IPPS
payments would constitute the majority
of payments that would otherwise be
made without the demonstration and
the applicable percentage increase is the
factor used under the IPPS to update the
inpatient hospital payment rates. Most
of the hospitals participating in the
demonstration would be paid under the
IPPS payment methodology if they were
not in the demonstration. Then, for the
same reasons discussed in Step 1, we
proposed to multiply the product of the
applicable estimated total payments that
generally would otherwise be made
without the demonstration and the IPPS
applicable percentage increases
applicable to the years involved by the
3-percent annual volume adjustment for
each of FYs 2016 through 2018 (or FYs
2017 and 2018, in accordance with the
discussion above). The result would be
the general total estimated payment
amount that would otherwise be paid
without the demonstration for FY 2018
to participating hospitals for covered
inpatient hospital services.
Step 3: We proposed to subtract the
amount derived in Step 2 (representing
the sum of estimated amounts that
generally would otherwise be paid to
the participating hospitals for covered
inpatient hospital services for FY 2018
if the demonstration were not
implemented) from the amount derived
in Step 1 (representing the sum of the
estimated reasonable cost amounts that
generally would be paid under the
demonstration to all participating
hospitals for covered inpatient hospital
services for FY 2018). We proposed that
the resulting difference would be the
estimated amount of the costs of the
demonstration for FY 2018, which
would be incorporated into an
adjustment to the national IPPS rates.
Similar to previous years, in order to
meet the budget neutrality requirement
in section 410A(c)(2) of Public Law
108–173, we proposed that when
finalized cost reports for each of the
second 5 years of the 10-year extension
period become available, we would
determine the difference between the
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actual costs of the demonstration as
determined from these finalized cost
reports and the estimated cost indicated
in the corresponding fiscal year IPPS
final rule, and include that difference
either as a positive or negative
adjustment in the upcoming year’s final
rule.
Specifically for FY 2018, when the
finalized cost reports beginning in FY
2018 are available, we stated that we
would determine the difference between
the actual costs of the demonstration as
determined from these finalized cost
reports and the estimated cost indicated
in the FY 2018 (or FY 2019, as
discussed above) IPPS/LTCH PPS final
rule, and include that difference either
as a positive or negative adjustment in
the applicable year’s final rule.
Thus, in keeping with the
methodologies used in previous final
rules, we stated that we would continue
to use a methodology for calculating the
budget neutrality offset amount for the
second 5-years of the 10-year extension
period consisting of two components:
(1) The estimated demonstration costs
in the upcoming fiscal year (as
described above); and (2) the amount by
which the actual demonstration costs
corresponding to an earlier, given year
(which would be known once finalized
cost reports became available for that
year) differed from the budget neutrality
offset amount finalized in the
corresponding year’s IPPS final rule.
We invited public comments on the
budget neutrality calculation
methodology proposed above. In
addition, we invited public comments
on other approaches that would be
consistent with section 410A(c)(2) of
Public Law 108–173, and that would
provide a reasonable determination of
budget neutrality for the demonstration.
We did not receive any public
comments on the budget neutrality
calculation that we proposed, which
would apply in accordance with our
proposed implementation approach.
However, because we are not finalizing
our proposed implementation approach,
we are not finalizing the proposed
budget neutrality calculation
methodology. As subsequently
discussed in section V.L.4.d. of the
preamble of this final rule, we are
finalizing the alternative budget
neutrality methodology that was
described in section V.L.4.d. of the
preamble of the FY 2018 IPPS/LTCH
PPS proposed rule.
d. Finalized Budget Neutrality
Approach
In section V.L.3.b. of the preamble of
the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 19993), we described an
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alternative approach that we considered
for implementing the extension of the
demonstration pursuant to section
15003 of Public Law 114–255, and we
invited public comments on this
alternative approach. Under this
alternative approach, for each
previously participating hospital that
decided to participate in the second 5
years of the 10-year extension period,
the cost-based payment methodology
under section 410A of Public Law 108–
173 (as amended by section 15003 of
Pub. L. 114–255) would begin on the
date immediately following the end date
of its period of performance for the first
5-year extension period.
As discussed above, we are finalizing
and adopting this alternative
implementation approach in this final
rule. Depending on which among the
Cohort 1 and 2 hospitals choose to
participate in this second 5-year
extension period, the demonstration’s
cost-based payment methodology would
be applied to dates as far back as
January 1, 2015 and as late as January
1, 2017. This will require reconciling
the reasonable costs associated with
furnishing Medicare covered inpatient
hospital services as reported on cost
reports with the amounts already paid
under the other Medicare payment
methodologies applied since the end of
their periods of performance for the first
5-year extension. Under this approach,
any additional amounts associated with
the cost-based payment methodology for
this period would be paid to the
hospitals.
In general, as described in the
proposed rule, the methodology for
calculating the budget neutrality offset
under this approach would involve the
following steps:
• To reflect the costs of the
demonstration for fiscal years before FY
2018, for the previously participating
hospitals (Cohorts 1 and 2) that decide
to participate in the 5-year extension
period authorized by section 15003 of
Public Law 114–255, when finalized
cost reports become available, we
indicated that we would determine the
actual costs of the demonstration for
cost report periods beginning on the day
after the last day of the hospitals’
periods of performance in the first 5year extension period and extending
through the last day of the cost report
periods ending in FY 2018 (or FY 2017
for hospitals with an October 1 cost
report start date, as explained below),
and incorporate these amounts in the
budget neutrality offset amount to be
included in a future IPPS final rule.
Thus, we would determine the actual
costs for the previously participating
hospitals for the period prior to the start
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of FY 2018. Similar to our proposed
approach for implementation and
budget neutrality, as described in
sections V.L.3.b. and V.L.4.c. of the
preamble of the proposed rule, under
this methodology, we would begin our
estimation of the costs of the
demonstration for all hospitals in the
same fiscal year (that is, in FY 2018,
with each hospital’s first cost reporting
period beginning on or after October 1,
2017).
Thus, under this approach, for a
Cohort 1 hospital whose period of
performance in the first extension
period ended June 30, 2015, we would
determine the actual costs of the
demonstration for the cost reporting
periods from July 1, 2015 through June
30, 2016, from July 1, 2016 through June
30, 2017, and from July 1, 2017 through
June 30, 2018. For a Cohort 2 hospital
whose period of performance in the first
extension period ended June 30, 2016,
under this approach, we would
determine the actual costs of the
demonstration for the cost reporting
periods from July 1, 2016 through June
30, 2017, and from July 1, 2017 through
June 30, 2018. We noted that for both of
these Cohorts 1 and 2 hospitals, this last
cost report period would encompass
services occurring since the enactment
of Public Law 114–255, which
authorizes the second extension period.
However, we stated that we believed
that applying a uniform method for
determining costs across a cost report
year would be more reasonable from the
standpoint of operational feasibility and
consistent application of cost
determination principles. (We noted
that, for hospitals (either Cohort 1 or 2)
with an October 1 cost report start date,
the estimation of costs for FY 2018
would apply for the period starting
October 1, 2017, that is, the first day of
FY 2018. Therefore, for these hospitals,
we would determine actual costs from
finalized cost reports when available for
the period starting from the day after the
last day of the period of performance
under the first 5-year extension period
and concluding with the last day of FY
2017.) For all hospitals, under this
approach, we stated that we would
incorporate these amounts into a single
amount to be included in the
calculation of the budget neutrality
offset amount to the national IPPS rates
in a future final rule after such finalized
cost reports become available.
• To reflect the costs of the
demonstration for the upcoming fiscal
year (that is, FY 2018) for Cohorts 1 and
2 hospitals that have decided to
participate in the second 5-years of the
10-year extension period, we indicated
that we would estimate the costs of the
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demonstration for FY 2018, based on
historical ‘‘as submitted’’ cost reports,
applying prorating factors and updates
as appropriate, as described below.
Similar to the proposed methodology
described in section V.L.4.c. of the
preamble of the FY 2018 IPPS/LTCH
PPS proposed rule for estimating the
costs of the demonstration for FY 2018,
we stated that the methodology for this
approach for estimating the costs of the
demonstration for FY 2018 would
follow 3 steps:
Step 1: We stated that we would
determine the total estimated reasonable
cost amount for covered inpatient
hospital services (as indicated on the
‘‘as submitted’’ cost reports for the most
recent cost reporting period available)
for all participating hospitals for FY
2018 calculated under the
demonstration’s reasonable cost-based
payment methodology. We stated that
these calculations would be identical to
those described for our proposed
methodology in section V.L.4.c. of the
preamble of the proposed rule, with the
exception that the formulation of the
‘‘hospital-specific prorating factor,’’ to
be applied to each participating
hospital’s reasonable cost amounts as
derived from its most recently available
‘‘as submitted’’ cost report, would be
different. Under the different
methodology for the formulation of the
hospital-specific prorating factor, for
hospitals with a cost report start date
other than October 1, we indicated that
the hospital-specific prorating factor
would be the ratio of the number of
months between the end of the cost
reporting period ending in FY 2018, on
the basis of which actual costs are
determined (as described above), and
the end of the fiscal year, out of the total
number of months in the fiscal year.
Therefore, for a hospital (either Cohort
1 or 2) for which the end of the period
on which we would determine actual
costs (that is, the end date of the
hospital’s cost report year) would be
June 30, 2018, there would be 3 months
remaining in FY 2018, and the hospitalspecific prorating factor would be .25.
(We noted that hospitals with an
October 1 cost report start date would
participate in the demonstration for the
full 12 months of FY 2018 and thus
would have a hospital-specific prorating
factor of 1.0.) We stated that we would
then follow the same calculations as in
our proposed budget neutrality
calculation described in section V.L.4.c.
of the preamble of the proposed rule,
including application of the same
update factors to reflect increases in cost
and volume.
Step 2: We stated that we would
estimate the amount that would
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otherwise be paid for Medicare covered
inpatient hospital services to all
participating hospitals in FY 2018
without the demonstration. These
calculations would be identical to those
described for our proposed methodology
in section V.L.4.c. of the preamble of the
proposed rule, except for the difference
that the hospital-specific prorating
factor, to be applied to the estimated
amount that the hospital would be paid
without the demonstration, as derived
from its most recently available ‘‘as
submitted’’ cost report, would be
formulated in the same manner as
described in Step 1 above under this
methodology.
Step 3: We stated that we would then
subtract the amount derived in Step 2
(representing the estimated amount that
would otherwise be paid to the
participating hospitals for covered
inpatient hospital services for FY 2018
if the demonstration were not
implemented) from the amount derived
in Step 1 (representing the estimated
reasonable cost amounts that generally
would be paid under the demonstration
to all participating hospitals for covered
inpatient hospital services for FY 2018).
The resulting difference would be the
estimated amount of the costs of the
demonstration for FY 2018, which
would be incorporated into an
adjustment to the national IPPS rates.
• For the Cohort 3 hospitals, we
indicated that we would follow the
identical methodology for estimating the
costs of the demonstration for FY 2018
as described for the proposed budget
neutrality methodology discussed in
section V.L.4.c. of the preamble of the
proposed rule under the proposed
implementation approach. In the
proposed rule, we noted that if the
selection of additional participants
under the solicitation authorized by
Public Law 114–255 were not
announced by June 2017, we would not
be able to include the estimates of the
costs of the demonstration for FY 2018
for the Cohort 3 hospitals in the budget
neutrality offset adjustment for FY 2018,
and similar to our proposed
methodology in that situation, we
would incorporate this estimate in the
budget neutrality offset adjustment in
the FY 2019 IPPS/LTCH PPS final rule.
We noted that, under these
circumstances, the budget neutrality
offset adjustment for the FY 2019 IPPS
proposed and final rules would also
include the estimated costs of the
demonstration for FY 2019 for these
Cohort 3 hospitals based on historical,
‘‘as submitted’’ cost reports and the
appropriate update factors.
• Consistent with our approach in
previous final rules, when the finalized
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cost reports for cost reporting periods
beginning in FY 2018 are available, we
stated that we would determine the
difference between the actual costs of
the demonstration as determined from
these finalized cost reports and the
estimated cost indicated in the FY 2018
IPPS/LTCH PPS final rule (or the FY
2019 IPPS/LTCH PPS final rule, as
explained earlier), and include that
difference either as a positive or
negative adjustment in the upcoming
year’s final rule.
• For future years, we stated that we
would continue to incorporate the
estimated costs of the demonstration for
all participating hospitals for the
upcoming fiscal year in the budget
neutrality offset adjustment in the IPPS
final rule of the corresponding fiscal
year. For these hospitals, we indicated
that we also would determine the actual
costs of the demonstration when
finalized cost reports become available,
and include the difference between the
estimated and actual costs of the
demonstration in the calculation of the
budget neutrality offset amount to the
national IPPS rates in the final rule for
a future year.
We noted that, under this approach,
although we would not be able to
include an estimate of the costs of the
demonstration for FY 2018 Cohort 3
hospitals in the budget neutrality offset
adjustment in the FY 2018 final rule if
we were not able to announce the
selection of additional hospitals by June
2017, we would do so for the Cohorts
1 and 2 hospitals.
We invited public comments on this
alternative budget neutrality calculation
methodology, as discussed earlier.
We did not receive any public
comments on this alternative
methodology.
Because we are finalizing the
alternative implementation approach
described in section V.L.3.b. of the
preamble of this final rule, according to
which each previously participating
hospital would begin the second 5 years
of the 10-year extension period and the
cost-based payment methodology under
section 410A of Public Law 108–173 (as
amended by section 15003 of Pub. L.
114–255) on the date immediately after
the date the period of performance
under the first 5-year extension period
ended, we are finalizing the alternative
budget neutrality methodology from the
proposed rule, as described in section
V.L.4.d. of the preamble of this final
rule specific to this approach. We note
that in advance of finalizing our policy
about the start date for the period of
performance for the second 5-year
extension period for the previously
participating hospitals (Cohorts 1 and
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2), at the time of publication of this final
rule, we have not been able to verify
which among these hospitals will
continue to participate in the second 5year extension period. Therefore, we are
not including an estimate of the costs of
the demonstration for any of the
previously participating Cohort 1 or 2
hospitals for FY 2018 in the budget
neutrality offset adjustment in this FY
2018 IPPS/LTCH PPS final rule. In
addition, because the selection of
additional participants under the
solicitation authorized by Public Law
114–255 was not announced by June
2017, we also are not able to include the
estimates of the costs of the
demonstration for the Cohort 3 hospitals
for FY 2018 in the budget neutrality
offset adjustment in this FY 2018 IPPS/
LTCH PPS final rule. As a result, there
will be no budget neutrality offset
adjustment for the demonstration in this
FY 2018 IPPS/LTCH PPS final rule. We
will include the estimated costs of the
demonstration for all participating
hospitals (Cohorts 1, 2, and 3) for FY
2018 in the budget neutrality offset
amount in the FY 2019 IPPS proposed
and final rules.
e. Reconciling Actual and Estimated
Costs of the Demonstration for Previous
Years (2011, 2012, and 2013)
As described earlier, we have
calculated the difference for FYs 2005
through 2010 between the actual costs
of the demonstration, as determined
from finalized cost reports once
available, and estimated costs of the
demonstration as identified in the
applicable IPPS final rules for these
years. In the FY 2017 IPPS/LTCH PPS
final rule (81 FR 57037), we finalized a
proposal to reconcile the budget
neutrality offset amounts identified in
the IPPS final rules for FYs 2011
through 2016 with the actual costs of
the demonstration for those years,
considering the fact that the
demonstration was scheduled to end
December 31, 2016. In that final rule, we
stated that we believed it would be
appropriate to conduct this analysis for
FYs 2011 through 2016 at one time,
when all of the finalized cost reports for
cost reporting periods beginning in FYs
2011 through 2016 are available. We
stated that such an aggregate analysis
encompassing the cost experience
through the end of the period of
performance of the demonstration
would represent an administratively
streamlined method, allowing for the
determination of any appropriate
adjustment to the IPPS rates and
obviating the need for multiple, fiscal
year-specific calculations and regulatory
actions. Given the general lag of 3 years
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in finalizing cost reports, we stated that
we expected any such analysis would be
conducted in FY 2020.
With the extension of the
demonstration for another 5-year period,
as authorized by section 15003 of Public
Law 114–255, in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 20000),
we proposed to modify the plan
outlined in the FY 2017 IPPS/LTCH PPS
final rule, and instead return to the
general procedure in previous final
rules; that is, as finalized cost reports
become available, to determine the
amount by which the actual costs of the
demonstration for an earlier, given year
differ from the estimated costs for the
demonstration set forth in the IPPS final
rule for the corresponding fiscal year,
and then incorporate that amount into
the budget neutrality offset amount for
an upcoming fiscal year. We proposed
that if the actual costs of the
demonstration for the earlier fiscal year
exceed the estimated costs of the
demonstration identified in the final
rule for that year, this difference would
be added to the estimated costs of the
demonstration for the upcoming fiscal
year when determining the budget
neutrality adjustment for the final rule.
Conversely, we proposed that if the
estimated costs of the demonstration set
forth in the final rule for a prior fiscal
year exceed the actual costs of the
demonstration for that year, this
difference would be subtracted from the
estimated cost of the demonstration for
the upcoming fiscal year when
determining the budget neutrality
adjustment for an upcoming fiscal year.
However, given that this adjustment for
specific years could be positive or
negative, we proposed to combine this
reconciliation for multiple prior years
into one adjustment to be applied to the
budget neutrality offset amount for a
single fiscal year, thus reducing the
possibility of both positive and negative
adjustments to be applied in
consecutive years, and enhancing
administrative feasibility. Specifically,
we proposed that when finalized cost
reports for FYs 2011, 2012, and 2013 are
available, we would include this
difference for these years in the budget
neutrality offset adjustment to be
applied to the national IPPS rates in a
future final rule. We stated that we
expected that this would occur in FY
2019. We also proposed that when
finalized cost reports for FYs 2014
through 2016 are available, we would
include the difference between the
actual costs as reflected on these cost
reports and the amounts included in the
budget neutrality offset amounts for
these fiscal years in a future final rule.
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We stated in the proposed rule that we
plan to provide an update in a future
final rule regarding the year that we
would expect that this analysis would
occur.
We invited public comments on this
proposal.
We did not receive any public
comments on this proposal. We are
finalizing our proposal for reconciling
the actual and estimated costs of the
demonstration for 2011 through 2013.
M. Adjustment to IPPS Rates Resulting
From 2-Midnight Policy for FY 2018
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50906 through 50954), we
adopted the 2-midnight policy, effective
for dates of admission on or after
October 1, 2013. As discussed in the FY
2017 IPPS/LTCH PPS final rule (81 FR
57058 through 57060), under the 2midnight policy, an inpatient admission
is generally appropriate for Medicare
Part A payment if the physician (or
other qualified practitioner) admits the
patient as an inpatient based upon the
reasonable expectation that the patient
will need hospital care that crosses at
least 2 midnights. In assessing the
expected duration of necessary care, the
physician (or other qualified
practitioner) may take into account
outpatient hospital care received prior
to inpatient admission. If the patient is
expected to need less than 2 midnights
of care in the hospital, the services
furnished should generally be billed as
outpatient services. We note that
revisions were made to this policy in
the CY 2016 OPPS/ASC final rule with
comment period (80 FR 70545). Our
actuaries estimated that the 2-midnight
policy would increase expenditures by
approximately $220 million in FY 2014
due to an expected net increase in
inpatient encounters. We used our
authority under section 1886(d)(5)(I)(i)
of the Act to make a reduction of 0.2
percent to the standardized amount, the
Puerto Rico standardized amount, and
the hospital-specific payment rates, and
we used our authority under section
1886(g) of the Act to make a reduction
of 0.2 percent to the national capital
Federal rate and the Puerto Rico-specific
capital rate, in order to offset this
estimated $220 million in additional
IPPS expenditures in FY 2014.
For the reasons outlined in the FY
2017 IPPS/LTCH PPS proposed and
final rules (81 FR 25136 through 25138
and 81 FR 57058 through 57060), we
used our authority under sections
1886(d)(5)(I)(i) and 1886(g) of the Act to
prospectively remove, beginning in FY
2017, the 0.2 percent reduction to the
rates put in place beginning in FY 2014.
The 0.2 percent reduction was
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implemented by including a factor of
0.998 in the calculation of the FY 2014
standardized amount, hospital-specific
payment rates, and the national capital
Federal rate, permanently reducing the
rates for FY 2014 and future years until
the 0.998 is removed. In the FY 2017
IPPS/LTCH PPS final rule (81 FR 57281
and 57294), we permanently removed
the 0.998 reduction beginning in FY
2017 by including a factor of (1/0.998)
in the calculation of the FY 2017
standardized amount, the hospitalspecific payment rates, and the national
capital Federal rate.
We also stated in the FY 2017 IPPS/
LTCH PPS proposed and final rules that,
for the reasons outlined in those rules,
we believe it would be appropriate to
use our authority under sections
1886(d)(5)(I)(i) and 1886(g) of the Act to
temporarily increase the rates, only for
FY 2017, to address the effect of the 0.2
percent reduction to the rates in effect
for FY 2014, the 0.2 percent reduction
to the rates in effect for FY 2015 (recall
the 0.998 factor included in the
calculation of the FY 2014 rates
permanently reduced the rates for FY
2014 and future years until it is
removed), and the 0.2 percent reduction
to the rates in effect for FY 2016. We
stated that we believe the most
transparent, expedient, and
administratively feasible method to
accomplish this was a temporary onetime prospective increase to the FY
2017 rates of 0.6 percent (= 0.2 percent
+ 0.2 percent + 0.2 percent).
Specifically, we finalized our proposal
to include a factor of 1.006 in the
calculation of the standardized amount,
the hospital-specific payment rates, and
the national capital Federal rate in FY
2017 and then to remove this temporary
one-time prospective increase by
including a factor of (1/1.006) in the
calculation of the rates for FY 2018. We
stated that while we generally did not
believe it is appropriate in a prospective
system to retrospectively adjust rates,
we took this action in the specific
context of this unique situation.
In summary, for the reasons described
in the FY 2017 IPPS/LTCH PPS
proposed and final rules, we finalized
our proposal to include a permanent
factor of (1/0.998) and a temporary onetime factor of (1.006) in the calculation
of the FY 2017 standardized amount,
hospital-specific payment rates, and
national capital Federal rate and to
include a factor of (1/1.006) in the
calculation of the FY 2018 standardized
amount, hospital-specific payment rates,
and national capital Federal rate to
remove the temporary one-time factor of
1.006.
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In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20001), we stated
that we were including a factor of (1/
1.006) in the calculation of the FY 2018
standardized amount, hospital-specific
payment rates, and national capital
Federal rate to remove the temporary
one-time factor of 1.006, as explained in
detail in section II. of the Addendum to
the proposed rule.
We noted that, in the FY 2017 IPPS/
LTCH PPS final rule, in our response to
public comments, we recognized that
for closed, converted, or new hospitals,
our prospective method generally may
have had a differential positive or
negative impact compared to hospitals
that were IPPS hospitals for all of the FY
2014 through FY 2017 time period. We
stated that we generally believe that,
given the prospective nature of our
method and our goal to adopt a
transparent, expedient, and
administratively feasible approach,
these differential impacts would be an
appropriate consequence. However,
after consideration of the public
comments received, we agreed that we
should provide a process to address the
situation of closed or converted
hospitals. Due to the small number of
hospitals impacted, we stated that we
will address closed and converted
hospitals as part of the cost report
settlement process. We stated that these
hospitals should identify themselves to
their MACs so that the appropriate cost
report adjustment can be applied.
Comment: One commenter opposed
the removal of the one-time 1.006
adjustment, stating that the original
reduction was improper. Another
commenter indicated that CMS should
recalculate an adjustment to the IPPS
rates using both medical and surgical
Medicare claims data and recalculate
the FY 2018 IPPS rates accordingly.
Response: We did not propose to
make any adjustment to the FY 2018
rates related to the 2-midnight policy.
We note that in the FY 2017 IPPS/LTCH
PPS final rule (81 FR 57060), we
finalized the policy to remove the onetime 1.006 adjustment in the FY 2018
rates. We also refer readers to the FY
2017 IPPS/LTCH PPS final rule (81 FR
57060), where we responded to similar
comments.
As we finalized in the FY 2017 IPPS/
LTCH PPS final rule, we are including
a factor of (1/1.006) in the calculation of
the FY 2018 standardized amount,
hospital specific payment rates, and
national capital Federal rate to remove
the temporary one-time factor of 1.006
that was in place for FY 2017.
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N. Provider-Based Status of Indian
Health Service and Tribal Facilities and
Organizations
As we discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 20001
through 20002), since the beginning of
the Medicare program, some providers,
which we refer to as ‘‘main providers,’’
have functioned as a single entity while
owning and operating multiple
departments, locations, and facilities.
We have maintained that having clear
criteria for provider-based status is
important because a provider-based
status designation can result in
additional Medicare payments under
the OPPS for services provided at the
provider-based facility, as well as
increased beneficiary coinsurance
liability for Medicare beneficiaries.
The Medicare criteria for providerbased status are set forth in our
regulations at 42 CFR 413.65. In the
April 7, 2000 OPPS final rule (65 FR
18507), CMS (then HCFA), responded to
several commenters who were
concerned that the implementation of
the proposed provider-based regulations
would have the effect of denying
Medicare participation as providerbased entities to a number of Indian
Health Service (IHS) facilities that were
being operated by Indian Tribes under
the auspices of the Indian SelfDetermination and Education
Assistance Act (Pub. L. 93–638). Other
commenters were concerned that the
regulations would jeopardize statutorily
authorized contracting and compacting
relationships and would severely
restrict a number of IHS and Tribal
clinics from receiving payments for
outpatient services. The IHS itself
strongly recommended that the
proposed regulations not apply to IHS
and the Tribal health system. In
response to these concerns, we stated in
that final rule (68 FR 18507): ‘‘We
recognize that the provision of health
services to members of federally
recognized Tribes is based on a special
and legally recognized relationship
between Indian Tribes and the United
States Government. To address this
relationship, the IHS has developed an
integrated system to provide care that
has its foundation in IHS hospitals.
Because of these special circumstances,
not present in the case of private, nonFederal facilities and organizations that
serve patients generally, we agree that it
would not be appropriate to apply the
provider-based criteria to IHS facilities
or organizations or to most tribal
facilities or organizations.’’
In the April 7, 2000 OPPS final rule
(65 FR 18507), we finalized a policy at
§ 413.65(m) of our regulations under
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which facilities and organizations
operated by the IHS or Tribes would be
considered to be ‘‘departments of
hospitals operated by the IHS or
Tribes,’’ and thereby grandfathered from
application of the provider-based rules,
if on or before April 7, 2000, they
furnished only services that were billed
as if they had been furnished by a
department of a hospital operated by the
IHS or a Tribe and they are: (1) Owned
and operated by the IHS; (2) owned by
the Tribe but leased from the Tribe by
the IHS under the Indian SelfDetermination and Education
Assistance Act in accordance with
applicable regulations and policies of
the IHS in consultation with Tribes; or
(3) owned by the IHS but leased and
operated by the Tribe under the Indian
Self-Determination and Education
Assistance Act in accordance with
applicable regulations and policies of
the IHS in consultation with Tribes.
In order to qualify for grandfathering
under § 413.65(m), we required that the
services be furnished by the facility or
organization on or before April 7, 2000
because of our concern that, without
such a date limitation, this provision
would create an incentive for IHS or
Tribal hospitals to establish new
outpatient departments that were not
sufficiently integrated with the main
provider to support payment under the
OPPS for the services that they
furnished. Our intent was to implement
a policy that both addressed a primary
concern (that is, the rapid growth of offcampus provider-based clinics) that
necessitated the provider-based
regulations and recognized longstanding
and complex IHS and Tribal
arrangements. Since we finalized the
policy at § 413.65(m), we have issued
guidance on circumstances that would
and would not result in a facility or
organization losing its grandfathered
status. In particular, we recognized the
special relationship between Tribes and
the IHS under the Self-Determination
and Education Assistance Act and
stated that changes in the status of a
hospital or a facility from IHS to Tribal
operation, or vice versa, or the
realignment of a facility from one IHS or
Tribal hospital to another IHS or Tribal
hospital, would not be a basis for losing
such a grandfathered status, so long as
the resulting configuration is one that
would have qualified for grandfathering
under § 413.65(m) had it been in effect
on April 7, 2000.
In the years since we implemented
§ 413.65(m) and issued the guidance
described earlier, we have considered
whether it remains necessary to require
that facilities and organizations be
furnishing the services on or before
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April 7, 2000 in order to qualify for
grandfathering. We have concluded that
it does not because IHS policies and
procedures (for example, as specified in
the Indian Health Manual available on
the IHS Web site at: https://ihs.gov/
aboutihs/indianhealthmanual/)
regarding the planning, operation, and
funding of such facilities and
organizations are resulting in
appropriate Medicare payments to them.
Therefore, after further consideration of
the position CMS has set out in prior
guidance, the special and legally
recognized relationship between Indian
Tribes and the U.S. Government, as well
as current IHS policies and procedures,
in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20002), we
proposed to remove the date limitation
in § 413.65(m) that restricted the
grandfathering provision to IHS or
Tribal facilities and organizations
furnishing services on or before April 7,
2000.
We also proposed to make a technical
change to the billing reference in
§ 413.65(m) by replacing ‘‘were billed’’
with ‘‘are billed using the CCN of the
main provider and with the consent of
the main provider.’’ We stated that we
believe this proposed change will make
the regulation text more consistent with
our current rules that require these
facilities to comply with all applicable
Medicare conditions of participation
that apply to the main provider. In the
proposed rule, we did not propose to
otherwise change the requirement that
the only services furnished at the
facility or organization must be hospital
outpatient services, or to change the
other requirements for grandfathering in
paragraphs (m)(1) through (3) of
§ 413.65. Therefore, under our proposal,
a facility or organization operated by the
IHS or a Tribe will be considered to be
a department of a hospital operated by
the IHS or a Tribe if it furnishes only
hospital outpatient services that are
billed using the CMS Certification
Number (CCN) of the main provider
with the consent of the main provider,
and it also meets one of the conditions
in § 413.65(m)(1) through (3).
We welcomed public comments on
our proposals.
Comment: Commenters supported
both CMS proposals to remove the date
limitation and to clarify that only
hospital outpatient services can be
billed using the CCN of the main
provider and with the consent of the
main provider. Commenters requested
that CMS further revise § 413.65(m)(1)
through (3) to add an additional
condition for facilities owned and
operated by a Tribe or Tribal
Organization pursuant to a contract or
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38289
compact under the Indian SelfDetermination Act (ISDA). Commenters
contended that it is clear in the ISDA
that Congressional intent was that the
same resources available to the IHS be
also available to Tribes to operate the
same programs and services. Therefore,
the commenters believed that the
provisions in § 413.65(m) should be
applied uniformly. Finally, commenters
requested CMS to consider making
regulatory changes to create flexibility
in applying requirements at 42 CFR part
482, the conditions of participation
(CoP) for provider-based IHS and Tribal
facilities, and to similarly remove the
April 7, 2000 date restriction for Tribal
Grandfathered FQHC requirements.
Response: We appreciate the
commenters’ support for our proposals.
Regarding the commenters’ request to
add an additional condition for
exemption under § 413.65(m)(1) through
(3), we did not propose to change the
other requirements for grandfathering in
paragraphs (m)(1) through (3) of
§ 413.65. However, we will take this
comment under consideration and, if
appropriate, address it in future
rulemaking.
We appreciate the views shared by
commenters regarding compliance with
the hospital Conditions of Participation
(CoPs) set out at 42 CFR part 482, and
how the hospital CoPs might apply to
provider-based facilities. We reiterate
that the provider-based rules at § 413.65
govern whether a facility or organization
is considered to be part of the main
provider for purposes of Medicare
payment, and those rules do not exempt
any provider-based facilities from the
need to comply with hospital
requirements under the CoPs at Part
482. We also did not propose any
changes to the Tribal grandfathered
FQHC policy. As discussed in the CY
2016 Medicare Physician Fee Schedule
final rule (80 FR 71089 through 71096),
in order to qualify for the
‘‘grandfathered’’ Tribal FQHC payment
rate, a Tribal facility is required to have
billed as a department of a provider
prior to April 7, 2000. While we are
finalizing our proposed removal of the
April 7, 2000 date from § 413.65(m) in
this final rule, this date requirement
will remain in effect for Tribal FQHCs.
However, we will take these views into
consideration for future rulemaking.
After consideration of public
comments we received, we are
finalizing the proposed revisions to
§ 413.65(m). We are removing the date
limitation in § 413.65(m) that restricted
the grandfathering provision to IHS or
Tribal facilities and organizations
furnishing services on or before April 7,
2000. We also are finalizing the
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technical change to the billing reference
in § 413.65(m) by replacing ‘‘were
billed’’ with ‘‘are billed using the CCN
of the main provider and with the
consent of the main provider.’’
VI. Changes to the IPPS for CapitalRelated Costs
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A. Overview
Section 1886(g) of the Act requires the
Secretary to pay for the capital-related
costs of inpatient acute hospital services
in accordance with a prospective
payment system established by the
Secretary. Under the statute, the
Secretary has broad authority in
establishing and implementing the IPPS
for acute care hospital inpatient capitalrelated costs. We initially implemented
the IPPS for capital-related costs in the
FY 1992 IPPS final rule (56 FR 43358).
In that final rule, we established a 10year transition period to change the
payment methodology for Medicare
hospital inpatient capital-related costs
from a reasonable cost-based payment
methodology to a prospective payment
methodology (based fully on the Federal
rate).
FY 2001 was the last year of the 10year transition period that was
established to phase in the IPPS for
hospital inpatient capital-related costs.
For cost reporting periods beginning in
FY 2002, capital IPPS payments are
based solely on the Federal rate for
almost all acute care hospitals (other
than hospitals receiving certain
exception payments and certain new
hospitals). (We refer readers to the FY
2002 IPPS final rule (66 FR 39910
through 39914) for additional
information on the methodology used to
determine capital IPPS payments to
hospitals both during and after the
transition period.)
The basic methodology for
determining capital prospective
payments using the Federal rate is set
forth in the regulations at 42 CFR
412.312. For the purpose of calculating
capital payments for each discharge, the
standard Federal rate is adjusted as
follows:
(Standard Federal Rate) × (DRG Weight)
× (Geographic Adjustment Factor
(GAF)) × (COLA for hospitals
located in Alaska and Hawaii) × (1
+ Capital DSH Adjustment Factor +
Capital IME Adjustment Factor, if
applicable).
In addition, under § 412.312(c),
hospitals also may receive outlier
payments under the capital IPPS for
extraordinarily high-cost cases that
qualify under the thresholds established
for each fiscal year.
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B. Additional Provisions
1. Exception Payments
The regulations at 42 CFR 412.348
provide for certain exception payments
under the capital IPPS. The regular
exception payments provided under
§§ 412.348(b) through (e) were available
only during the 10-year transition
period. For a certain period after the
transition period, eligible hospitals may
have received additional payments
under the special exceptions provisions
at § 412.348(g). However, FY 2012 was
the final year hospitals could receive
special exceptions payments. For
additional details regarding these
exceptions policies, we refer readers to
the FY 2012 IPPS/LTCH PPS final rule
(76 FR 51725).
Under § 412.348(f), a hospital may
request an additional payment if the
hospital incurs unanticipated capital
expenditures in excess of $5 million due
to extraordinary circumstances beyond
the hospital’s control. Additional
information on the exception payment
for extraordinary circumstances in
§ 412.348(f) can be found in the FY 2005
IPPS final rule (69 FR 49185 and 49186).
2. New Hospitals
Under the capital IPPS, the
regulations at 42 CFR 412.300(b) define
a new hospital as a hospital that has
operated (under previous or current
ownership) for less than 2 years and
lists examples of hospitals that are not
considered new hospitals. In accordance
with § 412.304(c)(2), under the capital
IPPS, a new hospital is paid 85 percent
of its allowable Medicare inpatient
hospital capital-related costs through its
first 2 years of operation, unless the new
hospital elects to receive full
prospective payment based on 100
percent of the Federal rate. We refer
readers to the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51725) for additional
information on payments to new
hospitals under the capital IPPS.
3. Payments for Hospitals Located in
Puerto Rico
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57061), we revised the
regulations at 42 CFR 412.374 relating to
the calculation of capital IPPS payments
to hospitals located in Puerto Rico
beginning in FY 2017 to parallel the
change in the statutory calculation of
operating IPPS payments to hospitals
located in Puerto Rico, for discharges
occurring on or after January 1, 2016,
made by section 601 of the Consolidated
Appropriations Act, 2016 (Pub. L. 114–
113). Section 601 of Public Law 114–
113 increased the applicable Federal
percentage of the operating IPPS
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payment for hospitals located in Puerto
Rico from 75 percent to 100 percent and
decreased the applicable Puerto Rico
percentage of the operating IPPS
payments for hospitals located in Puerto
Rico from 25 percent to zero percent,
applicable to discharges occurring on or
after January 1, 2016. As such, under
revised § 412.374, for discharges
occurring on or after October 1, 2016,
capital IPPS payments to hospitals
located in Puerto Rico are based on 100
percent of the capital Federal rate.
C. Annual Update for FY 2018
The annual update to the national
capital Federal rate, as provided for at
§ 412.308(c), for FY 2018 is discussed in
section III. of the Addendum to this
final rule.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50906 through 50954), we
adopted the 2-midnight policy effective
for dates of admission on or after
October 1, 2013, under which an
inpatient admission is generally
appropriate for Medicare Part A
payment if the physician (or other
qualified practitioner) admits the
patient as an inpatient based upon the
reasonable expectation that the patient
will need hospital care that crosses at
least 2 midnights. At that time, our
actuaries estimated that the 2-midnight
policy would increase expenditures by
approximately $220 million in FY 2014
due to an expected net increase in
inpatient encounters. Using our
authority under section 1886(g) of the
Act, and consistent with the approach
taken for the operating IPPS
standardized amount, the Puerto Ricospecific standardized amount and the
hospital-specific payment rates, we
made a reduction of 0.2 percent (an
adjustment factor of 0.998) to the
national capital Federal rate and the
Puerto Rico-specific capital rate to offset
the estimated increase in capital IPPS
expenditures associated with the
projected increase in inpatient
encounters that was expected to result
from the new inpatient admission
guidelines (78 FR 50746 through 50747).
(As explained in section V.B.3. of the
FY 2017 IPPS/LTCH PPS final rule, we
discontinued use of the Puerto Rico
capital rate in the calculation of capital
IPPS payments to hospitals located in
Puerto Rico beginning in FY 2017.)
For the reasons discussed in the FY
2017 IPPS/LTCH PPS proposed and
final rules (81 FR 25136 through 25138
and 57058 through 57060) and
consistent with our approach for the
operating IPPS rates, we used our
authority under section 1886(g) of the
Act to permanently remove the 0.2
percent reduction to the national capital
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Federal rate beginning in FY 2017.
Specifically, we made an adjustment of
(1/0.998) to the national capital Federal
rate to remove the 0.2 percent reduction,
consistent with the adjustment to the
operating IPPS standardized amount
and the hospital-specific payment rates.
In addition, consistent with our
approach for the operating IPPS
standardized amount and hospitalspecific payment rates, and for the
reasons discussed in the FY 2017 IPPS/
LTCH PPS proposed and final rules, we
finalized our proposal to use our
authority under section 1886(g) of the
Act to adjust the FY 2017 national
capital Federal rate to address the
effects of the 0.2 percent reduction to
the national capital Federal rates in
effect for FY 2014, FY 2015, and FY
2016 by making a one-time prospective
adjustment of 1.006 in FY 2017 to the
national capital Federal rate and, for FY
2018, to remove the effects of this onetime prospective adjustment through an
adjustment of (1/1.006) to the national
capital Federal rate. Therefore,
consistent with our finalized policy, and
as discussed in the FY 2018 IPPS/LTCH
PPS proposed rule, for FY 2018, we are
including a factor of (1/1.006) in the
calculation of the FY 2018 operating
IPPS standardized amount, the hospitalspecific payment rates, and the national
capital Federal rate to remove the
temporary one-time factor of 1.006. (For
additional details, we refer readers to
section IV.P. of the preamble of the FY
2017 IPPS/LTCH PPS final rule (81 FR
57058 through 57060 and 57062 through
57063) and to section V.M. of the
preamble of this final rule.)
In section II.D. of the preamble of this
final rule, we present a discussion of the
MS–DRG documentation and coding
adjustment, including previously
finalized policies and historical
adjustments, as well as the adjustment
to the standardized amount under
section 1886(d) of the Act that we
proposed, and are finalizing, for FY
2018 in accordance with the
amendments made to section 7(b)(1)(B)
of Public Law 110–90 by section 414 of
the MACRA and section 15005 of the
21st Century Cures Act. Because these
provisions require us to make an
adjustment only to the operating IPPS
standardized amount, we are not
making a similar adjustment to the
national capital Federal rate (or to the
hospital-specific rates).
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VII. Changes for Hospitals Excluded
From the IPPS
A. Rate-of-Increase in Payments to
Excluded Hospitals for FY 2018
Certain hospitals excluded from a
prospective payment system, including
children’s hospitals, 11 cancer
hospitals, and hospitals located outside
the 50 States, the District of Columbia,
and Puerto Rico (that is, hospitals
located in the U.S. Virgin Islands,
Guam, the Northern Mariana Islands,
and American Samoa) receive payment
for inpatient hospital services they
furnish on the basis of reasonable costs,
subject to a rate-of-increase ceiling. A
per discharge limit (the target amount as
defined in § 413.40(a) of the regulations)
is set for each hospital based on the
hospital’s own cost experience in its
base year, and updated annually by a
rate-of-increase percentage. For each
cost reporting period, the updated target
amount is multiplied by total Medicare
discharges during that period and
applied as an aggregate upper limit (the
ceiling as defined in § 413.40(a)) of
Medicare reimbursement for total
inpatient operating costs for a hospital’s
cost reporting period. In accordance
with § 403.752(a) of the regulations,
religious nonmedical health care
institutions (RNHCIs) also are subject to
the rate-of-increase limits established
under § 413.40 of the regulations
discussed previously. Furthermore, as
discussed in VIII.J. of the preamble of
this final rule, in accordance with
§ 412.526(c)(3) of the regulations,
extended neoplastic disease care
hospitals (formerly termed long-term
care neoplastic disease hospitals) also
are subject to the rate-of-increase limits
established under § 413.40 of the
regulations discussed previously.
As explained in the FY 2006 IPPS
final rule (70 FR 47396 through 47398),
beginning with FY 2006, we have used
the percentage increase in the IPPS
operating market basket to update the
target amounts for children’s hospitals,
cancer hospitals, and RNHCIs.
Consistent with §§ 412.23(g),
413.40(a)(2)(ii)(A), and
413.40(c)(3)(viii), we also have used the
percentage increase in the IPPS
operating market basket to update the
target amounts for short-term acute care
hospitals located in the U.S. Virgin
Islands, Guam, the Northern Mariana
Islands, and American Samoa. In the
FYs 2014 and 2015 IPPS/LTCH PPS
final rules (78 FR 50747 through 50748
and 79 FR 50156 through 50157,
respectively), we adopted a policy of
using the percentage increase in the FY
2010-based IPPS operating market
basket to update the target amounts for
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FY 2014 and subsequent fiscal years for
children’s hospitals, cancer hospitals,
RNHCIs, and short-term acute care
hospitals located in the U.S. Virgin
Islands, Guam, the Northern Mariana
Islands, and American Samoa. However,
as discussed in section IV. of the
preamble of the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 20004), we
proposed to rebase and revise the IPPS
operating basket to a 2014 base year.
Therefore, we proposed to use the
percentage increase in the 2014-based
IPPS operating market basket to update
the target amounts for children’s
hospitals, the 11 cancer hospitals,
RNHCIs, and short-term acute care
hospitals located in the U.S. Virgin
Islands, Guam, the Northern Mariana
Islands, and American Samoa for FY
2018 and subsequent fiscal years.
Accordingly, for FY 2018, the rate-ofincrease percentage to be applied to the
target amount for these hospitals would
be the FY 2018 percentage increase in
the 2014-based IPPS operating market
basket. We did not receive any public
comments on these proposals.
Therefore, we are finalizing these
policies as proposed. Based on IGI’s
2016 fourth quarter forecast, for the
proposed rule, we estimated that the
2014-based IPPS operating market
basket update for FY 2018 would be 2.9
percent (that is, the estimate of the
market basket rate-of-increase). We
indicated in the proposed rule that if
more recent data became available for
the final rule, we would use them to
calculate the IPPS operating market
basket update for FY 2018. For this FY
2018 IPPS/LTCH PPS final rule, based
on IGI’s 2017 second quarter forecast
(which is the most recent data
available), we calculated the 2014-based
IPPS operating market basket update for
FY 2018 to be 2.7 percent. Therefore,
the FY 2018 rate-of-increase percentage
that is applied to the FY 2017 target
amounts in order to calculate the FY
2018 target amounts for children’s
hospitals, cancer hospitals, RNCHIs, and
short-term acute care hospitals located
in the U.S. Virgin Islands, Guam, the
Northern Mariana Islands, and
American Samoa is 2.7 percent, in
accordance with the applicable
regulations at 42 CFR 413.40.
In addition, as discussed in section
VIII.J. of the preamble of this final rule,
as originally enacted section
1886(d)(1)(B)(iv) of the Act established
an IPPS-excluded category of hospitals
that experience extended average
inpatient length-of-stays, which are
known as LTCHs under the Medicare
program. Historically, section
1886(d)(1)(B)(iv) of the Act consisted of
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two subclauses (I) and (II) (that is,
sections 1886(d)(1)(B)(iv)(I) and
(d)(1)(B)(iv)(II) of the Act), and the two
categories of hospitals were generally
referred to as ‘‘subclause (I)’’ and
‘‘subclause (II)’’ LTCHs. Section 15008
of the 21st Century Cures Act (Pub. L.
114–255) amended section 1886(d)(1)(B)
of the Act by redesignating the
‘‘subclause (II) LTCH’’ provision in
section 1886(d)(1)(B)(iv)(II) of the Act to
section 1886(d)(1)(B)(vi) of the Act. In
addition, subsection (b) of section 15008
of Public Law 114–255 specifies that, for
cost reporting periods beginning on or
after January 1, 2015, hospitals
classified under section
1886(d)(1)(B)(vi) of the Act are not
subject to section 1886(m) of the Act,
which sets forth the LTCH PPS. Section
15008(c) further specifies that, for cost
reporting periods beginning on or after
January 1, 2015, payment for inpatient
operating costs for such hospitals is to
be made as described in 42 CFR
412.526(c)(3), and payment for capital
costs is to be made as described in 42
CFR 412.526(c)(4). In order to
implement these requirements, in the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 20029), we proposed to amend
§ 412.23 to codify the redesignation of
such hospitals from section
1886(d)(1)(B)(iv)(II) of the Act to new
section 1886(d)(1)(B)(vi) of the Act
(which we referred to as ‘‘long-term care
neoplastic disease hospitals’’) and the
statutory payment requirements for
inpatient operating and capital costs.
(For additional information on
‘‘subclause (II)’’ LTCHs, including the
statutory criteria and the establishment
of the payment adjustment under
§ 412.526, and our changes to § 412.22
to implement the provisions of section
15008 of Public Law 114–255, we refer
readers to section VIII.J. of the preamble
of this final rule.)
Under the redesignation of subclause
(II) LTCHs to long-term care neoplastic
disease hospitals provided by section
15008 of Public Law 114–255 (described
above), the statute specifies that
payment for inpatient operating costs
shall continue to be made on a
reasonable cost basis in the manner
provided in § 412.526(c)(3) of the
regulations. Section 412.526(c)(3)
provides that the hospital’s Medicare
allowable net inpatient operating costs
for that period are paid on a reasonable
cost basis, subject to that hospital’s
ceiling, as determined under
§ 412.526(c)(1), for that period. Under
section 412.526(c)(1), for each cost
reporting period, the ceiling was
determined by multiplying the updated
target amount, as defined in
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§ 412.526(c)(2), for that period by the
number of Medicare discharges paid
during that period. Section
412.526(c)(2)(i) describes the method for
determining the target amount for cost
reporting periods beginning during FY
2015. Section 412.526(c)(2)(ii) specifies
that, for cost reporting periods
beginning during fiscal years after FY
2015, the target amount will equal the
hospital’s target amount for the previous
cost reporting period updated by the
applicable annual rate-of-increase
percentage specified in § 413.40(c)(3) for
the subject cost reporting period (79 FR
50197).
For FY 2018, in accordance with
proposed § 412.23(j)(2) and existing
§ 412.526(c)(2)(ii) of the regulations, in
the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 20029), we proposed that,
for cost reporting periods beginning
during FY 2018, the update to the target
amount for long-term care neoplastic
disease hospitals (that is, hospitals
described under proposed § 412.23(j))
would be the applicable annual rate-ofincrease percentage specified in
§ 413.40(c)(3) for FY 2018, which would
be equal to the percentage increase
projected by the hospital market basket
index, which, in the proposed rule, was
estimated to be the percentage increase
in the proposed 2014-based IPPS
operating market basket (that is, the
estimate of the market basket rate-ofincrease). Accordingly, for the proposed
rule, the update to a long-term care
neoplastic disease hospital’s target
amount for FY 2018 was 2.9 percent,
which was based on IGI, Inc.’s 2016
fourth quarter forecast. Furthermore, we
proposed that if more recent data
became available for the final rule, we
would use that updated data to calculate
the IPPS operating market basket update
for FY 2018. For this final rule, based on
IHS Global Insight, Inc.’s second quarter
forecast (which is the most recent data
available), the update to an extended
neoplastic disease care hospital’s target
amount for FY 2018 is 2.7 percent.
Comment: Some commenters
requested that CMS move the
regulations concerning payment for
these hospitals from proposed § 412.23
to § 412.22.
Response: We agree with these
commenters and are finalizing our
payment regulation at new paragraph (i)
under § 412.22. We note that the
language of this paragraph is identical
(with the exception of minor technical
editing for cross-references) to the
language we proposed.
Comment: Some commenters pointed
out that the proposed rule preamble
description of hospitals excluded from
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the IPPS does not include these
hospitals and requested their inclusion.
Response: We agree and have made
conforming changes to the preamble of
this final rule.
Comment: Some commenters
requested that CMS change the name of
these hospitals from ‘‘long-term care
neoplastic disease hospitals’’ to
‘‘hospital for the treatment of advanced
cancer and other diseases.’’
Response: We do not believe that the
name suggested by the commenters is
sufficiently descriptive to accurately
capture a specific subset of hospitals.
Most, if not all, hospitals treat advanced
cancer and other diseases. However,
given the commenters’ concerns about
the use of the term ‘‘long-term care’’ in
the name of the new category of
hospital, we are finalizing the name
‘‘extended neoplastic disease care
hospital.’’ We believe this is appropriate
because it distinguishes these hospitals
from the 11 cancer hospitals and to
account for the fact that these hospitals
are still statutorily required to maintain
a minimum average length of stay.
Comment: Some commenters
requested CMS to add a claims
processing provision to the Medicare
payment regulations for these hospitals.
Response: We do not believe that it is
appropriate to include claims
processing information in our
regulations and, therefore, are not
adding the additional language
requested by commenters.
Comment: Some commenters
requested that CMS include sunset dates
to § 412.526.
Response: As we have added a sunset
date to § 412.22 (proposed
§ 412.23(e)(ii)), we do not believe that it
is necessary to include separate sunset
dates in § 412.526.
After consideration of the public
comments we received, we are
finalizing our proposals with the minor
technical changes noted above.
B. Changes to the Hospital-WithinHospital Regulations
On September 1, 1994, we published
regulations governing hospitals-withinhospitals (HwHs) to address
inappropriate Medicare payments to
LTCHs that were effectively units of
other hospitals (59 FR 45330). There
was concern that the LTCH HwH model
was being used by some acute care
hospitals paid under the IPPS as a way
of inappropriately receiving higher
payments for a subset of their cases.
Moreover, we stated that the IPPSexclusion of long-term care ‘‘units’’ may
be inconsistent with the statutory
scheme, which does not provide for the
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exclusion from the IPPS of long-term
care units.
Therefore, we codified the HwH
regulations at 42 CFR 412.23 (currently
at § 412.22(e)) for an LTCH HwH that is
co-located with another hospital. A colocated hospital is a hospital that
occupies space in a building also used
by another hospital or in one or more
separate buildings located on the same
campus as buildings used by another
hospital. The regulations at § 412.22(e)
required that, to be excluded from the
IPPS, long-term care HwHs must have a
separate governing body, a chief
medical officer, medical staff, and a
chief executive officer, from that of the
hospital with which it is co-located. In
addition, the long-term care HwH must
have met either of the following two
criteria: The HwH must perform certain
specified basic hospital functions on its
own and not receive them from the host
hospital or a third entity that controls
both hospitals; or the HwH must receive
at least 75 percent of its inpatients from
sources other than the co-located
hospital. A third option was added to
the regulations on September 1, 1995
(60 FR 45778) that allowed long-term
care HwHs to demonstrate their
separateness by showing that the cost of
the services that the hospital obtains
under contracts or other agreements
with the co-located hospital or a third
entity that controls both hospitals is no
more than 15 percent of the hospital’s
total inpatient operating cost. In 1997,
we extended application of the HwH
regulations at § 412.22 to all
classifications of IPPS-excluded
hospitals. Therefore, effective for cost
reporting periods beginning on or after
October 1, 1997, psychiatric,
rehabilitation, cancer, and children’s
hospitals that are co-located with
another hospital also are generally
required to meet the ‘‘separateness’’
criteria at § 412.22(e). In addition, a
‘‘grandfathering’’ provision (that is,
hospitals that were IPPS-excluded
HwHs before October 1, 1995 are not
required to comply with the
separateness and control regulations so
long as they continue to operate under
the same terms and conditions) was
added to the regulations at § 412.22(f).
We later modified the grandfathering
provision to allow for a grandfathered
hospital to make specified changes (for
example increasing the number of beds)
during particular timeframes, which
vary depending on the change the
hospital had made. Below we discuss
our FY 2018 proposed and finalized
changes to our HwH regulations.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20004), we
proposed to revise our HwH regulations
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so that the separateness and control
requirements would only apply to IPPSexcluded HwHs that are co-located with
IPPS hospitals. Under this proposal, any
hospital that occupies a building also
used by another hospital, or in one or
more separate buildings located on the
same campus as buildings used by
another hospital would remain, by
definition, an HwH. However, the
separateness and control requirements
for IPPS-excluded HwHs would apply
only when the IPPS-excluded hospital is
co-located with an IPPS hospital. The
proposal was premised on the belief that
the policy concerns that underlie our
existing HwH regulations (that is,
inappropriate patient shifting and
hospitals acting as illegal de facto units)
are sufficiently moderated in situations
where IPPS-excluded hospitals are colocated with each other but not IPPS
hospitals, in large part due to the
payment system changes that have
occurred over the intervening years for
IPPS-excluded hospitals. For example,
LTCHs, inpatient rehabilitation facilities
(IRFs) and inpatient psychiatric
facilities (IPFs) are no longer paid on a
reasonable cost-basis as was the case
when HwH regulations were adopted.
Currently, LTCHs, IRFs, and IPFs are
each paid under their own respective
PPS, and those payment systems
include policies based on the types of
patients they admit for treatment. For
example, to be classified for payment
under Medicare’s IRF PPS, at least 60
percent of a facility’s total inpatient
population must require inpatient
hospital-level treatment for one or more
of 13 conditions listed in 42 CFR
412.29(b)(2), and recent statutory
changes require that specified patientlevel criteria be met for LTCH
discharges to be paid based on the
standard Federal payment rate under
the LTCH PPS. For these reasons, we
proposed to revise our HwH regulations
so that the separateness and control
requirements would only apply to IPPSexcluded HwHs that are co-located with
IPPS hospitals; we proposed to revise
the introductory language of § 412.22(e)
to reflect the proposed change. That is,
the introductory language of § 412.22(e)
would state that, beginning on or after
October 1, 2017, an HwH that is
excluded from the IPPS that occupies
space in a building also used by an IPPS
hospital, or in one or more separate
buildings located on the same campus
as buildings used by an IPPS hospital,
must meet the criteria specified in
§§ 412.22(e)(1) through (e)(3) in order to
be excluded from the IPPS. While we
did not propose to make changes to our
HwH regulations for co-located IPPS
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and IPPS-excluded hospitals, we invited
public comments on the issue of
whether the separateness and control
requirements are still necessary for
IPPS-excluded HwHs that are co-located
with IPPS hospitals, which we would
consider for potential future
rulemaking.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20004), we also
proposed to revise the requirements at
§ 412.22(e)(1)(v), which outlines
performance of basic hospital functions,
to make them effective for fiscal years
prior to FY 2018. We believe that the
requirements in paragraph (e)(1)(v)(A)
are generally duplicative of CMS’
interpretative guidance that relate to a
number of hospital conditions of
participation (CoPs) that are in the
regulations (for example, 42 CFR 482.21
through 482.27, 482.30, 482.42, 482.43,
and 482.45). As such, we proposed to
remove the overlap between the HwH
regulations and the CoP Interpretative
Guidance from the regulations by
sunsetting the requirements in
paragraph (e)(1)(v)(A) of § 412.22. (The
COP Interpretive Guidance for hospitals
can be found in Appendix A of the State
Operations Manual (CMS Pub. 100–07).)
In addition, we proposed to remove the
requirements in paragraph (e)(1)(v)(B) of
§ 412.22 because we believe these
payment requirements could be
interpreted to conflict with the
requirements under the hospital CoPs,
which do not provide for a minimum
cost threshold regarding the services the
HwH obtains from the hospital with
which it is occupying space. We stated
that we did not believe that this
proposed revision would result in a
practical change to how HwHs are
currently operated because the
performance of basic hospital functions
requirements at § 412.22(e)(1)(v) are
currently addressed under CMS’
Interpretative Guidance for the hospital
CoPs. In addition, we stated that we did
not believe, at that time, that there are
payment policy concerns that would
justify imposition of regulatory
requirements on the performance of
basic hospital functions for HwHs that
are more stringent than what is
addressed under the Interpretative
Guidance for the hospital CoPs.
We invited public comment on these
proposals.
Comment: Several commenters
supported CMS’ proposal to apply the
separateness and control requirements
only to IPPS-excluded HwHs that are
co-located with IPPS hospitals. Some
commenters requested clarification that
§ 412.22(e)(1)(v)(C) would also not
apply to a HwH after October 1, 2017
because the retention of that
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requirement, taken together with the
removal of § 412.22(e)(1)(v)(A) and (B),
would have the result of eliminating
HwH status for many IPPS-excluded
HwHs. Some commenters also stated
that the proposed revision to
§ 412.22(e)(1)(v) should not be
interpreted to mean that a HwH must
have complied with § 412.22(e)(1)(v)
prior to October 1, 2017 in order to
maintain its IPPS-excluded status after
October 1, 2017.
Response: We thank the commenters
for their support and confirm that our
intent was to eliminate the requirement
that HwHs comply with § 412.22(e)(1)(v)
in its entirety starting in FY 2018.
Eliminating § 412.22(e)(1)(v)(A) and (B),
but not (C), would have the unintended
effect of requiring HwHs to ensure that
they met the 75 percent inpatient
population requirement during the 6month period immediately preceding
the first cost reporting period for which
they sought an exclusion in order to
maintain that excluded status. As that
was not our intent, we are finalizing
that, beginning with FY 2018, HwHs
will no longer be required to satisfy any
of the criteria in § 412.22(e)(1)(v) in
order to maintain their HwH status. This
change will not affect requirements
applicable to HwHs prior to October 1,
2017. We also note that none of the
changes to the HwH regulations that we
are finalizing in this final rule constitute
changes to the conditions of
participation (CoPs) at 42 CFR part 482
and applicable interpretative guidance;
and that every hospital, regardless of colocation, must independently comply
with all applicable CoPs.
Comment: Some commenters believed
that the proposed revisions to the HwH
rules apply to all forms of co-located
hospitals. Other commenters requested
that CMS make analogous changes to
the satellite facility rules in addition to
the HwH rules.
Response: We believe that some
commenters have misunderstood the
scope of our proposals. Co-located
hospital locations can be either HwHs
(entire hospitals that are co-located with
another hospital) or satellite facilities
(parts of hospitals that are co-located
with another hospital). The HwH rules
do not apply to satellite facilities.
Regulations governing payment to
satellite facilities can be found at
§ 412.22(h). We appreciate the request
by some commenters to consider
making analogous changes to the
regulations governing satellite facilities,
and we will take that request under
advisement for future rulemaking.
Comment: Several commenters
responded to CMS’ solicitation of
comments on whether it remains
necessary to maintain the separateness
and control requirements for IPPSexcluded HwHs that are co-located with
IPPS hospitals.
Response: We appreciate the
comments we received on this topic and
will take them under advisement for
future rulemaking.
After consideration of the public
comments we received, we are
finalizing our proposals as proposed,
with one modification. Under our final
policies, HwHs will no longer be
required to satisfy any of the criteria at
§ 412.22(e)(1)(v), including paragraph
(e)(1)(v)(C), in order to maintain their
HwH status.
C. Report on Adjustment (Exceptions)
Payments
Section 4419(b) of Public Law 105–33
requires the Secretary to publish
annually in the Federal Register a
report describing the total amount of
adjustment payments made to excluded
hospitals and hospital units by reason of
section 1886(b)(4) of the Act during the
previous fiscal year.
Class of hospital
The process of requesting, adjusting,
and awarding an adjustment payment is
likely to occur over a 2-year period or
longer. First, generally, an excluded
hospital must file its cost report for the
fiscal year in accordance with
§ 413.24(f)(2) of the regulations. The
MAC reviews the cost report and issues
a notice of provider reimbursement
(NPR). Once the hospital receives the
NPR, if its operating costs are in excess
of the ceiling, the hospital may file a
request for an adjustment payment.
After the MAC receives the hospital’s
request in accordance with applicable
regulations, the MAC or CMS,
depending on the type of adjustment
requested, reviews the request and
determines if an adjustment payment is
warranted. This determination is
sometimes not made until more than
180 days after the date the request is
filed because there are times when the
request applications are incomplete and
additional information must be
requested in order to have a completed
request application. However, in an
attempt to provide interested parties
with data on the most recent adjustment
payments for which we have data, we
are publishing data on adjustment
payments that were processed by the
MAC or CMS during FY 2016.
The table below includes the most
recent data available from the MACs
and CMS on adjustment payments that
were adjudicated during FY 2016. As
indicated above, the adjustments made
during FY 2016 only pertain to cost
reporting periods ending in years prior
to FY 2016. Total adjustment payments
given to excluded hospitals during FY
2016 are $13,123,870. The table depicts
for each class of hospitals, in the
aggregate, the number of adjustment
requests adjudicated, the excess
operating costs over the ceiling, and the
amount of the adjustment payments.
Excess cost
over ceiling
Number
Adjustment
payments
Hospitals in Territories .................................................................................................................
Cancer .........................................................................................................................................
Religious Nonmedical Health Care Institution (RNHCI) ..............................................................
Psychiatric Unit ............................................................................................................................
1
1
4
1
$3,007,636
21,255,065
420,960
2,116,384
$2,112,404
10,236,366
420,960
354,140
Total ......................................................................................................................................
........................
........................
13,123,870
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D. Critical Access Hospitals (CAHs)
1. Background
Section 1820 of the Act provides for
the establishment of Medicare Rural
Hospital Flexibility Programs
(MRHFPs), under which individual
States may designate certain facilities as
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critical access hospitals (CAHs).
Facilities that are so designated and
meet the CAH conditions of
participation under 42 CFR part 485,
subpart F, will be certified as CAHs by
CMS. Regulations governing payments
to CAHs for services to Medicare
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beneficiaries are located in 42 CFR part
413.
2. Frontier Community Health
Integration Project (FCHIP)
Demonstration
Section 123 of the Medicare
Improvements for Patients and
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Providers Act of 2008 (Pub. L. 110–275),
as amended by section 3126 of the
Affordable Care Act, authorizes a
demonstration project to allow eligible
entities to develop and test new models
for the delivery of health care services
in eligible counties in order to improve
access to and better integrate the
delivery of acute care, extended care
and other health care services to
Medicare beneficiaries. The
demonstration is titled ‘‘Demonstration
Project on Community Health
Integration Models in Certain Rural
Counties,’’ and is commonly known as
the Frontier Community Health
Integration Project (FCHIP)
demonstration.
The authorizing statute states the
eligibility criteria for entities to be able
to participate in the demonstration. An
eligible entity, as defined in section
123(d)(1)(B) of Public Law 110–275, as
amended, is an MRHFP grantee under
section 1820(g) of the Act (that is, a
CAH); and is located in a State in which
at least 65 percent of the counties in the
State are counties that have 6 or less
residents per square mile.
The authorizing statute stipulates
several other requirements for the
demonstration. Section 123(d)(2)(B) of
Public Law 110–275, as amended, limits
participation in the demonstration to
eligible entities in not more than 4
States. Section 123(f)(1) of Public Law
110–275 requires the demonstration
project to be conducted for a 3-year
period. In addition, section 123(g)(1)(B)
of Public Law 110–275 requires that the
demonstration be budget neutral.
Specifically, this provision states that in
conducting the demonstration project,
the Secretary shall ensure that the
aggregate payments made by the
Secretary do not exceed the amount
which the Secretary estimates would
have been paid if the demonstration
project under the section were not
implemented. Furthermore, section
123(i) of Public Law 110–275 states that
the Secretary may waive such
requirements of titles XVIII and XIX of
the Act as may be necessary and
appropriate for the purpose of carrying
out the demonstration project, thus
allowing the waiver of Medicare
payment rules encompassed in the
demonstration.
In January 2014, CMS released a
request for applications (RFA) for the
FCHIP demonstration. Using 2013 data
from the U.S. Census Bureau, CMS
identified Alaska, Montana, Nevada,
North Dakota, and Wyoming as meeting
the statutory eligibility requirement for
participation in the demonstration. The
RFA solicited CAHs in these five States
to participate in the demonstration,
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stating that participation would be
limited to CAHs in four of the States. To
apply, CAHs were required to meet the
eligibility requirements in the
authorizing legislation, and, in addition,
to describe a proposal to enhance
health-related services that would
complement those currently provided
by the CAH and better serve the
community’s needs. In addition, in the
RFA, CMS interpreted the eligible entity
definition in the statute as meaning a
CAH that receives funding through the
MHRFP. The RFA identified four
interventions, under which specific
waivers of Medicare payment rules
would allow for enhanced payment for
telehealth, skilled nursing facility/
nursing facility beds, ambulance
services, and home health services,
respectively. These waivers were
formulated with the goal of increasing
access to care with no net increase in
costs.
Ten CAHs were selected for
participation in the demonstration,
which started on August 1, 2016. These
CAHs are located in Montana, Nevada
and North Dakota, and they are
participating in three of the four
interventions identified in the FY 2017
IPPS/LTCH PPS final rule. Eight CAHs
are participating in the telehealth
intervention, three CAHs are
participating in the skilled nursing
facility/nursing facility bed
intervention, and two CAHs are
participating in the ambulance services
intervention. Each CAH is allowed to
participate in more than one of the
interventions. None of the selected
CAHs are participants in the home
health intervention, which was the
fourth intervention proposed in the
RFA.
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57064 through 57065), we
finalized a policy to address the budget
neutrality requirement for the
demonstration. As explained in the FY
2017 IPPS/LTCH PPS final rule, we
based our selection of CAHs for
participation with the goal of
maintaining the budget neutrality of the
demonstration on its own terms (that is,
the demonstration will produce savings
from reduced transfers and admissions
to other health care providers, thus
offsetting any increase in payments
resulting from the demonstration).
However, because of the small size of
this demonstration and uncertainty
associated with projected Medicare
utilization and costs, we adopted a
contingency plan to ensure that the
budget neutrality requirement in section
123 of Public Law 110–275 is met. If
analysis of claims data for Medicare
beneficiaries receiving services at each
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38295
of the participating CAHs, as well as
from other data sources, including cost
reports for these CAHs, shows that
increases in Medicare payments under
the demonstration during the 3-year
period are not sufficiently offset by
reductions elsewhere, we will recoup
the additional expenditures attributable
to the demonstration through a
reduction in payments to all CAHs
nationwide. Because of the small scale
of the demonstration, we indicated that
we did not believe it would be feasible
to implement budget neutrality by
reducing payments to only the
participating CAHs. Therefore, in the
event that this demonstration is found
to result in aggregate payments in excess
of the amount that would have been
paid if this demonstration were not
implemented, we will comply with the
budget neutrality requirement by
reducing payments to all CAHs, not just
those participating in the
demonstration. We stated that we
believe it is appropriate to make any
payment reductions across all CAHs
because the FCHIP demonstration is
specifically designed to test innovations
that affect delivery of services by the
CAH provider category. We explained
our belief that the language of the
statutory budget neutrality requirement
at section 123(g)(1)(B) of Public Law
110–275 permits the agency to
implement the budget neutrality
provision in this manner. The statutory
language merely refers to ensuring that
aggregate payments made by the
Secretary do not exceed the amount
which the Secretary estimates would
have been paid if the demonstration
project was not implemented, and does
not identify the range across which
aggregate payments must be held equal.
Based on actuarial analysis using cost
report settlements for FYs 2013 and
2014, the demonstration is projected to
satisfy the budget neutrality
requirement and likely yield a total net
savings. For the FY 2017 IPPS/LTCH
PPS final rule, we estimated that the
total impact of the payment recoupment
would be no greater than 0.03 percent
of CAHs’ total Medicare payments
within one fiscal year (that is, Medicare
Part A and Part B). The final budget
neutrality estimates for the FCHIP
demonstration will be based on the
demonstration period, which is August
1, 2016 through July 31, 2019.
The demonstration is projected to
impact payments to participating CAHs
under both Medicare Part A and Part B.
As stated in the FY 2017 IPPS/LTCH
PPS final rule, in the event the
demonstration is found not to have been
budget neutral, any excess costs will be
recouped over a period of 3 cost
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reporting years, beginning in CY 2020.
The 3-year period for recoupment will
allow for a reasonable timeframe for the
payment reduction and to minimize any
impact on CAHs’ operations. Therefore,
because any reduction to CAH payments
in order to recoup excess costs under
the demonstration will not begin until
CY 2020, this policy will have no
impact for any national payment system
for FY 2018.
We did not receive any public
comments on our discussion of this
demonstration in the proposed rule.
3. Physician Certification Requirement
for Payment of Inpatient CAH Services
Under Medicare Part A
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a. Background
For inpatient CAH services to be
payable under Medicare Part A, section
1814(a)(8) of the Act requires that a
physician certify that the individual
may reasonably be expected to be
discharged or transferred to a hospital
within 96 hours after admission to the
CAH. The regulations implementing this
statutory requirement are located at 42
CFR 424.15.
We most recently addressed the 96hour certification requirement in the FY
2015 IPPS/LTCH PPS final rule (79 FR
50163 through 50165). In that rule, we
finalized a policy regarding the timing
of this physician certification
requirement. We revised the regulations
such that all physician certification
requirements must be completed,
signed, and documented in the medical
record no later than 1 day before the
date on which the claim for payment for
the inpatient CAH service is submitted.
This policy change was effective
October 1, 2014. Prior to that revision,
our policy, which was in effect during
FY 2014, had been that the certification
began with the order for inpatient
admission and was required to be
completed, signed, and documented in
the medical record prior to discharge.
In addition to this change regarding
the timing of the 96-hour certification
requirement, we also provided a general
review of this certification requirement
in the FY 2015 IPPS/LTCH PPS final
rule (79 FR 50165). We stated that
because the statutory requirement at
section 1814(a)(8) of the Act is based on
an expectation, if a physician certifies,
in good faith, that an individual may
reasonably be expected to be discharged
or transferred to a hospital within 96
hours after admission to the CAH and
then something unforeseen occurs that
causes the individual to stay longer at
the CAH, Medicare will pay for the costs
of treating that patient and there would
not be a problem with regard to the CAH
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designation as long as that individual’s
stay does not cause the CAH to exceed
its 96-hour annual average condition of
participation (CoP) requirement under
42 CFR 485.620(b) (which we note is
separate and distinct from the 96-hour
physician certification requirement).
However, if a physician cannot in good
faith certify that an individual may
reasonably be expected to be discharged
or transferred within 96 hours after
admission to the CAH, the CAH will not
receive Medicare Part A payment for
any portion of that individual’s
inpatient stay (79 FR 50165). We further
noted that time as an outpatient at the
CAH is not included in applying the 96hour requirement, nor does time in a
CAH swing bed, which is being used to
provide skilled nursing services, count
towards the 96-hour requirement. The
clock for the 96 hours only begins once
the individual is admitted to the CAH
as an inpatient.
b. Notice Regarding Changes to
Instructions for the Review of the CAH
96-Hour Certification Requirement
As discussed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 20007),
based on feedback from stakeholders,
we reviewed the CAH 96-hour
certification requirement to determine if
there were ways to minimize providers’
concerns regarding this requirement. We
noted that the requirement is statutory
and cannot be modified through
regulation. However, we do have
discretion to determine how CMS will
prioritize monitoring and enforcement
of the requirement. In order to minimize
the concerns of CAHs with respect to
the 96-hour certification requirement, in
the FY 2018 IPPS/LTCH PPS proposed
rule, we provided notice that CMS will
direct Quality Improvement
Organizations (QIOs), Medicare
Administrative Contractors (MACs), the
Supplemental Medical Review
Contractor (SMRC), and Recovery Audit
Contractors (RACs) to make the CAH 96hour certification requirement a low
priority for medical record reviews
conducted on or after October 1, 2017.
We stated that this means that, absent
concerns of probable fraud, waste, or
abuse, these contractors will not
conduct medical record reviews with
respect to the 96-hour certification
requirement. Reviews by other entities,
including, but not limited to, Zone
Program Integrity Contractors (ZPICs),
the Office of Inspector General, and the
Department of Justice will continue as
appropriate. Quality reviews and
automated reviews (for example, those
reviews that do not involve medical
records) will also continue as
appropriate.
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We stated that, in the past, RACs have
never performed medical record reviews
for CAH claims, and we will not
approve medical record review of CAHs
for only the 96-hour certification
requirement. We provided notice that,
beginning October 1, 2017, CMS will
direct the QIOs, MACs, and the SMRC
to make medical record review of CAHs
for only the 96-hour certification
requirement a low priority. We stated
that QIOs and MACs may continue to
conduct medical record review of CAH
claims for the purposes of verifying
compliance with other requirements,
such as beneficiary complaints, quality
of care reviews, higher weighted DRG
reviews, readmission reviews, and the
requirement that procedures be
medically necessary.
In the FY 2018 IPPS/LTCH PPS
proposed rule, we stated that, under the
revised instructions to contractors,
CAHs will not receive any medical
record requests from MACs, RACs,
QIOs, or the SMRC related to the 96hour certification requirement unless
CMS or its contractors find evidence of
gaming or a failure to comply with CMS’
provider screening and revalidation
requirements, or if medical review is
needed for other issues. If this occurs,
the MACs, RACs, QIOs, or the SMRC
could also review the 96-hour
certification requirement. In addition, if
data analysis or other information
indicates that possible fraud exists,
CAHs may also receive medical record
requests for the 96-hour certification
requirement.
Comment: Commenters supported
CMS’ notice in the FY 2018 IPPS/LTCH
PPS proposed rule that, with respect to
the 96-hour certification requirement,
CMS is directing QIOs, MACs, the
SMRC, and RACs to make the CAH 96hour certification requirement a low
priority for medical record reviews
conducted on or after October 1, 2017.
Commenters requested permanent
removal of the 96-hour certification
requirement, and many noted they are
continuing to advocate for a legislative
solution.
Commenters stated they appreciated
CMS recognizing that the 96-hour
certification requirement could hinder
the promotion of essential and lifesaving health care services to rural
America. Commenters also noted they
appreciated CMS recognizing the
conflict between the 96-hour
certification requirement and the 96hour annual average CoP requirement,
as well as the administrative complexity
associated with the certification
requirement. Some commenters urged
CMS to finalize the proposed notice so
that CAHs can be assured that the 96-
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hour certification requirement will not
be the subject of future audits. Other
commenters stated that providing notice
that the CAH 96-hour certification
requirement is a low priority for
medical record reviews is a positive first
step. One commenter stated that the
notice demonstrates that CMS is aware
of the problems inherent in the 96-hour
certification requirement, and asked
CMS to provide a solution for these
problems in future rulemaking that goes
beyond instructing contractors to forego
reviews of medical records associated
with the 96-hour certification
requirement apart from instances where
there are specific concerns related to
program integrity.
Other commenters stated they
appreciated CMS’ notice but were
concerned that the notice, as included
in the proposed rule, is too ambiguous
because it does not remove the 96-hour
certification requirement from the
statute, and, therefore, CAHs are still at
risk for penalties. The commenters
believed there would be varying levels
of enforcement of the 96-hour
certification because of both broad
definitions and concerns of fraud, waste
and abuse. They encouraged CMS to
finalize permanent removal of the 96hour certification requirement to give
CAHs certainty that CMS will not
engage in future audits related to the 96hour certification requirement.
One commenter appreciated the
recognition that the 96-hour
certification requirement is burdensome
and unnecessary. However, the
commenter indicated that the notice
regarding the 96-hour certification
requirement included in the proposed
rule is not a permanent moratorium.
The commenter stated that CAHs must
still comply with the requirement and,
therefore, can still be audited for
noncompliance. The commenter
expressed concern regarding the impact
on large health systems where failures
of one hospital in the system can result
in consequences for the entire system.
The commenter stated that the notice
included in the proposed rule ‘‘muddies
the waters’’ and urged CMS to eliminate
the 96-hour certification requirement.
Commenters stated that, while the
notice provides some relief, it does not
remove the 96-hour certification
requirement from statute, and, therefore,
there are concerns that CAHs may still
be at risk for penalties, including
liability under the False Claims Act, as
well as outside auditors using the 96hour certification requirement to target
and penalize CAHs.
Response: We appreciate commenters’
support of the notice included in the
proposed rule regarding the 96-hour
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certification requirement. In this final
rule, we are reiterating that CMS will
direct QIOs, MACs, the SMRC, and
RACs to make the CAH 96-hour
certification requirement a low priority
for medical record reviews conducted
on or after October 1, 2017. CAHs
should not expect to receive any
medical record requests from QIOs,
MACs, RACs, or the SMRC related to the
96-hour certification requirement unless
CMS or its contractors find evidence of
gaming or a failure to comply with CMS’
provider screening and revalidation
requirements, or if medical review is
needed for other issues. As commenters
have noted, the 96-hour certification
requirement is statutory; therefore,
removal of this requirement requires
legislative action.
Comment: Commenters expressed
their concerns with respect to the 96hour certification requirement in
general. Commenters stated that while
CAHs may meet the 96-hour annual
average length of stay CoP requirement,
they also provide medical services that
require inpatient stays of more than 96
hours. In these situations, CAHs cannot
adhere to the 96-hour certification
requirement because a physician
cannot, in good faith, certify that the
beneficiary’s stay will be 96 hours or
less. In this scenario, if the 96-hour
certification requirement were to be
enforced, a CAH would not receive
payment for the specific inpatient
service and, as a result, patients would
no longer have access to critical services
that require an inpatient length of stay
of more than 96 hours. Commenters
further noted that because Medicare
payments comprise approximately 47
percent of CAHs’ revenues, any change
in these payments is difficult to absorb
and affects CAHs’ ability to provide care
to those living in rural areas.
One commenter stated that from the
inception of the CAH program through
late 2013, the 96-hour annual average
CoP requirement provided CAHs with
greater flexibility within the CAH
designation process. The commenter
stated that strict enforcement of the 96hour certification requirement leads to
unnecessary red tape and barriers for
CAHs as well as eliminates the
flexibility to allow general surgical
services to be provided by high quality
local providers. The commenter stated
that the 96-hour certification
requirement is not consistent with
congressional intent to provide CAHs
with greater flexibility. The commenter
referenced the change made as part of
the Balanced Budget Refinement Act of
1999 (Pub. L. 106–113), which amended
the CAH CoP length of stay requirement
such that it became based on an annual
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average number of hours. The
commenter stated that the 96-hour
certification requirement limits access
to rural health care because it does not
permit providers to focus on patient
care. The commenter further stated that
the 96-hour certification requirement
interferes with practitioner judgment
because high quality and qualified local
providers are placed in a situation
where they cannot care for their
patients, and therefore patients have to
travel further from home to receive care.
The commenter believed these transfers
result in additional Medicare
expenditures because it is 2.5 percent
less expensive to provide the same
Medicare services in a rural setting
versus an urban or suburban setting.
The commenter referred to a study
published in the Journal of the
American Medical Association (JAMA),
which stated that Medicare
expenditures for minor general surgical
procedures, when adjusted for patient
factors and procedure type, are lower in
CAHs, and that such procedures are
associated with lower rates of serious
complications when performed in
CAHs. The commenter noted that these
are the types of procedures generally
called into question under the 96-hour
certification requirement. Another
comment raised concerns regarding
‘‘judgmental pressure’’ placed on
admitting physicians and
inconveniences placed on patients and
their families with respect to meeting
the 96-hour certification requirement.
One commenter stated that the 96hour certification requirement has
imposed significant burdens on the
surgical community, whose members
extend essential surgical care to
Medicare’s rural beneficiaries. The
commenter also expressed concerns
regarding compliance with the 96-hour
certification requirement and its
intersection with the Emergency
Medical Treatment and Labor Act
(EMTALA) and the CoPs. Another
commenter communicated concern that
the 96-hour certification requirement is
a quality and safety CoP requirement
and is, therefore, for enforcement
purposes, required to be included in
accrediting body manuals. The
commenter requested that CMS remove
the 96-hour certification requirement
from the quality and safety CoPs and
instead rely on MACs such that
accrediting organizations are not
required to enforce the requirement but
rather it is a part of CMS’ fiscal
oversight.
Response: We appreciate commenters
sharing their concerns regarding the 96hour certification requirement. As noted
throughout this section of the preamble,
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the 96-hour certification requirement is
statutory and cannot be amended
through notice-and-comment
rulemaking without a change in
legislation. We also clarify that the 96hour certification requirement (section
1814(a)(8) of the Act) is separate and
distinct from the 96-hour annual
average length of inpatient stay CoP
(meaning condition of participation)
requirement (section 1820(c)(2)(B)(iii) of
the Act). The 96-hour certification
requirement is not directly relevant to
determining whether a facility remains
eligible for designation as a CAH, but
rather is applicable to determining
whether a CAH may receive Medicare
payment under Part A for inpatient CAH
services. Therefore, primary
enforcement of the 96-hour certification
requirement should not be conducted by
accrediting bodies.
In summary, as stated earlier, we are
reiterating that CMS will direct QIOs,
MACs, the SMRC, and RACs to make
the CAH 96-hour certification
requirement a low priority for medical
record reviews conducted on or after
October 1, 2017. CAHs should not
expect to receive any medical record
requests from QIOs, MACs, RACs, or the
SMRC related to the 96-hour
certification requirement unless CMS or
its contractors find evidence of gaming
or a failure to comply with CMS’
provider screening and revalidation
requirements or if medical review is
needed for other issues.
VIII. Changes to the Long-Term Care
Hospital Prospective Payment System
(LTCH PPS) for FY 2018
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A. Background of the LTCH PPS
1. Legislative and Regulatory Authority
Section 123 of the Medicare,
Medicaid, and SCHIP (State Children’s
Health Insurance Program) Balanced
Budget Refinement Act of 1999 (BBRA)
(Pub. L. 106–113) as amended by
section 307(b) of the Medicare,
Medicaid, and SCHIP Benefits
Improvement and Protection Act of
2000 (BIPA) (Pub. L. 106–554) provides
for payment for both the operating and
capital-related costs of hospital
inpatient stays in long-term care
hospitals (LTCHs) under Medicare Part
A based on prospectively set rates. The
Medicare prospective payment system
(PPS) for LTCHs applies to hospitals
that are described in section
1886(d)(1)(B)(iv) of the Act, effective for
cost reporting periods beginning on or
after October 1, 2002.
Section 1886(d)(1)(B)(iv)(I) of the Act
originally defined an LTCH as a hospital
which has an average inpatient length of
stay (as determined by the Secretary) of
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greater than 25 days. Section
1886(d)(1)(B)(iv)(II) of the Act also
provided an alternative definition of
LTCHs: Specifically, a hospital that first
received payment under section 1886(d)
of the Act in 1986 and had an average
inpatient length of stay (as determined
by the Secretary of Health and Human
Services (the Secretary)) of greater than
20 days and had 80 percent or more of
its annual Medicare inpatient discharges
with a principal diagnosis that reflected
a finding of neoplastic disease in the 12month cost reporting period ending in
FY 1997. However, as discussed below,
section 15008 of the 21st Century Cures
Act (Pub. L. 114–255) amended section
1886 of the Act to exclude former
‘‘subclause II’’ LTCHs from payment
under the LTCH PPS and created a new
category of IPPS-excluded hospitals
(named in the proposed rule ‘‘long-term
care neoplastic disease hospitals’’ but
renamed in this final rule ‘‘extended
neoplastic disease care hospitals’’) for
hospitals that were formally classified
as ‘‘subclause (II)’’ LTCHs.
Section 123 of the BBRA requires the
PPS for LTCHs to be a ‘‘per discharge’’
system with a diagnosis-related group
(DRG) based patient classification
system that reflects the differences in
patient resources and costs in LTCHs.
Section 307(b)(1) of the BIPA, among
other things, mandates that the
Secretary shall examine, and may
provide for, adjustments to payments
under the LTCH PPS, including
adjustments to DRG weights, area wage
adjustments, geographic reclassification,
outliers, updates, and a disproportionate
share adjustment.
In the August 30, 2002 Federal
Register, we issued a final rule that
implemented the LTCH PPS authorized
under the BBRA and BIPA (67 FR
55954). For the initial implementation
of the LTCH PPS (FYs 2003 through FY
2007), the system used information from
LTCH patient records to classify
patients into distinct long-term care
diagnosis-related groups (LTC–DRGs)
based on clinical characteristics and
expected resource needs. Beginning in
FY 2008, we adopted the Medicare
severity long-term care diagnosis-related
groups (MS–LTC–DRGs) as the patient
classification system used under the
LTCH PPS. Payments are calculated for
each MS–LTC–DRG and provisions are
made for appropriate payment
adjustments. Payment rates under the
LTCH PPS are updated annually and
published in the Federal Register.
The LTCH PPS replaced the
reasonable cost-based payment system
under the Tax Equity and Fiscal
Responsibility Act of 1982 (TEFRA)
(Pub. L. 97–248) for payments for
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inpatient services provided by an LTCH
with a cost reporting period beginning
on or after October 1, 2002. (The
regulations implementing the TEFRA
reasonable cost-based payment
provisions are located at 42 CFR part
413.) With the implementation of the
PPS for acute care hospitals authorized
by the Social Security Amendments of
1983 (Pub. L. 98–21), which added
section 1886(d) to the Act, certain
hospitals, including LTCHs, were
excluded from the PPS for acute care
hospitals and were paid their reasonable
costs for inpatient services subject to a
per discharge limitation or target
amount under the TEFRA system. For
each cost reporting period, a hospitalspecific ceiling on payments was
determined by multiplying the
hospital’s updated target amount by the
number of total current year Medicare
discharges. (Generally, in this section of
the preamble of this final rule, when we
refer to discharges, we describe
Medicare discharges.) The August 30,
2002 final rule further details the
payment policy under the TEFRA
system (67 FR 55954).
In the August 30, 2002 final rule, we
provided for a 5-year transition period
from payments under the TEFRA system
to payments under the LTCH PPS.
During this 5-year transition period, an
LTCH’s total payment under the PPS
was based on an increasing percentage
of the Federal rate with a corresponding
decrease in the percentage of the LTCH
PPS payment that is based on
reasonable cost concepts, unless an
LTCH made a one-time election to be
paid based on 100 percent of the Federal
rate. Beginning with LTCHs’ cost
reporting periods beginning on or after
October 1, 2006, total LTCH PPS
payments are based on 100 percent of
the Federal rate.
In addition, in the August 30, 2002
final rule, we presented an in-depth
discussion of the LTCH PPS, including
the patient classification system,
relative weights, payment rates,
additional payments, and the budget
neutrality requirements mandated by
section 123 of the BBRA. The same final
rule that established regulations for the
LTCH PPS under 42 CFR part 412,
subpart O, also contained LTCH
provisions related to covered inpatient
services, limitation on charges to
beneficiaries, medical review
requirements, furnishing of inpatient
hospital services directly or under
arrangement, and reporting and
recordkeeping requirements. We refer
readers to the August 30, 2002 final rule
for a comprehensive discussion of the
research and data that supported the
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establishment of the LTCH PPS (67 FR
55954).
In the FY 2016 IPPS/LTCH PPS final
rule (80 FR 49601 through 49623), we
implemented the provisions of the
Pathway for Sustainable Growth Rate
(SGR) Reform Act of 2013 (Pub. L. 113–
67), which mandated the application of
the ‘‘site neutral’’ payment rate under
the LTCH PPS for discharges that do not
meet the statutory criteria for exclusion
beginning in FY 2016. For cost reporting
periods beginning on or after October 1,
2015, discharges that do not meet
certain statutory criteria for exclusion
are paid based on the site neutral
payment rate. Discharges that do meet
the statutory criteria continue to receive
payment based on the LTCH PPS
standard Federal payment rate. For
more information on the statutory
requirements of the Pathway for SGR
Reform Act of 2013, we refer readers to
the FY 2016 IPPS/LTCH PPS final rule
(80 FR 49601 through 49623).
Section 231 of Consolidated
Appropriations Act, 2016 (Pub. L. 114–
113) amended section 1886(m)(6) of the
Act by revising subparagraph (A)(i) and
adding new subparagraph (E), which
established a temporary exception to the
site neutral payment rate for certain
severe wound care discharges occurring
prior to January 1, 2017 from LTCHs
identified by the amendment made by
section 4417(a) of the Balanced Budget
Act of 1997 that are located in a rural
area (as defined in section 1886(d)(2)(D)
of the Act) or treated as being so located
in accordance with section 1886(d)(8)(E)
of the Act.
We implemented the provisions of
section 231 of Public Law 114–113, and
amended our regulations at 42 CFR
412.522 to reflect those policies, in an
interim final rule with comment period
(IFC) that appeared in the Federal
Register on April 21, 2016 (81 FR 23428
through 23438). In the FY 2017 IPPS/
LTCH PPS final rule (81 FR 57068), we
finalized the provisions of the April 21,
2016 IFC and made limited
modifications of those policies set forth
in the April 21, 2016 IFC by revising the
definitions of a ‘‘wound with morbid
obesity’’ and an ‘‘infected wound,’’ and
adding additional ICD–10 diagnosis
codes to our list of such codes to
identify cases that meet the established
definition of a ‘‘severe wound’’ for the
six severe wound categories other than
the categories of a ‘‘wound with morbid
obesity’’ and an ‘‘infected wound.’’ The
provisions implementing section 231 of
Public Law 114–113 were effective for
LTCH discharges from qualifying LTCHs
for discharges on or after April 21, 2016,
through December 31, 2016. For a full
discussion of these provisions, we refer
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readers to the April 21, 2016 IFC (81 FR
23428) and the FY 2017 IPPS/LTCH PPS
final rule (81 FR 57068 through 57075).
The 21st Century Cures Act (‘‘the
Cures Act’’) (Pub. L. 114–255) contains
several provisions that affect the LTCH
PPS. Section 15004 of Public Law 114–
255 contains provisions that change the
moratorium on increasing the number of
beds in existing LTCHs and LTCH
satellite facilities. We discuss our
implementation of the provisions of
section 15004 in section VIII.H. of the
preamble of this final rule. The
provisions of section 15004 also
included a change to the payment
methodology for high-cost outlier
payments made to LTCHs. We discuss
our proposals and final policies related
to high-cost outlier payments in section
V.D. of the Addendum of this final rule.
The provisions of section 15006 of
Public Law 114–255 extended various
moratoria on the implementation of the
25-percent threshold policy. We discuss
our proposals and final policy related to
the provisions of section 15006 in
section VIII.G. of the preamble of this
final rule. The provisions of section
15007 of Public Law 114–255 revised
the requirements of the average lengthof-stay criterion for LTCH classification.
We discuss our proposals and final
policy related to the provisions of
section 15007 in section VIII.I. of the
preamble of this final rule. The
provisions of section 15008 of Public
Law 114–255 changed the classification
of certain hospitals. We discuss our
proposals and final policy related to the
provisions of section 15008 in section
VIII.J. of the preamble of this final rule.
The provisions of section 15009 of
Public Law 114–255 contain a
temporary exception to the site neutral
payment rate for certain spinal cord
specialty hospitals. We discuss our
proposals and final policy related to the
provisions of section 15009 in section
VIII.E. of the preamble of this final rule.
The provisions of section 15010 of
Public Law 114–255 contain a
temporary exception to the site neural
payment rate for certain severe wound
care discharges from certain LTCHs. We
discuss our proposals and final policy
related to the provisions of section
15010 in section VIII.F. of the preamble
of this final rule. In addition, as we
proposed in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 20009), in this
final rule we are amending 42 CFR
412.500 to include Public Law 114–255
as one of the bases and scope of subpart
O of part 412.
We received several public comments
that addressed issues that were outside
the scope of the FY 2018 proposed rule.
We will keep these comments in mind
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and may consider them for future
rulemaking.
2. Criteria for Classification as an LTCH
a. Classification as an LTCH
Under the regulations at
§ 412.23(e)(1), to qualify to be paid
under the LTCH PPS, a hospital must
have a provider agreement with
Medicare. Furthermore, § 412.23(e)(2)(i),
which implements section
1886(d)(1)(B)(iv) of the Act, requires
that a hospital have an average Medicare
inpatient length of stay of greater than
25 days to be paid under the LTCH PPS.
Alternatively, existing § 412.23(e)(2)(ii)
states that, for cost reporting periods
beginning on or after August 5, 1997, a
hospital that was first excluded from the
PPS in 1986 and can demonstrate that
at least 80 percent of its annual
Medicare inpatient discharges in the 12month cost reporting period ending in
FY 1997 have a principal diagnosis that
reflects a finding of neoplastic disease
must have an average inpatient length of
stay for all patients, including both
Medicare and non-Medicare inpatients,
of greater than 20 days (referred to as
‘‘subclause (II)’’ LTCHs). In the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
20029), under our proposed changes to
§ 412.23(e)(2)(ii) of the regulations to
implement the provisions of section
15008 of Public Law 114–255, we
proposed to add a sunset date to
subclause (II) LTCHs (which have
become a new category of IPPSexcluded hospitals named in the
proposed rule ‘‘long-term care
neoplastic disease hospitals’’ but
renamed ‘‘extended neoplastic disease
care hospitals’’ in this final rule).
Extended neoplastic disease care
hospitals are discussed in greater detail
in section VIII.J. of the preamble of this
final rule. In addition, in section VIII.I.
of the preamble of the proposed rule
and this final rule, we discuss the
proposed and finalized changes to the
calculation of the greater than 25-day
average length-of-stay requirement
provided by the provisions of section
15007 of Public Law 114–255.
b. Hospitals Excluded From the LTCH
PPS
The following hospitals are paid
under special payment provisions, as
described in § 412.22(c) and, therefore,
are not subject to the LTCH PPS rules:
• Veterans Administration hospitals.
• Hospitals that are reimbursed under
State cost control systems approved
under 42 CFR part 403.
• Hospitals that are reimbursed in
accordance with demonstration projects
authorized under section 402(a) of the
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Social Security Amendments of 1967
(Pub. L. 90–248) (42 U.S.C. 1395b–1),
section 222(a) of the Social Security
Amendments of 1972 (Pub. L. 92–603)
(42 U.S.C. 1395b–1 (note)) (Statewide
all-payer systems, subject to the rate-ofincrease test at section 1814(b) of the
Act), or section 3201 of the Patient
Protection and Affordable Care Act
(Pub. L. 111–148 (42 U.S.C. 1315a)).
• Nonparticipating hospitals
furnishing emergency services to
Medicare beneficiaries.
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3. Limitation on Charges to Beneficiaries
In the August 30, 2002 final rule, we
presented an in-depth discussion of
beneficiary liability under the LTCH
PPS (67 FR 55974 through 55975). This
discussion was further clarified in the
RY 2005 LTCH PPS final rule (69 FR
25676). In keeping with those
discussions, if the Medicare payment to
the LTCH is the full LTC–DRG payment
amount, consistent with other
established hospital prospective
payment systems, § 412.507 currently
provides that an LTCH may not bill a
Medicare beneficiary for more than the
deductible and coinsurance amounts as
specified under §§ 409.82, 409.83, and
409.87 and for items and services
specified under § 489.30(a). However,
under the LTCH PPS, Medicare will
only pay for days for which the
beneficiary has coverage until the shortstay outlier (SSO) threshold is exceeded.
If the Medicare payment was for a SSO
case (§ 412.529), and that payment was
less than the full LTC–DRG payment
amount because the beneficiary had
insufficient remaining Medicare days,
the LTCH is currently also permitted to
charge the beneficiary for services
delivered on those uncovered days
(§ 412.507). In the FY 2016 IPPS/LTCH
PPS final rule (80 FR 49623), we
amended our regulations to expressly
limit the charges that may be imposed
on beneficiaries whose discharges are
paid at the site neutral payment rate
under the LTCH PPS.
In section VII.G. of the preamble of
the FY 2017 IPPS/LTCH PPS final rule
(81 FR 57102), we also amended the
existing regulations relating to the
limitation on charges to expressly
address beneficiary charges for LTCH
services provided by subclause (II)
LTCHs as part of our refinement of the
payment adjustment for subclause (II)
LTCHs under § 412.526. We also
amended the regulations under
§ 412.507 to clarify our existing policy
that blended payments made to an
LTCH during its transitional period (that
is, payment for discharges occurring in
cost reporting periods beginning in FY
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2016 or 2017) are considered to be site
neutral payment rate payments.
4. Administrative Simplification
Compliance Act (ASCA) and Health
Insurance Portability and
Accountability Act (HIPAA)
Compliance
Claims submitted to Medicare must
comply with both the Administrative
Simplification Compliance Act (ASCA)
(Pub. L. 107–105), and the Health
Insurance Portability and
Accountability Act of 1996 (HIPAA)
(Pub. L. 104–191). Section 3 of the
ASCA generally requires that the
Medicare Program deny payment under
Part A or Part B for any expenses
incurred for items or services for which
a claim is submitted other than in an
electronic form specified by the
Secretary. Section 1862(h) of the Act (as
added by section 3(a) of the ASCA)
provides that the Secretary shall waive
such denial in two specific types of
cases, and may also waive such denial
in such unusual cases as the Secretary
finds appropriate (68 FR 48805). Section
3 of the ASCA operates in the context
of the HIPAA regulations, which
include, among other provisions, the
transactions and code sets standards
requirements codified under 45 CFR
parts 160 and 162 (generally known as
the Transactions Rule). The
Transactions Rule requires covered
entities, including covered health care
providers, to conduct certain electronic
health care transactions according to the
applicable transactions and code sets
standards.
The Department of Health and Human
Services (HHS) has a number of
initiatives designed to encourage and
support the adoption of health
information technology (health IT) and
promote nationwide health information
exchange to improve health care. The
Office of the National Coordinator for
Health Information Technology (ONC)
leads these efforts in collaboration with
other agencies, including CMS and the
Office of the Assistant Secretary for
Planning and Evaluation (ASPE).
Through a number of activities,
including several open government
initiatives, HHS is promoting the
adoption of health IT products,
including electronic health record (EHR)
technology certified under the ONC
Health IT Certification Program (https://
www.healthit.gov/policy-researchersimplementers/about-onc-health-itcertification-program) developed to
support secure, interoperable, health
information exchange. We believe that
the use of certified EHRs by LTCHs (and
other types of providers that are
ineligible for the Medicare and
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Medicaid EHR Incentive Programs) can
effectively and efficiently help
providers improve internal care delivery
practices, support the exchange of
important information across care
partners and during transitions of care,
and enable the reporting of
electronically specified clinical quality
measures (eCQMs) (as described
elsewhere in this final rule). In 2015,
ONC released a document entitled
‘‘Connecting Health and Care for the
Nation: A Shared Nationwide
Interoperability Roadmap’’ (available at:
https://www.healthit.gov/sites/default/
files/hie-interoperability/nationwideinteroperability-roadmap-final-version1.0.pdf). In the near term, the Roadmap
focuses on actions that will enable
individuals and providers across the
care continuum to send, receive, find,
and use a common set of electronic
clinical information at the nationwide
level by the end of 2017. The Roadmap’s
goals also align with the Improving
Medicare Post-Acute Care
Transformation Act of 2014 (Pub. L.
113–185) (IMPACT Act), which requires
assessment data to be standardized and
interoperable to allow for exchange of
the data. Moreover, the vision described
in the Roadmap significantly expands
the types of electronic health
information, information sources, and
information users well beyond clinical
information derived from EHRs. The
Roadmap identifies four critical
pathways that health IT stakeholders
should focus on now in order to create
a foundation for long-term success: (1)
Improve technical standards and
implementation guidance for priority
data domains and associated elements;
(2) rapidly shift and align Federal, State,
and commercial payment policies from
fee-for-service to value-based models to
stimulate the demand for
interoperability; (3) clarify and align
Federal and State privacy and security
requirements that enable
interoperability; and (4) align and
promote the use of consistent policies
and business practices that support
interoperability and address those that
impede interoperability, in coordination
with stakeholders.
In support of the goals of the
Roadmap, ONC released the 2017
Interoperability Standards Advisory
(ISA) (available at: https://
www.healthit.gov/standards-advisory), a
coordinated catalog of standards and
implementation specifications
developed and used to meet specific
interoperability needs. The ISA is
intended to serve as an industry
resource to further the use of
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interoperable electronic health
information exchange.
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B. Medicare Severity Long-Term Care
Diagnosis-Related Group (MS–LTC–
DRG) Classifications and Relative
Weights for FY 2018
1. Background
Section 123 of the BBRA required that
the Secretary implement a PPS for
LTCHs to replace the cost-based
payment system under TEFRA. Section
307(b)(1) of the BIPA modified the
requirements of section 123 of the BBRA
by requiring that the Secretary examine
the feasibility and the impact of basing
payment under the LTCH PPS on the
use of existing (or refined) hospital
DRGs that have been modified to
account for different resource use of
LTCH patients.
When the LTCH PPS was
implemented for cost reporting periods
beginning on or after October 1, 2002,
we adopted the same DRG patient
classification system utilized at that
time under the IPPS. As a component of
the LTCH PPS, we refer to this patient
classification system as the ‘‘long-term
care diagnosis-related groups (LTC–
DRGs).’’ Although the patient
classification system used under both
the LTCH PPS and the IPPS are the
same, the relative weights are different.
The established relative weight
methodology and data used under the
LTCH PPS result in relative weights
under the LTCH PPS that reflect the
differences in patient resource use of
LTCH patients, consistent with section
123(a)(1) of the BBRA (Pub. L. 106–113).
As part of our efforts to better
recognize severity of illness among
patients, in the FY 2008 IPPS final rule
with comment period (72 FR 47130), the
MS–DRGs and the Medicare severity
long-term care diagnosis-related groups
(MS–LTC–DRGs) were adopted under
the IPPS and the LTCH PPS,
respectively, effective beginning
October 1, 2007 (FY 2008). For a full
description of the development,
implementation, and rationale for the
use of the MS–DRGs and MS–LTC–
DRGs, we refer readers to the FY 2008
IPPS final rule with comment period (72
FR 47141 through 47175 and 47277
through 47299). (We note that, in that
same final rule, we revised the
regulations at § 412.503 to specify that
for LTCH discharges occurring on or
after October 1, 2007, when applying
the provisions of 42 CFR part 412,
subpart O applicable to LTCHs for
policy descriptions and payment
calculations, all references to LTC–
DRGs would be considered a reference
to MS–LTC–DRGs. For the remainder of
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this section, we present the discussion
in terms of the current MS–LTC–DRG
patient classification system unless
specifically referring to the previous
LTC–DRG patient classification system
that was in effect before October 1,
2007.)
The MS–DRGs adopted in FY 2008
represent an increase in the number of
DRGs by 207 (that is, from 538 to 745)
(72 FR 47171). The MS–DRG
classifications are updated annually.
There are currently 757 MS–DRG
groupings. For FY 2018, there will be
754 MS–DRG groupings based on the
changes discussed in section II.F. of the
preamble of this FY 2018 IPPS/LTCH
PPS final rule. Consistent with section
123 of the BBRA, as amended by section
307(b)(1) of the BIPA, and § 412.515 of
the regulations, we use information
derived from LTCH PPS patient records
to classify LTCH discharges into distinct
MS–LTC–DRGs based on clinical
characteristics and estimated resource
needs. We then assign an appropriate
weight to the MS–LTC–DRGs to account
for the difference in resource use by
patients exhibiting the case complexity
and multiple medical problems
characteristic of LTCHs.
In this section of the final rule, we
provide a general summary of our
existing methodology for determining
the FY 2018 MS–LTC–DRG relative
weights under the LTCH PPS.
As we proposed, in this final rule, in
general, for FY 2018, we are continuing
to use our existing methodology to
determine the proposed MS–LTC–DRG
relative weights (as discussed in greater
detail in section VIII.B.3. of the
preamble of this final rule). As we
established when we implemented the
dual rate LTCH PPS payment structure
codified under § 412.522, which began
in FY 2016, the annual recalibration of
the MS–LTC–DRG relative weights are
determined: (1) Using only data from
available LTCH PPS claims that would
have qualified for payment under the
new LTCH PPS standard Federal
payment rate if that rate had been in
effect at the time of discharge when
claims data from time periods before the
dual rate LTCH PPS payment structure
applies are used to calculate the relative
weights; and (2) using only data from
available LTCH PPS claims that qualify
for payment under the new LTCH PPS
standard Federal payment rate when
claims data from time periods after the
dual rate LTCH PPS payment structure
applies are used to calculate the relative
weights (80 FR 49624). That is, under
our current methodology, our MS–LTC–
DRG relative weight calculations do not
use data from cases paid at the site
neutral payment rate under
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38301
§ 412.522(c)(1) or data from cases that
would have been paid at the site neutral
payment rate if the dual rate LTCH PPS
payment structure had been in effect at
the time of that discharge. For the
remainder of this discussion, we use the
phrase ‘‘applicable LTCH cases’’ or
‘‘applicable LTCH data’’ when referring
to the resulting claims data set used to
calculate the relative weights (as
described later in greater detail in
section VIII.B.3.c. of the preamble of
this final rule). In addition, in the FY
2018 IPPS/LTCH PPS proposed rule (82
FR 20011), for FY 2018, we proposed to
continue to exclude the data from allinclusive rate providers and LTCHs paid
in accordance with demonstration
projects, as well as any Medicare
Advantage claims from the MS–LTC–
DRG relative weight calculations for the
reasons discussed in section VIII.B.3.c.
of the preamble of the proposed rule.
Furthermore, for FY 2018, in using
data from applicable LTCH cases to
establish MS–LTC–DRG relative
weights, we proposed to continue to
establish low-volume MS–LTC–DRGs
(that is, MS–LTC–DRGs with less than
25 cases) using our quintile
methodology in determining the MS–
LTC–DRG relative weights because
LTCHs do not typically treat the full
range of diagnoses as do acute care
hospitals. Therefore, for purposes of
determining the relative weights for the
large number of low-volume MS–LTC–
DRGs, we group all of the low-volume
MS–LTC–DRGs into five quintiles based
on average charges per discharge. Then,
under our existing methodology, we
account for adjustments made to LTCH
PPS standard Federal payments for
short-stay outlier (SSO) cases (that is,
cases where the covered length of stay
at the LTCH is less than or equal to fivesixths of the geometric average length of
stay for the MS–LTC–DRG), and we
make adjustments to account for
nonmonotonically increasing weights,
when necessary. The methodology is
premised on more severe cases under
the MS–LTC–DRG system requiring
greater expenditure of medical care
resources and higher average charges
such that, in the severity levels within
a base MS–LTC–DRG, the relative
weights should increase monotonically
with severity from the lowest to highest
severity level. (We discuss each of these
components of our MS–LTC–DRG
relative weight methodology in greater
detail in section VIII.B.3.g. of the
preamble of this final rule.)
We did not receive any public
comments on these proposals.
Therefore, we are finalizing our
proposals for calculating the MS–LTC–
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DRG relative weights for FY 2018
without modification.
2. Patient Classifications Into MS–LTC–
DRGs
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a. Background
The MS–DRGs (used under the IPPS)
and the MS–LTC–DRGs (used under the
LTCH PPS) are based on the CMS DRG
structure. As noted previously in this
section, we refer to the DRGs under the
LTCH PPS as MS–LTC–DRGs although
they are structurally identical to the
MS–DRGs used under the IPPS.
The MS–DRGs are organized into 25
major diagnostic categories (MDCs),
most of which are based on a particular
organ system of the body; the remainder
involve multiple organ systems (such as
MDC 22, Burns). Within most MDCs,
cases are then divided into surgical
DRGs and medical DRGs. Surgical DRGs
are assigned based on a surgical
hierarchy that orders operating room
(O.R.) procedures or groups of O.R.
procedures by resource intensity. The
GROUPER software program does not
recognize all ICD–10–PCS procedure
codes as procedures affecting DRG
assignment. That is, procedures that are
not surgical (for example, EKGs), or
minor surgical procedures (for example,
a biopsy of skin and subcutaneous
tissue (procedure code 0JBH3ZX)) do
not affect the MS–LTC–DRG assignment
based on their presence on the claim.
Generally, under the LTCH PPS, a
Medicare payment is made at a
predetermined specific rate for each
discharge that varies based on the MS–
LTC–DRG to which a beneficiary’s
discharge is assigned. Cases are
classified into MS–LTC–DRGs for
payment based on the following six data
elements:
• Principal diagnosis;
• Additional or secondary diagnoses;
• Surgical procedures;
• Age;
• Sex; and
• Discharge status of the patient.
Currently, for claims submitted using
version ASC X12 5010 format, up to 25
diagnosis codes and 25 procedure codes
are considered for an MS–DRG
assignment. This includes one principal
diagnosis and up to 24 secondary
diagnoses for severity of illness
determinations. (For additional
information on the processing of up to
25 diagnosis codes and 25 procedure
codes on hospital inpatient claims, we
refer readers to section II.G.11.c. of the
preamble of the FY 2011 IPPS/LTCH
PPS final rule (75 FR 50127).)
Under the HIPAA transactions and
code sets regulations at 45 CFR parts
160 and 162, covered entities must
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comply with the adopted transaction
standards and operating rules specified
in Subparts I through S of Part 162.
Among other requirements, by January
1, 2012, covered entities were required
to use the ASC X12 Standards for
Electronic Data Interchange Technical
Report Type 3—Health Care Claim:
Institutional (837), May 2006, ASC
X12N/005010X223, and Type 1 Errata to
Health Care Claim: Institutional (837)
ASC X12 Standards for Electronic Data
Interchange Technical Report Type 3,
October 2007, ASC X12N/
005010X233A1 for the health care
claims or equivalent encounter
information transaction (45 CFR
162.1102(c)).
HIPAA requires covered entities to
use the applicable medical data code set
requirements when conducting HIPAA
transactions (45 CFR 162.1000).
Currently, upon the discharge of the
patient, the LTCH must assign
appropriate diagnosis and procedure
codes from the most current version of
the International Classification of
Diseases, 10th Revision, Clinical
Modification (ICD–10–CM) for diagnosis
coding and the International
Classification of Diseases, 10th
Revision, Procedure Coding System
(ICD–10–PCS) for inpatient hospital
procedure coding, both of which were
required to be implemented October 1,
2015 (45 CFR 162.1002(c)(2) and (3)).
For additional information on the
implementation of the ICD–10 coding
system, we refer readers to section
II.F.1. of the FY 2017 IPPS/LTCH PPS
final rule (81 FR 56787 through 56790)
and section II.F.1. of the preamble of
this final rule. Additional coding
instructions and examples are published
in the AHA’s Coding Clinic for ICD-10CM/PCS.
To create the MS–DRGs (and by
extension, the MS–LTC–DRGs), base
DRGs were subdivided according to the
presence of specific secondary
diagnoses designated as complications
or comorbidities (CCs) into one, two, or
three levels of severity, depending on
the impact of the CCs on resources used
for those cases. Specifically, there are
sets of MS–DRGs that are split into 2 or
3 subgroups based on the presence or
absence of a CC or a major complication
or comorbidity (MCC). We refer readers
to section II.D. of the FY 2008 IPPS final
rule with comment period for a detailed
discussion about the creation of MS–
DRGs based on severity of illness levels
(72 FR 47141 through 47175).
MACs enter the clinical and
demographic information submitted by
LTCHs into their claims processing
systems and subject this information to
a series of automated screening
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processes called the Medicare Code
Editor (MCE). These screens are
designed to identify cases that require
further review before assignment into a
MS–LTC–DRG can be made. During this
process, certain cases are selected for
further explanation (74 FR 43949).
After screening through the MCE,
each claim is classified into the
appropriate MS–LTC–DRG by the
Medicare LTCH GROUPER software on
the basis of diagnosis and procedure
codes and other demographic
information (age, sex, and discharge
status). The GROUPER software used
under the LTCH PPS is the same
GROUPER software program used under
the IPPS. Following the MS–LTC–DRG
assignment, the MAC determines the
prospective payment amount by using
the Medicare PRICER program, which
accounts for hospital-specific
adjustments. Under the LTCH PPS, we
provide an opportunity for LTCHs to
review the MS–LTC–DRG assignments
made by the MAC and to submit
additional information within a
specified timeframe as provided in
§ 412.513(c).
The GROUPER software is used both
to classify past cases to measure relative
hospital resource consumption to
establish the MS–LTC–DRG relative
weights and to classify current cases for
purposes of determining payment. The
records for all Medicare hospital
inpatient discharges are maintained in
the MedPAR file. The data in this file
are used to evaluate possible MS–DRG
and MS–LTC–DRG classification
changes and to recalibrate the MS–DRG
and MS–LTC–DRG relative weights
during our annual update under both
the IPPS (§ 412.60(e)) and the LTCH PPS
(§ 412.517), respectively.
b. Changes to the MS–LTC–DRGs for FY
2018
As specified by our regulations at
§ 412.517(a), which require that the MS–
LTC–DRG classifications and relative
weights be updated annually, and
consistent with our historical practice of
using the same patient classification
system under the LTCH PPS as is used
under the IPPS, in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 20012),
we proposed to update the MS–LTC–
DRG classifications effective October 1,
2017, through September 30, 2018 (FY
2018), consistent with the proposed
changes to specific MS–DRG
classifications presented in section II.F.
of the preamble of the proposed rule.
Accordingly, the MS–LTC–DRGs for FY
2018 presented in the proposed rule and
this final rule are the same as the MS–
DRGs that will be used under the IPPS
for FY 2018. In addition, because the
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MS–LTC–DRGs for FY 2018 are the
same as the MS–DRGs for FY 2018, the
other changes that affect MS–DRG (and
by extension MS–LTC–DRG)
assignments under GROUPER Version
35 as discussed in section II.F. of the
preamble of this final rule, including the
changes to the MCE software and the
ICD–10–CM/PCS coding system, also
will be applicable under the LTCH PPS
for FY 2018.
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3. Development of the FY 2018 MS–
LTC–DRG Relative Weights
a. General Overview of the Development
of the MS–LTC–DRG Relative Weights
One of the primary goals for the
implementation of the LTCH PPS is to
pay each LTCH an appropriate amount
for the efficient delivery of medical care
to Medicare patients. The system must
be able to account adequately for each
LTCH’s case-mix in order to ensure both
fair distribution of Medicare payments
and access to adequate care for those
Medicare patients whose care is more
costly (67 FR 55984). To accomplish
these goals, we have annually adjusted
the LTCH PPS standard Federal
prospective payment rate by the
applicable relative weight in
determining payment to LTCHs for each
case. In order to make these annual
adjustments under the dual rate LTCH
PPS payment structure, beginning with
FY 2016, we recalibrate the MS–LTC–
DRG relative weighting factors annually
using data from applicable LTCH cases
(80 FR 49614 through 49617). Under
this policy, the resulting MS–LTC–DRG
relative weights would continue to be
used to adjust the LTCH PPS standard
Federal payment rate when calculating
the payment for LTCH PPS standard
Federal payment rate cases.
The established methodology to
develop the MS–LTC–DRG relative
weights is generally consistent with the
methodology established when the
LTCH PPS was implemented in the
August 30, 2002 LTCH PPS final rule
(67 FR 55989 through 55991). However,
there have been some modifications of
our historical procedures for assigning
relative weights in cases of zero volume
and/or nonmonotonicity resulting from
the adoption of the MS–LTC–DRGs,
along with the change made in
conjunction with the implementation of
the dual rate LTCH PPS payment
structure beginning in FY 2016 to use
LTCH claims data from only LTCH PPS
standard Federal payment rate cases (or
LTCH PPS cases that would have
qualified for payment under the LTCH
PPS standard Federal payment rate if
the dual rate LTCH PPS payment
structure had been in effect at the time
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of the discharge). (For details on the
modifications to our historical
procedures for assigning relative
weights in cases of zero volume and/or
nonmonotonicity, we refer readers to
the FY 2008 IPPS final rule with
comment period (72 FR 47289 through
47295) and the FY 2009 IPPS final rule
(73 FR 48542 through 48550).) For
details on the change in our historical
methodology to use LTCH claims data
only from LTCH PPS standard Federal
payment rate cases (or cases that would
have qualified for such payment had the
LTCH PPS dual payment rate structure
been in effect at the time) to determine
the MS–LTC–DRG relative weights, we
refer readers to the FY 2016 IPPS/LTCH
PPS final rule (80 FR 49614 through
49617). Under the LTCH PPS, relative
weights for each MS–LTC–DRG are a
primary element used to account for the
variations in cost per discharge and
resource utilization among the payment
groups (§ 412.515). To ensure that
Medicare patients classified to each
MS–LTC–DRG have access to an
appropriate level of services and to
encourage efficiency, we calculate a
relative weight for each MS–LTC–DRG
that represents the resources needed by
an average inpatient LTCH case in that
MS–LTC–DRG. For example, cases in an
MS–LTC–DRG with a relative weight of
2 would, on average, cost twice as much
to treat as cases in an MS–LTC–DRG
with a relative weight of 1.
b. Development of the MS–LTC–DRG
Relative Weights for FY 2018
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57078 through 57079), we
presented our policies for the
development of the MS–LTC–DRG
relative weights for FY 2017.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20013), we
proposed to continue to use our current
methodology to determine the MS–
LTC–DRG relative weights for FY 2018,
including the continued application of
established policies related to: The
hospital-specific relative value
methodology, the treatment of severity
levels in the MS–LTC–DRGs, lowvolume and no-volume MS–LTC–DRGs,
adjustments for nonmonotonicity, the
steps for calculating the MS–LTC–DRG
relative weights with a budget neutrality
factor, and only using data from
applicable LTCH cases (which includes
our policy of only using cases that
would meet the criteria for exclusion
from the site neutral payment rate (or,
for discharges occurring prior to the
implementation of the dual rate LTCH
PPS payment structure, would have met
the criteria for exclusion had those
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criteria been in effect at the time of the
discharge)).
In this section, we present our
application of our existing methodology
for determining the MS–LTC–DRG
relative weights for FY 2018, and we
discuss the effects of our policies
concerning the data used to determine
the FY 2018 MS–LTC–DRG relative
weights on the various components of
our existing methodology in the
discussion that follows.
c. Data
For this final rule, consistent with our
policies regarding the calculation of the
MS–LTC–DRG relative weights for FY
2018, we obtained total charges from FY
2016 Medicare LTCH claims data from
the March 2017 update of the FY 2016
MedPAR file, which are the best
available data at this time, and we are
using Version 35 of the GROUPER to
classify LTCH cases. Consistent with
our historical practice, we used those
data and the finalized Version 35 of the
GROUPER in establishing the FY 2018
MS–LTC–DRG relative weights in this
final rule. To calculate the FY 2018 MS–
LTC–DRG relative weights under the
dual rate LTCH PPS payment structure,
we are continuing to use applicable
LTCH data, which includes our policy
of only using cases that meet the criteria
for exclusion from the site neutral
payment rate (or would have met the
criteria had they been in effect at the
time of the discharge) (80 FR 49624).
Specifically, we began by first
evaluating the LTCH claims data in the
March 2017 update of the FY 2016
MedPAR file to determine which LTCH
cases would meet the criteria for
exclusion from the site neutral payment
rate under § 412.522(b) had the dual rate
LTCH PPS payment structure been in
effect at the time of discharge. (We note
that while the dual rate LTCH PPS
payment structure began to be phased in
during FY 2016, due to the statutory
requirement that individual LTCHs
begin to receive payment under the dual
rate LTCH PPS payment structure based
on their individual cost reporting
periods, there are LTCH discharges that
occurred in FY 2016 that would not
have been paid under that structure.)
We identified the FY 2016 LTCH cases
that were not assigned to MS–LTC–
DRGs 876, 880, 881, 882, 883, 884, 885,
886, 887, 894, 895, 896, 897, 945 and
946, which identify LTCH cases that do
not have a principal diagnosis relating
to a psychiatric diagnosis or to
rehabilitation; and that either—
• The admission to the LTCH was
‘‘immediately preceded’’ by discharge
from a subsection (d) hospital and the
immediately preceding stay in that
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subsection (d) hospital included at least
3 days in an ICU, as we define under the
ICU criterion; or
• The admission to the LTCH was
‘‘immediately preceded’’ by discharge
from a subsection (d) hospital and the
claim for the LTCH discharge includes
the applicable procedure code that
indicates at least 96 hours of ventilator
services were provided during the LTCH
stay, as we define under the ventilator
criterion. Claims data from the FY 2016
MedPAR file that reported ICD–10–PCS
procedure code 5A1955Z were used to
identify cases involving at least 96
hours of ventilator services in
accordance with the ventilator criterion.
We note that, for purposes of developing
the FY 2018 MS–LTC–DRG relative
weights using our current methodology,
we did not make any proposals
regarding the identification of cases that
would have been excluded from the site
neutral payment rate under the statutory
provisions that provided for temporary
exception from the site neutral payment
rate under the LTCH PPS for certain
severe wound care discharges from
certain LTCHs or for certain spinal cord
specialty hospitals provided by sections
15009 and 15010 of Public Law 114–
255, respectively, had our
implementation of that law and the dual
rate LTCH PPS payment structure been
in effect at the time of the discharge. At
this time, it is uncertain how many
LTCHs and how many cases in the
claims data we are using for this final
rule would have met the criteria to be
excluded from the site neutral payment
rate under those exceptions (had the
dual rate LTCH PPS payment structure
been in effect at the time of the
discharge). Therefore, for the remainder
of this section, when we refer to LTCH
claims only from cases that meet the
criteria for exclusion from the site
neutral payment rate (or would have
met the criteria had the applicable
statutes been in effect at the time of the
discharge), such data do not include any
discharges that would have been paid
based on the LTCH PPS standard
Federal payment rate under the
provisions of sections 15009 and 15010
of Public Law 114–255, had the
exception been in effect at the time of
the discharge.
Furthermore, consistent with our
historical methodology, as we proposed,
we are excluding any claims in the
resulting data set that were submitted by
LTCHs that are all-inclusive rate
providers and LTCHs that are paid in
accordance with demonstration projects
authorized under section 402(a) of
Public Law 90–248 or section 222(a) of
Public Law 92–603. In addition,
consistent with our historical practice
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and our policies, we are excluding any
Medicare Advantage (Part C) claims in
the resulting data. Such claims were
identified based on the presence of a
GHO Paid indicator value of ‘‘1’’ in the
MedPAR files. The claims that remained
after these three trims (that is, the
applicable LTCH data) were then used
to calculate the MS–LTC–DRG relative
weights for FY 2018. In summary, in
general, we identified the claims data
used in the development of the FY 2018
MS–LTC–DRG relative weights in this
final rule, as we proposed, by trimming
claims data that would have been paid
the site neutral rate had the dual
payment rate structure been in effect
(except for discharges which would
have been excluded from the site
neutral payment under the temporary
exception for certain severe wound care
discharges from certain LTCHs and
under the temporary exception for
certain spinal cord specialty hospitals),
as well as the claims data of 9 allinclusive rate providers reported in the
March 2017 update of the FY 2016
MedPAR file and any Medicare
Advantage claims data. (We note that
there were no data from any LTCHs that
are paid in accordance with a
demonstration project reported in the
March 2017 update of the FY 2016
MedPAR file. However, had there been
we would trim the claims data from
those LTCHs as well, in accordance
with our established policy.) We used
the remaining data (that is, the
applicable LTCH data) to calculate the
relative weights for FY 2018.
d. Hospital-Specific Relative Value
(HSRV) Methodology
By nature, LTCHs often specialize in
certain areas, such as ventilatordependent patients. Some case types
(MS–LTC–DRGs) may be treated, to a
large extent, in hospitals that have, from
a perspective of charges, relatively high
(or low) charges. This nonrandom
distribution of cases with relatively high
(or low) charges in specific MS–LTC–
DRGs has the potential to
inappropriately distort the measure of
average charges. To account for the fact
that cases may not be randomly
distributed across LTCHs, consistent
with the methodology we have used
since the implementation of the LTCH
PPS, in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20014), we
proposed to continue to use a hospitalspecific relative value (HSRV)
methodology to calculate the MS–LTC–
DRG relative weights for FY 2018. We
believe that this method removes this
hospital-specific source of bias in
measuring LTCH average charges (67 FR
55985). Specifically, under this
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methodology, we proposed to reduce
the impact of the variation in charges
across providers on any particular MS–
LTC–DRG relative weight by converting
each LTCH’s charge for an applicable
LTCH case to a relative value based on
that LTCH’s average charge for such
cases.
Under the HSRV methodology, we
standardize charges for each LTCH by
converting its charges for each
applicable LTCH case to hospitalspecific relative charge values and then
adjusting those values for the LTCH’s
case-mix. The adjustment for case-mix
is needed to rescale the hospital-specific
relative charge values (which, by
definition, average 1.0 for each LTCH).
The average relative weight for an LTCH
is its case-mix; therefore, it is reasonable
to scale each LTCH’s average relative
charge value by its case-mix. In this
way, each LTCH’s relative charge value
is adjusted by its case-mix to an average
that reflects the complexity of the
applicable LTCH cases it treats relative
to the complexity of the applicable
LTCH cases treated by all other LTCHs
(the average LTCH PPS case-mix of all
applicable LTCH cases across all
LTCHs).
In accordance with our established
methodology, for FY 2018, as we
proposed, we are continuing to
standardize charges for each applicable
LTCH case by first dividing the adjusted
charge for the case (adjusted for SSOs
under § 412.529 as described in section
VIII.B.3.g. (Step 3) of the preamble of
this final rule) by the average adjusted
charge for all applicable LTCH cases at
the LTCH in which the case was treated.
SSO cases are cases with a length of stay
that is less than or equal to five-sixths
the average length of stay of the MS–
LTC–DRG (§ 412.529 and § 412.503).
The average adjusted charge reflects the
average intensity of the health care
services delivered by a particular LTCH
and the average cost level of that LTCH.
The resulting ratio is multiplied by that
LTCH’s case-mix index to determine the
standardized charge for the case.
Multiplying the resulting ratio by the
LTCH’s case-mix index accounts for the
fact that the same relative charges are
given greater weight at an LTCH with
higher average costs than they would at
a LTCH with low average costs, which
is needed to adjust each LTCH’s relative
charge value to reflect its case-mix
relative to the average case-mix for all
LTCHs. By standardizing charges in this
manner, we count charges for a
Medicare patient at an LTCH with high
average charges as less resource
intensive than they would be at an
LTCH with low average charges. For
example, a $10,000 charge for a case at
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an LTCH with an average adjusted
charge of $17,500 reflects a higher level
of relative resource use than a $10,000
charge for a case at an LTCH with the
same case-mix, but an average adjusted
charge of $35,000. We believe that the
adjusted charge of an individual case
more accurately reflects actual resource
use for an individual LTCH because the
variation in charges due to systematic
differences in the markup of charges
among LTCHs is taken into account.
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e. Treatment of Severity Levels in
Developing the MS–LTC–DRG Relative
Weights
For purposes of determining the MS–
LTC–DRG relative weights, under our
historical methodology, there are three
different categories of MS–DRGs based
on volume of cases within specific MS–
LTC–DRGs: (1) MS–LTC–DRGs with at
least 25 applicable LTCH cases in the
data used to calculate the relative
weight, which are each assigned a
unique relative weight; (2) low-volume
MS–LTC–DRGs (that is, MS–LTC–DRGs
that contain between 1 and 24
applicable LTCH cases that are grouped
into quintiles (as described later in this
section of the final rule) and assigned
the relative weight of the quintile); and
(3) no-volume MS–LTC–DRGs that are
cross-walked to other MS–LTC–DRGs
based on the clinical similarities and
assigned the relative weight of the crosswalked MS–LTC–DRG (as described in
greater detail below). For FY 2018, we
proposed to continue to use applicable
LTCH cases to establish the same
volume-based categories to calculate the
FY 2018 MS–LTC–DRG relative weights.
In determining the FY 2018 MS–LTC–
DRG relative weights, when necessary,
as is our longstanding practice, as we
proposed, we make adjustments to
account for nonmonotonicity, as
discussed in greater detail later in Step
6 of section VIII.B.3.g. of the preamble
of this final rule. We refer readers to the
discussion in the FY 2010 IPPS/RY 2010
LTCH PPS final rule for our rationale for
including an adjustment for
nonmonotonicity (74 FR 43953 through
43954).
f. Low-Volume MS–LTC–DRGs
In order to account for MS–LTC–
DRGs with low-volume (that is, with
fewer than 25 applicable LTCH cases),
consistent with our existing
methodology, we proposed to continue
to employ the quintile methodology for
low-volume MS–LTC–DRGs, such that
we group the ‘‘low-volume MS–LTC–
DRGs’’ (that is, MS–LTC–DRGs that
contain between 1 and 24 applicable
LTCH cases into one of five categories
(quintiles) based on average charges (67
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FR 55984 through 55995; 72 FR 47283
through 47288; and 81 FR 25148)). In
cases where the initial assignment of a
low-volume MS–LTC–DRG to a quintile
results in nonmonotonicity within a
base-DRG, as we proposed, we make
adjustments to the resulting low-volume
MS–LTC–DRGs to preserve
monotonicity, as discussed in detail in
section VIII.B.3.g. (Step 6) of the
preamble of this final rule.
In this final rule, based on the best
available data (that is, the March 2017
update of the FY 2016 MedPAR files),
we identified 262 MS–LTC–DRGs that
contained between 1 and 24 applicable
LTCH cases. This list of MS–LTC–DRGs
was then divided into one of the 5 lowvolume quintiles, each containing at
least 52 MS–LTC–DRGs (262/5 = 52
with a remainder of 2). We assigned the
low-volume MS–LTC–DRGs to specific
low-volume quintiles by sorting the
low-volume MS–LTC–DRGs in
ascending order by average charge in
accordance with our established
methodology. Based on the data
available for the proposed rule, the
number of MS–LTC–DRGs with less
than 25 applicable LTCH cases was not
evenly divisible by 5 and, therefore, we
employed our historical methodology
for determining which of the proposed
low-volume quintiles contain the
additional proposed low-volume MS–
LTC–DRG. However, based on the data
available for this final rule, the number
of MS–LTC–DRGs with less than 25
applicable LTCH cases was not evenly
divisible by 5 and, therefore, we
employed our historical methodology
for determining which of the lowvolume quintiles contain the additional
proposed low-volume MS–LTC–DRG.
Specifically for this final rule, after
organizing the MS–LTC–DRGs by
ascending order by average charge, we
assigned the first 52 (1st through 52nd)
of low-volume MS–LTC–DRGs (with the
lowest average charge) into Quintile 1.
The 52 MS–LTC–DRGs with the highest
average charge cases were assigned into
Quintile 5. Because the average charge
of the 105th low-volume MS–LTC–DRG
in the sorted list was closer to the
average charge of the 104th low-volume
MS–LTC–DRG (assigned to Quintile 2)
than to the average charge of the 106th
low-volume MS–LTC–DRG (assigned to
Quintile 3), we assigned it to Quintile 2
(such that Quintile 2 contains 53 lowvolume MS–LTC–DRGs before any
adjustments for nonmonotonicity, as
discussed below). Because the average
charge of the 158th low-volume MS–
LTC–DRG in the sorted list was closer
to the 157th low-volume MS–LTC–DRG
(assigned to Quintile 3) than to the
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38305
average charge of the 159th low-volume
MS–LTC–DRG (assigned to Quintile 4),
we assigned it to Quintile 3 (such that
Quintile 3 contains 53 low-volume MS–
LTC–DRGs before any adjustments for
nonmonotonicity, as discussed below.
This results in 3 of the 5 low-volume
quintiles containing 52 MS–LTC–DRGs
(Quintiles 1, 4, and 5) and 2 low-volume
quintile containing 53 MS–LTC–DRGs
(Quintiles 2 and 3). Table 13A, listed in
section VI. of the Addendum to this
final rule and available via the Internet,
lists the composition of the low-volume
quintiles for MS–LTC–DRGs for FY
2018.
In order to determine the FY 2018
relative weights for the low-volume
MS–LTC–DRGs, consistent with our
historical practice, we used the five lowvolume quintiles described previously.
We determined a relative weight and
(geometric) average length of stay for
each of the five low-volume quintiles
using the methodology described in
section VIII.B.3.g. of the preamble of
this final rule. We assigned the same
relative weight and average length of
stay to each of the low-volume MS–
LTC–DRGs that make up an individual
low-volume quintile. We note that, as
this system is dynamic, it is possible
that the number and specific type of
MS–LTC–DRGs with a low-volume of
applicable LTCH cases will vary in the
future. Furthermore, we note that we
continue to monitor the volume (that is,
the number of applicable LTCH cases)
in the low-volume quintiles to ensure
that our quintile assignments used in
determining the MS–LTC–DRG relative
weights result in appropriate payment
for LTCH cases grouped to low-volume
MS–LTC–DRGs and do not result in an
unintended financial incentive for
LTCHs to inappropriately admit these
types of cases.
g. Steps for Determining the FY 2018
MS–LTC–DRG Relative Weights
In this final rule, as we proposed, we
are continuing to use our current
methodology to determine the FY 2018
MS–LTC–DRG relative weights.
In summary, to determine the FY
2018 MS–LTC–DRG relative weights, we
grouped applicable LTCH cases to the
appropriate MS–LTC–DRG, while taking
into account the low-volume quintiles
(as described above) and cross-walked
no-volume MS–LTC–DRGs (as described
later in this section). After establishing
the appropriate MS–LTC–DRG (or lowvolume quintile), as we proposed, we
calculated the FY 2018 relative weights
by first removing cases with a length of
stay of 7 days or less and statistical
outliers (Steps 1 and 2 below). Next, we
adjusted the number of applicable LTCH
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cases in each MS–LTC–DRG (or lowvolume quintile) for the effect of SSO
cases (Step 3 below). After removing
applicable LTCH cases with a length of
stay of 7 days or less (Step 1 below) and
statistical outliers (Step 2 below), which
are the SSO-adjusted applicable LTCH
cases and corresponding charges (step 3
below), we calculated ‘‘relative adjusted
weights’’ for each MS–LTC–DRG (or
proposed low-volume quintile) using
the HSRV method.
Step 1—Remove cases with a length
of stay of 7 days or less.
The first step in our calculation of the
FY 2018 MS–LTC–DRG relative weights
is to remove cases with a length of stay
of 7 days or less. The MS–LTC–DRG
relative weights reflect the average of
resources used on representative cases
of a specific type.
Generally, cases with a length of stay
of 7 days or less do not belong in an
LTCH because these stays do not fully
receive or benefit from treatment that is
typical in an LTCH stay, and full
resources are often not used in the
earlier stages of admission to an LTCH.
If we were to include stays of 7 days or
less in the computation of the FY 2018
MS–LTC–DRG relative weights, the
value of many relative weights would
decrease and, therefore, payments
would decrease to a level that may no
longer be appropriate. We do not believe
that it would be appropriate to
compromise the integrity of the
payment determination for those LTCH
cases that actually benefit from and
receive a full course of treatment at an
LTCH by including data from these very
short stays. Therefore, consistent with
our existing relative weight
methodology and as proposed, in
determining the FY 2018 MS–LTC–DRG
relative weights, we removed LTCH
cases with a length of stay of 7 days or
less from applicable LTCH cases. (For
additional information on what is
removed in this step of the relative
weight methodology, we refer readers to
67 FR 55989 and 74 FR 43959.)
Step 2—Remove statistical outliers.
The next step in our calculation of the
FY 2018 MS–LTC–DRG relative weights
is to remove statistical outlier cases
from the LTCH cases with a length of
stay of at least 8 days. Consistent with
our existing relative weight
methodology, as we proposed, we
continued to define statistical outliers as
cases that are outside of 3.0 standard
deviations from the mean of the log
distribution of both charges per case and
the charges per day for each MS–LTC–
DRG. These statistical outliers are
removed prior to calculating the relative
weights because we believe that they
may represent aberrations in the data
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that distort the measure of average
resource use. Including those LTCH
cases in the calculation of the relative
weights could result in an inaccurate
relative weight that does not truly
reflect relative resource use among those
MS–LTC–DRGs. (For additional
information on what is removed in this
step of the relative weight methodology,
we refer readers to 67 FR 55989 and 74
FR 43959.) After removing cases with a
length of stay of 7 days or less and
statistical outliers, we are left with
applicable LTCH cases that have a
length of stay greater than or equal to 8
days. In this final rule, we refer to these
cases as ‘‘trimmed applicable LTCH
cases.’’
Step 3—Adjust charges for the effects
of SSOs.
As the next step in the calculation of
the FY 2018 MS–LTC–DRG relative
weights, consistent with our historical
approach and as we proposed, we
adjusted each LTCH’s charges per
discharge for those remaining cases (that
is, trimmed applicable LTCH cases) for
the effects of SSOs (as defined in
§ 412.529(a) in conjunction with
§ 412.503). Specifically, we made this
adjustment by counting an SSO case as
a fraction of a discharge based on the
ratio of the length of stay of the case to
the average length of stay for the MS–
LTC–DRG for non-SSO cases. This has
the effect of proportionately reducing
the impact of the lower charges for the
SSO cases in calculating the average
charge for the MS–LTC–DRG. This
process produces the same result as if
the actual charges per discharge of an
SSO case were adjusted to what they
would have been had the patient’s
length of stay been equal to the average
length of stay of the MS–LTC–DRG.
Counting SSO cases as full LTCH
cases with no adjustment in
determining the FY 2018 MS–LTC–DRG
relative weights would lower the FY
2018 MS–LTC–DRG relative weight for
affected MS–LTC–DRGs because the
relatively lower charges of the SSO
cases would bring down the average
charge for all cases within a MS–LTC–
DRG. This would result in an
‘‘underpayment’’ for non-SSO cases and
an ‘‘overpayment’’ for SSO cases.
Therefore, as we proposed, we are
continuing to adjust for SSO cases
under § 412.529 in this manner because
it would result in more appropriate
payments for all LTCH PPS standard
Federal payment rate cases. (For
additional information on this step of
the relative weight methodology, we
refer readers to 67 FR 55989 and 74 FR
43959.)
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Step 4—Calculate the FY 2018 MS–
LTC–DRG relative weights on an
iterative basis.
Consistent with our historical relative
weight methodology and as we
proposed, we calculated the FY 2018
MS–LTC–DRG relative weights using
the HSRV methodology, which is an
iterative process. First, for each SSOadjusted trimmed applicable LTCH case,
we calculate a hospital-specific relative
charge value by dividing the charge per
discharge after adjusting for SSOs of the
LTCH case (from Step 3) by the average
charge per SSO-adjusted discharge for
the LTCH in which the case occurred.
The resulting ratio is then multiplied by
the LTCH’s case-mix index to produce
an adjusted hospital-specific relative
charge value for the case. We used an
initial case-mix index value of 1.0 for
each LTCH.
For each MS–LTC–DRG, we
calculated the FY 2018 relative weight
by dividing the SSO-adjusted average of
the hospital-specific relative charge
values for applicable LTCH cases for the
MS–LTC–DRG (that is, the sum of the
hospital-specific relative charge value
from above divided by the sum of
equivalent cases from Step 3 for each
MS–LTC–DRG) by the overall SSOadjusted average hospital-specific
relative charge value across all
applicable LTCH cases for all LTCHs
(that is, the sum of the hospital-specific
relative charge value from above
divided by the sum of equivalent
applicable LTCH cases from Step 3 for
each MS–LTC–DRG). Using these
recalculated MS–LTC–DRG relative
weights, each LTCH’s average relative
weight for all of its SSO-adjusted
trimmed applicable LTCH cases (that is,
its case-mix) was calculated by dividing
the sum of all the LTCH’s MS–LTC–
DRG relative weights by its total number
of SSO-adjusted trimmed applicable
LTCH cases. The LTCHs’ hospitalspecific relative charge values (from
previous) are then multiplied by the
hospital-specific case-mix indexes. The
hospital-specific case-mix adjusted
relative charge values are then used to
calculate a new set of MS–LTC–DRG
relative weights across all LTCHs. This
iterative process continued until there
was convergence between the relative
weights produced at adjacent steps, for
example, when the maximum difference
was less than 0.0001.
Step 5—Determine a FY 2018 relative
weight for MS–LTC–DRGs with no
applicable LTCH cases.
Using the trimmed applicable LTCH
cases, consistent with our historical
methodology and as we proposed, we
identified the MS–LTC–DRGs for which
there were no claims in the March 2017
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update of the FY 2016 MedPAR file and,
therefore, for which no charge data was
available for these MS–LTC–DRGs.
Because patients with a number of the
diagnoses under these MS–LTC–DRGs
may be treated at LTCHs, consistent
with our historical methodology, we
generally assign a relative weight to
each of the no-volume MS–LTC–DRGs
based on clinical similarity and relative
costliness (with the exception of
‘‘transplant’’ MS–LTC–DRGs, ‘‘error’’
MS–LTC–DRGs, and MS–LTC–DRGs
that indicate a principal diagnosis
related to a psychiatric diagnosis or
rehabilitation (referred to as the
‘‘psychiatric or rehabilitation’’ MS–
LTC–DRGs), as discussed later in this
section of this final rule). (For
additional information on this step of
the relative weight methodology, we
refer readers to 67 FR 55991 and 74 FR
43959 through 43960.)
We cross-walked each no-volume
MS–LTC–DRG to another MS–LTC–DRG
for which we calculated a relative
weight (determined in accordance with
the methodology described above).
Then, the ‘‘no-volume’’ MS–LTC–DRG
was assigned the same relative weight
(and average length of stay) of the MS–
LTC–DRG to which it was cross-walked
(as described in greater detail in this
section of this final rule).
Of the 754 MS–LTC–DRGs for FY
2018, we identified 348 MS–LTC–DRGs
for which there are no trimmed
applicable LTCH cases (the number
identified includes the 8 ‘‘transplant’’
MS–LTC–DRGs, the 2 ‘‘error’’ MS–LTC–
DRGs, and the 15 ‘‘psychiatric or
rehabilitation’’ MS–LTC–DRGs, which
are discussed below). We assigned
relative weights to each of the 348 novolume MS–LTC–DRGs that contained
trimmed applicable LTCH cases based
on clinical similarity and relative
costliness to 1 of the remaining 406 (754
¥ 348 = 406) MS–LTC–DRGs for which
we calculated relative weights based on
the trimmed applicable LTCH cases in
the FY 2016 MedPAR file data using the
steps described previously. (For the
remainder of this discussion, we refer to
the ‘‘cross-walked’’ MS–LTC–DRGs as
the MS–LTC–DRGs to which we crosswalked 1 of the 348 ‘‘no volume’’ MS–
LTC–DRGs.) Then, we generally
assigned the 348 no-volume MS–LTC–
DRGs the relative weight of the crosswalked MS–LTC–DRG. (As explained
below in Step 6, when necessary, we
made adjustments to account for
nonmonotonicity.)
We cross-walked the no-volume MS–
LTC–DRG to a MS–LTC–DRG for which
we calculated relative weights based on
the March 2017 update of the FY 2016
MedPAR file, and to which it is similar
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clinically in intensity of use of resources
and relative costliness as determined by
criteria such as care provided during the
period of time surrounding surgery,
surgical approach (if applicable), length
of time of surgical procedure,
postoperative care, and length of stay.
(For more details on our process for
evaluating relative costliness, we refer
readers to the FY 2010 IPPS/RY 2010
LTCH PPS final rule (73 FR 48543).) We
believe in the rare event that there
would be a few LTCH cases grouped to
one of the no-volume MS–LTC–DRGs in
FY 2017, the relative weights assigned
based on the cross-walked MS–LTC–
DRGs would result in an appropriate
LTCH PPS payment because the
crosswalks, which are based on clinical
similarity and relative costliness, would
be expected to generally require
equivalent relative resource use.
We then assigned the relative weight
of the cross-walked MS–LTC–DRG as
the relative weight for the no-volume
MS–LTC–DRG such that both of these
MS–LTC–DRGs (that is, the no-volume
MS–LTC–DRG and the cross-walked
MS–LTC–DRG) have the same relative
weight (and average length of stay) for
FY 2018. We note that, if the crosswalked MS–LTC–DRG had 25
applicable LTCH cases or more, its
relative weight (calculated using the
methodology described in Steps 1
through 4 above) is assigned to the novolume MS–LTC–DRG as well.
Similarly, if the MS–LTC–DRG to which
the no-volume MS–LTC–DRG was crosswalked had 24 or less cases and,
therefore, is designated to 1 of the lowvolume quintiles for purposes of
determining the relative weights, we
assigned the relative weight of the
applicable low-volume quintile to the
no-volume MS–LTC–DRG such that
both of these MS–LTC–DRGs (that is,
the no-volume MS–LTC–DRG and the
cross-walked MS–LTC–DRG) have the
same relative weight for FY 2018. (As
we noted previously, in the infrequent
case where nonmonotonicity involving
a no-volume MS–LTC–DRG resulted,
additional adjustments as described in
Step 6 are required in order to maintain
monotonically increasing relative
weights.)
For this final rule, a list of the novolume MS–LTC–DRGs and the MS–
LTC–DRGs to which each was crosswalked (that is, the cross-walked MS–
LTC–DRGs) for FY 2018 is shown in
Table 13B, which is listed in section VI.
of the Addendum to this final rule and
is available via the Internet on the CMS
Web site.
To illustrate this methodology for
determining the relative weights for the
proposed FY 2018 MS–LTC–DRGs with
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no applicable LTCH cases, we are
providing the following example, which
refers to the no-volume proposed MS–
LTC–DRGs crosswalk information for
FY 2018 provided in Table 13B.
Example: There were no trimmed
applicable LTCH cases in the FY 2016
MedPAR file that we are using for this
final rule for MS–LTC–DRG 061 (Acute
Ischemic Stroke with Use of
Thrombolytic Agent with MCC). We
determined that MS–LTC–DRG 070
(Nonspecific Cerebrovascular Disorders
with MCC) is similar clinically and
based on resource use to MS–LTC–DRG
061. Therefore, we assigned the same
relative weight (and average length of
stay) of MS–LTC–DRG 70 of 0.8833 for
FY 2018 to MS–LTC–DRG 061 (we refer
readers to Table 11, which is listed in
section VI. of the Addendum to this
final rule and is available via the
Internet on the CMS Web site). Again,
we note that, as this system is dynamic,
it is entirely possible that the number of
MS–LTC–DRGs with no volume will
vary in the future. Consistent with our
historical practice, we used the most
recent available claims data to identify
the trimmed applicable LTCH cases
from which we determined the relative
weights in this rule.
For FY 2018, consistent with our
historical relative weight methodology
and as we proposed, we are establishing
a relative weight of 0.0000 for the
following transplant MS–LTC–DRGs:
Heart Transplant or Implant of Heart
Assist System with MCC (MS–LTC–DRG
001); Heart Transplant or Implant of
Heart Assist System without MCC (MS–
LTC–DRG 002); Liver Transplant with
MCC or Intestinal Transplant (MS–LTC–
DRG 005); Liver Transplant without
MCC (MS–LTC–DRG 006); Lung
Transplant (MS–LTC–DRG 007);
Simultaneous Pancreas/Kidney
Transplant (MS–LTC–DRG 008);
Pancreas Transplant (MS–LTC–DRG
010); and Kidney Transplant (MS–LTC–
DRG 652). This is because Medicare
only covers these procedures if they are
performed at a hospital that has been
certified for the specific procedures by
Medicare and presently no LTCH has
been so certified. At the present time,
we include these eight transplant MS–
LTC–DRGs in the GROUPER program
for administrative purposes only.
Because we use the same GROUPER
program for LTCHs as is used under the
IPPS, removing these MS–LTC–DRGs
would be administratively burdensome.
(For additional information regarding
our treatment of transplant MS–LTC–
DRGs, we refer readers to the RY 2010
LTCH PPS final rule (74 FR 43964).) In
addition, consistent with our historical
policy and as we proposed, we are
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establishing a relative weight of 0.0000
for the 2 ‘‘error’’ MS–LTC–DRGs (that is,
MS–LTC–DRG 998 (Principal Diagnosis
Invalid as Discharge Diagnosis) and
MS–LTC–DRG 999 (Ungroupable))
because applicable LTCH cases grouped
to these MS–LTC–DRGs cannot be
properly assigned to an MS–LTC–DRG
according to the grouping logic.
In this final rule, consistent with our
practice in FYs 2016 and 2017 and as
we proposed, we are establishing a
relative weight for FY 2018 equal to the
respective FY 2015 relative weight of
the MS–LTC–DRGs for the following
‘‘psychiatric or rehabilitation’’ MS–
LTC–DRGs: MS–LTC–DRG 876 (O.R.
Procedure with Principal Diagnoses of
Mental Illness); MS–LTC–DRG 880
(Acute Adjustment Reaction &
Psychosocial Dysfunction); MS–LTC–
DRG 881 (Depressive Neuroses); MS–
LTC–DRG 882 (Neuroses Except
Depressive); MS–LTC–DRG 883
(Disorders of Personality & Impulse
Control); MS–LTC–DRG 884 (Organic
Disturbances & Mental Retardation);
MS–LTC–DRG 885 (Psychoses); MS–
LTC–DRG 886 (Behavioral &
Developmental Disorders); MS–LTC–
DRG 887 (Other Mental Disorder
Diagnoses); MS–LTC–DRG 894
(Alcohol/Drug Abuse or Dependence,
Left Ama); MS–LTC–DRG 895 (Alcohol/
Drug Abuse or Dependence, with
Rehabilitation Therapy); MS–LTC–DRG
896 (Alcohol/Drug Abuse or
Dependence, without Rehabilitation
Therapy with MCC); MS–LTC–DRG 897
(Alcohol/Drug Abuse or Dependence,
without Rehabilitation Therapy without
MCC); MS–LTC–DRG 945
(Rehabilitation with CC/MCC); and MS–
LTC–DRG 946 (Rehabilitation without
CC/MCC). As we discussed when we
implemented the dual rate LTCH PPS
payment structure, LTCH discharges
that are grouped to these 15 ‘‘psychiatric
and rehabilitation’’ MS–LTC–DRGs do
not meet the criteria for exclusion from
the site neutral payment rate.
As such, under the criterion for a
principal diagnosis relating to a
psychiatric diagnosis or to
rehabilitation, there are no applicable
LTCH cases to use in calculating a
relative weight for the ‘‘psychiatric and
rehabilitation’’ MS–LTC–DRGs. In other
words, any LTCH PPS discharges
grouped to any of the 15 ‘‘psychiatric
and rehabilitation’’ MS–LTC–DRGs
would always be paid at the site neutral
payment rate, and, therefore, those MS–
LTC–DRGs would never include any
LTCH cases that meet the criteria for
exclusion from the site neutral payment
rate. However, section 1886(m)(6)(B) of
the Act establishes a transitional
payment method for cases that would be
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paid at the site neutral payment rate for
LTCH discharges occurring in cost
reporting periods beginning during FY
2016 or FY 2017. Under the transitional
payment method for site neutral
payment rate cases, for LTCH discharges
occurring in cost reporting periods
beginning on or after October 1, 2016,
and on or before September 30, 2017,
site neutral payment rate cases are paid
a blended payment rate, calculated as 50
percent of the applicable site neutral
payment rate amount for the discharge
and 50 percent of the applicable LTCH
PPS standard Federal payment rate.
Because the LTCH PPS standard Federal
payment rate is based on the relative
weight of the MS–LTC–DRG, in order to
determine the transitional blended
payment for site neutral payment rate
cases grouped to one of the ‘‘psychiatric
or rehabilitation’’ MS–LTC–DRGs in FY
2018, we assigned a relative weight to
these MS–LTC–DRGs for FY 2018 that is
the same as the FY 2015 relative weight
(which is also the same as the FY 2016
relative weight). We believe that using
the respective FY 2015 relative weight
for each of the ‘‘psychiatric or
rehabilitation’’ MS–LTC–DRGs results
in appropriate payments for LTCH cases
that are paid at the site neutral payment
rate under the transition policy
provided by the statute because there
are no clinically similar MS–LTC–DRGs
for which we were able to determine
relative weights based on applicable
LTCH cases in the March 2017 update
of the FY 2016 MedPAR file data using
the steps described above. Furthermore,
we believe that it would be
administratively burdensome and
introduce unnecessary complexity to
the MS–LTC–DRG relative weight
calculation to use the LTCH discharges
in the MedPAR file data to calculate a
relative weight for those 15 ‘‘psychiatric
and rehabilitation’’ MS–LTC–DRGs to
be used for the sole purpose of
determining half of the transitional
blended payment for site neutral
payment rate cases during the transition
period (80 FR 49631 through 49632).
In summary, for FY 2018, we are
establishing a relative weight (and
average length of stay thresholds) equal
to the respective FY 2015 relative
weight of the MS–LTC–DRGs for the 15
‘‘psychiatric or rehabilitation’’ MS–
LTC–DRGs listed previously (that is,
MS–LTC–DRGs 876, 880, 881, 882, 883,
884, 885, 886, 887, 894, 895, 896, 897,
945, and 946). Table 11, which is listed
in section VI. of the Addendum to this
final rule and is available via the
Internet on the CMS Web site, reflects
this policy.
Step 6—Adjust the FY 2018 MS–LTC–
DRG relative weights to account for
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nonmonotonically increasing relative
weights.
The MS–DRGs contain base DRGs that
have been subdivided into one, two, or
three severity of illness levels. Where
there are three severity levels, the most
severe level has at least one secondary
diagnosis code that is referred to as an
MCC (that is, major complication or
comorbidity). The next lower severity
level contains cases with at least one
secondary diagnosis code that is a CC
(that is, complication or comorbidity).
Those cases without an MCC or a CC are
referred to as ‘‘without CC/MCC.’’ When
data do not support the creation of three
severity levels, the base MS–DRG is
subdivided into either two levels or the
base MS–DRG is not subdivided. The
two-level subdivisions may consist of
the MS–DRG with CC/MCC and the
MS–DRG without CC/MCC.
Alternatively, the other type of twolevel subdivision may consist of the
MS–DRG with MCC and the MS–DRG
without MCC.
In those base MS–LTC–DRGs that are
split into either two or three severity
levels, cases classified into the ‘‘without
CC/MCC’’ MS–LTC–DRG are expected
to have a lower resource use (and lower
costs) than the ‘‘with CC/MCC’’ MS–
LTC–DRG (in the case of a two-level
split) or both the ‘‘with CC’’ and the
‘‘with MCC’’ MS–LTC–DRGs (in the
case of a three-level split). That is,
theoretically, cases that are more severe
typically require greater expenditure of
medical care resources and would result
in higher average charges. Therefore, in
the three severity levels, relative
weights should increase by severity,
from lowest to highest. If the relative
weights decrease as severity increases
(that is, if within a base MS–LTC–DRG,
an MS–LTC–DRG with CC has a higher
relative weight than one with MCC, or
the MS–LTC–DRG ‘‘without CC/MCC’’
has a higher relative weight than either
of the others), they are nonmonotonic.
We continue to believe that utilizing
nonmonotonic relative weights to adjust
Medicare payments would result in
inappropriate payments because the
payment for the cases in the higher
severity level in a base MS–LTC–DRG
(which are generally expected to have
higher resource use and costs) would be
lower than the payment for cases in a
lower severity level within the same
base MS–LTC–DRG (which are generally
expected to have lower resource use and
costs). Therefore, in determining the FY
2018 MS–LTC–DRG relative weights,
consistent with our historical
methodology, we are continuing to
combine MS–LTC–DRG severity levels
within a base MS–LTC–DRG for the
purpose of computing a relative weight
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when necessary to ensure that
monotonicity is maintained. For a
comprehensive description of our
existing methodology to adjust for
nonmonotonicity, we refer readers to
the FY 2010 IPPS/RY 2010 LTCH PPS
final rule (74 FR 43964 through 43966).
Any adjustments for nonmonotonicity
that were made in determining the FY
2018 MS–LTC–DRG relative weights in
this final rule by applying this
methodology are denoted in Table 11,
which is listed in section VI. of the
Addendum to this final rule and is
available via the Internet on the CMS
Web site.
Step 7—Calculate the FY 2018 MS–
LTC–DRG reclassification and
recalibration budget neutrality factor.
In accordance with the regulations at
§ 412.517(b) (in conjunction with
§ 412.503), the annual update to the
MS–LTC–DRG classifications and
relative weights is done in a budget
neutral manner such that estimated
aggregate LTCH PPS payments would be
unaffected, that is, would be neither
greater than nor less than the estimated
aggregate LTCH PPS payments that
would have been made without the MS–
LTC–DRG classification and relative
weight changes. (For a detailed
discussion on the establishment of the
budget neutrality requirement for the
annual update of the MS–LTC–DRG
classifications and relative weights, we
refer readers to the RY 2008 LTCH PPS
final rule (72 FR 26881 and 26882).)
The MS–LTC–DRG classifications and
relative weights are updated annually
based on the most recent available
LTCH claims data to reflect changes in
relative LTCH resource use (§ 412.517(a)
in conjunction with § 412.503). To
achieve the budget neutrality
requirement at § 412.517(b), under our
established methodology, for each
annual update, the MS–LTC–DRG
relative weights are uniformly adjusted
to ensure that estimated aggregate
payments under the LTCH PPS would
not be affected (that is, decreased or
increased). Consistent with that
provision and as we proposed, we are
update the MS–LTC–DRG classifications
and relative weights for FY 2018 based
on the most recent available LTCH data
for applicable LTCH cases, and continue
to apply a budget neutrality adjustment
in determining the FY 2018 MS–LTC–
DRG relative weights. In this FY 2018
IPPS/LTCH PPS final rule, as we
proposed, to ensure budget neutrality in
the update to the MS–LTC–DRG
classifications and relative weights
under § 412.517(b), we are continuing to
use our established two-step budget
neutrality methodology.
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To calculate the normalization factor
for FY 2018, we grouped applicable
LTCH cases using the FY 2018 Version
35 GROUPER, and the recalibrated FY
2018 MS–LTC–DRG relative weights to
calculate the average case-mix index
(CMI); we grouped the same applicable
LTCH cases using the FY 2017
GROUPER Version 34 and MS–LTC–
DRG relative weights and calculated the
average CMI; and computed the ratio by
dividing the average CMI for FY 2017 by
the average CMI for FY 2018. That ratio
is the normalization factor. Because the
calculation of the normalization factor
involves the relative weights for the
MS–LTC–DRGs that contained
applicable LTCH cases to calculate the
average CMIs, any low-volume MS–
LTC–DRGs are included in the
calculation (and the MS–LTC–DRGs
with no applicable LTCH cases are not
included in the calculation).
To calculate the budget neutrality
adjustment factor, we simulated
estimated total FY 2018 LTCH PPS
standard Federal payment rate
payments for applicable LTCH cases
using the FY 2018 normalized relative
weights and GROUPER Version 35;
simulated estimated total FY 2017
LTCH PPS standard Federal payment
rate payments for applicable LTCH
cases using the FY 2017 MS–LTC–DRG
relative weights and the FY 2017
GROUPER Version 34; and calculated
the ratio of these estimated total
payments by dividing the simulated
estimated total LTCH PPS standard
Federal payment rate payments for FY
2017 by the simulated estimated total
LTCH PPS standard Federal payment
rate payments for FY 2018. The
resulting ratio is budget neutrality
adjustment factor. The calculation of the
budget neutrality factor involves the
relative weights for the LTCH cases used
in the payment simulation, which
includes any cases grouped to lowvolume MS–LTC–DRGs or to MS–LTC–
DRGs with no applicable LTCH cases,
and generally does not include
payments for cases grouped to a MS–
LTC–DRG with no applicable LTCH
cases. (Occasionally, a few LTCH cases
(that is, those with a covered length of
stay of 7 days or less, which are
removed from the relative weight
calculation in step 2) that are grouped
to a MS–LTC–DRG with no applicable
LTCH cases are included in the payment
simulations used to calculate the budget
neutrality factor. However, the number
and payment amount of such cases have
a negligible impact on the budget
neutrality factor calculation).
In this final rule, to ensure budget
neutrality in the update to the MS–LTC–
DRG classifications and relative weights
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38309
under § 412.517(b), as we proposed, we
are continuing to use our established
two-step budget neutrality methodology.
Therefore, in this final rule, in the first
step of our MS–LTC–DRG budget
neutrality methodology, for FY 2018, we
calculate and apply a normalization
factor to the recalibrated relative
weights (the result of Steps 1 through 6
discussed previously) to ensure that
estimated payments are not affected by
changes in the composition of case
types or the changes to the classification
system. That is, the normalization
adjustment is intended to ensure that
the recalibration of the MS–LTC–DRG
relative weights (that is, the process
itself) neither increases nor decreases
the average case-mix index.
To calculate the normalization factor
for FY 2018 (the first step of our budget
neutrality methodology), we used the
following three steps: (1.a.) Used the
most recent available applicable LTCH
cases from the most recent available
data (that is, LTCH discharges from the
FY 2016 MedPAR file) and grouped
them using the FY 2018 GROUPER (that
is, Version 35 for FY 2018) and the
recalibrated FY 2018 MS–LTC–DRG
relative weights (determined in Steps 1
through 6 above) to calculate the
average case-mix index; (1.b.) grouped
the same applicable LTCH cases (as are
used in Step 1.a.) using the FY 2017
GROUPER (Version 34) and FY 2017
MS–LTC–DRG relative weights and
calculated the average case-mix index;
and (1.c.) computed the ratio of these
average case-mix indexes by dividing
the average CMI for FY 2017
(determined in Step 1.b.) by the average
case-mix index for FY 2018 (determined
in Step 1.a.). As a result, in determining
the MS–LTC–DRG relative weights for
FY 2018, each recalibrated MS–LTC–
DRG relative weight is multiplied by the
normalization factor of 1.28590
(determined in Step 1.c.) in the first step
of the budget neutrality methodology,
which produced ‘‘normalized relative
weights.’’
In the second step of our MS–LTC–
DRG budget neutrality methodology, we
calculate a second budget neutrality
factor consisting of the ratio of
estimated aggregate FY 2018 LTCH PPS
standard Federal payment rate
payments for applicable LTCH cases
(the sum of all calculations under Step
1.a. mentioned previously) after
reclassification and recalibration to
estimated aggregate payments for FY
2018 LTCH PPS standard Federal
payment rate payments for applicable
LTCH cases before reclassification and
recalibration (that is, the sum of all
calculations under Step 1.b. mentioned
previously).
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That is, for this final rule, for FY
2018, under the second step of the
budget neutrality methodology, as we
proposed, we determine the budget
neutrality adjustment factor using the
following three steps: (2.a.) Simulated
estimated total FY 2018 LTCH PPS
standard Federal payment rate
payments for applicable LTCH cases
using the normalized relative weights
for FY 2018 and GROUPER Version 35
(as described above); (2.b.) simulated
estimated total FY 2017 LTCH PPS
standard Federal payment rate
payments for applicable LTCH cases
using the FY 2017 GROUPER (Version
34) and the FY 2017 MS–LTC–DRG
relative weights in Table 11 of the FY
2017 IPPS/LTCH PPS final rule
available on the Internet, as described in
section VI. of the Addendum of that
final rule; and (2.c.) calculated the ratio
of these estimated total payments by
dividing the value determined in Step
2.b. by the value determined in Step 2.a.
In determining the FY 2018 MS–LTC–
DRG relative weights, each normalized
relative weight is then multiplied by a
budget neutrality factor of 0.9907845
(the value determined in Step 2.c.) in
the second step of the budget neutrality
methodology to achieve the budget
neutrality requirement at § 412.517(b).
Accordingly, in determining the FY
2018 MS–LTC–DRG relative weights in
this final rule, consistent with our
existing methodology, we applied a
normalization factor of 1.28590 and a
budget neutrality factor of 0.9907845.
Table 11, which is listed in section VI.
of the Addendum to this final rule and
is available via the Internet on the CMS
Web site, lists the MS–LTC–DRGs and
their respective relative weights,
geometric mean length of stay, and fivesixths of the geometric mean length of
stay (used to identify SSO cases under
§ 412.529(a)) for FY 2018.
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C. Changes to the LTCH PPS Payment
Rates and Other Changes to the LTCH
PPS for FY 2018
1. Overview of Development of the
LTCH PPS Standard Federal Payment
Rates
The basic methodology for
determining LTCH PPS standard
Federal payment rates is currently set
forth at 42 CFR 412.515 through
412.538. In this section, we discuss the
factors that we used to update the LTCH
PPS standard Federal payment rate for
FY 2018, that is, effective for LTCH
discharges occurring on or after October
1, 2017 through September 30, 2018.
Under the dual rate LTCH PPS payment
structure required by statute, beginning
with discharges in cost reporting
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periods beginning in FY 2016, only
LTCH discharges that meet the criteria
for exclusion from the site neutral
payment rate are paid based on the
LTCH PPS standard Federal payment
rate specified at § 412.523. (For
additional details on our finalized
policies related to the dual rate LTCH
PPS payment structure required by
statute, we refer readers to the FY 2016
IPPS/LTCH PPS final rule (80 FR 49601
through 49623).)
Prior to the implementation of the
dual payment rate system in FY 2016,
all LTCHs were paid similarly to those
now exempt from the site neutral
payment rate. That legacy payment rate
was called the standard Federal rate. For
details on the development of the initial
standard Federal rate for FY 2003, we
refer readers to the August 30, 2002
LTCH PPS final rule (67 FR 56027
through 56037). For subsequent updates
to the standard Federal rate (FYs 2003
through 2015)/LTCH PPS standard
Federal payment rate (FY 2016 through
present) as implemented under
§ 412.523(c)(3), we refer readers to the
following final rules: RY 2004 LTCH
PPS final rule (68 FR 34134 through
34140); RY 2005 LTCH PPS final rule
(68 FR 25682 through 25684); RY 2006
LTCH PPS final rule (70 FR 24179
through 24180); RY 2007 LTCH PPS
final rule (71 FR 27819 through 27827);
RY 2008 LTCH PPS final rule (72 FR
26870 through 27029); RY 2009 LTCH
PPS final rule (73 FR 26800 through
26804); FY 2010 IPPS/RY 2010 LTCH
PPS final rule (74 FR 44021 through
44030); FY 2011 IPPS/LTCH PPS final
rule (75 FR 50443 through 50444); FY
2012 IPPS/LTCH PPS final rule (76 FR
51769 through 51773); FY 2013 IPPS/
LTCH PPS final rule (77 FR 53479
through 53481); FY 2014 IPPS/LTCH
PPS final rule (78 FR 50760 through
50765); FY 2015 IPPS/LTCH PPS final
rule (79 FR 50176 through 50180); FY
2016 IPPS/LTCH PPS final rule (80 FR
49634 through 49637); and FY 2017
IPPS/LTCH PPS final rule (81 FR 57296
through 57310).
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20021 through
20022), we presented our proposals
related to the proposed annual update to
the LTCH PPS standard Federal
payment rate for FY 2018, which
include certain statutory requirements
as discussed below.
The application of the update to the
LTCH PPS standard Federal payment
rate for FY 2018 is presented in section
V.A. of the Addendum to this final rule.
The components of the annual update to
the LTCH PPS standard Federal
payment rate for FY 2018 are discussed
below, including the reduction to the
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annual update for LTCHs that fail to
submit quality reporting data for FY
2018 as required by the statute (as
discussed in section VIII.C.2.c. of the
preamble of this final rule). In addition,
we are making an adjustment to the
LTCH PPS standard Federal payment
rate to account for the estimated effect
of the changes to the area wage level
adjustment for FY 2018 on estimated
aggregate LTCH PPS payments, in
accordance with § 412.523(d)(4) (as
discussed in section V.B. of the
Addendum to this final rule), and a
budget neutrality adjustment stemming
from our change to the SSO payment
methodology (as discussed in VIII.D. of
the preamble of this final rule).
2. FY 2018 LTCH PPS Standard Federal
Payment Rate Annual Market Basket
Update
a. Overview
Historically, the Medicare program
has used a market basket to account for
input price increases in the services
furnished by providers. The market
basket used for the LTCH PPS includes
both operating and capital related costs
of LTCHs because the LTCH PPS uses a
single payment rate for both operating
and capital-related costs. We adopted
the 2013-based LTCH-specific market
basket for use under the LTCH PPS
beginning in FY 2017 (81 FR 57101
through 57102). For additional details
on the historical development of the
market basket used under the LTCH
PPS, we refer readers to the FY 2013
IPPS/LTCH PPS final rule (77 FR 53467
through 53476), and for a complete
discussion of the LTCH market basket
and a description of the methodologies
used to determine the operating and
capital-related portions of the 2013based LTCH market basket, we refer
readers to section VII.D. of the preamble
of the FY 2017 IPPS/LTCH PPS
proposed and final rules.
Section 3401(c) of the Affordable Care
Act provides for certain adjustments to
any annual update to the LTCH PPS
standard Federal payment rate and
refers to the timeframes associated with
such adjustments as a ‘‘rate year’’
(which are discussed in more detail in
section VIII.C.2.b. of the preamble of
this final rule.) We note that because the
annual update to the LTCH PPS
policies, rates, and factors now occurs
on October 1, we adopted the term
‘‘fiscal year’’ (FY) rather than ‘‘rate
year’’ (RY) under the LTCH PPS
beginning October 1, 2010, to conform
with the standard definition of the
Federal fiscal year (October 1 through
September 30) used by other PPSs, such
as the IPPS (75 FR 50396 through
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50397). Although the language of
sections 3004(a), 3401(c), 10319, and
1105(b) of the Affordable Care Act refers
to years 2010 and thereafter under the
LTCH PPS as ‘‘rate year,’’ consistent
with our change in the terminology used
under the LTCH PPS from ‘‘rate year’’ to
‘‘fiscal year,’’ for purposes of clarity,
when discussing the annual update for
the LTCH PPS standard Federal
payment rate, including the provisions
of the Affordable Care Act, we use
‘‘fiscal year’’ rather than ‘‘rate year’’ for
2011 and subsequent years.
b. Annual Update to the LTCH PPS
Standard Federal Payment Rate for FY
2018
Section 1886(m)(3)(A) of the Act
provides that, beginning in FY 2010,
any annual update to the LTCH PPS
standard Federal payment rate is
reduced by the adjustments specified in
clauses (i) and (ii) of subparagraph (A).
Clause (i) of section 1886(m)(3)(A) of the
Act provides for a reduction, for FY
2012 and each subsequent rate year, by
the productivity adjustment described
in section 1886(b)(3)(B)(xi)(II) of the Act
(that is, ‘‘the multifactor productivity
(MFP) adjustment’’). Clause (ii) of
section 1886(m)(3)(A) of the Act
provides for a reduction, for each of FYs
2010 through 2019, by the ‘‘other
adjustment’’ described in section
1886(m)(4)(F) of the Act.
Section 411(e) of the Medicare Access
and CHIP Reauthorization Act (MACRA)
(Pub. L. 114–10), enacted on April 16,
2015, amended section 1886(m)(3) of
the Act by amending subparagraph (A)
to be ‘‘subject to subparagraph (C)’’ and
by adding new subparagraph (C), which
specifies an additional special rule for
FY 2018. Specifically, section
1886(m)(3)(C) of the Act states for FY
2018, the annual update under
subparagraph (A) for the fiscal year,
after application of clauses (i) and (ii) of
subparagraph (A), shall be 1 percent.
That is, the annual update for FY 2018,
after applications of the reductions for
the MFP adjustment (under clause (i) of
section 1886(m)(3)(A)) and the ‘‘other
adjustment’’ (under clause (ii) of section
1886(m)(3)(A)) is 1 percent.
Historically, CMS has used an
estimated market basket increase to
update the LTCH PPS. Under the
authority of section 123 of the BBRA as
amended by section 307(b) of the BIPA,
we adopted a newly created 2013-based
LTCH-specific market basket for use
under the LTCH PPS beginning in FY
2017. The 2013-based LTCH-specific
market basket is based solely on the
Medicare cost report data submitted by
LTCHs and, therefore, specifically
reflects the cost structures of only
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LTCHs. For additional details on the
development of the 2013-based LTCHspecific market basket, we refer readers
to the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57101 through 57102). For
FYs 2010 through 2017, the estimated
market basket update under the LTCH
PPS was reduced by the MFP
adjustment and ‘‘other adjustment’’ as
applicable. However, as described
above, section 411(e) of the MACRA
subsequently amended section
1886(m)(3)(A) of the Act so that, after
the adjustments above, the FY 2018
annual update is set at 1 percent.
c. Adjustment to the LTCH PPS
Standard Federal Payment Rate Under
the Long-Term Care Hospital Quality
Reporting Program (LTCH QRP)
In accordance with section 1886(m)(5)
of the Act, as added by section 3004(a)
of the Affordable Care Act, the Secretary
established the Long-Term Care
Hospital Quality Reporting Program
(LTCH QRP). Failure to report quality
data under the LTCH QRP for FY 2014
and subsequent fiscal years results in a
2.0 percentage point reduction in the
annual update as codified under
§ 412.523(c)(4) of the regulations. (As
previously noted, although the language
of section 3004(a) of the Affordable Care
Act refers to years 2011 and thereafter
under the LTCH PPS as ‘‘rate year,’’
consistent with our change in the
terminology used under the LTCH PPS
from ‘‘rate year’’ to ‘‘fiscal year,’’ for
purposes of clarity, when discussing the
annual update for the LTCH PPS,
including the provisions of the
Affordable Care Act, we use ‘‘fiscal
year’’ rather than ‘‘rate year’’ for 2011
and subsequent years.) The LTCH QRP,
as required for FY 2014 and subsequent
fiscal years by section 1886(m)(5)(A)(i)
of the Act, applies a 2.0 percentage
point reduction to any update under
§ 412.523(c)(3) for an LTCH that does
not submit quality reporting data to the
Secretary in accordance with section
1886(m)(5)(C) of the Act with respect to
such a year (that is, in the form and
manner and at the time specified by the
Secretary under the LTCH QRP)
(§ 412.523(c)(4)(i)). Section
1886(m)(5)(A)(ii) of the Act provides
that the application of the 2.0
percentage points reduction may result
in an annual update that is less than 0.0
for a year, and may result in LTCH PPS
payment rates for a year being less than
such LTCH PPS payment rates for the
preceding year (§ 412.523(c)(4)(iii)).
Furthermore, section 1886(m)(5)(B) of
the Act specifies that the 2.0 percentage
points reduction is applied in a
noncumulative manner, such that any
reduction made under section
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38311
1886(m)(5)(A) of the Act shall apply
only with respect to the year involved,
and shall not be taken into account in
computing the LTCH PPS payment
amount for a subsequent year
(§ 412.523(c)(4)(ii)).
d. Annual Update Under the LTCH PPS
for FY 2018
Consistent with the amendments to
section 1886(m)(3)(C) of the Act
provided by section 411 of the MACRA,
as we proposed in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 20021),
we are making an update to the LTCH
PPS standard Federal payment rate of 1
percent for FY 2018.
For FY 2018, section 1886(m)(5) of the
Act requires that, for LTCHs that do not
submit quality reporting data as
required under the LTCH QRP, any
annual update to an LTCH PPS standard
Federal payment rate, after application
of the adjustments required by section
1886(m)(3) of the Act, shall be further
reduced by 2.0 percentage points. For
LTCHs that fail to submit quality
reporting data under the LTCH QRP,
under § 412.523(c)(3)(xiv) in
conjunction with § 412.523(c)(4), as we
proposed, we are further reducing the
annual update to the LTCH PPS
standard Federal payment rate by 2.0
percentage points in accordance with
section 1886(m)(5) of the Act. As such,
the update to the LTCH PPS standard
Federal payment rate for FY 2018 for
LTCHs that fail to submit quality
reporting data under the LTCH QRP is
the 1-percent annual rate increase for
FY 2018 reduced by 2.0 percentage
points. For this final rule, we are
establishing an annual update to the
LTCH PPS standard Federal payment
rate of ¥1 percent (that is, 1 percent
minus 2.0 percentage points) for FY
2018 for LTCHs that fail to submit
quality reporting data as required under
the LTCH QRP. As provided in
§ 412.523(c)(4)(iii) and as noted above,
the application of the 2.0 percentage
points reduction may result in an
annual update that is less than 0.0 for
a year, and may result in LTCH PPS
payment rates for a year being less than
such LTCH PPS payment rates for the
preceding year. (We note that,
consistent with historical practice, in
determining the FY 2018 LTCH PPS
standard Federal payment rate, we are
also applying an area wage level budget
neutrality factor in accordance with
§ 412.523(d)(4) (as discussed in section
V.B. of the Addendum to this final rule)
and a budget neutrality adjustment
stemming from our change to the SSO
payment methodology (as discussed in
VIII.D. of the preamble of this final
rule).
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Absent the special provisions for FY
2018 required by section 1886(m)(3)(C)
of the Act, we note the annual market
basket update would have been based
on the FY 2018 full market basket
increase of 2.7 percent (based on IGI’s
second quarter 2017 forecast of the
2013-based LTCH market basket)
reduced by the FY 2018 MFP
adjustment of 0.6 percentage point (also
based on IGI’s second quarter 2017
forecast). Following application of the
productivity adjustment, the adjusted
market basket update of 2.1 percent (2.7
percent minus 0.6 percentage point)
would have then been further reduced
by 0.75 percentage point, as required by
sections 1886(m)(3)(A)(ii) and
1886(m)(4)(F) of the Act. This would
have resulted in an annual market
basket update under to the LTCH PPS
standard Federal payment rate for FY
2018 of 1.35 percent (that is, 2.7
percent, less the MFP adjustment of 0.6
percentage point, and less the 0.75
percentage point required under section
1886(m)(4)(F) of the Act). (For
additional information on the
application of the MFP adjustment and
‘‘other adjustment’’ in developing the
annual market based update under our
historical approach, refer to the FY 2017
IPPS/LTCH PPS final rule (81 FR 57296
through 57310).)
D. Changes to the Short-Stay Outlier
Adjustment Policy (§ 412.529)
In the FY 2003 LTCH PPS final rule
(67 FR 55954) that implemented the
LTCH PPS, under § 412.529, we
established a special payment policy for
short-stay outlier (SSO) cases; that is,
cases with a covered length of stay that
is less than or equal to five-sixths of the
geometric average length of stay for each
LTC–DRG. When we established the
SSO policy, we explained that a shortstay outlier case may occur when a
beneficiary receives less than the full
course of treatment at the LTCH before
being discharged (67 FR 55995). Also, in
the FY 2003 LTCH PPS final rule, we
stated that when we first described the
policy in the proposed rule, we based
the proposed policy on the belief that
many of these patients could have been
treated more appropriately in an acute
hospital subject to the acute care
hospital inpatient prospective payment
system (67 FR 55995).
Therefore, under the LTCH PPS, we
implemented a special payment
adjustment for SSO cases. Under the
original SSO policy, for LTCH PPS
discharges with a covered length of stay
of up to and including five-sixths of the
geometric average length of stay for the
LTC–DRG, we adjusted the per
discharge payment amount under the
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LTCH PPS as the least of 120 percent of
the estimated cost of the case, 120
percent of the LTC–DRG specific per
diem amount multiplied by the covered
length of stay of that discharge, or the
full LTC–DRG payment amount (67 FR
55995 through 56000).
As noted previously, generally LTCHs
are defined by statute as having an
average length of stay of greater than 25
days. In the FY 2003 LTCH PPS final
rule, we stated that we believed that the
SSO payment adjustment results in
more appropriate payments because
these SSO cases most likely did not
receive a full course of treatment at a
LTCH level in such a short period of
time, and the full LTC–DRG payment
would generally not be appropriate.
Payment-to-cost ratio analyses at that
time indicated that if LTCHs received a
full LTC–DRG payment for those cases,
they would have been significantly
‘‘overpaid’’ for the resources they
actually expended in treating those
patients (67 FR 55995 through 56000).
Furthermore, in establishing the SSO
policy, we stated that we believed that
providing a reduced payment for SSO
cases would discourage hospitals from
admitting these patients. We also
believed that the policy did not severely
penalize providers that, in good faith,
had admitted a patient and provided
some services before realizing that the
beneficiary could receive more
appropriate treatment at another site of
care. As we further explained in the FY
2003 LTCH PPS final rule, establishing
a SSO payment adjustment for these
types of cases addresses the incentives
inherent in a discharge-based PPS for
LTCHs for treating patients with a short
length of stay (67 FR 55995 through
56000). We have made several changes
to our SSO policy since it was first
introduced.
For a full discussion of those historic
changes, we refer readers to the RY 2008
LTCH PPS final rule (72 FR 26904
through 26919).
During our FY 2016 and FY 2017
IPPS/LTCH PPS rulemaking cycles, we
received public comments that we
determined were outside the scope of
the FY 2016 and FY 2017 proposed
rules that expressed concern with our
existing SSO policy. Commenters stated
that our SSO payment adjustment
appears to result in an incentive to
improperly hold patients beyond the
SSO threshold (five-sixths the geometric
average length of stay for the MS–LTC–
DRG). Specifically, as SSO cases are
paid the ‘‘lesser of’’ various payment
options, while non-SSO cases are paid
the full MS–LTC–DRG payment, there is
an economic incentive to hold a patient
beyond the SSO threshold in order to
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increase (and in some cases
dramatically increase) the LTCH PPS
payment for that case. In its comment in
response to the FY 2016 IPPS/LTCH
PPS proposed rule, MedPAC stated that
its analysis of LTCH discharge patterns
have shown that LTCHs respond to that
incentive. Analyses of lengths-of-stay by
MS–LTC–DRG have consistently shown
that the frequency of discharges rises
sharply immediately after the SSO
threshold is met.
This pattern holds true across MS–
LTC–DRGs and for every category of
LTCHs. We believe that these analyses
strongly suggest that LTCHs’ discharge
decisions are influenced at least as
much by this financial incentive as by
clinical considerations. Our own
analysis of LTCH claims data showed
similar findings.
In light of these concerns, in the FY
2018 IPPS/LTCH PPS proposed rule (82
FR 20023), we proposed to address this
financial incentive and discourage such
delay in the discharge of LTCH patients
by proposing to revise our SSO policy.
We note that, under the dual rate LTCH
PPS payment structure, our existing
SSO policy only applies to the LTCH
PPS standard Federal payment rate.
Accordingly, as explained in the
proposed rule, the proposed changes to
our SSO policy would only apply to
LTCH PPS standard Federal payment
rate cases (or, for cost reporting periods
beginning before October 1, 2017, the
LTCH PPS standard Federal payment
rate portion of the blended rate payment
under § 412.522(c)(3)(ii)).
Under our proposed policy, the SSO
definition remained unchanged, but the
current payment adjustment options
would be replaced with a single
graduated per diem payment adjustment
calculated using a blended payment rate
that, as the length of stay increases,
consists of a decreasing portion of the
payment amount paid at the IPPS per
diem amount (referred to as the ‘‘IPPS
comparable amount’’) and an increasing
portion paid at 120 percent of the MS–
LTC–DRG per diem payment amount
(referred to as the ‘‘LTCH PPS per diem
amount’’), with a maximum payment
amount set at the full LTCH PPS
standard Federal payment rate.
Specifically, beginning with discharges
occurring on or after October 1, 2017,
we proposed to pay SSO cases solely on
the ‘‘blended’’ option in the current SSO
payment adjustment formula described
at § 412.529(c)(2)(iv); that is, a SSO case
would be paid based on a blend of the
IPPS comparable amount (determined
under § 412.529(d)(4)(i)) and the MS–
LTC–DRG per diem amount (determined
under § 412.529(d)(1) in conjunction
with § 412.503).
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Under this blended payment method
at existing § 412.529(c)(2)(iv), as the
length of stay of a SSO case increases,
the percentage of the per diem payment
amounts based on the full MS–LTC–
DRG standard Federal payment rate
would increase, and the percentage of
the payment based on the IPPS
comparable amount would decrease.
This blended per diem payment rate
adjustment would result in paying
LTCH cases with a very short length of
stay more like an IPPS case, and LTCH
cases with relatively longer lengths-ofstay more like a non-short-stay LTCH
PPS standard Federal payment rate case.
Therefore, as the length of stay of as
SSO case increases, the treatment
resources and costs associated with the
stay are more comparable with typical
LTCH PPS standard Federal payment
rate payments and less comparable to
payments for the same stay at an acute
care hospital under the IPPS.
We stated in the proposed rule that,
if adopted, this policy would result in
payment amounts becoming more
commensurate with the LTCH PPS
standard Federal payment rate as the
case begins to resemble a more
characteristic LTCH PPS standard
Federal payment rate case. We stated
that we believe that, by paying SSO
cases on this basis, we would reduce, if
not eliminate, the payment ‘‘cliffs’’ (or
payment differentials) inherent in our
current payment methodology, as well
as the financial incentives that appear to
have resulted in potentially improper
delays in patient discharges other than
solely for medical reasons. In addition,
we stated that we believe that the per
diem ‘‘blended’’ approach would
provide an appropriate balance between
the 1-day marginal payment and the 1day marginal incurred cost.
Under this proposal, we proposed to
codify the change to the SSO policy
described above by revising § 412.529 of
the regulation. Specifically, we
proposed to add paragraph (c)(4) to
provide that, for discharges occurring on
or after October 1, 2017, SSO cases will
be paid according to the blended
payment option at existing
§ 412.529(c)(2)(iv) and corresponding
changes to § 412.529(c)(3) by sunsetting
the previous SSO payment formula as of
October 1, 2017.
Comment: Commenters supported the
proposal to revise the SSO policy. Many
commenters requested clarification on
the interaction between the proposal
and the so-called ‘‘very short stay
outlier’’ policy at § 412.529(c)(3)(ii).
Response: We appreciate the
commenters’ support. In response to
those seeking clarification, we note that
our proposed changes to the SSO policy
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would apply to all short-stay cases,
including those cases currently paid
under § 412.529(c)(3)(ii) (that is, the
‘‘very short stay outlier’’ policy).
Because the proposed blended payment
method pays cases with relatively short
stays more like IPPS cases, we believe
this single payment option provides
appropriate payments for those SSO
cases that most likely did not receive a
full course of treatment at an LTCH.
Moreover, as stated above, in the
proposed rule, we proposed to sunset
the existing SSO payment formula at
§ 412.529(c)(3), effective October 1,
2017. Because the ‘‘very short stay
outlier’’ payment is paragraph (ii) of
§ 412.529(c)(3), our proposal would
eliminate that payment option, while
our proposed addition of § 412.529(c)(4)
provides for an adjustment to all SSO
cases under a single payment formula.
After consideration of the public
comments we received, we are adopting
our proposed changes to § 412.529 as
final without modification. Specifically,
we are finalizing our proposal to add
paragraph (c)(4) to provide that, for
discharges occurring on or after October
1, 2017, SSO cases will be paid
according to the blended payment
option at existing § 412.529(c)(2)(iv) and
finalizing our proposal to make
corresponding changes to
§ 412.529(c)(3) by sunsetting the
previous SSO payment formula as of
October 1, 2017.
The goal of revising the SSO policy is
to remove the incentive to delay patient
discharges for payment reasons. As
explained in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 20023), in
assessing the potential impact of this
proposed policy change, we found two
different impacts on Medicare LTCH
spending: One would increase spending
while the other would decrease
spending.
First, as we stated in the proposed
rule, we expect this SSO payment
adjustment methodology would result
in increased payments to SSO cases.
Based on data and FY 2018 payment
estimates used for the proposed rule, we
estimate that, under this SSO payment
adjustment, Medicare payments to SSO
cases will increase approximately 30
percent, or approximately $145 million
(without taking into account any
assumptions on changes to LTCHs’
discharge practices). These increased
payments for SSO cases will produce a
somewhat substantial increase in
aggregate Medicare spending for LTCH
PPS standard Federal payment rate
cases (that is, an approximate 4.6percent increase to current projected
LTCH PPS standard Federal payment
rate case payments).
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At the same time, without the
economic incentive to delay discharge
until the SSO threshold is met, under
our proposal, we stated that we expect
LTCHs would discharge some patients
sooner, even while the length of stay of
the patient is still within the SSO
period. Therefore, in the absence of this
policy, these cases would not have
previously been SSO cases. We stated
our belief that this policy would result
in some reduction in Medicare spending
due to an expected decrease in Medicare
payments for LTCH PPS standard
Federal payment rate cases that, under
the current SSO policy, were not
receiving the SSO payment adjustment
(because discharges were delayed until
the SSO threshold was met).
However, as also discussed in the
proposed rule, while we expect this
behavior change by LTCHs will reduce
Medicare expenditures, we do not
believe that the decrease in
expenditures from fewer delayed
discharge cases will offset the estimated
increase in expenditures under the
proposed SSO payment adjustment
methodology. As such, we projected
that the proposed change to the
payment formula for SSOs would result
in a net increase in aggregate Medicare
LTCH payments compared to aggregate
Medicare payments under the current
methodology.
As we stated in the proposed rule, the
goal of the proposed policy is to remove
the incentive to delay patient discharges
for payment reasons, not to increase
aggregate Medicare LTCH PPS
payments. Therefore, we believed the
appropriate policy approach was to
propose to implement this change to the
SSO payment methodology on a budget
neutral basis; that is, to implement the
SSO payment adjustment methodology
by adjusting the LTCH PPS standard
Federal payment rate so that our
projection of aggregate FY 2018
payments for LTCH PPS standard
Federal payment rate cases made under
this SSO payment adjustment
methodology would be equal to our
projection of aggregate FY 2018
payments paid for LTCH PPS standard
Federal payment rate cases under our
existing SSO payment adjustment
methodology.
We further note that, based on most
recent claims data, we believe the
effects of a budget neutral approach
would primarily occur within each
LTCH and, therefore, result in minimal
redistribution between different LTCHs.
Specifically, FY 2015 claims data show
that nearly all LTCHs treated at least
one SSO case, and those that did not
treat any SSO cases, on average, had
very few LTCH PPS standard Federal
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payment rate cases. In addition, for over
90 percent of all LTCHs, at least 20
percent of their LTCH PPS standard
Federal payment rate cases were SSO
cases. Therefore, in the proposed rule,
we stated that we expect that, for most
LTCHs, the increase in payments for
their SSO cases under this proposed
change to the SSO payment
methodology would generally offset any
SSO budget neutrality-related decrease
in payment to their non-SSO LTCH PPS
standard Federal payment rate cases.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20023), we
proposed to implement the proposed
change to the SSO payment
methodology by using a budget
neutrality adjustment to offset the
projected net increase in Medicare
spending while accounting for both the
estimated decrease in Medicare
payments resulting from LTCHs no
longer holding patients until the SSO
threshold is met and the larger
estimated increase in spending to SSO
cases described earlier. We stated that
we believe our proposal to incorporate
a projection of the expected decrease in
spending resulting from a behavior
change to not hold patients beyond the
SSO threshold appropriately reflects the
net impact of the proposed change.
Further, this lessens the impact of any
budget neutrality adjustment estimated
without accounting for these expected
behavioral changes—in other words, if
the budget neutrality adjustment only
adjusted for the increased payments to
SSO cases.
To do so, we proposed to amend
§ 412.523(d) by adding a new paragraph
(5), which would specify that the LTCH
PPS standard Federal payment rate will
be adjusted by a one-time, permanent
factor that accounts for the projected
change in estimated aggregate payments
to LTCH PPS standard Federal payment
rate cases in FY 2018 due to the change
in the payment methodology for SSO
cases described at § 412.529(c)(4). (As
noted earlier, this budget neutrality
adjustment would only affect the LTCH
PPS standard Federal payment rate.)
This factor would ensure that the
proposed change to the SSO payment
methodology in FY 2018 does not affect
aggregate LTCH PPS payments; that is,
this proposed policy change is budget
neutral. Specifically, in the proposed
rule, we set out a proposed methodology
to determine the budget neutrality factor
that would be applied to the FY 2018
LTCH PPS standard Federal payment
rate using the 2016 LTCH standard
Federal payment rate payment cases
used for the proposed rule. These
estimates were based upon the most
recently available data (the December
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2016 update of the FY 2016 MedPAR
file), and consistent with historical
practice, if more recent data become
available, we proposed to use such data
for the final rule.
Comment: A few commenters,
including MedPAC, supported the
proposal to implement changes to the
SSO payment adjustment by including a
budget neutrality factor to the FY 2018
LTCH PPS standard Federal payment
rate. Several other commenters urged
CMS to implement these changes
without a budget neutrality adjustment
in light of various other changes to
Medicare payment policies relating to
LTCHs, such as the decrease in
payments to site neutral payment rate
cases resulting from the end of the
blended payment rate provided under
the statute. Many commenters objected
to making the proposed changes to the
SSO payment methodology (which, if
finalized, would increase payments)
budget neutral on the grounds that
previous revisions to the SSO payment
adjustment resulted in a net decrease in
aggregate LTCH PPS payments and were
not made budget neutral. Other
commenters urged CMS to apply this
factor in FY 2018 but not make it
permanent. Commenters generally
supported the proposal to include
behavioral impact estimates in
determining the budget neutral factor.
However, some commenters
addressed the actuarial assumptions
used in the proposal, which we discuss
in greater detail below.
Response: We thank MedPAC and
other commenters for their support of
our proposal. In regard to those
comments urging us to implement these
changes without the budget neutral
adjustment or only a temporary budget
neutral adjustment, as we stated earlier
and in the proposed rule, the goal of the
proposed policy is to remove the
incentive to delay patient discharges for
payment reasons, not to increase
aggregate Medicare LTCH PPS
payments. While commenters are
correct that previous changes to the SSO
policy were not budget neutral, the
proposed change to the SSO policy is
being made for considerably different
policy reasons than previous ones. In
the past, we made changes to the SSO
policy to ensure that LTCHs were paid
appropriately for cases that were
notably shorter than average. The
proposed change in the SSO policy in
the FY 2018 proposed rule was
developed in response to LTCHs’
apparent inappropriate behavior in
delaying discharge in order to maximize
Medicare payment. We see no reason
why addressing the financial incentive
for such behavior should result in
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increased payments to LTCHs.
Therefore, we believe that it is wholly
appropriate to make this change in a
budget neutral manner. We further note
that, under our proposed budget
neutrality adjustment, the
redistributional effects occur largely
within individual LTCHs. As such,
while individual hospitals will
experience a difference in payment for
individual discharges, they will not
typically experience an overall
reduction in aggregate payments for all
of the LTCH’s discharges due to this
budget neutral change to the SSO
policy. A temporary budget neutral
adjustment would only maintain the
level of aggregate payments for the
period the budget neutrality adjustment
is applied, thereby merely delaying the
increase aggregate Medicare LTCH PPS
payments until that adjustment is
removed. Lastly, the purpose of the
budget neutrality adjustment is not
related to the statutory change in
payments under the application of the
site neutral payment rate and, therefore,
does not provide sufficient explanation
for implementing the proposed changes
to the SSO policy without a budget
neutrality adjustment.
After consideration of the public
comments we received, we are
finalizing our proposal, without
modifications, to amend § 412.523(d) by
adding a new paragraph (5), which will
specify that the LTCH PPS standard
Federal payment rate will be adjusted
by a one-time, permanent factor that
accounts for the projected change in
estimated aggregate payments to LTCH
PPS standard Federal payment rate
cases in FY 2018 due to the change in
the payment methodology for SSO cases
described at § 412.529(c)(4). Moreover,
we are finalizing our proposal to
include behavioral impact estimates in
determining the budget neutral factor.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20023 through
20026), we proposed to use a 3-step
methodology (which contained
substeps) to determine the budget
neutrality factor that would be applied
to the FY 2018 LTCH PPS standard
Federal payment rate. The steps in our
proposed methodology are summarized
below.
Step 1—Simulate estimated aggregate
FY 2018 LTCH PPS standard Federal
payment rate payments using the
existing SSO payment methodology at
§ 412.529(c)(3).
Step 2—Simulate estimated aggregate
FY 2018 LTCH PPS standard Federal
payment rate payments using the
proposed SSO payment methodology at
proposed § 412.529(c)(4), after
accounting for expected changes in
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LTCHs’ discharge behavior, which is
determined as follows in Step 2a
through Step 2d.
Step 2a—Simulate estimated
aggregate FY 2018 LTCH PPS standard
Federal payment rate payments under
the proposed SSO payment
methodology without accounting for
expected changes in LTCHs’ discharge
behavior.
Step 2b—Determine the estimated
amount of aggregate FY 2018 LTCH PPS
standard Federal payment rate
payments that would reflect the
projected decrease in non-SSO cases
under the changes to the SSO policy.
Step 2c—Determine the estimated
amount of aggregate FY 2018 LTCH PPS
standard Federal payment rate
payments that reflect the projected
increase in SSO cases under the
proposed changes to the SSO policy.
Step 2d—Adjust the original
estimated unadjusted FY 2018 payments
under the proposed SSO payment
methodology (from Step 2a) to account
for the projected decrease in non-SSO
cases under the proposed changes to the
SSO policy (by subtracting the amount
determined in Step 2b) and for the
projected increase in SSO cases under
the proposed changes to the SSO policy
(by adding the amount estimated in Step
2c).
Step 3—Calculate the ratio of the
estimated aggregate FY 2018 LTCH PPS
standard Federal payment rate
payments under the existing and
proposed SSO policies to determine the
adjustment factor that would need to be
applied to the proposed FY 2018 LTCH
PPS standard Federal payment rate to
achieve budget neutrality (that is, where
the estimated aggregate payments
calculated in Step 2 are estimated to be
equal to the estimated aggregate
payments calculated in Step 1). A
discussion and supporting details for
the assumptions for expected changes in
LTCHs’ discharge behavior used in Step
2 are provided below. (A complete
discussion of our proposed budget
neutrality methodology, which we are
finalizing without modification as
discussed more fully below, can be
found in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20023 through
20026).)
Specifically, in the proposed rule (82
FR 20024 through 20025), we discussed
the actuarial assumptions for shifts in
cases used under Steps 2b and 2c in our
proposed methodology for determining
the budget neutrality factor or the
proposed changes to the SSO payment
methodology. As explained in the
proposed rule, our actuarial
assumptions for LTCHs’ discharge
behavior under our proposed SSO
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policy were estimated based on a
comparative analysis of distributions of
LTCH discharges relative to the SSO
thresholds in FY 2003 and FY 2015
using data from FY 2002 (the year before
the LTCH PPS was implemented and
the final year prior to a SSO payment
adjustment) to LTCH discharges in FY
2015 (the most recent complete year of
data available at the time the
comparative analysis was performed in
preparation for the proposed rule). (We
note that, for FY 2002, because there
was no applicable SSO threshold, we
used the SSO thresholds from FY 2003
(LTC–DRG Version 23) based on the
billed LTC–DRG (LTC–DRG Version 22)
on the FY 2002 claim.)
The FY 2002 distribution shows a
nearly continuous distribution of LTCH
discharges relative to what would
become the SSO threshold in FY 2003,
and approximate symmetry before and
after the SSO threshold. In other words,
for FY 2002, the distribution of
discharges just after what would become
the FY 2003 threshold looks similar to
the distribution of discharges just before
that threshold, and there is a
corresponding similarity between
discharges well after and well before
what would become the SSO threshold.
While the FY 2015 distribution of
LTCH discharges relative to the SSO
threshold shows the same symmetry
among discharges well before and well
after the threshold, there are
significantly fewer discharges just
before the SSO threshold and
significantly more discharges just after
the SSO threshold (instead of a
symmetry among discharges just before
and just after the SSO threshold). For
FY 2015, this lack of symmetry is
concentrated in the 3 days leading up to
the SSO threshold. (We note that, in our
analysis of LTCH discharge patterns
relative to the applicable SSO threshold,
we found similar patterns for FYs 2003
through 2014 as those observed for FY
2015, as well as for FY 2016 LTCH
discharges.)
In particular, the FY 2015 LTCH
discharges have, as a proportion of total
FY 2015 LTCH discharges,
approximately 20 percent more
discharges occurring just after the SSO
threshold when compared to FY 2002
discharges. However, due to other
substantial changes in Medicare
payments to LTCHs, including the
introduction of the LTCH PPS in FY
2003, we stated that we do not believe
the entire 20-percent shift in discharges
is attributable to only the introduction
and subsequent revisions to the LTCH
PPS SSO payment adjustment.
Moreover, this shift is not uniform
across all SSO discharges because the
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majority of shifting past the SSO
threshold occurs within 3 days of the
SSO threshold. Based on this, we stated
that our actuaries estimate that the
elimination of the payment cliff would
result in a 10-percent reduction in nonSSO cases, so that SSO cases increase at
the same level as the projected decrease
in non-SSO cases. For these non-SSO
cases that shift, we stated that our
actuaries estimate the discharges to
occur within 3 days prior to the SSO
threshold based on the analysis of LTCH
discharge patterns relative to the
applicable SSO threshold described
earlier.
Comment: Several commenters
advocated for a smaller budget
neutrality reduction, with many
commenters urging CMS to reconsider
the actuarial assumptions used to arrive
at the 10 percent behavioral shift as they
believed this shift should be higher. A
few commenters considered CMS’ 10
percent behavioral shift to be arbitrary,
and some commenters urged CMS to
consider 15 percent to 20 percent or
higher. Among those urging CMS to
consider 15 percent to 20 percent, a few
commenters pointed to a working
paper 98 that they believed supports a
15-percent behavioral shift, while other
commenters referred to analysis by KNG
Health Consulting on behalf of the
National Association of Long Term
Hospitals (NALTH) that shows LTCHs
can shift 20 percent or more of non-SSO
cases to below the SSO threshold and
still meet the greater than 25-day
average length of stay requirement.
Other commenters, based on
comparisons of historic LTCH discharge
rates, suggested that CMS consider
LTCH cases discharged within 6 days of
the threshold, thereby increasing the
expected shift beyond the 10 percent
estimated by our actuaries. One
commenter stated that its internal
modeling suggested the budget
neutrality adjustment should be 2.7
percent instead of the approximately 3.3
percent reduction in the proposed rule.
Response: We reviewed all the
supporting material and studies
submitted or referenced by commenters.
We note that we do not have sufficient
information to evaluate the individual
commenter’s claim that the budget
neutrality adjustment should be 2.7
percent. However, we note that an
adjustment of this magnitude is in line
with what we estimate the budget
neutrality adjustment would be under
our proposed methodology if we were to
98 Paul J. Eliason, et al. Strategic Patient
Discharge: The Case of Long-Term Care Hospitals.
National Bureau of Economic Research. NBER
Working Paper 22958. Available at: https://
www.nber.org/papers/w22598.pdf.
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use an assumption of a behavioral shift
in the 15 to 20 percent range as
suggested by other commenters.
As stated in the proposed rule and
earlier in this final rule, while we
observed a shift of 20 percent in nonSSO cases from FY 2002 to FY 2015, the
introduction of various payment
policies in the intervening years does
not support attributing the full 20
percent to the SSO payment policy
alone, and thus, our actuarial
assumption of 10 percent is based upon
consideration of the impact such
changes have had over the years.
Similarly, we do not believe it is
appropriate to further extend our
analysis based on a 3-day window to a
6-day window because we do not have
any rationale or evidence to attribute the
FY 2002 to FY 2015 change in
discharges 6 days past the threshold to
the SSO policy. In this case,
particularly, we do not believe cases
more than 3 days past the threshold
represent a response to financial
incentives because each day past the
threshold a patient remains in the LTCH
represents a negative response to these
financial incentives: each day a patient
is held beyond the threshold increases
the provider’s costs without the
opportunity to increase the full MS–
LTC–DRG payment. In other words,
there are diminishing returns the longer
a discharge is delayed for financial
reasons.
After consideration of the public
comments and supporting documents
we received, we believe the available
data and supporting studies are
consistent with our actuarial
assumption of a 10-percent behavioral
shift. As noted by commenters, the KNG
Health Consulting study only shows
that increasing the shift to 20 percent is
feasible in light of the greater than 25
average length of stay requirement for
LTCHs. In other words, this finding
establishes a ceiling for the behavioral
shift, but it does not establish a lower
bound nor does it point to an
appropriate or expected shift resulting
from the proposed changes to the SSO
policy. Therefore, this analysis is
consistent with a shift of up to 20
percent, which includes our actuarial
assumption of a 10-percent shift.
While commenters pointed to the
working paper as evidence for
increasing our assumption of the shift in
LTCH cases to 15 percent, we note the
working paper is not addressing the
same issue. The study examines the
influence of financial incentives on
LTCHs’ discharges in order to compare
the effectiveness various SSO payment
policies have on this incentive by
building a model incorporating financial
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incentives of a selected category of
LTCH discharges. Specifically, as noted
in the paper, the study assesses the
impact of various SSO payment policies
on nine selected MS–LTC–DRGs (177,
189, 190, 193, 207, 539, 592, 871, and
949) and among these DRGs, only those
LTCH patients discharged to home or a
nursing facility as ‘‘these are the
discharges for which hospitals have the
most discretion.’’ (Paul J. Eliason, et al.,
p. 18.) The 15 percent cited by
commenters represents the proportion
of change in modeled non-SSO
discharges, limited to these select cases,
from our current SSO payment policy
(their baseline) to a per diem SSO
payment policy among these selected
cases. As noted above, the paper
presumes their selected category of
cases are the LTCH cases most likely to
be held, and thus, much like the average
length of stay analysis discussed above,
the 15 percent cited by commenters, as
with the analysis by KNG Health
Consulting, represents a ceiling on the
behavioral shift and is not inconsistent
with our actuarial assumption of 10
percent, which is representative of all
MS–LTC–DRGs and cases.
After consideration of the public
comments we received, for the reasons
presented above, we are finalizing our
proposed methodology for computing
the budget neutrality factor, including
the 10 percent actuarial assumption in
steps 2b and 2c, without modification.
Based on the claims data used for the
proposed rule, we estimated that our
proposed change to the SSO payment
methodology would result in an
increase in payments of approximately
$102 million (that is, the $3.177 billion
as calculated in Step 1 in the proposed
rule minus the $3.279 billion as
calculated in Step 2 in the proposed
rule) which reflected the approximate
$43 million decrease that accounts for
our actuarial assumptions for expected
changes in LTCHs’ discharge behavior
under the proposed changes to the SSO
policy. For the proposed rule, using the
steps in the proposed methodology, we
then determined a proposed budget
neutrality factor for the proposed
change to the SSO payment
methodology of 0.9672. Accordingly, in
section V.A. of the Addendum to the
proposed rule, to determine the
proposed FY 2018 LTCH PPS standard
Federal payment rate, we proposed to
apply a one-time, permanent budget
neutrality factor of 0.9672 for the
proposed change in the SSO payment
methodology (82 FR 20025 through
20026).
For this final rule, as we proposed, we
are using the most recent available data
(that is, FY 2016 LTCH standard Federal
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payment rate payment cases from the
March 2017 update of the FY 2016
MedPAR file) to determine the budget
neutrality factor applied to the FY 2018
LTCH PPS standard Federal payment
rate to ensure that the change to the SSO
payment methodology in FY 2018 does
not affect aggregate LTCH PPS
payments. Based upon the most recent
data, and discussed in greater detail
below, we are applying a one-time,
permanent budget neutrality factor of
0.9651 under new § 412.523(d)(5) for the
change in the SSO payment
methodology at new § 412.529(c)(4).
Specifically, the methodology
summarized above and outlined in the
proposed rule (82 FR 20025 through
20026) applied to the best available data
used for this final rule yields the
following results. We estimate that our
change to the SSO payment
methodology results in an increase in
payments of approximately $112
million (that is, the $3.204 billion as
calculated in Step 1 using data for this
final rule minus the $3.316 billion as
calculated in Step 2 using data for this
final rule) which reflects the
approximate $40 million decrease that
accounts for our actuarial assumptions
for expected changes in LTCHs’
discharge behavior under the changes to
the SSO policy. Therefore, for this final
rule, using the steps in the methodology
outlined in the proposed rule and using
the most recently updated data, we have
determined a budget neutrality factor for
the change to the SSO payment
methodology of 0.9651. Accordingly, in
section V.A. of the Addendum to this
final rule, to determine the FY 2018
LTCH PPS standard Federal payment
rate, we are finalizing the application of
a one-time, permanent budget neutrality
factor of 0.9651 for the change in the
SSO payment methodology.
E. Temporary Exception to the Site
Neutral Payment Rate for Certain Spinal
Cord Specialty Hospitals
Section 15009 of Public Law 114–255
added new subparagraph (F) to section
1886(m)(6) of the Act, which provides
for a temporary exception to the site
neutral payment rate for certain spinal
cord specialty hospitals. Under this
provision, discharges occurring in cost
reporting periods beginning during FY
2018 and FY 2019 for LTCHs that meet
the specified statutory criteria are
excepted from the site neutral payment
rate (that is, all discharges from such
LTCHs during this period would be paid
at the LTCH PPS standard Federal
payment rate). Clauses (i) through (iii) of
section 1886(m)(6)(F) of the Act state
that, in order for an LTCH to qualify for
this temporary exception, the LTCH
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must: (1) Have been a not-for-profit
LTCH on June 1, 2014, as determined by
cost report data; (2) of the discharges in
calendar year 2013 from the LTCH for
which payment was made under the
LTCH PPS, at least 50 percent were
classified under MS–LTC–DRGs 28, 29,
52, 57, 551, 573, and 963; and (3) have
discharged inpatients (including both
individuals entitled to, or enrolled for,
Medicare Part A benefits and
individuals not so entitled or enrolled)
during FY 2014 who had been admitted
from at least 20 of the 50 States,
determined by the States of residency of
such inpatients and based on such data
submitted by the hospital to the
Secretary as the Secretary may require.
The statute further provides authority
for the Secretary to implement the third
criterion (set forth at section
1886(m)(6)(F)(iii) of the Act and referred
to as the ‘‘significant out-of-state
admissions criterion’’) by program
instruction or otherwise, and exempts
the policy initiatives from any
information collection requirements
under the Paperwork Reduction Act
(Chapter 35 of Title 44 of the United
States Code). Given this express
authority, as we stated in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
20026), we plan to provide further
details regarding the implementation of
the significant out-of-state admissions
criterion through subregulatory
guidance. However, in the proposed
rule, we proposed to codify the
requirements of the temporary
exception to the site neutral payment
rate for certain spinal cord specialty
hospitals specified under section
1886(m)(6)(F) of the Act, as added by
section 15009 of Public Law 114–255.
Specifically, we proposed to codify the
requirements of this provision at new
§ 412.522(b)(4), by providing for an
exception from the site neutral payment
rate for discharges occurring in cost
reporting periods beginning during FYs
2018 and 2019 for LTCHs that meet the
specified statutory criteria.
We sought public comments on this
proposal. Based on information
currently available, we believe that two
hospitals may qualify for this exception.
Comment: Several commenters
supported CMS’ proposals to implement
section 15009 of the 21st Century Cures
Act.
Response: We thank these
commenters for their support.
After consideration of the public
comments we received, we are
finalizing our proposals without
modification.
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F. Temporary Exception to the Site
Neutral Payment Rate for Certain
Discharges With Severe Wounds From
Certain LTCHs
Section 15010 of Public Law 114–255
added a new subparagraph (G) to
section 1886(m)(6) of the Act, which
creates a temporary exception to the site
neutral payment rate for certain severe
wound discharges from certain LTCHs
during such LTCHs’ cost reporting
periods beginning during FY 2018 (that
is, for cost reporting period beginning
on or after October 1, 2017 and on or
before September 30, 2018). Under the
provisions of section 15010 of Public
Law 114–255, in order for an LTCH’s
discharge to be excluded from the site
neutral payment rate under this
exception during its FY 2018 cost
reporting period, the discharge must be:
(1) From an LTCH ‘‘identified by the last
sentence of subsection (d)(1)(B)’’ of the
Act; (2) classified under MS–LTC–DRG
602, 603, 539, or 540; and (3) with
respect to an individual treated by an
LTCH, for a severe wound. The statute
defines a ‘‘severe wound,’’ for the
purposes of the exception, as ‘‘a wound
which is a stage 3 wound, stage 4
wound, unstageable wound, nonhealing surgical wound, or fistula as
identified in the claim from the longterm care hospital.’’ The statute further
defines a ‘‘wound’’ as ‘‘an injury
involving division of tissue or rupture of
the integument or mucous membrane
with exposure to the external
environment.’’
Much of this language is identical or
substantially similar to the language for
the previous temporary exception for
discharges for the treatment of severe
wounds provided for under the
amendments made by section 231 of the
Consolidated Appropriations Act, 2016
(Pub. L. 114–113), except for three key
differences. First, the previous
temporary exception for severe wound
discharges applied to LTCHs that are
grandfathered hospitals-withinhospitals (HwHs) (that is, hospitals that
are described under § 412.23(e)(2)(i) that
meet the criteria of § 412.22(f)) and are
located in a rural area or treated as rural
(§ 412.522(b)(2)(ii)(B)), while the new
temporary exception for severe wound
discharges only requires that LTCHs are
grandfathered HwHs (and does not
require the LTCH to also be located in
a rural area or treated as rural). Second,
under this new temporary exception for
severe wound discharges, the definition
of a ‘‘severe wound’’ includes only five
of the eight categories (stage 3 wound,
stage 4 wound, unstageable wound,
non-healing surgical wound, and fistula)
included in the definition of a ‘‘severe
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wound’’ under the original temporary
exception for severe wound discharges
(and does not include the categories of
infected wound, osteomyelitis, and
wound with morbid obesity). Finally,
this new temporary exception for severe
wound discharges is limited to
discharges that meet the definition of a
severe wound and are grouped to
certain specified MS–LTC–DRGs, while
the previous temporary exception for
severe wound discharges only required
the discharge to meet the definition of
a severe wound (and did not include the
requirement for the discharge to also be
grouped to certain specified MS–LTC–
DRGs). Additional details of the new
temporary exception for payment for
severe wound discharges provided by
Public Law 114–255, including further
discussion of the likenesses to and
differences from the original temporary
exception for payment for severe wound
discharges provided by Public Law 114–
113 are discussed below.
We implemented the original
temporary exception for payment for
discharges for the treatment of severe
wounds that was provided by the
amendments made by section 231 of
Public Law 114–113 in an interim final
rule with comment period (IFC) that
appeared in the Federal Register on
April 21, 2016 (81 FR 23428 through
23438) (referred to as the ‘‘April 21,
2016 IFC’’) and finalized our FY 2017
proposed rule and that IFC concurrently
in the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57070). Therefore, to the
extent applicable, we are implementing
the temporary exception provision in an
identical manner to our implementation
of the original temporary exception
under section 231 of Pub. 114–113,
which is codified in the LTCH PPS
regulations at § 412.522(b)(2).
Specifically, § 412.522(b)(2)(ii)(B)(1)
refers to LTCHs ‘‘identified by the last
sentence of subsection (d)(1)(B)’’ of the
Act as LTCHs ‘‘[d]escribed in
§ 412.23(e)(2)(i) and meets the criteria of
§ 412.22(f).’’ In the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 20026), we
proposed to codify the requirements of
this ‘‘new’’ temporary exception for
severe wounds at new § 412.522(b)(3),
by providing for an exception for
discharges meeting the statutory criteria
that occur in a cost reporting period that
begins during FY 2018 for LTCHs
described in § 412.23(e)(2)(i) and meet
the criteria of § 412.22(f).
Clauses (ii) and (iii) of section
1886(m)(6)(G) of the Act, respectively,
as added by section 15010 of Public Law
114–255, includes definitions of ‘‘severe
wound’’ and ‘‘wound’’ for purposes of
this ‘‘new’’ temporary exception for
discharges for the treatment of severe
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wounds. We proposed to incorporate
the definitions of ‘‘wound’’ and ‘‘severe
wound’’ at § 412.522(b)(3)(i) as they are
defined in the statute. We note that the
definition of a ‘‘wound’’ in section
15010 is nearly identical to CMS’
definition of ‘‘wound’’ at existing
§ 412.522(b)(2)(i). We further note that
the definition of a ‘‘severe wound’’ is
nearly identical to the definition used in
section 231 of Public Law 114–113 with
the exception that three categories
included in the latter (that is, infected
wound, osteomyelitis, and wound with
morbid obesity) are not included in the
definition set forth in section 15010 of
Public Law 114–255. The five remaining
categories of stage 3 wound, stage 4
wound, unstageable wound, nonhealing surgical wound, and fistula are
identified by the list of ICD–10–CM
codes posted to the CMS Web site at:
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
LongTermCareHospitalPPS/
download.html under the ‘‘Severe
Wound Diagnosis Codes by Category for
Implementation of Section 231 of Public
Law 114–113’’ download file. For more
information on our interpretation of
these terms, we refer readers to the
April 21, 2016 IFC (81 FR 23428
through 23438) and the FY 2017 IPPS/
LTCH PPS final rule (81 FR 57070).
Therefore, this information on how CMS
interpreted the meanings of these
categories of a ‘‘severe wound’’ for
Public Law 114–113 was available at the
time Public Law 114–255 was enacted.
As such, we are implementing the
‘‘new’’ temporary exception for
discharges for the treatment of severe
wounds provided for by section 15010
using the same list of ICD–10–CM codes
to identify the five categories of severe
wounds enumerated in that section of
Public Law 114–255. In addition, as
provided by section 1886(m)(6)(G)(i)(III)
of the Act as added by section 15010 of
Public Law 114–255, we proposed at
new § 412.522(b)(3)(ii) that the patient
must be treated for a severe wound that
meets the statutory definition of a
‘‘severe wound’’ at proposed
§ 412.522(b)(3)(i) in order for the LTCH
discharge to meet this ‘‘new’’ temporary
exception for discharges for the
treatment of severe wounds.
As we stated in the proposed rule, we
believe that the requirement under the
‘‘new’’ temporary exception for
discharges for the treatment of severe
wounds set forth under section
1886(m)(6)(G)(i)(II) of the Act as added
by section 15010 of Public Law 114–255
for an LTCH discharge be classified
under MS–LTC–DRG 602, 603, 539, or
540 is self-implementing. Accordingly,
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we proposed to codify this requirement
at new § 412.522(b)(3)(ii)(C) by listing
the applicable MS–LTC–DRGs.
Section 1886(m)(6)(G)(i)(I) of the Act,
as added by section 15010 of Public Law
114–255, specifies that, for purposes of
this ‘‘new’’ temporary exception for
discharges for the treatment of severe
wounds, the LTCH discharge must be
from an LTCH ‘‘identified by the last
sentence of subsection (d)(1)(B)’’. The
phrase ‘‘identified by the last sentence
of subsection (d)(1)(B) [of the Act]’’ is
equivalent to the phrase ‘‘identified by
the amendment made by section 4417(a)
of the Balanced Budget Act of 1997’’
used in section 231 of Public Law 114–
113, because the amendment made by
section 4417(a) of the Balanced Budget
Act of 1997 added the last sentence of
subsection (d)(1)(B) to the Act. As
discussed in the April 21, 2016 IFC (81
FR 23428), the phrase ‘‘identified by the
amendment made by section 4417(a) of
the Balanced Budget Act of 1997’’
(which as previously discussed is
equivalent to ‘‘identified by the last
sentence of subsection (d)(1)(B) of the
Act’’) has been interpreted by CMS to
mean hospitals-within-hospitals (HwHs)
that were participating in Medicare, but
excluded from the hospital IPPS on or
before September 30, 1995 (that is,
hospitals which are described under
§ 412.23(e)(2)(i)) that meet the criteria of
§ 412.22(f) (81 FR 23430 through 23432).
As further discussed in the April 21,
2016 IFC, § 412.22(f) generally requires
that, in order to have grandfathered
status, an HwH must continue to
operate under the same terms and
conditions, including, but not limited
to, the number of beds. A limited
exception to this general policy allowed
eligible hospitals to increase the number
of beds between October 1, 1995, and
September 30, 2003, without loss of
their grandfathered status. A second
exception allows grandfathered HwHs
to increase square footage or decrease
the number of beds for cost reporting
periods beginning on or after October 1,
2006, while still retaining grandfathered
status. Because this phrase had already
been interpreted in this manner, the
April 21, 2016 IFC adopted the same
meaning of the phrase for purposes of
implementing section 231 of Public Law
114–113. For additional information on
hospitals ‘‘identified by the amendment
made by section 4417(a) of the Balanced
Budget Act of 1997,’’ we refer readers to
the April 21, 2016 IFC (81 FR 23431
through 23432). Therefore, for the
purposes of the new temporary
exception for LTCH discharges for the
treatment of severe wounds, ‘‘identified
by the last sentence of subsection
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(d)(1)(B) of the Act’’ means HwHs that
were participating in Medicare, but
excluded from the hospital IPPS on or
before September 30, 1995 (that is,
hospitals which are described under
§ 412.23(e)(2)(i)) that meet the criteria of
§ 412.22(f). We finalized this policy
without modification in the FY 2017
IPPS/LTCH PPS final rule (81 FR
57069). Because we have already
finalized our interpretation of this
phrase, we believe that the requirement
at section 1886(m)(6)(G)(i)(I) of the Act
is self-implementing. Accordingly, we
proposed to codify this requirement at
new § 412.522(b)(3)(ii)(B). LTCHs that
believe they meet the requirements to be
a grandfathered HwH should contact
their MACs. MACs will verify that the
LTCH meets these requirements.
Comment: Several commenters
supported CMS’ proposals to implement
section 15010 of the 21st Century Cures
Act.
Response: We thank the commenters
for their support.
Comment: Some commenters
requested that CMS expand the scope of
the exception to allow additional LTCHs
to benefit from the provision. Other
commenters requested that CMS
exclude severe wound discharges from
the site neutral payment rate all together
or to otherwise broaden the scope of
cases excepted from the site neutral
payment rate.
Response: As we have stated in
response to substantially similar
comments in the past (80 FR 49602),
under the LTCH PPS we do not have the
authority to pay anything other than the
site neutral payment rate for any LTCH
discharge that does not meet the
exclusion criteria. The statute explicitly
established the dual payment rate
structure, which expressly provides that
payment for all LTCH discharges will be
calculated based on the site neutral
payment rate, unless the LTCH
discharge meets the statutorily defined
exclusion criteria to be paid based on
the LTCH PPS standard Federal
payment rate.
After consideration of the public
comments we received, we are
finalizing our proposals without
modification.
G. Moratorium and Regulatory Delay of
the Full Implementation of the ‘‘25Percent Threshold Policy’’ Adjustment
(§ 412.538)
The ‘‘25-percent threshold policy’’ is
a per discharge payment adjustment in
the LTCH PPS that is applied to
payments for Medicare patient
discharges from an LTCH when the
number of such patients originating
from any single referring hospital is in
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excess of the applicable threshold for a
given cost reporting period (such
threshold is generally set at 25 percent,
with exceptions for rural and urban
single or MSA-dominant hospitals). If
an LTCH exceeds the applicable
threshold during a cost reporting period,
payment for the discharge that puts the
LTCH over its threshold and all
discharges subsequent to that discharge
in the cost reporting period from the
referring hospital are adjusted at cost
report settlement (discharges not in
excess of the threshold are unaffected by
the 25-percent threshold policy). The
25-percent threshold policy was
originally established in the FY 2005
IPPS final rule for LTCH HwHs and
satellites (69 FR 49191 through 49214).
We later expanded the 25-percent
threshold policy in the RY 2008 LTCH
PPS final rule to include all LTCHs and
LTCH satellite facilities (72 FR 26919
through 26944). Several laws have
mandated delayed implementation of
the policy, including, most recently,
section 1206 of the Pathway for
Sustainable Growth Rate (SGR) Reform
Act (Pub. L. 113–67). Section
1206(b)(1)(B) provides a permanent
exemption from the application of the
25-percent threshold policy for LTCHs
identified by the amendment made by
section 4417(a) of the Balanced Budget
Act of 1997 (Pub. L. 105–33). As
explained more fully in section VIII.H.
of the preamble of this final rule, LTCHs
‘‘identified by the amendment made by
section 4417(a) of the Balanced Budget
Act of 1997’’ are HwHs that were
participating in Medicare, but excluded
from the hospital IPPS on or before
September 30, 1995 (that is, hospitals
which are described under
§ 412.23(e)(2)(i)) that meet the criteria of
§ 412.22(f). LTCHs that believe they
meet the requirements to be a
grandfathered HwH should contact their
MACs. MACs will verify that the LTCH
meets these requirements. Section
1206(b)(1)(A) of Public Law 113–67
extended prior moratoria on the full
implementation of the 25-percent
threshold policy until cost reporting
periods beginning on or after either July
1, 2016 (for LTCHs subject to 42 CFR
412.534) or October 1, 2016 (for LTCHs
subject to 42 CFR 412.536). For more
details on the various laws that delayed
the full implementation of the 25percent threshold policy, we refer
readers to the FY 2015 IPPS/LTCH PPS
final rule (79 FR 50356 through 50357).
In the FY 2017 IPPS/LTCH PPS final
rule, we consolidated the 25-percent
threshold policy by sunsetting
§§ 412.534 and 412.536 and establishing
provisions under new § 412.538.
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Section 15006 of Public Law 114–255
further amended section 114(c)(1)(A) of
the MMSEA (as amended) by striking
‘‘for a 9-year period’’ and inserting
‘‘through June 30, 2016, and for
discharges occurring on or after October
1, 2016 and before October 1, 2017’’,
which provides for an extension of the
moratorium on the full implementation
of the 25-percent threshold policy. In
addition, section 15006(b) of Public Law
114–255 further amended section
114(c)(2) of the MMSEA (as amended)
by inserting ‘‘or any similar provision,’’
after ‘‘Regulations,’’ in subparagraphs
(A) and (B). (We note that the functional
result of the extension of the
moratorium under section 15006(a) of
Public Law 114–255 only extends to
discharges on or after October 1, 2016
and before October 1, 2017.)
To implement the provisions of
section 15006 of Public Law 114–255, in
the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 20028), we proposed to
make conforming amendments to the
regulations that currently govern the
application of the 25-percent threshold
policy. Section 114(c)(1) of the MMSEA,
from its inception, precluded CMS from
implementing either §§ 412.534 or
412.536 (as applicable), as well as any
similar provision to hospitals described
in the provision of the MMSEA. Section
15006 of Public Law 114–255 amended
section 114(c)(2) of the MMSEA by
adding the words ‘‘or any similar
provisions’’ to both (A) and (B). Section
412.538 of the regulations is a similar
provision to the provisions of both
§§ 412.534 and 412.536 (we adopted the
payment policy under § 412.538 to
create a consolidated and streamlined
25-percent threshold policy to replace
the policies under §§ 412.534 and
412.536, which were sunset).
Therefore, in order to implement the
moratorium on the implementation of
the 25-percent threshold policy
provided under section 15006 of Public
Law 114–255, we proposed to amend
§ 412.538 to account for these statutory
changes. We note that, similar to the
July 1, 2012 through September 30, 2012
‘‘gap’’ period discussed in the FY 2013
IPPS/LTCH PPS final rule (77 FR 53484
through 53486), this extension of the
moratorium on the full application of
the 25-percent threshold policy results
in a ‘‘gap’’ period where LTCHs are
required to comply with the fullyimplemented 25-percent threshold
policy for their cost reporting periods
beginning on or after July 1, 2016, and
before October 1, 2016, for any
discharges occurring on or before
September 30, 2016. For the same
reasons discussed in the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53485
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38319
through 53486), although those LTCHs
with cost reporting periods beginning
on or after July 1 and before October 1
2016 are ‘‘technically’’ subject to the 25percent threshold policy until October
1, 2016, we believe that very few, if any,
LTCHs will actually receive a payment
adjustment because these LTCHs would
rarely, if ever, admit more than 25
percent of their discharges from any one
referring hospital during the limited
period of 1 to 3 months (depending on
the LTCH’s cost reporting beginning
date) that the 25-percent threshold
policy was technically in effect.)
Comment: Several commenters
supported CMS’ proposals to implement
section 15006 of the 21st Century Cures
Act.
Response: We thank these
commenters for their support.
After consideration of the public
comments we received, we are
finalizing our proposals without
modification.
In addition, in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 20028),
we proposed to adopt a 1-year
regulatory moratorium on the
implementation of the 25-percent
threshold policy; that is, we proposed to
impose a regulatory moratorium on our
implementation of § 412.538 until
October 1, 2018. This proposal was
made in response to the further
statutory delays and our continued
consideration of public comments
received in response to our proposal to
consolidate and streamline the 25percent threshold policy in the FY 2017
IPPS/LTCH PPS proposed rule. In
response to that proposed rule, several
commenters stated that the new site
neutral payment rate would alleviate the
policy concerns underlying the 25percent threshold policy. As we stated
in more detail in our response to those
comments in the FY 2017 IPPS/LTCH
PPS final rule (81 FR 57106), we are not
convinced that this is the case.
However, given this additional
statutory moratorium, we believe that it
was appropriate at that time to propose
to establish a regulatory moratorium on
the implementation of the 25-percent
threshold policy until we can examine
data under the application of the site
neutral payment rate to further evaluate,
when more data are available, whether
the policy is in fact still necessary. We
stated in the proposed rule that while
we are not convinced that the
application of the site neutral payment
rate removes the need for the 25-percent
threshold policy, we believe that
evaluating the impact of the application
of the site neutral payment rate on
LTCH admission practices would be
premature at that time. The statute
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provides that the site neutral payment
rate be phased in, effective with LTCH
cost reporting periods beginning on or
after October 1, 2015 and before October
1, 2017 (that is, LTCH cost reporting
periods beginning in FYs 2016 and
2017). LTCH claims data for discharges
that occurred in FY 2016 is currently
the best available data, and given that
phase-in of the site neutral payment rate
is based on LTCHs’ cost reporting
period start dates, many LTCH
discharges that occurred during FY 2016
were not yet subject to the site neutral
payment rate because they occurred in
a LTCH cost reporting period that had
begun prior to October 1, 2016.
Consequently, at the time of the
proposed rule, we only had a partial
year of LTCH claims data under the
period where the site neural payment
rate was in effect, which may not be
fully reflective of any changes in LTCH
admission practices under the new dual
rate LTCH PPS. We stated in the
proposed rule that proposing an
additional regulatory moratorium on the
25-percent threshold policy through FY
2018 would allow CMS the opportunity
to do an analysis of LTCH admission
practices under the new dual payment
rate LTCH PPS based on more complete
data and would avoid creating any
additional confusion by having the 25percent threshold policy become
effective for a period of time when
future analysis of LTCH claims data may
indicate the policy concerns underlying
the 25-percent threshold policy have
been moderated.
Therefore, in the proposed rule, we
proposed to revise the effective date of
§ 412.538 so that the 25-percent
threshold policy would apply to
discharges occurring on or after October
1, 2018. Further, we proposed that if, in
response to public comments, we did
not finalize this proposed additional 1year regulatory moratorium, we would
revise § 412.538 so that the 25-percent
threshold policy would apply to
discharges occurring on or after October
1, 2017, consistent with the provisions
of section 15006 of Public Law 114–255.
We sought public comments on our
proposals.
Comment: Several commenters
supported CMS’ proposal for an
additional 1-year regulatory delay in the
full application of the 25-percent
threshold policy. In addition, several
commenters requested that, in lieu of or
in addition to the additional 1-year
regulatory delay in the full application
of the 25-percent threshold policy, CMS
rescind the policy. Some of these
commenters also requested that CMS
make public its analysis about whether
the policy continues to be necessary.
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MedPAC opposed the proposed
additional 1-year delay in the full
application of the 25-percent threshold
policy.
Response: We thank commenters for
their support of the proposed additional
1-year regulatory delay of the 25-percent
threshold policy for FY 2018. As we
explained in both the FY 2016 and FY
2017 rulemaking cycles, and reiterated
in the proposed rule, we are not
convinced that recent revisions to the
LTCH PPS (for example the introduction
of the site-neutral payment rate) have
addressed the policy concerns which
caused us to adopt the policy. We
believe that the 1-year delay will allow
both CMS and providers to gain
additional experience with the site
neutral payment rate and allow us to
determine whether the policy is still
necessary. For this reason, although we
understand MedPAC’s concerns, we
believe that we should have additional
experience under the revised LTCH PPS
prior to the policy becoming effective in
order to ensure it is still necessary and
appropriate. We note that if we
undertake further rulemaking on this
topic, we will, in accordance with the
APA, publically note our reasons for
any potential proposed changes.
After consideration of the public
comments we received, we are
finalizing the proposal for an additional
1-year regulatory delay of the 25-percent
threshold policy for FY 2018 without
modification.
Comment: Some commenters
requested confirmation that the
regulations at §§ 412.534 and 412.536
would not apply until October 1, 2018
and that the 25-percent threshold policy
would not apply during the ‘‘gap’’
period between July 1, 2016 and
October 1, 2016 for certain locations of
certain hospitals.
Response: In the FY 2017 IPPS/LTCH
PPS final rule (81 FR 57102), we
sunsetted both §§ 412.534 and 536 and
replaced them with the unified 25percent threshold policy at § 412.538.
Under the unified policy, regardless of
any statutory or regulatory moratorium
on § 412.538, by the terms of § 412.534
and 536 themselves, hospitals are no
longer subject to them. As discussed
above, we are finalizing our proposal of
an additional 1-year regulatory delay of
the 25-percent threshold policy for FY
2018. As such, we confirm that, under
our finalized changes to the regulations,
no hospital will be subject to § 412.538
until discharges occurring on or after
October 1, 2018. The commenters are
incorrect that we proposed not to apply
the 25-percent threshold policy during
the ‘‘gap’’ period. However, as we stated
in the proposed rule, we do not believe
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that there will be any practical effect of
the application of the policy. The 25percent threshold policy (under
§§ 412.434, 412.536, and 412.538) is
calculated based on a hospital’s entire
cost reporting period, which is generally
a full calendar year (12 months). In
order for a hospital to have any payment
reduction during the ‘‘gap’’ period
(which would only apply to discharges
occurring before October 1, 2016 in cost
reporting periods beginning on or after
July 1, 2016) the hospital must exceed
the 25-percent threshold with respect to
a referring hospital within (at most) a 3month period.
H. Revision To Moratorium on
Increasing Beds in Existing LTCH or
LTCH Satellite Locations Under the 21st
Century Cures Act (Pub. L. 114–255)
(§ 412.23)
Section 1206(b)(2) of Public Law 113–
67, as amended by section 112(b) of the
Protecting Access to Medicare Act of
2014 (PAMA) (Pub. L. 113–93),
established ‘‘new’’ statutory moratoria
on the establishment of new LTCHs and
LTCH satellite facilities and on the
increase in the number of hospital beds
in existing LTCHs and LTCH satellite
facilities, effective April 1, 2014 through
September 30, 2017, by amending
section 114(d)(1) of the MMSEA (as
amended). In addition, the statute also
provided an exception under the ‘‘new’’
moratorium under section 114(d)(7) of
the MMSEA (as amended) to establish a
new LTCH or LTCH satellite facility
during the period between April 1,
2014, and September 30, 2017, if a
hospital or entity meets criteria, which
mirror the expired provisions of section
114(d)(2)(A). For a discussion on our
implementation of these moratoria, we
refer readers to the FY 2015 IPPS/LTCH
PPS final rule (79 FR 50189 through
50193).
Section 15004(a) of Public Law 114–
255 further amended section 114(d)(7)
of the MMSEA (as amended) by striking
‘‘The moratorium under paragraph
(1)(A)’’ and inserting ‘‘[a]ny moratorium
under paragraph (1)’’ and specified that
such amendment shall take effect as if
included in the enactment of section
112 of the PAMA. Under this
amendment, all existing LTCHs or
LTCH satellite locations are no longer
subject to a moratorium on an increase
in LTCH beds set forth in paragraph
(1)(B) if they meet certain criteria. In
order to implement this statutory
change, in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20029), we
proposed to amend § 412.23(e)(7) by
revising paragraph (e)(7)(iii) to specify
that the moratorium on increasing the
number of beds in existing LTCHs and
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existing LTCH satellites does not apply
if one or more or the exceptions
described in § 412.23(e)(6)(ii) is met in
accordance with the provisions of
section 15004(a) of Public Law 114–255.
(We note that section 15004(b) of Public
Law 114–255 provides for a
modification to LTCH high-cost outlier
payments. Our proposals to implement
this provision were discussed in section
V.D. of the Addendum to the proposed
rule.) We sought public comments on
this proposal.
Comment: Several commenters
supported CMS’ proposal to implement
section 15004(a) of the 21st Century
Cures Act.
Response: We thank these
commenters for their support.
After consideration of the public
comments we received, we are
finalizing our proposal, without
modification, to amend § 412.23(e)(7) by
revising paragraph (e)(7)(iii) to specify
that the moratorium on increasing the
number of beds in existing LTCHs and
existing LTCH satellites does not apply
if one or more or the exceptions
described in § 412.23(e)(6)(ii) is met in
accordance with the provisions of
section 15004(a) of Public Law 114–255.
I. Change To the Average Length of Stay
Criterion Under the 21st Century Cures
Act (Pub. L. 114–255)
Under the requirements at sections
1886(d)(1)(B)(iv)(I) and 1861(ccc) of the
Act, in order for a hospital to be
classified as an LTCH, the hospital has
to maintain an average length of stay of
greater than 25 days as calculated by the
Secretary. Section 1206(a)(3) of the
Pathway for SGR Reform Act of 2013
(Pub. L. 113–67) excluded Medicare
Advantage plans’ and site neutral
payment rate discharges from this
calculation for hospitals that were
classified as LTCHs as of December 10,
2013. We implemented this provision in
the FY 2016 IPPS/LTCH PPS final rule
(80 FR 49638). Section 15007 of Public
Law 114–255 amended section
1206(a)(3) of the Pathway for SGR
Reform Act by extending the exclusion
of Medicare Advantage plans’ and site
neutral payment rate discharges from
the calculation of the average length of
stay to all LTCHs, for discharges
occurring in cost reporting periods
beginning on or after October 1, 2015. In
order to implement this provision, in
the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 20029), we proposed to
remove the final sentence of our
regulations at 42 CFR 412.23(e)(2)(vi),
which included site neutral payment
rate and Medicare Advantage discharges
in the calculation of the average length
of stay for LTCHs which were classified
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as such after December 10, 2013. We
sought public comments on our
proposal.
Comment: Several commenters
supported CMS’ proposal to implement
section 15007 of the 21st Century Cures
Act.
Response: We thank these
commenters for their support.
Comment: Several commenters
requested that CMS remove the
requirement for LTCHs to maintain a
greater than 25 day average length of
stay entirely, lower the requisite average
length of stay, and/or make changes to
the method of calculating the average
length of stay.
Response: While we consider these
comments outside the scope of this
proposed rule, we note that the
requirement that LTCHs maintain an
average length of stay of greater than 25
days is required under section
1886(d)(1)(B)(iv) of the Act, and
therefore we have no authority to either
remove or reduce this requirement. We
may consider the possibility of refining
the method of calculating whether an
LTCH has maintained the requisite
average length of stay in future
rulemaking.
After consideration of the public
comments we received, we are
finalizing our proposal, without
modification, to remove the final
sentence of our regulations at 42 CFR
412.23(e)(2)(vi), which included site
neutral payment rate and Medicare
Advantage discharges in the calculation
of the average length of stay for LTCHs
which were classified as such after
December 10, 2013.
J. Change in Medicare Classification for
Certain Hospitals (§ 412.22)
When enacted, section
1886(d)(1)(B)(iv) of the Act established
a category of hospitals that experience
extended average inpatient length of
stays, which are known as LTCHs under
the Medicare program. Clause (iv) of
section 1886(d)(1)(B) consisted of two
subclauses (I) and (II) (that is, section
1886(d)(1)(B)(iv)(I) and section
1886(d)(1)(B)(iv)(II) of the Act) which
corresponded to two categories of
hospitals that were generally referred to
as ‘‘subclause (I)’’ and ‘‘subclause (II)’’
LTCHs. ‘‘Subclause (I)’’ LTCHs were
required to have an average inpatient
length of stay that is greater than 25
days. ‘‘Subclause (II)’’ LTCHs were only
required to have an average inpatient
length of stay of greater than 20 days.
The ‘‘subclause (II)’’ LTCH definition
further limited the classification of a
‘‘subclause (II)’’ LTCH by including the
requirement that the LTCH must have
been first excluded from the IPPS in CY
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1986, and treated a Medicare inpatient
population in which 80 percent of the
discharges in the 12-month reporting
period ending in Federal FY 1997 had
a principal diagnosis that reflected a
finding of neoplastic disease as defined
in subsection (f)(1)(iv) section 1886 of
the Act. This statutory requirement was
implemented under 42 CFR
412.23(e)(2)(ii).
As part of our FY 2015 IPPS/LTCH
PPS rulemaking cycle, under the
authority provided by section 1206(d)(2)
of the Pathway to SGR Reform Act (Pub.
L. 113–67), we adopted an adjustment to
the LTCH PPS payment for LTCHs
classified under section
1886(d)(1)(B)(iv)(II) of the Act
(‘‘subclause (II)’’ LTCHs). Under this
payment adjustment, ‘‘subclause (II)’’
LTCHs receive payment under the
LTCH PPS that is generally equivalent
to an amount determined under the
reasonable cost-based payment rules for
both operating and capital-related costs
under 42 CFR part 413 (that is, an
amount generally equivalent to an
amount determined under the TEFRA
payment system methodology). This
payment adjustment for ‘‘subclause (II)’’
LTCHs is specified at § 412.526. For
more information on this payment
adjustment, we refer readers to the FY
2015 IPPS/LTCH PPS final rule (79 FR
50193 through 50197). As initially
adopted, the ‘‘TEFRA-like’’ reasonable
cost-based payment adjustment for
‘‘subclause (II)’’ LTCHs did not
incorporate the limitation on charges to
Medicare beneficiaries policies under
the TEFRA payment system. In the FY
2017 IPPS/LTCH PPS final rule (81 FR
57109 through 57110), we amended the
regulations at § 412.507 relating to the
limitation on charges to address
beneficiary charges for LTCH services
provided by ‘‘subclause (II)’’ LTCHs as
part of our refinement of the payment
adjustment for ‘‘subclause (II)’’ LTCHs
under § 412.526. Under this refinement,
‘‘subclause (II)’’ LTCHs are treated the
same as IPPS-excluded hospitals paid
under the TEFRA payment system for
purposes of the limitation on charges to
beneficiaries and related billing
requirements.
Section 15008 of Public Law 114–225
provides for a change in Medicare
classification for ‘‘subclause (II)’’ LTCH
by redesignating such hospitals from
section 1886(d)(1)(B)(iv)(II) to section
1886(d)(1)(B)(vi) of the Act. In addition,
subsection (b) of section 15008 specifies
that, for cost reporting periods
beginning on or after January 1, 2015,
such hospitals classified under section
1886(d)(1)(B)(vi) of the Act are not
subject to section 1886(m) of the Act,
which sets forth the LTCH PPS. Section
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15008 further specifies that, for cost
reporting periods beginning on or after
January 1, 2015, payment for inpatient
operating costs is to be made as
described in 42 CFR 412.526(c)(3),
including any subsequent
modifications, and payment for capital
costs is to be made as described in 42
CFR 412.526(c)(4) as in effect on January
1, 2015. (We note that there have been
no revisions to the regulations at 42 CFR
412.526, including § 412.526(c)(3) and
§ 412.526(c)(4), since January 1, 2015.)
In order to implement these
requirements, in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 20029),
we proposed to revise § 412.23(e)(2)(ii)
so that the definition in that paragraph
would apply to hospitals in cost
reporting periods beginning on or after
August 5, 1997 and on or before
December 31, 2014. In addition, we
proposed to add a new paragraph (j) to
§ 412.23 that would establish a new
classification of IPPS-excluded hospital
(formerly named ‘‘long-term care
neoplastic disease hospitals’’ but
renamed ‘‘extended neoplastic disease
care hospital’’) that would identify
hospitals classified under new section
1886(d)(1)(B)(vi) of the Act. Proposed
new paragraph (j) would further specify
in paragraph (j)(2) that payment for
inpatient operating costs for these
hospitals is made as described in
§ 412.526(c)(3) and payment for capital
costs for these hospitals is made as
described in § 412.526(c)(4). (We note
that we did not propose to make
changes to Subpart O by removing
references to ‘‘subclause (II) LTCHs’’
due to the sunset date we proposed to
add to § 412.23(e)(2)(ii).) We sought
public comments on our proposal.
In section VII.A of the preamble of
this final rule, we summarize and
respond to the public comments on
these proposals. In summary, as
discussed in greater detail in section
VII.A of this preamble, we are finalizing
our proposal, without modification, to
revise § 412.23(e)(2)(ii) so that the
definition in that paragraph will apply
to hospitals in cost reporting periods
beginning on or after August 5, 1997
and on or before December 31, 2014;
and in response to public comments we
are making our changes to payment
regulations at new paragraph (i) under
§ 412.22 (which is identical, with the
exception of minor technical editing for
cross-references, to the language we
proposed at § 412.23(j)) that establishes
a new classification of IPPS-excluded
hospital (formerly termed ‘‘long-term
care neoplastic disease hospitals,’’ but
renamed ‘‘extended neoplastic disease
care hospitals’’) that will identify
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hospitals classified under new section
1886(d)(1)(B)(vi) of the Act.
IX. Quality Data Reporting
Requirements for Specific Providers
and Suppliers
We seek to promote higher quality
and more efficient healthcare for
Medicare beneficiaries. This effort is
supported by the adoption of widely
agreed-upon quality measures. We have
worked with stakeholders to define
quality measures for most settings and
to measure various aspects of care for
most Medicare beneficiaries. These
measures assess structural aspects of
care, clinical processes, care
coordination, and improving patient
outcomes (including patient experiences
with care).
We have implemented quality
reporting programs for multiple care
settings, including, for example:
• Hospital inpatient services under
the Hospital Inpatient Quality Reporting
(IQR) Program (formerly referred to as
the Reporting Hospital Quality Data for
Annual Payment Update (RHQDAPU)
Program);
• Prospective Payment System (PPS)exempt cancer hospitals under the PPSExempt Cancer Hospital Quality
Reporting (PCHQR) Program;
• Long-term care hospitals under the
Long-Term Care Hospital Quality
Reporting Program (LTCH QRP) (also
referred to as the LTCHQR Program);
• Inpatient psychiatric facilities
under the Inpatient Psychiatric
Facilities Quality Reporting (IPFQR)
Program;
• Hospital outpatient services under
the Hospital Outpatient Quality
Reporting (OQR) Program (formerly
referred to as the Hospital Outpatient
Quality Data Reporting Program (HOP
QDRP));
• Ambulatory surgical centers under
the Ambulatory Surgical Center Quality
Reporting (ASCQR) Program;
• Inpatient rehabilitation facilities
under the Inpatient Rehabilitation
Facility Quality Reporting Program (IRF
QRP);
• Care furnished by physicians and
other eligible professionals under the
Physician Quality Reporting System
(PQRS). We note that beginning in CY
2019, PQRS will be replaced by the
Quality Payment Program (QPP), as
stated in the MIPS APM final rule with
comment period (81 FR 77008);
• Skilled nursing facilities under the
Skilled Nursing Facility Quality
Reporting Program (SNF QRP);
• Home health agencies under the
Home Health Quality Reporting Program
(HH QRP); and
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• Hospices under the Hospice Quality
Reporting Program (HQRP).
We have also implemented programs
which link payment to performance
including: The Hospital Readmissions
Reduction Program (HRRP); the Hospital
Value-Based Purchasing (VBP) Program
(described further below); the HospitalAcquired Condition (HAC) Reduction
Program; the End-Stage Renal Disease
Quality Incentive Program (ESRD QIP);
and the Quality Payment Program
(QPP).
In implementing the Hospital IQR
Program and other quality reporting
programs, we have focused on measures
which have high impact and support
CMS and HHS priorities for improved
quality and efficiency of care for
Medicare beneficiaries. We have made
significant progress over recent program
years in reaching our goal of aligning
the clinical quality measure
requirements of the Hospital IQR
Program with various other Medicare
and Medicaid programs, including those
authorized by the Health Information
Technology for Economic and Clinical
Health (HITECH) Act, so that the
reporting burden of multiple programs
on providers will be reduced. We
outline the aligned policies between the
Hospital IQR Program and the Medicare
and Medicaid EHR Incentive Programs
in the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57172). Our goal for the
future is to continue to align those
quality measurement requirements and
to adopt a more streamlined set of
clinical quality measures with
electronic specifications aligned to
standardized data elements so that
electronic collection of performance
information is a seamless component of
care delivery. We believe the electronic
collection and reporting of quality data
using health IT will greatly simplify and
streamline reporting for various CMS
quality reporting programs, and
hospitals will experience decreased
financial and administrative burden as
they are able to switch primarily to
health IT based data reporting for many
measures that are currently manually
chart-abstracted.
We also have implemented a Hospital
VBP Program under section 1886(o) of
the Act, described in the FY 2013
Hospital Inpatient VBP Program final
rule (76 FR 26490 through 26547); the
FY 2014 the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50676 through 50707);
the FY 2015 IPPS/LTCH PPS final rule
(79 FR 50048 through 50087); the FY
2016 IPPS/LTCH PPS final rule (80 FR
49544 through 49570); the FY 2017
IPPS/LTCH PPS final rule (81 FR 56979
through 57011); and the CY 2017 OPPS/
ASC final rule with comment period (81
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FR 79855 through 79862). Under the
Hospital VBP Program, performance
standards are set and applied to a
performance period for the applicable
FY. Hospitals receive value based
incentive payments based on these
performance standards. The measures
under the Hospital VBP Program must
be selected from current measures (other
than readmission measures) specified
under the Hospital IQR Program as
required by section 1886(o)(2)(A) of the
Act.
In selecting measures for the Hospital
IQR Program, we are mindful of the
conceptual framework we have
developed for the Hospital VBP
Program. Because measures adopted for
the Hospital VBP Program must first
have been adopted and publicly
reported under the Hospital IQR
Program, these two programs are linked.
We view the Hospital VBP Program as
the next step in promoting higher
quality care for Medicare beneficiaries
by transforming Medicare from a
passive payer of claims into an active
purchaser of quality healthcare for its
beneficiaries. Value-based purchasing is
an important step to revamping how
care and services are paid for, moving
increasingly toward rewarding better
value, outcomes, and innovations.
We also view the HAC Reduction
Program, authorized by section 1886(p)
of the Act, and the Hospital VBP
Program as related but separate efforts to
reduce HACs. The Hospital VBP
Program is an incentive program that
awards payments to hospitals based on
quality performance on a wide variety of
measures (scoring performance on each
measure on the greater of improvement
or achievement), while the HAC
Reduction Program creates a payment
adjustment resulting in payment
reductions for hospitals with scores in
the lowest performing quartile based on
their rates of HACs.
In the preamble of FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 20030
through 20064), we proposed changes to
the following Medicare quality reporting
systems:
• In section IX.A., the Hospital IQR
Program.
• In section IX.B., the PCHQR
Program.
• In section IX.C., the LTCH QRP.
• In section IX.D., the IPFQR
Program.
In addition, in section IX.E. of the
preamble of the proposed rule (82 FR
20130 through 20139), we proposed
changes to the Medicare and Medicaid
EHR Incentive Programs for eligible
hospitals and critical access hospitals
(CAHs).
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A. Hospital Inpatient Quality Reporting
(IQR) Program
1. Background
a. History of the Hospital IQR Program
We seek to promote higher quality
and more efficient health care for
Medicare beneficiaries. This effort is
supported by the adoption of widelyagreed upon quality measures. We have
worked with relevant stakeholders to
define measures of quality in almost
every setting and currently measure
some aspect of care for almost all
Medicare beneficiaries. These measures
assess structural aspects of care, clinical
processes, patient experiences with
care, and outcomes. We have
implemented quality measure reporting
programs for multiple settings of care.
To measure the quality of hospital
inpatient services, we implemented the
Hospital Inpatient Quality Reporting
(IQR) Program, previously referred to as
the Reporting Hospital Quality Data for
Annual Payment Update (RHQDAPU)
Program. We refer readers to the FY
2010 IPPS/LTCH PPS final rule (74 FR
43860 through 43861) and the FY 2011
IPPS/LTCH PPS final rule (75 FR 50180
through 50181) for detailed discussions
of the history of the Hospital IQR
Program, including the statutory history,
and to the FY 2015 IPPS/LTCH PPS
final rule (79 FR 50217 through 50249),
the FY 2016 IPPS/LTCH PPS final rule
(80 FR 49660 through 49692), and the
FY 2017 IPPS/LTCH PPS final rule (81
FR 57148 through 57150) for the
measures we have adopted for the
Hospital IQR Program measure set
through the FY 2019 payment
determination and subsequent years.
We strive to put patients first,
ensuring they are empowered to make
decisions about their own healthcare
along with their clinicians using
information from data-driven insights
that are increasingly aligned with
meaningful quality measures. We
support technology that reduces burden
and allows clinicians to focus on
providing high-quality healthcare for
their patients. We also support
innovative approaches to improve
quality, accessibility, and affordability
of care while paying particular attention
to improving clinicians’ and
beneficiaries’ experience when
interacting with our programs. In
combination with other efforts across
the Department of Health and Human
Services, we believe the Hospital IQR
Program helps to incentivize hospitals
to improve healthcare quality and value,
while giving patients and providers the
tools and information needed to make
the best decisions for them. Recognizing
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that the Hospital IQR Program
represents a key component of the way
that we bring quality measurement and
improvement together with payment,
we have taken efforts to review existing
policies to identify how to move the
program forward in the least
burdensome manner possible while
continuing to incentivize improvement
in the quality of care provided to
patients.
b. Maintenance of Technical
Specifications for Quality Measures
The technical specifications for chartabstracted clinical process of care
measures used in the Hospital IQR
Program, or links to Web sites hosting
technical specifications, are contained
in the CMS/The Joint Commission (TJC)
Specifications Manual for National
Hospital Inpatient Quality Measures
(Specifications Manual). This
Specifications Manual is posted on the
QualityNet Web site at: https://
www.qualitynet.org/. We generally
update the Specifications Manual on a
semiannual basis and include in the
updates detailed instructions and
calculation algorithms for hospitals to
use when collecting and submitting data
on required chart-abstracted clinical
process of care measures.
The technical specifications for
electronic clinical quality measures
(eCQMs) used in the Hospital IQR
Program are contained in the CMS
Annual Update for Hospital Quality
Reporting Programs (Annual Update).
This Annual Update is posted on the
eCQI Resource Center webpage at:
https://ecqi.healthit.gov/. We generally
update the measure specifications on an
annual basis through the Annual
Update, which includes code updates,
logic corrections, alignment with
current clinical guidelines, and
additional guidance for hospitals and
EHR vendors to use in order to collect
and submit data on eCQMs from
hospital EHRs.
In addition, we believe that it is
important to have in place a subregulatory process to incorporate nonsubstantive updates to the measure
specifications for measures we have
adopted for the Hospital IQR Program so
that these measures remain up-to-date.
We refer readers to the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53504
through 53505) and the FY 2015 IPPS/
LTCH PPS final rule (79 FR 50203) for
our policy for using a sub-regulatory
process to make non-substantive
updates to measures used for the
Hospital IQR Program.
We recognize that some changes made
to measures undergoing maintenance
review are substantive in nature and
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might not be appropriate for adoption
using a sub-regulatory process. We will
continue to use rulemaking to adopt
substantive updates made to measures
we have adopted for the Hospital IQR
Program. We refer readers to the FY
2017 IPPS/LTCH PPS final rule (81 FR
57111) for additional discussion of the
maintenance of technical specifications
for quality measures for the Hospital
IQR Program. We also refer readers to
the FY 2015 IPPS/LTCH PPS final rule
(79 FR 50202 through 50203) for
additional details on the measure
maintenance process.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20031), we did not
propose any changes to our policies on
the measures maintenance process,
including the maintenance of nonsubstantive updates to measures used
for the Hospital IQR Program.
c. Public Display of Quality Measures
Section 1886(b)(3)(B)(viii)(VII) of the
Act was amended by the Deficit
Reduction Act (DRA) of 2005. Section
5001(a) of the DRA requires that the
Secretary establish procedures for
making information regarding measures
submitted available to the public after
ensuring that a hospital has the
opportunity to review its data before
they are made public. Our current
policy is to report data from the
Hospital IQR Program as soon as it is
feasible on CMS Web sites such as the
Hospital Compare Web site, https://
www.medicare.gov/hospitalcompare
after a 30-day preview period (78
FR50776 through 50778).
Information is available to the public
on the Hospital Compare Web site.
Hospital Compare is an interactive web
tool that assists beneficiaries by
providing information on hospital
quality of care to those who need to
select a hospital. The Hospital IQR
Program currently includes process of
care measures, risk-adjusted outcome
measures, the HCAHPS patient
experience-of-care survey measure,
structural measures, Emergency
Department throughput measures,
patient safety and adverse event
measures, immunization measures,
hospital-acquired infection measures,
and payment measures, all of which are
featured on the Hospital Compare Web
site. For more information on measures
reported to Hospital Compare, we refer
readers to the Web site at: https://
www.medicare.gov/hospitalcompare.
Other information that may not be as
relevant to or easily understood by
beneficiaries and information for which
there are unresolved display issues or
design considerations are not reported
on Hospital Compare and may be made
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available on other CMS Web sites, such
as https://data.medicare.gov. CMS also
provides stakeholders access to archived
data from Hospital Compare, which can
be found at: https://data.medicare.gov/
data/archives/hospital-compare.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20031 through
20032), we did not propose any changes
to these policies.
d. Accounting for Social Risk Factors in
the Hospital IQR Program
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20032 through
20033), we discussed the accounting for
social risk factors in the Hospital IQR
Program. We understand that social risk
factors such as income, education, race
and ethnicity, employment, disability,
community resources, and social
support (certain factors of which are
also sometimes referred to as
socioeconomic status (SES) factors or
socio-demographic status (SDS) factors)
play a major role in health. One of our
core objectives is to improve beneficiary
outcomes including reducing health
disparities, and we want to ensure that
all beneficiaries, including those with
social risk factors, receive high quality
care. In addition, we seek to ensure that
the quality of care furnished by
providers and suppliers is assessed as
fairly as possible under our programs
while ensuring that beneficiaries have
adequate access to excellent care.
We have been reviewing reports
prepared by the Office of the Assistant
Secretary for Planning and Evaluation
(ASPE) 99 and the National Academies
of Sciences, Engineering, and Medicine
on the issue of measuring and
accounting for social risk factors in
CMS’ quality measurement and
payment programs, and considering
options on how to address the issue in
these programs. On December 21, 2016,
ASPE submitted a Report to Congress on
a study it was required to conduct under
section 2(d) of the Improving Medicare
Post-Acute Care Transformation
(IMPACT) Act of 2014. The study
analyzed the effects of certain social risk
factors of Medicare beneficiaries on
quality measures and measures of
resource use used in one or more of nine
Medicare value-based purchasing
programs.100 The report also included
considerations for strategies to account
for social risk factors in these programs.
99 https://aspe.hhs.gov/pdf-report/reportcongress-social-risk-factors-and-performanceunder-medicares-value-based-purchasingprograms.
100 https://aspe.hhs.gov/pdf-report/reportcongress-social-risk-factors-and-performanceunder-medicares-value-based-purchasingprograms.
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In a January 10, 2017 report released by
the National Academies of Sciences,
Engineering, and Medicine, that body
provided various potential methods for
measuring and accounting for social risk
factors, including stratified public
reporting.101
As noted in the FY 2017 IPPS/LTCH
PPS final rule (81 FR 57124), the NQF
undertook a 2-year trial period in which
new measures, measures undergoing
maintenance review, and measures
endorsed with the condition that they
enter the trial period could be assessed
to determine whether risk adjustment
for selected social risk factors is
appropriate for these measures. This
trial entailed temporarily including
social risk factors in the risk-adjustment
approach for these measures. Since
publication of the FY 2018 IPPS/LTCH
PPS proposed rule, we have learned that
the trial period ended in April 2017 and
a draft report is available at: https://
www.qualityforum.org/SES_Trial_
Period.aspx.
As we continue to consider the
analyses and recommendations from
these reports, we are continuing to work
with stakeholders in this process. As we
have previously communicated, we are
concerned about holding providers to
different standards for the outcomes of
their patients with social risk factors
because we do not want to mask
potential disparities or minimize
incentives to improve the outcomes for
disadvantaged populations. Keeping
this concern in mind, while we sought
input on this topic previously, we
continue to seek public comment on
whether we should account for social
risk factors in the Hospital IQR Program,
and if so, what method or combination
of methods would be most appropriate
for accounting for social risk factors.
Examples of methods include:
Confidential reporting to providers of
measure rates stratified by social risk
factors; public reporting of stratified
measure rates; and potential risk
adjustment of a particular measure as
appropriate based on data and evidence.
In addition, in the proposed rule (82
FR 20032), we sought public comment
on which social risk factors might be
most appropriate for reporting stratified
measure scores and/or potential risk
adjustment of a particular measure.
Examples of social risk factors include,
but are not limited to: Dual eligibility/
low-income subsidy, race and ethnicity,
and geographic area of residence. We
also sought comments on which of these
101 National Academies of Sciences, Engineering,
and Medicine. 2017. Accounting for social risk
factors in Medicare payment. Washington, DC: The
National Academies Press.
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factors, including current data sources
where this information would be
available, could be used alone or in
combination, and whether other data
should be collected to better capture the
effects of social risk. We will take
commenters’ input into consideration as
we continue to assess the
appropriateness and feasibility of
accounting for social risk factors in the
Hospital IQR Program. We note that any
such changes would be proposed
through future notice-and-comment
rulemaking.
We refer readers to section IX.A.13. of
the preamble of this final rule, where we
discuss the potential future confidential
reporting of stratified measure data for
the Hospital 30-day, All-Cause, RiskStandardized Readmission Rate
Following Pneumonia Hospitalization
(NQF #0506) and the Hospital 30-day,
All-Cause, Risk Standardized Mortality
Rate (RSMR) for Pneumonia measures.
Our goal is to provide examples from
several domains for the same issue
(pneumonia). We want the reader to
understand the approaches from as
many perspectives as possible. In
addition, we sought comments on
options for publicly displaying stratified
rates using social risk factors as well as
which other social risk factors besides
dual eligibility should be used.
Of note, implementing any of the
above methods would be taken into
consideration in the context of how this
and other CMS programs operate (for
example, data submission methods,
availability of data, statistical
considerations relating to reliability of
data calculations, among others), so we
also welcomed comment on operational
considerations.
We received extensive comments in
response to our request for public
comment on whether we should
account for social risk factors in the
Hospital IQR Program, and if so, what
method or combination of methods
would be most appropriate for
accounting for social risk factors.
Comment: Several commenters were
generally supportive of accounting for
social risk factors in the Hospital IQR
Program. The commenters expressed
appreciation for CMS’ interest in
providing data to hospitals and to the
public to inform these efforts, and urged
CMS to provide data in a way that
minimizes the risk of providing
divergent signals to hospitals. The
commenters noted that risk stratification
and adjustment are equally significant
components of valid quality assessment.
Specifically, the commenters believed
that risk-adjusting quality measures
would: (1) Have a positive impact on
provider performance; (2) provide
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information essential to allocating
resources in high-risk areas; (3)
encourage equitable care delivery, while
also accounting for the currently
disproportionate penalties for safety net
and academic medical centers; (4)
reduce costs; and (5) prevent weakening
of the network of providers that serve
disadvantaged populations, which
could have the unintended consequence
of worsening health disparities.
Conversely, some commenters voiced
concerns such as: (1) This approach will
not address the underlying disparities
that are often associated with poor
health outcomes and might instead,
mask potential disparities or minimize
incentives to improve the outcomes for
disadvantaged populations; and (2)
adjustments to quality measures could
create a two-tier system of care where
those with few economic or social
resources are diminished in the
calculation of quality measures. Some
commenters stated that providers
should not be financially penalized
while caring for patients with greater
needs.
Several commenters recommended
that comorbidities, functional
impediments, and cognitive limitations
must be accounted for when assessing
quality and costs. The commenters
suggested that CMS conduct analyses to
determine the degree to which certain
variables, such as insurance, age, race,
and ethnicity, impact admission rates
before these factors are weighted as part
of any quality scoring metrics. Where
meaningful and comprehensive
neighborhood level SDS-data currently
exist, several commenters stated that
CMS should encourage empirical tests
of quality metrics adjusted for those
factors to assess the impact of said
adjustments on local provider
performance metrics. Based on these
tests, CMS and other agencies would be
able to prioritize the national collection
of data most essential for valid risk
adjustment methodologies.
Many commenters suggested that
CMS explore a variety of approaches for
accounting for social risk factors,
including; risk adjustment, stratification
of measure rates for public reporting,
and confidential stratification of
measures. The commenters also
encouraged CMS to work with measure
developers and relevant medical
societies to ensure social risk factors are
considered during the measure
development and update processes.
Some commenters recommended that
stratification or risk-adjustment
decisions should be made on a measure
by measure level and incorporated into
the measure specifications. Some
commenters recommended that CMS
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require measure developers to test a
range of national-level sociodemographic data elements, identified
in the ASPE 102 and NAM 103 reports,
into the risk adjustment methodology of
accountability metrics.
Many commenters recommended
providing this risk-adjusted data
alongside unadjusted data so that
interventions can be appropriately
targeted, but discouraged the use of
unadjusted data in publicly reported
and pay-for-performance measures.
Some commenters stated that CMS
should work with stakeholders after the
hospitals’ review is complete to publicly
report this data in an appropriate
fashion. Other concerns expressed by
some commenters included that data
should not be publicly reported until
hospitals have had sufficient time to
review and understand the results and
correct any errors that may stem from
the initial implementation of any new
methodology. Some commenters
suggested that CMS provide hospitals
with confidential reports of performance
on accountability measures stratified by
dual eligible status or other nationally
available data elements within a year of
this testing.
Commenters encouraged CMS to
continue to work on developing more
precise approaches to risk adjustment to
account for social factors in the rural
context. Some commenters stated that
CMS should implement demonstration
projects to encourage hospitals to collect
SDS data through their electronic health
records (EHR). Some commenters
advised CMS to monitor the effects of
changes to quality programs on
hospitals serving beneficiaries with
social risk factors so that future
programmatic changes are made with
these concerns in mind. Some
commenters also encouraged CMS to
reconsider the use of a 3-year look back
period historically used to calculate
readmission rates as it moves forward
with changes to this program.
Response: We appreciate all the
comments and interest in this topic. As
we have previously stated, we are
concerned about holding providers to
different standards for the outcomes of
their patients with social risk factors,
because we do not want to mask
potential disparities or minimize
102 Office of the Assistant Secretary for Planning
and Evaluation. 2016. Report to Congress: Social
Risk Factors and Performance Under Medicare’s
Value-Based Purchasing Programs. Available at:
https://aspe.hhs.gov/pdf-report/report-congresssocial-risk-factors-and-performance-undermedicares-value-based-purchasing-programs.
103 National Academies of Sciences, Engineering,
and Medicine. 2017. Accounting for social risk
factors in Medicare payment. Washington, DC: The
National Academies Press.
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incentives to improve outcomes for
disadvantaged populations. We believe
that the path forward should incentivize
improvements in health outcomes for
disadvantaged populations while
ensuring that beneficiaries have access
to excellent care. We appreciate that
some commenters recommended risk
adjustment as a strategy to account for
social risk factors, while others stated a
concern that risk adjustment could
minimize incentives and reduce efforts
to address disparities for patients with
social risk factors. We will consider all
suggestions as we continue to assess the
issue of accounting for social risk factors
within individual measures and the
program as a whole, and will actively
perform additional research and
monitor for trends to prevent
unintended consequences. We intend to
explore options including, but not
limited to, measure stratification by
social risk factors in a consistent
manner across programs when
appropriate, informed by considerations
described in section IX.A.13. of the
preamble of this final rule, which
describes options of: (1) Stratified
reporting of a measure by patient
factors, which highlights disparities in
outcomes by patient subgroup; and (2)
peer-to-peer benchmarking based on
hospital’s share of patient factors, which
allows hospitals to compare their
performance with like-peers. We also
intend to conduct further analyses on
the impact of different approaches such
as measure-level risk adjustment and
stratifying performance scoring to
account for social risk factors including
the options suggested by commenters. In
addition, we will consider the
commenters’ suggestion that we conduct
empirical testing of risk-adjusted quality
metrics, and assess the potential impact
of the findings from such testing on the
prioritization of national data collection,
in relation to risk adjustment
methodologies.
We appreciate commenters’
recommendations regarding specific
social risk factor variables and will work
to determine the feasibility of collecting
these patient-level variables. As we
consider the feasibility of collecting
patient-level data and the impact of
strategies to account for social risk
factors through further analysis, we will
also continue to evaluate the reporting
burden on providers.
We are committed to ensuring that
CMS beneficiaries have access to and
receive excellent care and that the
quality of care furnished by providers
and suppliers is assessed fairly in CMS
programs. We thank the commenters,
and we will consider their views as we
develop further policy regarding social
risk factors in the Hospital IQR Program.
Any proposals would be made in future
rulemaking after further research and
continued stakeholder engagement.
2. Retention of Previously Adopted
Hospital IQR Program Measures for
Subsequent Payment Determinations
We refer readers to the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53512
through 53513) for our finalized
measure retention policy. Pursuant to
this policy, when we adopt measures for
the Hospital IQR Program beginning
with a particular payment
determination, we automatically readopt these measures for all subsequent
payment determinations unless we
propose to remove, suspend, or replace
the measures. In the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 20033),
we did not propose any changes to this
policy.
3. Removal and Suspension of
Previously Adopted Hospital IQR
Program Measures
As discussed above, we generally
retain measures from the previous year’s
Hospital IQR Program measure set for
subsequent years’ measure sets except
when we specifically propose to
remove, suspend, or replace a measure.
We refer readers to the FY 2011 IPPS/
LTCH PPS final rule (75 FR 50185) and
the FY 2015 IPPS/LTCH PPS final rule
(79 FR 50203 through 50204) for more
information on the criteria we consider
for removing quality measures. We refer
readers to the FY 2016 IPPS/LTCH PPS
final rule (80 FR 49641 through 49643)
for more information on the additional
factors we consider in removing quality
measures and the factors we consider in
order to retain measures. We note in the
FY 2015 IPPS/LTCH PPS final rule (79
FR 50203 through 50204), we clarified
the criteria for determining when a
measure is ‘‘topped-out.’’ In the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
20033), we did not propose any changes
to these policies.
We refer readers to the FY 2017 IPPS/
LTCH PPS final rule (81 FR 57112
through 57120) for the list of 15
measures finalized for removal for the
FY 2019 payment determination and
subsequent years. In the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 20033),
we did not propose any measures for
removal.
4. Previously Adopted Hospital IQR
Program Measures for the FY 2019
Payment Determination and Subsequent
Years
The Hospital IQR Program has
previously finalized 62 measures for the
FY 2019 payment determination and
subsequent years as outlined in the table
below:
HOSPITAL IQR PROGRAM MEASURES FOR THE FY 2019 PAYMENT DETERMINATION AND SUBSEQUENT YEARS
Short name
Measure name
NQF #
Healthcare-Associated Infection Measures
CAUTI ..............................................
CDI ...................................................
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CLABSI ............................................
Colon and Abdominal Hysterectomy
SSI.
HCP .................................................
MRSA Bacteremia ...........................
National Healthcare Safety Network (NHSN) Catheter-associated Urinary Tract Infection
(CAUTI) Outcome Measure.
National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome Measure.
National Healthcare Safety Network (NHSN) Central Line-Associated Bloodstream Infection (CLABSI) Outcome Measure.
American College of Surgeons—Centers for Disease Control and Prevention (ACS–
CDC) Harmonized Procedure Specific Surgical Site Infection (SSI) Outcome Measure.
Influenza Vaccination Coverage Among Healthcare Personnel ...........................................
National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset
Methicillin-resistant Staphylococcus aureus (MRSA) Bacteremia Outcome Measure.
0138
1717
0139
0753
0431
1716
Claims-Based Patient Safety Measures
Hip/knee complications ....................
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Hospital-Level Risk-Standardized Complication Rate (RSCR) Following Elective Primary
Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA).
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HOSPITAL IQR PROGRAM MEASURES FOR THE FY 2019 PAYMENT DETERMINATION AND SUBSEQUENT YEARS—Continued
Short name
Measure name
NQF #
PSI 04 ..............................................
PSI 90 ..............................................
Death Rate among Surgical Inpatients with Serious Treatable Complications ....................
Patient Safety for Selected Indicators Composite Measure, Modified PSI 90 (Updated
Title: Patient Safety and Adverse Events Composite).
0351
0531
Claims-Based Mortality Outcome Measures
MORT–30–AMI ................................
MORT–30–CABG ............................
MORT–30–COPD ............................
MORT–30–HF ..................................
MORT–30–PN .................................
MORT–30–STK ...............................
Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Acute
Myocardial Infarction (AMI) Hospitalization.
Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Coronary Artery Bypass Graft (CABG) Surgery.
Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Chronic
Obstructive Pulmonary Disease (COPD) Hospitalization.
Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Heart
Failure (HF) Hospitalization.
Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Pneumonia Hospitalization.
Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Acute Ischemic
Stroke.
0230
2558
1893
0229
0468
N/A
Claims-Based Coordination of Care Measures
READM–30–AMI ..............................
READM–30–CABG ..........................
READM–30–COPD ..........................
READM–30–HF ...............................
READM–30–HWR ...........................
READM–30–PN ...............................
READM–30–STK .............................
READM–30–THA/TKA .....................
AMI Excess Days ............................
HF Excess Days ..............................
PN Excess Days ..............................
Hospital 30-Day All-Cause Risk-Standardized Readmission Rate (RSRR) Following
Acute Myocardial Infarction (AMI) Hospitalization.
Hospital 30-Day, All-Cause, Unplanned, Risk-Standardized Readmission Rate (RSRR)
Following Coronary Artery Bypass Graft (CABG) Surgery.
Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate (RSRR) Following
Chronic Obstructive Pulmonary Disease (COPD) Hospitalization.
Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate (RSRR) Following
Heart Failure (HF) Hospitalization.
Hospital-Wide All-Cause Unplanned Readmission Measure (HWR) ...................................
Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate (RSRR) Following
Pneumonia Hospitalization.
30-Day Risk Standardized Readmission Rate Following Stroke Hospitalization .................
Hospital-Level 30-Day, All-Cause Risk-Standardized Readmission Rate (RSRR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty
(TKA).
Excess Days in Acute Care after Hospitalization for Acute Myocardial Infarction ...............
Excess Days in Acute Care after Hospitalization for Heart Failure .....................................
Excess Days in Acute Care after Hospitalization for Pneumonia ........................................
0505
2515
1891
0330
1789
0506
N/A
1551
2881
2880
2882
Claims-Based Payment Measures
AMI Payment ...................................
HF Payment .....................................
PN Payment .....................................
THA/TKA Payment ..........................
MSPB ...............................................
Cellulitis Payment ............................
GI Payment ......................................
Kidney/UTI Payment ........................
AA Payment .....................................
Chole and CDE Payment ................
SFusion Payment ............................
Hospital-Level, Risk-Standardized Payment Associated with a 30-Day Episode-of-Care
for Acute Myocardial Infarction (AMI).
Hospital-Level, Risk-Standardized Payment Associated with a 30-Day Episode-of-Care
For Heart Failure (HF).
Hospital-Level, Risk-Standardized Payment Associated with a 30-day Episode-of-Care
For Pneumonia.
Hospital-Level, Risk-Standardized Payment Associated with an Episode-of-Care for Primary Elective Total Hip Arthroplasty and/or Total Knee Arthroplasty.
Payment-Standardized Medicare Spending Per Beneficiary (MSPB) ..................................
Cellulitis Clinical Episode-Based Payment Measure ............................................................
Gastrointestinal Hemorrhage Clinical Episode-Based Payment Measure ...........................
Kidney/Urinary Tract Infection Clinical Episode-Based Payment Measure ..........................
Aortic Aneurysm Procedure Clinical Episode-Based Payment Measure .............................
Cholecystectomy and Common Duct Exploration Clinical Episode-Based Payment Measure.
Spinal Fusion Clinical Episode-Based Payment Measure ...................................................
2431
2436
2579
N/A
2158
N/A
N/A
N/A
N/A
N/A
N/A
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Chart-Abstracted Clinical Process of Care Measures
ED–1* ...............................................
ED–2* ...............................................
Imm–2 ..............................................
PC–01* .............................................
Sepsis ..............................................
VTE–6 ..............................................
Median Time from ED Arrival to ED Departure for Admitted ED Patients ...........................
Admit Decision Time to ED Departure Time for Admitted Patients .....................................
Influenza Immunization .........................................................................................................
Elective Delivery ....................................................................................................................
Severe Sepsis and Septic Shock: Management Bundle (Composite Measure) ..................
Incidence of Potentially Preventable Venous Thromboembolism ........................................
0495
0497
1659
0469
0500
+
EHR-Based Clinical Process of Care Measures (that is, Electronic Clinical Quality Measures (eCQMs))
AMI–8a .............................................
CAC–3 .............................................
ED–1* ...............................................
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Primary PCI Received Within 90 Minutes of Hospital Arrival ...............................................
Home Management Plan of Care Document Given to Patient/Caregiver ............................
Median Time from ED Arrival to ED Departure for Admitted ED Patients ...........................
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HOSPITAL IQR PROGRAM MEASURES FOR THE FY 2019 PAYMENT DETERMINATION AND SUBSEQUENT YEARS—Continued
Short name
Measure name
NQF #
ED–2* ...............................................
EHDI–1a ..........................................
PC–01* .............................................
PC–05 ..............................................
STK–02 ............................................
STK–03 ............................................
STK–05 ............................................
STK–06 ............................................
STK–08 ............................................
STK–10 ............................................
VTE–1 ..............................................
VTE–2 ..............................................
Admit Decision Time to ED Departure Time for Admitted Patients .....................................
Hearing Screening Prior to Hospital Discharge ....................................................................
Elective Delivery ....................................................................................................................
Exclusive Breast Milk Feeding ..............................................................................................
Discharged on Antithrombotic Therapy ................................................................................
Anticoagulation Therapy for Atrial Fibrillation/Flutter ............................................................
Antithrombotic Therapy by the End of Hospital Day Two ....................................................
Discharged on Statin Medication ..........................................................................................
Stroke Education ...................................................................................................................
Assessed for Rehabilitation ..................................................................................................
Venous Thromboembolism Prophylaxis ...............................................................................
Intensive Care Unit Venous Thromboembolism Prophylaxis ...............................................
0497
1354
0469
0480
0435
0436
0438
0439
+
0441
0371
0372
Patient Experience of Care Survey Measures
HCAHPS ..........................................
Hospital Consumer Assessment of Healthcare Providers and Systems .............................
(including Care Transition Measure (CTM-3)) ......................................................................
0166
(0228)
Structural Patient Safety Measures
Patient Safety Culture ......................
Safe Surgery Checklist ....................
Hospital Survey on Patient Safety Culture ...........................................................................
Safe Surgery Checklist Use ..................................................................................................
N/A
N/A
* Measure listed twice, as both chart-abstracted and electronic clinical quality measure.
+ NQF endorsement has been removed.
Providers and Systems (HCAHPS)
Survey by refining the current Pain
Management questions (HCAHPS Q12,
Q13, and Q14) to focus on the hospital’s
communications with patients about the
patients’ pain during the hospital stay.
In accord with this new focus, we
proposed to update the name of the
composite measure from ‘‘Pain
Management’’ to ‘‘Communication
About Pain.’’
6. Refinements To Existing Measures in
the Hospital IQR Program for the FY
2020 Payment Determination and
Subsequent Years
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20035 through
20043), we proposed refinements to two
measures. First, we proposed
refinements to the Hospital Consumer
Assessment of Healthcare Providers and
Systems (HCAHPS) Survey (NQF #0166)
measure for the FY 2020 payment
determination and subsequent years.
Second, we proposed refinements to the
Stroke 30-Day Mortality Rate (MORT–
30–STK) measure for the FY 2023
payment determination and subsequent
years. We discuss these refinements in
more detail below.
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5. Considerations in Expanding and
Updating Quality Measures
We refer readers to the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53510
through 53512) for a discussion of the
considerations we use to expand and
update quality measures under the
Hospital IQR Program. In the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
20035), we did not propose any changes
to these policies.
(1) Background
The HCAHPS Survey (NQF #0166)
was adopted in the Reporting Hospital
Quality Data Annual Payment Update
Program in the CY 2007 OPPS final rule
(71 FR 68202 through 68204), beginning
with the FY 2008 payment
determination and for subsequent years.
This Survey includes three Pain
Management questions, Q12, Q13 and
Q14. In the FY 2013 IPPS/LTCH PPS
final rule (77 FR 53513 through 53516),
we added the Care Transition Measure
(CTM–3) (NQF #0228) to the existing
HCAHPS Survey, NQF #0166. The
HCAHPS Survey, combining both NQF
#0166 for the original survey and NQF
#0228 for the Care Transition Measure
adopted into the HCAHPS Survey in
2013, is the first national, standardized,
publicly reported survey of patients’
experience of hospital care. The
HCAHPS Survey asks discharged
patients 25 questions about their recent
hospital stay and 7 ‘‘About You’’
questions. Survey results have been
publicly reported on the Hospital
Compare Web site since 2008. We refer
readers to the FY 2011 IPPS/LTCH PPS
a. Refining the Hospital Consumer
Assessment of Healthcare Providers and
Systems (HCAHPS) Survey (NQF #0166)
Measure for the FY 2020 Payment
Determination and Subsequent Years
For the FY 2020 payment
determination and subsequent years, we
proposed to refine the existing Hospital
Consumer Assessment of Healthcare
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final rule (75 FR 50220), the FY 2012
IPPS/LTCH PPS final rule (76 FR 51641
through 51643), the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53537 through
53538), and the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50819 through
50820) for details on previously-adopted
HCAHPS requirements. We also refer
hospitals and HCAHPS Survey vendors
to the official HCAHPS Web site at:
https://www.hcahpsonline.org for new
information and program updates
regarding the HCAHPS Survey, its
administration, oversight, and data
adjustments.
The HCAHPS Survey (OMB control
number 0938–0981) is administered to a
random sample of adult patients who
receive medical, surgical, or maternity
care between 48 hours and 6 weeks (42
calendar days) after discharge and is not
restricted to Medicare beneficiaries.
Hospitals must survey patients
throughout each month of the year. The
HCAHPS Survey is available in official
English, Spanish, Chinese, Russian,
Vietnamese, and Portuguese versions.
The HCAHPS Survey and its protocols
for sampling, data collection and
coding, and file submission can be
found in the current HCAHPS Quality
Assurance Guidelines, which is
available on the official HCAHPS Web
site at: https://www.hcahpsonline.org/
qaguidelines.aspx. AHRQ carried out a
rigorous, scientific process to develop
and test the HCAHPS instrument. This
process entailed multiple steps,
including: A public call for measures;
literature reviews; cognitive interviews,
consumer focus groups; multiple
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38329
for a more in-depth discussion about
this process. The HCAHPS Survey was
endorsed by the NQF on August 5, 2005
(#0166).
The Pain Management questions
currently included in the HCAHPS
Survey are as follows:
In the CY 2017 OPPS/ASC final rule
with comment period in the context of
the Hospital VBP Program (81 FR
79856), we stated that we received
feedback that some stakeholders are
concerned about the Pain Management
dimension questions being used in a
program where there is any link
between scoring well on the questions
and higher hospital payments (81 FR
79856). The Pain Management
dimension used in the Hospital VBP
Program is identical in composition to
the Pain Management measure used in
the Hospital IQR Program, questions
Q12, Q13 and Q14 with one difference:
The HCAHPS dimension score in the
Hospital VBP program is based on the
percentage of patients who chose the
most positive response option (‘‘top-
box’’ response). For more information
about the Hospital VBP Program scoring
methodology, we refer readers to the FY
2017 IPPS/LTCH PPS final rule (81 FR
57006).
Some stakeholders believed that the
linkage of the Pain Management
dimension questions to the Hospital
VBP Program payment incentives
created pressure on hospital staff to
prescribe more opioids in order to
achieve higher scores on this dimension
(81 FR 79856). We stated that we
continue to believe that pain control is
an appropriate part of routine patient
care that hospitals should manage and
is an important concern for patients,
their families, and their caregivers (81
FR 79856). Further, we stated that it is
important to note that the HCAHPS
Survey does not specify any particular
type of pain control method (81 FR
79856). We added that appropriate pain
management includes communication
with patients about pain-related issues,
setting expectations about pain, shared
decision-making, and proper
prescription practices (81 FR 79856).
Furthermore, we stated that although we
were not aware of any scientific studies
that support an association between
scores on the Pain Management
dimension questions and opioid
prescribing practices, we were
developing alternative questions for the
Pain Management dimension in order to
remove any potential ambiguity in the
HCAHPS Survey. We noted that we
believe that removing the Pain
Management dimension from the
104 ‘‘Development, Implementation, and Public
Reporting of the HCAHPS Survey.’’ L.A. Giordano,
M.N. Elliott, E. Goldstein, W.G. Lehrman and P.A.
Spencer. Medical Care Research and Review, 67 (1):
27–37. 2010.
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opportunities for additional stakeholder
input; a 3-State pilot test; small-scale
field tests; and notice-and-comment
rulemaking.104 We refer readers to the
CY 2007 OPPS final rule (71 FR 68201)
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Hospital VBP Program scoring
calculations would address potential
confusion about the appropriate use of
the Pain Management dimension, and
provide us with an opportunity to
further refine the pain management
questions used in the HCAHPS Survey
(81 FR 79859).
In the same final rule, we stated we
would follow our standard survey
development processes, which included
drafting alternative questions, cognitive
interviews and focus group evaluation,
field testing, statistical analysis,
stakeholder input, the Paperwork
Reduction Act, and NQF endorsement
(81 FR 79856).
In that final rule, numerous
commenters supported the development
of modified questions regarding pain
management for the HCAHPS Survey
and some commenters expressed
particular support for modified pain
management questions that focused on
effective communication with patients
about pain management-related issues
(81 FR 79859 through 79860).
Specifically, a number of commenters
recommended modified pain
management questions focused on
shared decision-making, discussion of
treatment options, including non-opioid
pain management therapies, patient
understanding of pain management
options, and patient engagement in their
care (81 FR 79860).
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 20035
through 20039), for the FY 2020
payment determination and subsequent
years, we proposed to update and refine
the existing HCAHPS Survey questions
(HCAHPS Q12, Q13, and Q14) to focus
more directly on communication with
patients about their pain during the
hospital stay.
These proposed revised questions
would be used to form the composite
measure ‘‘Communication About Pain.’’
The proposed revised Communication
about Pain composite measure would be
a part of the HCAHPS Survey and
would be publicly reported in the
Hospital IQR Program. More
information about the revised questions/
composite measure is included below.
In compliance with section
1890A(a)(2) of the Act, measures
proposed for the Hospital IQR Program
were included in a publicly available
document: ‘‘List of Measures under
Consideration for December 1, 2016’’
available at: https://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/
QualityMeasures/Downloads/Measuresunder-Consideration-List-for-2016.pdf.
The Measure Applications
Partnership (MAP), a multi-stakeholder
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group convened by the NQF, reviews
the measures under consideration for
the Hospital IQR Program, among other
Federal programs, and provides input
on those measures to the Secretary. The
MAP’s 2017 recommendations for
quality measures under consideration
are captured in the following
documents: ‘‘2016–2017 Process and
Approach for MAP Pre Rulemaking
Deliberations’’ available at: https://
www.qualityforum.org/WorkArea/
linkit.aspx?LinkIdentifier=id&ItemID=
84455 and ‘‘2016–2017 Spreadsheet of
Final Recommendations to HHS and
CMS’’ available at: https://
www.qualityforum.org/WorkArea/
linkit.aspx?LinkIdentifier=id&ItemID=
84452.
We considered the input and
recommendations provided by the MAP.
The Communication About Pain
(MUC16–263) composite measure was
reviewed by the MAP in December
2016. The MAP recommended that this
composite measure be refined and
resubmitted prior to rulemaking. The
MAP emphasized the need to include
non-pharmacological options used to
treat pain. The MAP recommended that
the testing results demonstrate
reliability and validity for the Hospital
IQR Program. The MAP also
recommended that the measure be
submitted to NQF for review and
endorsement.105 We plan to resubmit
the proposed refined Communication
About Pain composite measure to the
MAP at the next opportunity. As we
discuss in more detail below, the
proposed refined Communication About
Pain composite measure underwent
field testing in 2016. Results were not
yet available for the MAP’s review in
December 2016, but are now complete
and are posted on the official HCAHPS
On-Line Web site, ‘‘Development of a
New Communication About Pain
Composite Measure for the HCAHPS
Survey,’’ available at: https://
www.hcahpsonline.org/mode
adjustment.aspx. We believe the
measure is now fully developed and
tested and we intend to provide
feedback to the MAP Hospital
Workgroup for review of testing results.
In early 2016, we empirically tested as
part of the field test the reliability and
validity of the proposed refined
Communication About Pain composite
measure in a large-scale experiment that
involved patients from 51 hospitals
across the nation. (We note that we are
correcting a technical error here; the
105 ‘‘2016–2017 Spreadsheet of Final
Recommendations to HHS and CMS’’ available at:
https://www.qualityforum.org/WorkArea/linkit.aspx?
LinkIdentifier=id&ItemID=84452.
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proposed rule (82 FR 20037) stated ‘‘50
hospitals.’’) Our analyses suggest the
proposed refined Communication About
Pain composite measure, which
includes two substantive items
regarding how often staff talked about
pain and how often staff discussed how
to treat pain while in the hospital (Q13
and Q14), as well as a screener item
(Q12), have strong reliability (evidence
that scores for hospitals are precisely
measured) and validity (evidence that
the measure does measure the intended
construct of patient experience).106
These properties of the individual
questions used in the proposed refined
Communication About Pain composite
measure are as good as or better than the
current Pain Management questions.
The new questions are not subject to
floor or ceiling effects (which would
occur if almost all responses were in the
lowest or highest response category),
have excellent hospital-level reliability
(here 0.88 or higher, where 0.70 or
higher is the conventional standard) at
recommended sample sizes, are not
redundant with other current questions,
are related in a predictable manner with
the standard patient-mix characteristics,
positively correlate with the two
HCAHPS questions that assess overall
patient experience (rating and
recommendation) with the hospital,
providing evidence of validity and do
not vary systematically by survey mode,
patient race/ethnicity, or hospital
characteristics after adjusting for patient
mix. They also have higher internal
consistency as a composite measure
(Cronbach’s alpha = 0.81), with 0.70 or
higher being the conventional threshold,
providing further evidence of
reliability.107
As stated above, the MAP
recommended the proposed refined
Communication About Pain composite
measure be submitted to the NQF for
review and endorsement once testing
has been completed.108 The proposed
refined Communication About Pain
composite measure is not yet NQF
endorsed; however, we intend to submit
the measure to the NQF for endorsement
when the Person and Family Centered
Care Project has a call for measures.
Whenever feasible, we adopt
measures that are NQF-endorsed, but
note sometimes there are important
106 Judd, C.M., & McClelland, G.H. (1998).
Measurement. In D.T. Gilbert, S.T. Fiske, & G.
Lindzey (Eds.), The handbook of social psychology
(4th ed., Vol. 1, pp. 180–232). New York: McGrawHill.
107 Cronbach, L.J. (1984). Essentials of
psychological testing (4th ed.). New York: Harper.
108 ‘‘2017 Considerations for Implementing
Measures Hospitals-Final Report,’’ available at:
https://www.qualityforum.org/map/.
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areas of clinical concern for which NQFendorsed measures do not exist. Section
1886(b)(3)(B)(IX)(bb) of the Act provides
that in the case of a specified area or
medical topic determined appropriate
by the Secretary for which a feasible and
practical measure has not been endorsed
by the entity with a contract under
section 1890(a) of the Act, the Secretary
may specify a measure that is not so
endorsed as long as due consideration is
given to measures that have been
endorsed or adopted by a consensus
organization identified by the Secretary.
(The NQF currently holds this contract.)
We considered other existing measures
which have been endorsed by the NQF
and other consensus organizations, but
we were unable to identify any NQFendorsed (or other consensus
organization endorsed) measures that
were feasible and practical.
While we consider MAP
recommendations and NQF
endorsement status as part of our
decision-making process for which
measures to include in the Hospital IQR
Program, we believe it is important to
adopt this proposed refined
Communication About Pain composite
measure, because communicating with
patients about their pain is an integral
part of delivering high quality, personcentered care.109 In developing the
proposed refined Communication About
Pain composite measure, we followed
our standard survey development
processes,110 which included drafting
alternative questions, cognitive
interviews, focus group evaluation, field
testing, statistical analysis, and
stakeholder input. We believe the
proposed refined Communication About
Pain composite measure has been
sufficiently tested, demonstrating high
levels of reliability and validity, as
noted above.
Further, we have consistently
received feedback from some
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109 ‘‘A Special Contribution from the Centers for
Medicare and Medicaid Services: Valuing Patient
Experience While Addressing the Prescription
Opioid Epidemic.’’ L. Tefera, W.G. Lehrman, E.G.
Goldstein and S. Agrawal. Annals of Emergency
Medicine. 2016. Published online, 7–19–16. https://
www.annemergmed.com/article/S01960644(16)30367-5/fulltext.
110 ‘‘Development, Implementation, and Public
Reporting of the HCAHPS Survey.’’ L.A. Giordano,
M.N. Elliott, E. Goldstein, W.G. Lehrman and P.A.
Spencer. Medical Care Research and Review, 67 (1):
27–37. 2010.
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stakeholders expressing concern that the
current Pain Management questions
encourage overprescribing of opioids as
discussed in the CY 2017 OPPS/ASC
final rule with comment period (81 FR
79856). As a result, we believe it is
important to refine the existing Pain
Management measure. In the proposed
rule (82 FR 20038), we noted that if our
proposal to revise the current Pain
Management measure questions with
those in the proposed refined
Communication About Pain composite
measure is not finalized, we would
continue to use the Pain Management
questions as previously finalized.
The proposed refined Communication
About Pain composite measure is
discussed below. We proposed to revise
the current Pain Management questions
(Q12, Q13, and Q14) in the HCAHPS
Survey for the FY 2020 payment
determination and subsequent years by
adopting the proposed refined
Communication About Pain composite
measure in the HCAHPS Survey
beginning with the FY 2020 payment
determination, which would be
applicable to surveys administered to
patients beginning with January 1, 2018
discharges and for subsequent years.
In compliance with section
1886(b)(3)(B)(viii)(VII) of the Act, we
calculate and publicly report HCAHPS
measures from four consecutive quarters
of data. From that point and forward,
the oldest quarter of data is rolled off,
the newest quarter is rolled on, and the
measure scores are calculated for this
unique set of four quarters and are
publicly reported on the Hospital
Compare Web site and available for
payment determination. Data submitted
for the current Pain Management
measure in CY 2017 for the FY 2019
payment determination will be publicly
reported on the Hospital Compare Web
site in October 2018. In the proposed
rule (82 FR 20038), we noted that if our
proposal to revise the HCAHPS Pain
Management measure with the HCAHPS
Communication About Pain composite
measure is finalized, we would begin to
use the new Pain Management questions
on the HCAHPS Survey in January of
2018. Once we have collected four
consecutive quarters of the HCAHPS
Communication About Pain composite
measure questions, we would create
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scores for the Communication About
Pain composite measure.
We would be unable to report or use
for payment determination either the
original or new Pain Management
measure unless and until we have
collected 4 quarters of data for the
measure. The CY 2017 reporting period/
FY 2019 payment determination would
be the last period for which we have
four quarters of the original Pain
Management measure data which, as
stated above, would be publicly
reported on the Hospital Compare Web
site in October 2018. We would be
unable to publicly report either the
original or proposed refined
Communication About Pain composite
measure on the Hospital Compare Web
site in December 2018, April 2019, or
July 2019 because there would be fewer
than 4 quarters of data for both the
original and the new measure. The CY
2018 reporting period/FY 2020 payment
determination would be the first period
for which we have four quarters of the
proposed refined Communication About
Pain composite measure. Therefore, the
first opportunity to publicly report the
Communication About Pain composite
measure on the Hospital Compare Web
site would be in October 2019. From
this point forward, the proposed refined
Communication About Pain composite
measure could be used for payment
determinations.
(2) Overview of Measure
The refined questions that comprise
the proposed refined Communication
About Pain composite measure closely
mirror the structure and style of the
existing Pain Management questions.
However, the new questions address
how providers communicate with
patients about pain while removing any
ambiguities in the wording or intent of
the questions. This refinement is
consistent with the HCAHPS Survey’s
original design, development, and NQF
endorsement (NQF #0166). Further, we
designed the Communication About
Pain composite measure to be consistent
and compatible with existing HCAHPS
questions and HCAHPS sampling and
survey administration protocols. The
three Communication About Pain
composite measure questions are as
follows:
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As stated above, in light of the
ongoing opioid epidemic, we believe it
is important the Communication About
Pain composite measure is abundantly
clear in its focus on communication
about pain between providers and their
patients, and it is applicable to all
patients who experienced pain during
their hospital stay.
(3) Data Collection
The proposed refined Communication
About Pain composite measure
questions would be administered and
data collected in exactly the same
manner as the current Pain Management
measure questions. There would be no
changes to HCAHPS patient eligibility
or exclusion criteria. Detailed
information on HCAHPS data collection
protocols can be found in the current
HCAHPS Quality Assurance Guidelines,
located at: https://
www.hcahpsonline.org/
qaguidelines.aspx. We reiterate that
other than the revision of the HCAHPS
Pain Management questions, the
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HCAHPS Survey and its administration
and data collection protocols would be
unchanged. The survey adjustment and
patient-mix adjustment for the proposed
refined Communication About Pain
composite measure would be made
available on the official HCAHPS OnLine Web site at: https://
www.hcahpsonline.org/
modeadjustment.aspx.
(4) Public Reporting
The scoring of the proposed refined
Communication About Pain composite
measure would be the same as the
current Pain Management measure.
Detailed information on how the
measure would be scored for purposes
of public reporting can be found on the
HCAHPS Web site at: https://
www.hcahpsonline.org/Files/
Calculation%20of%20HCAHPS%20
Scores.pdf.
We invited public comment on our
proposal to revise the current Pain
Management questions (Q12, Q13, and
Q14) in the HCAHPS Survey for the FY
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2020 payment determination and
subsequent years by adopting the
proposed refined Communication About
Pain composite measure in the HCAHPS
Survey beginning with the FY 2020
payment determination and subsequent
years, which would be applicable to
surveys administered to patients
beginning with January 1, 2018
discharges and for subsequent years as
discussed above.
Comment: There was a consensus
among commenters that pain care is a
critical matter to measure as part of
HCAHPS. Many commenters supported
the proposed refinement to the HCAHPS
Survey measure pain management
questions. The commenters noted
reframing the HCAHPS pain measures
as ‘‘Communication About Pain’’ is a
positive change that would help ensure
care is more patient-centered. The
commenters appreciated the fact the
new questions focus more directly on
communication with patients about
their pain during the hospital stay, as
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opposed to patients’ perceptions of the
adequacy of pain treatment during the
hospital stay. One commenter
commended CMS on its responsiveness
to concerns about pain and the
development of new items focusing less
on pharmacotherapy items. Another
commenter noted that pain management
measures address an important aspect of
patient care. Another commenter noted
that Pain Management questions are
needed for improved delivery of care,
proper pain management, and shared
decision making. Another commenter
noted that the revised pain management
questions are an improvement. One
commenter supported refining the pain
management questions to dissuade overprescription of opioids and remove
ambiguities, and appreciated the steps
taken by CMS to test for reliability and
validity. One commenter noted that the
new focus on pain communication is
positive, ensuring that care is more
patient-centered. Another commenter
noted that CMS should proceed with the
proposed changes to the pain
management questions.
Response: We thank the commenters
for their support. We believe that the
proposed refined pain management
questions as formulated shift focus from
the method of pain management to
patient-centered communication
between provider and patient. We
believe the proposed refined
Communication About Pain composite
measure adequately reflects shared
decision making and pain management
by focusing on communication between
patients and providers rather than the
particular course of treatment. We
engaged the patient and caregiver
community in evaluating and refining
the questions related to pain
management as part of our standard
survey development process.
Comment: Several commenters
supported complete removal of the pain
management questions from the
HCAHPS Survey measure, arguing that
questions evaluating how pain is
discussed offer no benefit to patients.
Another commenter encouraged CMS
to reduce external pressure on providers
to prescribe opioids inappropriately by
completely removing the current Pain
Management questions from the
HCAHPS Survey measure beginning in
CY 2018 because doing so would help
ensure physicians have the ability to
treat patients in the most appropriate
manner. In addition, the commenter
urged CMS to eliminate pain as a ‘‘fifth
vital sign’’ from all professional
standards because the current culture of
pain as a fifth vital sign minimizes
investigation into causes of pain and
incentivizes methods of addressing pain
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in a manner that may not support the
patient’s health in the long term.
Response: Pain management is an
important component of the quality of
care provided at a hospital, and we
believe continued inclusion of the
HCAHPS Survey measure in the
Hospital IQR Program provides patients
with critical information for use in
selecting a hospital setting for their care,
ensures hospitals continue to
appropriately manage patients’ pain,
and encourages hospitals to engage in
quality improvement efforts in
addressing pain management and
communication about pain. We
continue to believe pain control is a
critical part of routine patient care that
hospitals should manage and is an
important concern for patients, their
families, and patient caregivers.
Furthermore, as revised, the pain
management questions focus entirely on
communication about pain with
patients and do not refer to,
recommend, or imply that any
particular type of treatment is
appropriate. We believe the revised
Communication About Pain composite
measure questions should encourage
more and better communication
between hospital staff and patients
about pain and should not affect patient
treatment. Therefore, we believe there is
continued benefit to include and
publicly report the HCAHPS Survey
Pain Management questions in this and
other CMS quality programs that use the
HCAHPS Survey.
Finally, we acknowledge the
commenter’s recommendation that we
eliminate pain as a ‘‘fifth vital sign’’
from professional standards, and we
note that such requests should be
referred to and addressed by relevant
professional societies.
Comment: Many commenters
supported the proposed refinement of
the HCAHPS Survey measure pain
management questions to focus more on
communication about pain, but only if
first endorsed by the NQF. The
commenters stated that having the NQF
endorse the revised questions would
allow the measure to be publicly vetted
by different stakeholders, including
hospitals and patient advocates and
address concerns about the reliability
and validity of the proposed refined
Communication About Pain composite
measure before they are implemented.
The commenters expressed concern that
CMS intends to resubmit the measure to
the MAP Hospital Workgroup and to
NQF for endorsement when there is a
call for measures by the Person and
Family Centered Care Project, after the
measure is proposed to have been
implemented in Hospital IQR Program
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38333
already. In addition, one commenter
believed the potential unintended
consequences of the current pain
management questions has resulted in
CMS working too quickly to develop the
proposed refined Communication About
Pain composite measure, and cautioned
that field testing including patients from
51 hospitals does not produce strong
reliability and validity that are better
than the current questions.
Many commenters requested CMS
release findings from the field testing of
these proposed refined Communication
About Pain composite measure and
move the measure forward through the
NQF process prior to considering
adoption into the Hospital IQR Program.
Response: We thank the commenters
for their support. We continue to believe
the HCAHPS Survey measure Pain
Management questions, and the
HCAHPS Survey as a whole, are valid
and reliable measures of hospital quality
that encourage hospitals to assess and
improve the patient experience.111 112
The HCAHPS Survey as a whole is
already NQF-endorsed (NQF #0166). We
anticipate the proposed refined
Communication About Pain composite
measure will receive NQF-endorsement
when there is a call for measures by the
Person and Family Centered Care
Project. We intend to resubmit the
measure to the MAP and submit the
measure to the NQF for endorsement
after the measure refinement has already
been implemented in the Hospital IQR
Program. However, we have had to
weigh the potential, unintended public
health concerns against the necessary
time to complete these reviews. Out of
an abundance of caution, in the face of
a nationwide epidemic of opioid overprescription, we believe implementing
the proposed refined Communication
About Pain composite measure as soon
as feasible is necessary to address any
perceived conflict between appropriate
management of opioid use and patient
satisfaction by relieving any potential
pressure physicians may feel to
overprescribe opioids. We believe that
replacing the current pain management
questions in the HCAHPS Survey with
revised questions that focus on the
adequacy and frequency of
communication about pain will remove
any perceived ambiguity or confusion
about the intent of the pain items and
111 ‘‘Do Hospitals Rank Differently on HCAHPS
for Different Patient Subgroups?’’ M.N. Elliott, W.G.
Lehrman, E. Goldstein, K. Hambarsoomian, M.K.
Beckett and L.A. Giordano. Medical Care Research
and Review, 67 (1): 56–73. 2010.
112 National Quality Forum. NQF-Endorsed
Measures for Person- and Family-Centered Care.
Phase 1 Technical Report March 4, 2015. Pp. 26–
40.
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enhance communication about the
particular needs individual patients
have with respect to pain. We hope the
refined pain management questions will
shift focus from the method of pain
management to patient-centered
communication between provider and
patient.
As discussed in our proposal above,
whenever feasible, we adopt measures
that are NQF-endorsed, but note
sometimes there are important areas of
clinical concern for which NQFendorsed measures do not exist. Section
1886(b)(3)(B)(IX)(bb) of the Act provides
that in the case of a specified area or
medical topic determined appropriate
by the Secretary for which a feasible and
practical measure has not been endorsed
by the entity with a contract under
section 1890(a) of the Act, the Secretary
may specify a measure that is not so
endorsed as long as due consideration is
given to measures that have been
endorsed or adopted by a consensus
organization identified by the Secretary.
(The NQF currently holds this contract.)
We considered other existing measures
which have been endorsed by the NQF
and other consensus organizations, but
we were unable to identify any NQFendorsed (or other consensus
organization endorsed) measures that
were feasible and practical.
In addition, while we consider MAP
recommendations and NQF
endorsement status as part of our
decision-making process for which
measures to include in the Hospital IQR
Program, we believe it is important to
adopt the proposed refined
Communication About Pain composite
measure. In addition, in response to the
MAP’s request to receive an update on
the status of measures that received a
Refine and Resubmit recommendation,
we intend to update the MAP about
these Communication About Pain
composite measure questions.
The refined Communication About
Pain composite measure was informed
by input and guidance on survey
content and approach from a technical
expert panel, focus groups and cognitive
testing to explore patient experience
and interpretation of survey items, and
field testing of survey items to test item
properties and psychometric
performance and composite measures.
We disagree that field testing including
patients from 51 hospitals does not
produce strong reliability and validity
that are better than the current
questions. As described in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
20037), in early 2016, we empirically
tested, as part of the field testing, the
reliability and validity of the proposed
refined Communication About Pain
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composite measure in a large-scale
experiment that involved patients from
51 hospitals across the nation. The 51
hospitals were carefully selected to be
nationally representative, and the
sample sizes of patients and hospitals
exceeded requirements for assessing
reliability and validity. The statistical
reliability and validity of the new
proposed items meet high psychometric
standards and have undergone testing
that meets the standards of the field.
Our analyses suggest the proposed
refined Communication About Pain
composite measure has strong reliability
(evidence that scores for hospitals are
precisely measured) and validity
(evidence that the measure does
measure the intended construct of
patient experience).113 These properties
of the individual questions used in the
proposed refined Communication About
Pain composite measure are as good as
or better than the current Pain
Management questions. The new
questions are not subject to floor or
ceiling effects (which would occur if
almost all responses were in the lowest
or highest response category), have
excellent hospital-level reliability (here
0.88 or higher, where 0.70 or higher is
the conventional standard) at
recommended sample sizes, are not
redundant with other current questions,
are related in a predictable manner with
the standard patient-mix characteristics,
positively correlate with the two
HCAHPS questions that assess overall
patient experience (rating and
recommendation) with the hospital,
providing evidence of validity and do
not vary systematically by survey mode,
patient race/ethnicity, or hospital
characteristics after adjusting for patient
mix. They also have higher internal
consistency as a composite measure
(Cronbach’s alpha = 0.81), with 0.70 or
higher being the conventional threshold,
providing further evidence of
reliability.114 Therefore, we disagree
that the field testing does not produce
strong reliability and validity. With
respect to commenters’ request that we
release findings from the field testing of
the proposed refined Communication
About Pain questions, a summary of the
results of the field testing of the
proposed refined Communication About
Pain composite measure, among others,
became available in early July 2017 on
our HCAHPS On-Line Web site. We
refer readers to ‘‘Development of a New
113 Judd, C. M., & McClelland, G.H. (1998).
Measurement. In D.T. Gilbert, S.T. Fiske, & G.
Lindzey (Eds.), The handbook of social psychology
(4th ed., Vol. 1, pp. 180–232). New York: McGrawHill.
114 Cronbach, L.J. (1984). Essentials of
psychological testing (4th ed.). New York: Harper.
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Communication About Pain Composite
Measure for the HCAHPS Survey,’’
available at: https://
www.hcahpsonline.org/
modeadjustment.aspx.
As discussed in the CY 2017 OPPS/
ASC final rule with comment period (81
FR 79855 through 79862), and in the FY
2018 IPPS/LTCH PPS proposed rule (82
FR 20035), we followed our standard
survey development processes, which
included drafting alternative questions,
cognitive interviews and group
evaluation, field testing, statistical
analysis, and soliciting stakeholder
input. We believe the proposed refined
Communication About Pain questions
represent stakeholder consensus and
have been specifically designed to
reduce the probability of unintended
consequences and to maximize
improved patient outcomes. We will
monitor the proposed refined
Communication About Pain composite
measure for any possible unintended
consequences.
Comment: A few commenters
supported the proposed refinements to
the HCAHPS pain management
questions, but recommended
suspending public reporting of pain
management questions on the Hospital
Compare Web site until the questions
have been fully vetted by the NQF.
One commenter encouraged CMS to
consider publicly reporting less than
four quarters of data in the interim
period in which less than four quarters
of data are available so that this
important measure can be brought to the
public sooner.
Response: We believe continued
public reporting of Pain Management
performance rates provides the public
with important quality data for use in
health care decision-making and
incentivizes quality improvement
regarding pain management and
communication. We further believe
continued public reporting of the score
for the composite Pain Management
measure performance rates provides
valuable information to patients and
consumers and encourages hospitals to
appropriately manage patients’ pain and
continue engaging in quality
improvement efforts.115 However, in
order to be responsive to stakeholder
concerns, we are finalizing a
modification of our proposal, to delay
public reporting of the revised
Communication About Pain composite
measure. Instead of publicly reporting
115 L. Tefera, W.G. Lehrman, and P. Conway.
‘‘Measurement of the Patient Experience: Clarifying
Facts, Myths, and Approaches.’’ Journal of the
American Medical Association. Published online,
3–10–16. https://jama.jamanetwork.com/
article.aspx?articleid=2503222.
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in October 2019 using data from the CY
2018 reporting period/FY 2020 payment
determination, we will delay public
reporting of the refined Communication
About Pain composite measure on the
Hospital Compare Web site until
October of 2020, using data from the CY
2019 reporting period/FY 2021 payment
determination. After this initial public
reporting, public reporting will continue
for subsequent years.
In the meantime, we will provide
results on the refined Communication
About Pain composite measure
questions to hospitals in confidential
preview reports upon the availability of
four quarters of data based on CY 2018
data. We anticipate that the confidential
preview reports will be disseminated in
the summer of 2019. We note hospitals
may have access to their raw HCAHPS
data and to unofficial HCAHPS scores
through their survey vendor prior to the
submission of their HCAHPS data to
CMS and prior to the dissemination of
the Hospital Specific Confidential
Preview Reports that contain official
HCAHPS scores.
As stated above, we intend to
resubmit the measure to the MAP
Hospital Workgroup and to the NQF for
endorsement when there is a call for
measures by the Person and Family
Centered Care Project and we anticipate
the proposed refined Communication
About Pain composite measure will
receive MAP approval and NQF
endorsement. Delaying public reporting
of the proposed refined Communication
About Pain composite measure on the
Hospital Compare Web site until
October of 2020 should provide
sufficient time for NQF review prior to
public display of this measure data. In
addition, delaying public reporting of
this measure until October of CY 2020
will give hospitals one year to review
their performance data on the refined
Communication About Pain composite
measure questions prior to public
reporting of their performance data on
the Hospital Compare Web site.
In response to the commenter’s
suggestion that we consider publicly
reporting less than four quarters of data
in the interim period in which less than
four quarters of data are available so this
measure can be brought to the public
sooner, while we agree the Pain
Management questions convey
important information about hospital
quality, we believe the value of the
proposed refined Communication About
Pain composite measure would be
enhanced by adhering to the established
practice of collecting four quarters of
data for public reporting. Doing so
ensures that publicly reported HCAHPS
measures are based on the same
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discharge period and provides more
time for hospitals to attain the minimum
number of completed surveys required
for public reporting.
Comment: Many commenters
supported removal of the existing pain
management questions from the
HCAHPS Survey measure, but
expressed concern with the wording of
the refined Communication About Pain
composite measure. The commenters
believed the exact wording of the pain
management questions is important
because results from patient satisfaction
surveys influence quality improvement
initiatives since hospitals are partially
reimbursed based on patient satisfaction
scores. While commenters agreed it is
important to remove ambiguities in the
wording or intent of the questions and
appreciated CMS’ steps to appropriately
test the measure for reliability and
validity, some commenters expressed
concern the proposed refined
Communication About Pain composite
measure may not assist with quality
improvement activities to ensure that
patients receive appropriate pain
management. The commenters provided
a variety of alternate formulations for
the pain questions for CMS to consider.
Several commenters provided specific
suggested language with which to
replace the three existing pain
management questions. In addition to
specific language changes, some
commenters made more general
recommendations with respect to the
refinement of the Pain Management
questions.
One commenter expressed concern
with the use of the word ‘‘treat’’ in
question HP3. The commenter believed
the word ‘‘treat’’ implies complete pain
relief should be achieved, which is not
always possible. As such, the
commenter suggested question HP3 be
re-worded to replace the word ‘‘treat’’
with the words ‘‘manage or treat.’’ The
commenters asserted this wording
revision would be a better way to
encompass all methods of pain
management, rather than just
medication.
Another commenter challenged the
terminology used in all three questions
because the word ‘‘pain’’ has a negative
connotation and suggested that asking a
patient about their ‘‘comfort,’’ instead of
‘‘pain’’ would be more appropriate.
Finally, one commenter suggested all
three revised pain management
questions be modified to explicitly
include the type of clinical staff (that is,
nurses, primary care giver, or physician)
communicating with the patient at the
time the pain is being assessed.
Response: We thank the commenters
for their recommendations regarding
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alternative refinements to the wording
of the Pain Management questions in
the HCAHPS Survey measure. We
would like to reiterate that the HCAHPS
Survey is a patient experience of care
survey and not a patient satisfaction
survey. The HCAHPS Survey asks
recently discharged patients about
aspects of their hospital experience that
they are uniquely suited to address. The
survey asks ‘‘how often’’ or whether
patients experienced a critical aspect of
hospital care, rather than whether they
were ‘‘satisfied’’ with their care.116
Furthermore, we are unaware of any
empirical evidence demonstrating that
failing to prescribe opioids lowers a
hospital’s HCAHPS Survey scores.
However, we believe the potential
confusion about the appropriate use and
interpretation of the Pain Management
questions, coupled with the public
health concern about the opioid
epidemic, warrants refinement to the
existing Pain Management questions. As
outlined above, we received multiple
suggestions for alternate wording of the
Pain Management questions. We
appreciate the alternative survey
question wording submitted by
numerous commenters and will
consider them for future use. In some
instances, we have given consideration
to similar concepts and formulations,
but we note that for use in relatively
short, national surveys of patient
experience of care, items must be
widely applicable, simple, clear, easily
understood, and unambiguous.
As discussed in the CY 2017 OPPS/
ASC final rule with comment period (81
FR 79855 through 79862), and in the FY
2018 IPPS/LTCH PPS proposed rule (82
FR 20035), in developing the proposed
refined Pain Management questions, we
have followed our standard survey
development processes, working with
our contractors, which included drafting
alternative questions, cognitive
interviews and group evaluation, field
testing, statistical analysis, empirical
testing in a large-scale experiment, and
soliciting stakeholder input. We
conducted interviews with providers
and patients as well as cognitive testing
with patients.
We developed and submitted two
measures related to the refinement of
the pain management questions for
consideration by the MAP and,
subsequently, narrowed consideration
to just one measure, ‘‘Communication
about pain during the hospital stay,’’
withdrawing the measure
‘‘Communication about pain after
116 HCAHPS Fact Sheet available at: https://
www.hcahpsonline.org/Facts.aspx.
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discharge.’’117 The proposed refined
Communication About Pain composite
measure has proceeded through the prerulemaking process, including addition
onto the ‘‘Measures Under
Consideration’’ list and review by the
MAP, as well as notice-and-comment
rulemaking through this final rule.
Furthermore, we intend to seek NQF
endorsement for the proposed refined
Pain Management questions. We believe
the proposed refined pain management
questions as formulated shift focus from
the method of pain management to
patient-centered communication
between provider and patient.
Moreover, we cognitively tested with
both English- and Spanish-speaking
patients how the words ‘‘treat,’’
‘‘manage,’’ and ‘‘reduce’’ pain were
interpreted. After assessing the results,
we decided we decided to use ‘‘treat’’ in
the refined Communication About Pain
composite measure.
While we appreciate the suggestion,
we believe that use of the word
‘‘comfort’’ may lead to more
misunderstanding than use of the word
‘‘pain’’ because the concept of
‘‘comfort’’ is even more subjective than
the concept of the word ‘‘pain.’’ Finally,
in response to the commenter’s
suggestion that the Pain Management
questions be modified to explicitly
include the type of clinical staff
communicating with the patient, doing
so would entail adding more questions
to the survey, which would result in an
increase in the length and complexity of
the survey, and thus, also increase the
burden for both patients and hospitals,
which we believe is inadvisable and
unnecessary.
Comment: Several commenters
supported the refinements to the
HCAHPS Survey measure pain
management questions, but lacked
confidence that simply including
communication questions regarding
pain management would reflect the true
perception the patients have of their
experience relative to pain management.
These commenters encouraged CMS to
continue to explore other ways to
ensure better measurement of patients’
experience with pain management, such
as including additional questions about
whether hospital staff talked about
alternatives to medication for pain
management and clearly communicated
to the patients the addictive potential of
opioid medications. The commenters
also expressed concerns the questions
related to pain management pertain only
to whether the caregiver discussed the
patient’s pain but do not reflect the
patient’s engagement in this discussion.
Several commenters recommended
incorporating concepts of care quality
for pain management, such as: (1) The
degree to which hospital staff listened to
patients and responded to their pain
(including offering non-opioid or nonmedication options); and (2) the degree
to which patients felt the hospital staff
helped them understand their options to
manage their pain.
Response: We thank the commenters
for their support. In the comments
received, there was broad support for
shifting the focus of the pain
management questions in the HCAHPS
Survey from assessment of the adequacy
and effectiveness of pain control efforts
among patients who needed medicine
for pain, to assessment of the frequency
of hospital staff’s efforts to talk about
pain and its treatment among patients
who experienced pain during their
hospital stay. We continue to believe
pain control is a critical part of routine
patient care that hospitals should
manage and is an important concern for
patients, their families, and their
caregivers.
With respect to how pain is captured
and monitored, we believe that adequate
pain management is an important goal
for hospitals and a concern of patients
and consumers. By focusing directly on
communication about pain with the
patient, we believe that the refined
Communication About Pain composite
measure will encourage and enhance
hospital staff’s discussions with patients
about patients’ particular circumstances
while reducing the potential for
misinterpretation that could lead
hospital staff to using inappropriate
treatment. During measure
development, in the 2016 HCAHPS
mode experiment, we tested a question
that asked patients about various nonprescription pain treatments. However,
the question did not meet statistical
criteria for acceptability,118 and could
cause providers to infer that these
treatments are appropriate for every
patient. We will continue to evaluate
this question for possible future
inclusion as a question on the HCAHPS
Survey.
In addition, regarding the comment
raising concerns that the questions
pertain only to whether the caregiver
discussed the patient’s pain, but do not
reflect the patient’s engagement in this
discussion, we had tested different
117 List of Measures Under Consideration for
December 1, 2016.’’ Available at: https://
www.qualityforum.org/Projects/i-m/MAP/
2016_Measures_Under_Consideration_List.aspx.
118 ‘‘Development of a New Communication
About Pain Composite Measure for the HCAHPS
Survey,’’ https://www.hcahpsonline.org/
modeadjustment.aspx.
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words during measure development to
determine which would give better
responses. Through cognitive interviews
with patients and interviews with
providers, we have learned that
‘‘talking’’ with hospital staff about how
much pain the patient had or how to
treat pain indicated greater patient
engagement than did ‘‘discussing’’ or
‘‘telling’’ patients.
Furthermore, although important,
Pain Management is only one of nine
aspects of patient experience explored
by the HCAHPS Survey. Because
parsimony and brevity are fundamental
to the success of the survey, we believe
there are limits on the number and
specificity of the questions that can be
devoted to any particular topic.
Therefore, we had to balance brevity
with utility in determining the ultimate
version of the refined Communication
About Pain composite measure
questions. However, we will take into
consideration commenters’ suggestions
for the future and continue to
investigate effective means of exploring
patients’ pain management experience
and ways to ensure better measurement
of patients’ experiences with pain
management.
Comment: One commenter believed
these answers still would not provide
much real, significant information about
the patients’ experience or provide
information about whether their pain
was addressed. The commenter
suggested formulating questions that
focus on patient function and regular
assessment and treatment of their
overall status rather than solely on their
pain. A few commenters suggested that
the Communication About Pain
composite measure reflect current best
practice for both acute and chronic pain,
which is the use of multi-modal therapy
and poly-pharmacy. The commenters
suggested that treating pain using
different receptors and mechanisms not
only allows for the reduction of opioid
use and morbidity, but allows an
opportunity to optimize the patient’s
pain experience. One commenter
recommended the HCAHPS Survey
measure’s pain management questions
should capture whether this multimodal pain pathway process happened
during a hospitalization.
Response: We note that some
stakeholders have criticized the current
Pain Management questions because
they believed that asking patients who
needed medicine for pain how often
their pain was well controlled and how
often hospital staff did everything they
could to help with pain had the
unintended consequence of creating
pressure on physicians to over-prescribe
opioid treatment for pain. In response to
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this criticism, in the face of a national
epidemic of overuse of opioids, the
refined Communication About Pain
questions shift the focus from patient
assessments of the adequacy and vigor
of pain management efforts to the
frequency of communication about pain
and addressing the availability of
treatments.
We agree that the concepts of care
quality for pain management and use of
multi-modal therapy and polypharmacy are important components in
pain management for patients, as are
differences in chronic and acute pain. In
developing the new Communication
About Pain measure, we explored these
concepts in cognitive interviews and
focus groups with patients. We note that
the questions in the HCAHPS Survey
were designed to be applicable to and
easily understood by the wide spectrum
of patients in American hospitals, and
that its results are intended primarily
for public reporting. As such, we are
constrained to use questions in which
the wording and intent are applicable
and correctly understood by a wide
spectrum of patients. However, we will
consider use of multi-modal therapy
and poly-pharmacy and other steps to
address pain management, including
additional questions about pain
management in the HCAHPS Survey in
the future.
Comment: Some commenters
recommended further steps to address
pain management including analysis of:
(1) The complete care continuum to
identify breakdowns in communication
(such as insufficient medication
reconciliation on admission) that lead to
opioid misuse; (2) additional
considerations (pre-admission pain,
unclear guidance on pain management,
failure of the provider to identify nonopioid approaches to pain management,
etc.) that may affect the patient’s pain
management; and (3) enhancement of
the Communication About Pain
composite measure (MUC16–263) with
additional questions related to pain.
Response: We acknowledge the
commenters’ recommendations that we
analyze the complete care continuum to
identify breakdowns in communication
and additional considerations that may
affect the patient’s pain management,
however, we note the HCAHPS Survey
asks patients only about care
experiences during a specific hospital
stay. The HCAHPS Survey does not
inquire about specific individuals,
departments, or wards within the
hospital. HCAHPS data submitted to us
are patient de-identified. As such, it is
not possible to link the patient or survey
to anything that occurs pre-admission or
post-discharge, or to clinical records,
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thus we are prevented from following
patients through the continuum of care.
Furthermore, as stated above, although
important, Pain Management is only one
of nine aspects of patient experience
explored by the HCAHPS Survey.
Because parsimony and brevity are
fundamental to the success of the
survey, we believe there are limits on
the number and specificity of items that
can be devoted to any particular topic.
As noted above, we had to balance
brevity with utility in determining the
ultimate version of pain management
questions proposed.
Comment: Another commenter urged
CMS to revisit how pain is captured and
monitored because asking only about
the presence of pain does not provide
enough information to improve an
individual’s overall quality of life. For
example, pain levels may never change,
even when the function/ability of the
patient improves. Therefore, the focus
on pain should be on how the patient’s
pain limits their functioning and
physical abilities.
A few commenters suggested the
focus of the revised HCAHPS pain
questions include a discussion of
patient safety options, as well as the
effectiveness of the provided pain
treatment options, as opposed to solely
focusing on pain treatment options and
suggested that CMS cannot effectively
evaluate the efficacy of treatment merely
by including a question that asks
whether or not hospital staff discussed
pain treatment. One commenter
supported the proposed refinements to
the HCAHPS Survey measure Pain
Management questions, but
recommended CMS also consider the
measurement of an overall analgesia
strategy as part of an enhanced recovery
pathway (ERP).119 The commenter
noted that while the need for patient
reported experiences in the management
and communication of pain will
continue to be critical, the ERP
analgesia approach through enhanced
recovery after surgery (ERAS) is a more
comprehensive and patient-centered
approach to optimize patient pain relief.
Response: In response to the
commenters’ concern that the
Communication About Pain composite
measure does not effectively evaluate
the efficacy of treatment, the HCAHPS
Survey is not intended to evaluate the
efficacy of treatment. The refined
Communication About Pain composite
119 An ‘‘Enhanced Recovery Pathway’’ is a care
pathway designed to achieve early recovery after
surgical procedures. Definition ascertained from the
American Association of Nurse Anesthetist,
available at: https://www.aana.com/resources2/
professionalpractice/Pages/Enhanced-RecoveryAfter-Surgery.aspx.
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measure shifts the focus to
communication with patients to
promote more patient-centered care. As
discussed earlier, in response to
numerous public comments and out of
an abundance of caution, we revised
these pain management questions in the
face of a nation-wide epidemic of opioid
over-prescription. We believe that
replacing the current Pain Management
question in the HCAHPS Survey with
revised questions that focus on the
adequacy and frequency of
communication about pain will remove
any perceived ambiguity or confusion
about the intent of the pain questions
and enhance communication about the
particular needs individual patients
have with respect to pain. We hope the
refined Communication About Pain
questions will shift focus from the
method of pain management to patientcentered communication between
provider and patient.
We appreciate the commenter’s
suggestion that we consider the
measurement of an overall analgesia
strategy as part of an ERP, but the
HCAHPS Survey was not intended or
designed to ask patients about the
efficacy or outcome of clinical care or
treatment.
Comment: Some commenters
supported the proposed refinements to
the HCAHPS Survey measure, but
expressed concern with frequency rating
scale, observing that the response
options do not seem to align realistically
with the questions themselves. The
commenters criticized the refined
questions for being intangible and
insufficient for the purpose of
supporting beneficial initiatives tailored
to promote pain management. Several
commenters recommended changing
from the ‘‘Never-Always’’ response scale
to a ‘‘Yes/No’’ response option. One
commenter expressed concerns about
asking the frequency of the
communications and not necessarily the
quality or impact of the communication
on the patient’s perception of their pain
control. The commenter urged CMS to
shift from the physical experience of
pain to focus more on communication
about pain and ways to manage it, both
pharmacological and nonpharmacological. Another commenter
was concerned that the proposed
refined Communication About Pain
composite measure may inappropriately
lead to scores that are not meaningful,
specifically because the ‘‘NeverAlways’’ response scale is unclear with
respect to how patients or providers
should assess the term ‘‘Always.’’
Response: We designed the refined
Communication About Pain composite
measure in conformance with CAHPS
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survey principles and the established
format of the HCAHPS Survey,
including asking patients about the
frequency of communication rather than
whether such communication had ever
occurred. From its inception, HCAHPS
has inquired about frequency of
experiences and employed the ‘‘NeverAlways’’ response options for most
survey items. This scale and the
associated structure of survey questions
allows more granular responses than
binary options such as ‘‘Yes-No,’’ and it
is less susceptible to ceiling or floor
effects, enhances commonality among
survey questions, and maintains
continuity over time. Testing of the
HCAHPS Survey and other CAHPS
surveys with patients and caregivers
supports the understandability and
utility of the ‘‘Never-Always’’ response
scale.120 Further, the development of
the refined Communication About Pain
composite measure was in response to
stakeholder concerns that the existing
survey items, which inquire about
patients’ assessment of the efficacy of
pain management, unintentionally
created pressure on physicians to overprescribe opioid medications. Therefore,
we decided to shift away from the
patient’s assessment of the efficacy of
pain treatment and instead focus on
whether providers communicated with
patients about their pain.
Comment: One commenter supported
the refinements to the HCAHPS Survey
measure Pain Management questions,
but recommended CMS also consider
the measurement of an overall analgesia
strategy as part of an ERP.121 The
commenter noted that while the need
for patient reported experiences in the
management and communication of
pain will continue to be critical, the ERP
analgesia approach through enhanced
recovery after surgery (ERAS) is a more
comprehensive and patient-centered
approach to optimize patient pain relief.
Response: We appreciate the
commenter’s suggestion that we
consider the measurement of an overall
analgesia strategy as part of an ERP (a
pathway for a surgical specialty), but the
HCAHPS Survey was not intended or
designed to ask patients about the
efficacy or outcome of clinical care or
treatment.
sradovich on DSK3GMQ082PROD with RULES2
120 Development
and Evaluation of the CAHPS
Hospital Survey. Health Services Research. Special
Issue. Volume 40, Number 6, Part II. December
2005.
121 An ‘‘Enhanced Recovery Pathway’’ (ERP) is a
care pathway designed to achieve early recovery
after surgical procedures. Definition ascertained
from the American Association of Nurse
Anesthetist, available at: https://www.aana.com/
resources2/professionalpractice/Pages/EnhancedRecovery-After-Surgery.aspx.
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Comment: Several commenters
supported the refinements to the
HCAHPS Survey measure, but
expressed concern about potential
unintended consequences associated
with the proposed refined
Communication About Pain composite
measure, given the toll of the opioid
epidemic on communities. One
commenter commended CMS for
previously removing the HCAHPS
Survey questions related to pain
management from the Hospital VBP
Program because it eliminated any
perceived expectation that pain
management should always include the
use of powerful prescription drugs such
as opioids. The commenter
recommended CMS focus on overall
patient satisfaction, rather than the
granular level of detail currently
included in many of the HCAHPS
questions, and encouraged CMS to leave
this level of patient satisfaction data to
providers to determine and measure.
Another commenter believed the
changes would result in doctors and
hospitals denying patients their needed
pain medications.
One commenter cautioned CMS that
hospital payment incentives under the
Hospital VBP Program should not be
structured in such a manner to cause
hospitals to change their opioid
prescribing patterns in order to achieve
higher scores on the HCAHPS pain
management dimension.
Another commenter expressed
concern the refined Pain Management
questions may inappropriately lead to
scores that are not meaningful. The
commenter suggested additional testing
and understanding of these measures is
needed prior to implementation.
A few commenters urged CMS to
conduct regular assessments to ensure
no unintended or inappropriate
consequences on legitimate patient
access to needed medicines arise as a
result of the changes. These commenters
encouraged CMS to continue to evaluate
the proposed refined Communication
About Pain composite measure for
impact on HCAHPS scoring and
resulting prescribing habits, including
collecting more data for the measure. In
addition, commenters cautioned that the
proposed refined Communication About
Pain composite measure should be
carefully monitored for other
unexpected and unintended
consequences that may arise, including
altering patient expectations and
negatively impacting the doctor-patient
relationship.
Finally, several commenters urged
CMS not to continue to use the existing
pain questions if the proposed refined
Communication About Pain composite
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measure are not finalized, but rather
remove the pain management questions
from the HCAHPS Survey measure from
quality programs because the existing
pain management questions may pose
unintended consequences.
Response: We thank the commenters
for their support. As stated above, we
are not aware of any scientific studies or
empirical evidence that support an
association between scores on the Pain
Management questions and opioid
prescribing practices. In addition, we do
not believe that removing the pain
questions from the HCAHPS Survey is
appropriate because: (1) Many factors
outside the control of our quality
program requirements may contribute to
the perception of a link between the
Pain Management questions and opioid
prescribing practices, (2) pain control is
an appropriate part of routine patient
care that hospitals should manage, and
(3) pain control is an important concern
for patients, their families, and their
caregivers.122 To confront the opioid
epidemic in America, our agency and
other divisions of HHS have launched a
multi-dimensional effort.123 Removing
the Pain Management dimension from
the HCAHPS component of the Hospital
VBP Program and revising the Pain
Management questions on the HCAHPS
Survey are among those efforts. We
believe refining the Pain Management
questions in the HCAHPS Survey
measure will: (1) Help remove any
perceived ambiguity, and (2) shift focus
from strictly considering the method of
pain management to patient-centered
communication between provider and
patient.
With regard to the recommendation
that we focus on overall patient
satisfaction, rather than the granular
detail featured in most HCAHPS
questions, we do not agree. We always
have believed the survey should cover
a spectrum of patient experience, rather
than focus on patient satisfaction. The
HCAHPS Survey was designed to ask
about specific aspects of patient
experience of care (not patient
satisfaction) that are important to
patients and consumers and actionable
by hospitals. For that reason, the survey
delves into nine specific and actionable
aspects of the hospitals experience,
122 L. Tefera, W.G. Lehrman, and P. Conway.
‘‘Measurement of the Patient Experience: Clarifying
Facts, Myths, and Approaches.’’ Journal of the
American Medical Association. Published online,
3–10–16. https://jama.jamanetwork.com/
article.aspx?articleid=2503222.
123 HHS’ Opioid Initiative, available at: https://
www.hhs.gov/sites/default/files/Factsheet-opioids061516.pdf, focuses on improving opioid
prescribing practices, expanding access to
medication-assisted treatment, and increasing the
use of naloxone to reverse opioid overdoses.
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including pain management. We note
that the survey does contain two
questions about the overall experience:
(1) The patient’s overall rating of the
hospital; and (2) whether the patient
would recommend the hospital. We
continue to believe that it is valuable for
providers to understand patient
experience of care (not satisfaction with
care) in actionable areas that are
important to patients. We note that
providers are not prevented from
gathering additional information from
patients for their own purposes.
We do not believe the refined
Communication About Pain composite
measure will lead to scores that are not
meaningful because we believe, as noted
earlier, that large-scale testing of the
new Communication About Pain
measure questions has demonstrated
that they are valid and reliable. We have
thoroughly tested and evaluated the
proposed refined Communication About
Pain composite measure. We refer
readers to a summary of this analysis
which can be found on the HCAHPS
On-Line Web site: ‘‘Development of a
New Communication About Pain
Composite Measure for the HCAHPS
Survey,’’ at https://
www.hcahpsonline.org/
modeadjustment.aspx. To briefly
summarize the findings of that analysis,
as detailed earlier, a two-item version of
Communication About Pain composite
measure based on how often staff talked
about pain and how often staff
discussed how to treat pain, preceded
by a screener item asking whether the
patient had any pain during the hospital
stay, has strong psychometric
properties. The properties of the
individual items used in the proposed
refined Communication About Pain
composite measure themselves are as
good as or better than the two Pain
Management questions currently on the
HCAHPS Survey. The refined
Communication About Pain questions
in which a preponderance of responses
fall into the highest or lowest response
category are not subject to floor or
ceiling effects, have good (>0.80) or
excellent (>0.90) hospital-level
reliability at recommended sample
sizes, are not redundant with the
current items, are related in a
predictable manner with the standard
patient-mix characteristics, are
predictive of the global Hospital Rating
question on the HCAHPS Survey,
question number 21, and do not vary
systematically by survey mode after
adjusting for patient mix. They also
have high internal consistency as a
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composite (Cronbach’s alpha=0.81).124
We reiterate that the HCAHPS Survey is
a valid and reliable instrument for
assessing patient experience of care at
the hospital level, however, use of the
survey to measure and compare
individual practitioners is strongly
discouraged.125
We acknowledge the commenters’
concerns about unintended or
inappropriate consequences on
legitimate patient access to needed
medicines, and we will actively monitor
and analyze responses to the proposed
refined Communication About Pain
composite measure to understand
performance, relationship to other
survey measures, and possible
unintended consequences.
With respect to the commenter who
believed the changes would result in
doctors and hospitals denying patients
their needed pain medications, the
refined Communication About Pain
questions no longer reference any
specific pain treatment or circumstance
but rather focus on communication
about pain to address the concern that
the current items may have had an
unintended consequence of encouraging
opioid-based treatment of pain. We will
monitor use of the refined
Communication About Pain questions
and any feedback we receive from
stakeholders as they implement these
questions.
With respect to the commenter who
cautioned that hospital payment
incentives under the Hospital VBP
Program should not be structured in
such a manner to cause hospitals to
change their opioid prescribing patterns
in order to achieve higher scores on the
HCAHPS pain management dimension,
we note that in the CY 2017 OPPS/ASC
PPS final rule with comment period (81
FR 79862), we removed the Pain
Management dimension from the
Hospital VBP Program beginning with
the FY 2018 program year. We are not
intending to adopt the refined
Communication About Pain questions
as part of the HCAHPS pain
management dimension in the Hospital
VBP Program at this time. In addition,
124 ‘‘A Special Contribution from the Centers for
Medicare and Medicaid Services: Valuing Patient
Experience While Addressing the Prescription
Opioid Epidemic.’’ L. Tefera, W.G. Lehrman, E.G.
Goldstein and S. Agrawal. Annals of Emergency
Medicine. 2016. Published online, 7–19–16. https://
www.annemergmed.com/article/S01960644(16)30367-5/fulltext.
125 ‘‘Measurement of the Patient Experience:
Clarifying Facts, Myths, and Approaches.’’ L.
Tefera, W.G. Lehrman and P. Conway. Journal of
the American Medical Association. 2016. 315:
2167–2168. Published online, 3–10–16. https://
jama.jamanetwork.com/article.aspx?
articleid=2503222.
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we note that, as required under section
1890A of the Act, measures must be
reviewed by a multi-stakeholder group
(currently the MAP, convened by the
NQF) before they can be proposed for
adoption by a program.
Comment: Several commenters
supported the refinements to the
HCAHPS Survey measure pain
management questions, but expressed
concerns about the timing of
implementation of the proposed refined
Communication About Pain composite
measure.
One commenter generally requested
CMS allow pharmacists, physicians, and
other members of the healthcare team
sufficient time and opportunity to
provide meaningful input and
recommendations prior to finalizing and
implementing the refinements.
Another commenter suggested
transition to the revised wording begin
with January 1, 2018 discharges, as
proposed, would be feasible and would
provide enough time for hospitals to
properly prepare.
Response: We thank the commenters
for their support. As discussed in the
CY 2017 OPPS/ASC final rule with
comment period (81 FR 79855 through
79862), and the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 20035), in
developing the proposed refined Pain
Management questions, we have
followed our standard survey
development processes, which include
drafting alternative questions, cognitive
interviews and group evaluations, field
testing, statistical analysis, and
soliciting stakeholder input. In addition,
the proposed refined Pain Management
questions have proceeded through the
pre-rulemaking process, including
adding the measures to the ‘‘Measures
Under Consideration’’ list and having
them reviewed by the MAP, as well as
including them in notice-and-comment
rulemaking. In addition, we intend to
seek NQF endorsement for the proposed
refined Pain Management questions. We
believe that all of these processes have
allowed pharmacists, physicians, other
members of the healthcare team, and the
public at large, time and opportunity to
provide meaningful input and
recommendations. With respect to the
suggestion that we transition to the
revised wording beginning with January
1, 2018 discharges, we note that our
proposal stated that the revised
questions would be implemented
beginning with October of 2019 using
CY 2018 data, which is what we are
finalizing. In addition, implementation
of the proposed refined Communication
About Pain composite measure
beginning with patients discharged
January 1, 2018 will produce a full
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calendar year of data, which will
provide prompt feedback to hospitals on
their performance on this measure via
their confidential Preview Reports. We
will make information about the Pain
Management questions available to
HCAHPS Survey vendors and hospitals
through HCAHPS training and
information posted on the HCAHPS OnLine Web site, www.HCAHPSonline.org.
Comment: A few commenters did not
support the refinements to the HCAHPS
Survey Pain Management questions
because there is no peer-reviewed
evidence to suggest a link between
opioid prescribing and the current pain
management questions in this survey,
nor do the existing questions even
specify opioids as the treatment of
choice for pain. The commenters
disagreed with CMS’ assessment that
the HCAHPS pain management
questions influence clinical decisionmaking in a manner that creates
pressure on hospital staff to prescribe
more opioids in order to achieve higher
scores. The commenters suggested that
rather than recreating new medicationoriented pain questions to incorporate
back into HCAHPS at some future date,
CMS should develop questions in
collaboration with pain and palliative
medicine specialists to measure a
hospital’s overall pain management
strategies.
Response: We agree with the
commenters’ assertions that neither is
there any peer-reviewed evidence to
suggest a link between opioid
prescribing and the existing HCAHPS
questions regarding pain, nor the
existing questions even specify opioids
as the treatment of choice for pain. As
we stated above, we are not aware of
any scientific studies that support an
association between scores on the Pain
Management questions and opioid
prescribing practices. Furthermore, we
are unaware of any empirical evidence
demonstrating that failing to prescribe
opioids lowers a hospital’s HCAHPS
Survey scores. However, we believe the
potential confusion about the
appropriate use of the Pain Management
questions, coupled with the public
health concern about the opioid
epidemic, warrants refinement of the
Pain Management questions. We will
consider the commenter’s suggestion to
develop questions that assess a
hospital’s overall pain management
strategies in future rulemaking.
The current Pain Management
questions in the HCAHPS Survey apply
to patients who needed medicine for
pain; whereas, the proposed refined
Communication About Pain composite
measure will apply to patients who
experienced any pain during the
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hospital stay. As such, when
implemented, more patients will have
the opportunity to answer the proposed
refined Communication About Pain
composite measure, providing a broader
perspective on pain management in
hospitals. As stated in previous
responses, out of an abundance of
caution, in the face of a nation-wide
epidemic of opioid over-prescription,
we have chosen to focus the proposed
refined Communication About Pain
composite measure on communication
between hospital staff and patients
about patients’ pain. We believe this
will emphasize the importance of
communication about pain and its
treatment while avoiding any potential
inference that medication is the best or
only way to treat pain.
The Communication About Pain
measure questions were developed in
collaboration with pain and palliative
medicine specialists; we refer readers to
our response earlier in this section that
details the testing we undertook.
Comment: Some commenters noted
treating pain should be the objective of
physicians and should be managed
exclusively within the physician’s scope
of practice. However, another
commenter stated that patient
experience and satisfaction should not
be used for accountability purposes
because these are often not directly
under the control of the physician.
Response: We note that the HCAHPS
Survey assesses patient experience of
care at the hospital level, not the
physician level. We strongly advise
hospitals against using the HCAHPS
Survey to measure, assess, and/or
compare individual hospital staff.126
Comment: One commenter noted
patients’ experience of pain is subjective
and uniform guidelines dictating pain
management could contribute to
patients suffering as a result. Another
commenter stated that patient
experience and satisfaction should not
be used for accountability purposes as
these are: (1) Often subjective in nature;
and (2) not necessarily true indicators of
quality of overall care.
Response: We believe the HCAHPS
Survey measure is an appropriate
mechanism for hospital accountability
because patient experience of care is a
valid and vital measure of provider
quality across the healthcare spectrum
and is an essential element of public
reporting of provider quality and, where
appropriate, a basic component of pay126 L. Tefera, W.G. Lehrman, and P. Conway.
‘‘Measurement of the Patient Experience: Clarifying
Facts, Myths, and Approaches.’’ Journal of the
American Medical Association. Published online,
3–10–16. https://jama.jamanetwork.com/
article.aspx?articleid=2503222.
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for-performance programs. Carefully
constructed and thoroughly tested
surveys that attain high levels of
reliability and validity, such as the
CAHPS family of surveys,127 when
implemented in a standardized manner
by trained survey vendors and hospitals
subject to constant oversight, such as
HCAHPS, produce information that
allows fair comparisons of providers.
Thus, we do not agree that pain/patient
experience and satisfaction is
subjective. Not only do surveys such as
HCAHPS produce information about the
patient’s perspective that is beneficial in
its own right, but a growing body of
empirical research finds that hospitals
that perform well on the HCAHPS
Survey also perform well on indicators
of clinical process, outcomes,
readmissions, and mortality.128
We also refer readers to our response
above in which we detail the testing
these questions underwent. We also
disagree that the HCAHPS Survey
dictates pain management or contributes
to patient suffering. We continue to
believe many factors outside the control
of our quality program requirements
may contribute to the perception of a
link between the Pain Management
questions and opioid prescribing
practices, such as misuse of the survey,
use of the survey with patients other
than hospital inpatients (such as,
emergency room patients, outpatients,
or physician office patients),
disaggregation of surveys results to
assess the performance of individual
hospital staff, and/or failure to recognize
the HCAHPS Survey excludes certain
populations from the sampling frame.
Comment: Several commenters did
not support the refinements to the
HCAHPS Pain Management questions
and recommended that the pain
management questions in the HCAHPS
Survey measure remain unchanged.
These commenters did not believe
changing the questions will address the
real issue—whether or not a patient’s
pain was controlled. This is because the
questions do not rate care based on how
pain was managed and the questions do
not to hold hospitals accountable for
failing to manage patients’ pain.
127 R.A. Price, M.N. Elliott, A.M. Zaslavsky, R.D.
Hays, W.G. Lehrman, L. Rybowski, S. EdgmanLevitan and P.D. Cleary. ‘‘Examining the Role of
Patient Experience Surveys in Measuring Health
Care Quality.’’ Medical Care Research and Review,
71 (5): 522–554. 2014.
128 P. Chatterjee, T.C. Tsai and A.K. Jha.
Delivering Value by Focusing on Patient
Experience. American Journal of Managed Care,
Published Online: October 09, 2015. https://
www.ajmc.com/journals/issue/2015/2015-vol21n10/delivering-value-by-focusing-on-patientexperience.
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One commenter generally referenced
studies demonstrating patients get
healthier faster and are less prone to
secondary illness if their pain is
sufficiently treated, and suggested that it
is counter-intuitive that the proposed
refined Communication About Pain
composite measure does not assess any
action taken to reduce pain. The
commenter encouraged CMS to keep the
existing pain questions, or modify the
proposed refined Communication About
Pain composite measure to focus on
efforts or actions taken to reduce pain.
In addition, several commenters noted
discussions about pain are an
inadequate substitute for effective pain
treatment, arguing that attempting to
reduce addiction is not a valid reason
for causing patients to endure physical
and psychological pain.
Response: As stated above, we believe
pain management is an important
component of the quality of care
provided at a hospital, and we believe
the HCAHPS Survey measure provides
patients with critical information for use
in selecting a hospital setting for their
care, ensures hospitals continue to
appropriately manage patients’ pain,
and encourages hospitals to engage in
quality improvement efforts addressing
pain management and communication
about pain. We believe that replacing
the current Pain Management questions
in the HCAHPS Survey, which are
addressed to patients who needed
medicine for pain, with items addressed
to patients who had any pain during
their hospital stay and that are focused
on the adequacy and frequency of
communication about pain, will remove
any ambiguity about the intent of the
pain items and enhance communication
about the particular needs individual
patients have with respect to pain.
We disagree the current Pain
Management questions should be
retained because we believe refining the
Pain Management questions will
address any potential confusion about
appropriate pain management.
Moreover, we believe the proposed
refined pain management questions will
shift focus from the method of pain
management to patient-centered
communication between provider and
patient.
As noted in the CY 2017 OPPS/ASC
final rule with comment period (81 FR
79855 through 79862), some
stakeholders believe that the current
Pain Management items’ focus on the
vigor and efficaciousness of pain control
efforts creates pressure on physicians to
over-treat pain, therefore, the proposed
refined Communication About Pain
composite measure does not delve into
these topics. The shift in focus away
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from patients’ assessment of treatment
and outcomes and toward patient
communication brings the Pain
Management questions into closer
alignment with the other survey items.
We believe that placing greater
emphasis on communication with
patients about pain should encourage
appropriate pain management. We
reiterate the HCAHPS Survey is
designed to produce valid measures of
hospital-level performance, not that of
individual physicians or nurses.
Comment: A few commenters urged
CMS to move away from medicationbased pain questions entirely.
Response: We continue to believe
pain control is an appropriate part of
routine patient care that hospitals
should manage and is an important
concern for patients, their families, and
patient caregivers. We believe the
proposed refined Communication About
Pain questions appropriately focus more
clearly on patient-focused care than on
the method of pain management.
Comment: Many commenters did not
support the refinements to the HCAHPS
Survey measure pain management
questions because they stated the
proposed revised questions do not
assure and reflect quality pain
management, fail to objectively address
the existence of pain, and remain
ambiguous and open-ended. Several
commenters recommended CMS restart
the process of developing new pain
management questions with additional
testing and research prior to
implementation of these proposed
questions.
One commenter advised CMS to test
a variety of questions and answer
options to see which questions provide
the most accurate data without
negatively affecting patient care.
Specifically, the commenter suggested
CMS work with stakeholders to reach
consensus on the intent of the pain
measures to ensure there are no
unintended consequences, the measures
are understood by patients, and the
measures lead to improved patient
outcomes.
One commenter expressed concern
that neither the existing nor the
proposed refined pain management
questions adequately reflect either
shared decision making or adequate
pain management. The commenter
urged CMS to engage the patient and
caregiver community in evaluating and
refining the questions related to pain
management.
Another commenter believed the
proposed refined questions fail to
promise resolution of all pain or suggest
that pain treatment should always
include any one particular mode of
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38341
therapy. The commenter urged CMS to
lead the way in incentivizing evidence
based multi-modal pain care through
development of alternative methods for
assessing pain management in quality
reporting programs. Conversely, another
commenter noted that ‘‘no pain’’ is not
always a reasonable goal and decreasing
pain should be the expectation for the
patient.
Response: We disagree that the
revised questions do not assure and
reflect quality pain management, fail to
objectively address the existence of
pain, and remain ambiguous and openended, and that we should restart the
process of developing new pain
management questions with additional
testing and research prior to
implementation. We believe the refined
Communication About Pain questions
have already undergone rigorous
development and testing, and we refer
readers to our response earlier in this
section that details the testing we
undertook.
We thank the commenters for their
suggestion that we lead the way in
incentivizing evidence based multimodal pain care through development
of alternative methods for assessing pain
management in quality reporting
programs, but we believe that while
potentially valuable, these activities are
beyond the scope of the HCAHPS
Survey. We reiterate that the primary
purpose of the HCAHPS Survey is to
collect and report patient experience of
care in hospitals, not to collect clinical
information, promote particular
therapies, report patient outcomes or
create standards of care. During this
communication between patients and
providers, reasonable pain goals should
be addressed. Although ‘‘no pain’’ is not
always an achievable outcome, the
intent of the measure is to establish this
frequent communication to achieve
reasonable, mutually agreed upon pain
goals. We will consider additional
methods for assessing pain management
in quality reporting programs and for
incentivizing evidence-based multimodal pain care in the Hospital IQR
Program in the future.
Comment: One commenter
recommended CMS consider proxy
reporting as a subsequent change to the
HCAHPS Survey measure. The
commenter noted that by allowing
proxy reporting, CMS would have more
complete information on the experience
of care for all patients, rather than just
those who are healthy enough to
complete the survey.
Response: Although we have never
permitted proxy respondents, meaning
permitting any person other than the
patient who experienced the hospital
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stay to respond to the HCAHPS Survey
on behalf of the patient, we recently
collected and are in the process of
analyzing test data, in which proxies
were permitted. These analyses will
provide information about whether to
proceed with potential future changes to
the survey. Pending results of these
analyses, we may consider allowing
proxy reporting in the future.
Comment: One commenter urged
CMS to carefully consider whether
measures in general add value and
improve overall patient care before
including them in payment or public
reporting programs.
Response: We refer readers to the FY
2013 IPPS/LTCH PPS final rule (77 FR
53510 through 53512) for a discussion
of the considerations we use to expand
and update quality measures under the
Hospital IQR Program. With regard to
the proposed refined Communication
About Pain composite measure, and the
HCAHPS Survey in general, we believe
these improve overall patient care and
add value to public reporting programs.
Pain management is an important
component of the quality of care
provided at a hospital, and we believe
public reporting of hospital rates on the
HCAHPS Survey Pain Management
questions provides patients with critical
information for use in selecting a
hospital setting for their care, ensures
hospitals continue to appropriately
manage patients’ pain, and encourages
hospitals to engage in quality
improvement efforts addressing pain
management and communication. We
continue to believe pain control is a
critical part of routine patient care that
hospitals should manage and is an
important concern for patients, their
families, and their caregivers, and we
continue to explore ways to ensure
better measurement of patients’
experiences with pain management.
Comment: One commenter
recommended CMS distinguish between
hospice care (which usually occurs in
the last six months of a patient’s life)
and palliative care (which could occur
at any time during a patient’s life and
could re-occur at any time as well).
Response: The HCAHPS Survey only
asks about patient experience of care
during a hospital stay. In addition,
patients who are discharged to hospice
care are not eligible to receive the
HCAHPS Survey. We have implemented
a separate survey for patient experience
of care in hospices.
After consideration of the public
comments we received we are finalizing
our proposed refinements to the
HCAHPS Survey measure pain
management questions as proposed,
with a modification regarding public
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display. Instead of publicly reporting
results beginning with October of 2019
using CY 2018 data as proposed, we are
delaying public reporting, such that
hospital performance data on the
refined Communication About Pain
composite measure questions will not
be publicly reported on the Hospital
Compare Web site until October of CY
2020, using CY 2019 data. We will
provide performance results, based on
CY 2018 data on the refined
Communication About Pain composite
measure questions to hospitals in
confidential preview reports, upon the
availability of four quarters of data. We
anticipate that these confidential
preview reports would be available as
early as July 2019.
b. Refinement of the Hospital 30-Day,
All-Cause, Risk-Standardized Mortality
Rate (RSMR) Following Acute Ischemic
Stroke Hospitalization Measure for the
FY 2023 Payment Determination and
Subsequent Years
(1) Background
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20039 through
20043), for the FY 2023 payment
determination and subsequent years, we
proposed a refinement of the CMS
Hospital 30-Day, All-Cause, RiskStandardized Mortality Rate (RSMR)
following Acute Ischemic Stroke
Hospitalization Measure (hereafter
referred to as the Stroke 30-Day
Mortality Rate measure) by changing the
measure’s risk adjustment to include
stroke severity (Stroke 30-Day Mortality
Rate with the refined risk adjustment)
obtained from International
Classification of Disease, Tenth Edition
Clinical Modifier (ICD–10–CM) codes in
the administrative claims. The current
Stroke 30-Day Mortality Rate measure
was finalized in the Hospital IQR
Program in the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50798). The previously
adopted measure includes 42 risk
variables, but does not include an
assessment of stroke severity because,
previously, it has not been available in
claims data and was not routinely
performed by all providers. For more
details on the measure as currently
adopted and implemented, we refer
readers to its measure methodology
report and measure risk-adjustment
statistical model in the AMI, HF, PN,
COPD, and Stroke Mortality Update zip
file on our Web site at: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html.
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57161), we considered
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potential inclusion of the National
Institutes of Health (NIH) Stroke Scale
for the Hospital 30-Day Mortality
Following Acute Ischemic Stroke
Hospitalization measure beginning as
early as the FY 2022 payment
determination. Commenters generally
supported the inclusion of the NIH
Stroke Scale score in the Stroke 30-Day
Mortality Rate measure for future
inclusion in the Hospital IQR Program.
We refer readers to FY 2017 IPPS/LTCH
PPS final rule (81 FR 57161 through
57163) for a complete discussion of the
considered potential measure, public
comments, and our responses.
Initial assessment of stroke severity,
such as the NIH Stroke Scale score, is
one of the strongest predictors of
mortality in ischemic stroke
patients,129 130 131 and is part of the
national guidelines on stroke care.132
This measure refinement was
developed in collaboration with the
American Heart Association (AHA) and
American Stroke Association (ASA). We
are seeking to update the current
measure to include an assessment of
stroke severity, because it has become
feasible to do so due to both the
increased use of the NIH Stroke Scale
related to the AHA/ASA guidelines that
recommend administering the NIH
Stroke Scale on all stroke patients, as
well as due to the recent ability to
obtain the scores through claims data by
incorporation into ICD–10. The
proposed refinement would create a
more parsimonious risk model by
reducing the total number of risk
adjustment variables from 42 to 20 and
includes the NIH Stroke Scale 133 in the
risk-adjustment model as a measure of
stroke severity. These refinements result
in a modestly higher c-statistic,134 a
measure of the ability to discriminate
between patients at low and high risk of
mortality following ischemic stroke,
129 Fonarow GC, Saver JL, Smith EE, et al.
Relationship of national institutes of health stroke
scale to 30-day mortality in medicare beneficiaries
with acute ischemic stroke. J Am Heart Assoc. Feb
2012;1(1):42–50.
130 Nedeltchev K, Renz N, Karameshev A, et al.
Predictors of early mortality after acute ischemic
stroke. Swiss Medical Weekly. 2010;140(17–
18):254–259.
131 Smith EE, Shobha N, Dai D, et al. Risk score
for in-hospital ischemic stroke mortality derived
and validated within the Get With The GuidelinesStroke Program. Circulation. Oct 12
2010;122(15):149615041496–1504.
132 Jauch EC, Saver JL, Adams HP, Jr., et al.
Guidelines for the early management of patients
with acute ischemic stroke: A guideline for
healthcare professionals from the American Heart
Association/American Stroke Association. Stroke.
Mar 2013;44(3):870–947.
133 NIH Stroke Scale. Available at: https://
www.nihstrokescale.org/.
134 C-Statistic Definition available at: https://
www.statisticshowto.com/c-statistic/.
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compared with the risk-adjustment
model in the current Stroke 30-Day
Mortality Rate, which means the
updated measure model differentiates
the risk of mortality among patients
better than the current model.
Mortality following stroke is an
important adverse outcome which can
be measured reliably and objectively
and is influenced by both the severity of
the stroke as well as the quality of care
provided to patients during their initial
hospitalization; therefore, mortality is
an appropriate measure of quality of
care following stroke
hospitalization.135 136
Specifically, post-stroke mortality
rates have been shown to be influenced
by critical aspects of care such as
response to complications, speediness
of delivery of care, organization of care,
and appropriate imaging.137 138 139 140
We proposed a refinement to the
Stroke 30-Day Mortality Rate for several
reasons. First, the proposed, refined
measure would allow for more rigorous
risk adjustment by incorporating the
NIH Stroke Scale, discussed in more
detail below, as an assessment of stroke
severity.141 Second, the inclusion of the
NIH Stroke Scale is aligned with and
supportive of clinical guidelines, as use
of the NIH Stroke Scale to assess stroke
severity when patients first present with
acute ischemic stroke is Class I
recommended in the AHA and ASA
guidelines.142
135 Weir NU, Sandercock PA, Lewis SC, Signorini
DF, Warlow CP. Variations between countries in
outcome after stroke in the International Stroke
Trial (IST). Stroke. Jun 2001;32(6):1370–1377.
136 DesHarnais SI, Chesney JD, Wroblewski RT,
Fleming ST, McMahon LF, Jr. The Risk-Adjusted
Mortality Index. A new measure of hospital
performance. Med Care. Dec 1988;26(12):1129–
1148.
137 Hong KS, Kang DW, Koo JS, et al. Impact of
neurological and medical complications on 3month outcomes in acute ischaemic stroke.
European journal of neurology: The official journal
of the European Federation of Neurological
Societies. Dec 2008;15(12):1324–1331.
138 Lingsma HF, Dippel DW, Hoeks SE., et al.
Variation between hospitals in patient outcome
after stroke is only partly explained by differences
in quality of care: Results from the Netherlands
Stroke Survey. [Reprint in Ned Tijdschr Geneeskd.
2008 Sep 27;152(39):2126–32; PMID: 18856030].
Journal of Neurology, Neurosurgery & Psychiatry.
2008;79(8):888–894.
139 Reeves MJ, Smith E, Fonarow G, Hernandez A,
Pan W, Schwamm LH. Off-hour admission and inhospital stroke case fatality in the get with the
guidelines-stroke program. Stroke. Feb
2009;40(2):569–576.
140 Smith MA, Liou JI, Frytak JR, Finch MD. 30day survival and rehospitalization for stroke
patients according to physician specialty.
Cerebrovascular diseases (Basel, Switzerland).
2006;22(1):21–26.
141 NIH Stroke Scale. Available at: https://
www.nihstrokescale.org/.
142 Jauch EC, Saver JL, Adams HP, Jr., et al.
Guidelines for the early management of patients
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Third, in October 2016, the ICD–10–
CM codes for the NIH Stroke Scale were
implemented. As of that date, hospitals
can record the NIH Stroke Scale as a
representation of stroke severity in
Medicare claims by using ICD–10–CM
codes, and we can use this information
as a variable in the risk-adjustment
model for the refined Stroke 30-Day
Mortality Rate measure and other
claims-based measures with minimal
data collection burden for hospitals.143
Fourth, clinicians and stakeholders,
including AHA, ASA, and other
professional organizations, highlight the
importance of including an assessment
of stroke severity in risk-adjustment
models of stroke mortality.144 In the FY
2014 IPPS/LTCH PPS final rule (78 FR
50798 through 50802), commenters
emphasized that the medical literature
and their own experience suggest that
stroke severity is the dominant predictor
of mortality in stroke patients;
individuals and organizations expressed
concern the measure might be
misleading, limited, or inaccurate
without adjustment for stroke severity,
and four comments suggested risk
adjusting using the NIH Stroke Scale or
a similar index (78 FR 50800).
Members of the Technical Expert
Panel convened by the measure
developer also suggested risk-adjusting
for stroke severity. In addition, during
the 2012 Neurology Endorsement
Maintenance Consensus Development
Project, the NQF Neurology Steering
Committee specifically identified the
lack of the NIH Stroke Scale score in the
risk-adjustment model as a concern (78
FR 50800). Therefore, the refined Stroke
30-Day Mortality Rate is responsive to
public comments from a broad array of
stakeholder groups, including clinical
societies and clinical experts, and to
feedback received from the Technical
Expert Panel convened by the measure
developer (81 FR 57162).
Fifth, in addition to a modestly higher
c-statistic, which evaluates the
measure’s ability to differentiate
between patients at varying risks of
mortality following an acute ischemic
stroke, the refined Stroke 30-Day
Mortality Rate includes a more
parsimonious risk model than the stroke
with acute ischemic stroke: A guideline for
healthcare professionals from the American Heart
Association/American Stroke Association. Stroke.
Mar 2013;44(3):870–947.
143 ICD–10–CM Official Guidelines for Coding
and Reporting. Available at: https://www.cdc.gov/
nchs/data/icd/10cmguidelines_2017_final.pdf.
144 Jauch EC, Saver JL, Adams HP, Jr., et al.
Guidelines for the early management of patients
with acute ischemic stroke: A guideline for
healthcare professionals from the American Heart
Association/American Stroke Association. Stroke.
Mar 2013;44(3):870–947.
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mortality measure as previously
adopted and specified, with a total of 20
risk adjustment variables including the
NIH Stroke Scale, compared to the
current use of 42 risk adjustment
variables.
In compliance with section
1890A(a)(2) of the Act, the Stroke 30Day Mortality Rate (MUC15–294) with
the refined risk adjustment (using the
NIH Stroke Scale) was included on a
publicly available document entitled
‘‘List of Measures under Consideration
for December 1, 2015’’ (available at:
https://www.qualityforum.org/
ProjectMaterials.aspx?projectID=75367.
Select ‘‘2015 Measures Under
Consideration List.’’). The MAP
reviewed and conditionally supported
the Stroke 30-Day Mortality Rate
(MUC15–294) with the refined risk
adjustment pending NQF review and
endorsement, and asked that we
consider a phased approach in regards
to implementation, to avoid multiple
versions of the same measure.145 The
MAP also noted outcomes other than
mortality may be more meaningful for
stroke patients and to consider cognitive
or functional outcomes such as
impaired capacity. We considered the
input and recommendations provided
by the MAP and note the NIH Stroke
Scale incorporates cognitive functions
in assessing severity.
To avoid implementing multiple
versions of the same measure, we intend
for the Hospital IQR Program FY 2023
payment determination measure set
either to include the 30-day stroke
mortality measure as currently
implemented or this modified version
that includes the NIH stroke severity
scale in the measures risk-adjustment
model.
The Stroke 30-Day Mortality Rate
with the refined risk adjustment was
submitted to NQF for endorsement in
the neurology project on January 15,
2016, but did not obtain endorsement.
NQF endorsement was not granted
primarily due to the inability to test the
validity of NIH Stroke Scale data
elements derived from Medicare claims
prior to implementation of the new
ICD–10–CM codes in October 2016.146
The NQF Consensus Standards
Advisory Committee (CSAC) supported
the concern of the NQF committee
regarding our inability to test the
measure using ICD–10–CM codes since
145 2016 Spreadsheet of Final Recommendations
to HHS & CMS Available at: https://
www.qualityforum.org/ProjectMaterials.
aspx?projectID=75367.
146 The memo regarding the CSAC’s decision is
available at: https://www.qualityforum.org/
WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=
83217.
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the codes were not implemented until
October 2016. While we provided riskstandardized mortality rates using data
from Medicare administrative claims
and data from the Get With The
Guidelines (GWTG)-Stroke Registry, the
Committee noted we could not validate
the National Institutes of Health Stroke
Scale (NIH Stroke Scale) against ICD–
10–CM codes at the time the measure
was considered for endorsement. The
CSAC also acknowledged the primary
reason for upholding the Committee’s
decision was based on the lack of testing
of the measure using ICD–10–CM codes.
This measure went through the same
rigorous development process as the
other publicly reported outcomes
measures and involved extensive input
by stakeholders and clinical experts. It
follows the same scientific approach to
evaluate hospital performance as other
Hospital IQR Program outcome
measures.
When the NQF committee considered
the scientific acceptability of the Stroke
30-Day Mortality Rate measure, 19 of 22
members voted the measure met the
NQF’s evidence criterion, 19 members
voted the measure met the high or
moderate standard for the Performance
Gap, 18 members voted the measure met
high or moderate standard for
reliability, 19 members voted the
measure met the high or moderate
standard for feasibility, and 18 members
voted the measure met the moderate
standard for Use and Usability.147 We
tested and validated the measure using
NIH Stroke Scale data derived from
medical record review done by the
GWTG-Stroke registry data supplied by
AHA/ASA. However, the NQF
committee ultimately determined the
validity testing was not sufficient for
endorsement.148
We believe the inclusion of the NIH
Stroke Scale score in the measure’s riskadjustment model improves upon the
Stroke 30-Day Mortality Rate measure
which is currently publicly reported on
Hospital Compare and has been
implemented in the Hospital IQR
Program since FY 2016 (78 FR 50802).
This is supported by the improved riskadjustment model performance. For
example, the c-statistic, which is a
measure of the ability to discriminate
between patients at low and high risk of
mortality following ischemic stroke,
147 The
memo regarding the CSAC’s decision is
available at: https://www.qualityforum.org/
WorkArea/linkit.aspx?LinkIdentifier=id&
ItemID=83217.
148 Schwartz J, Wang Y, et al. Hospital 30-Day,
All-Cause, Risk-Standardized Mortality Rate
(RSMR) Following Acute Ischemic Stroke
Hospitalization with Claims-Based Risk Adjustment
for Stroke Severity Technical Report. 2016.
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associated with the new, modified riskadjustment model was 0.81 in the
measure development sample 149 and
improved to a c-statistic of 0.75 in the
most recent measurement period for the
Stroke 30-Day Mortality Rate measure
that is currently implemented in the
Hospital IQR Program.150
The new refined Stroke 30-Day
Mortality Rate measure also has
increased face validity which is
supported by the comments received
from stakeholders. For example, we
received comments that the more
rigorous risk adjustment facilitated by
the NIH Stroke Scale would help ensure
the measure accurately risk adjusts for
different hospital populations without
unfairly penalizing high-performance
providers, and the NIH Stroke Scale is
well validated, highly reliable, widely
used by providers caring for stroke
patients, and a strong predictor of
mortality and short- and long-term
functional outcomes. However, we were
not able to test the ICD–10 CM codes for
NIH Stroke Scale score in claims during
measure development because those
codes were not available for hospitals to
use in their claims until October 2016.
Therefore, we proposed this measure
now to inform hospitals they should
begin to include the NIH stroke severity
scale codes in the claims they submit for
patients with a discharge diagnosis of
ischemic stroke. Once hospitals have
submitted these data, it will be possible
for us to examine the completeness of
these data in re-evaluation of the new
refined Stroke 30-Day Mortality Rate
measure before the proposed measure
dry run and before the proposed
implementation in the Hospital IQR
Program. Once that testing is complete
we will submit the retested measure to
the NQF for endorsement prior to
implementation.
Section 1886(b)(3)(B)(IX)(bb) of the
Act provides that in the case of a
specified area or medical topic
determined appropriate by the Secretary
for which a feasible and practical
measure has not been endorsed by the
entity with a contract under section
1890(a) of the Act, the Secretary may
specify a measure that is not so
endorsed as long as due consideration is
given to measures that have been
endorsed or adopted by a consensus
149 Schwartz J, Wang Y, et al. Hospital 30-Day,
All-Cause, Risk-Standardized Mortality Rate
(RSMR) Following Acute Ischemic Stroke
Hospitalization with Claims-Based Risk Adjustment
for Stroke Severity Technical Report. 2016.
150 2017 Condition-Specific Mortality Measures
Updates and Specifications Report. Available at:
www.qualitynet.org > Hospitals—Inpatient >
Claims-Based Measures > Mortality Measures >
Measure Methodology.
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organization identified by the Secretary.
Although the proposed measure and the
existing Stroke 30-Day mortality
measure are not currently NQFendorsed, we considered other available
measures which have been endorsed or
adopted by the NQF, and we were
unable to identify any other NQFendorsed measures that assess stroke
mortality with a standard period of
follow-up. We also are not aware of any
other 30-day stroke mortality measures
that have been endorsed or adopted by
a consensus organization.
We proposed this measure now
because we believe the modifications to
the measure’s risk-adjustment model
represent a substantial improvement
over the Stroke 30-Day Mortality Rate
measure that is currently publicly
reported and implemented in the
Hospital IQR Program and which does
not include an assessment of stroke
severity in the risk-adjustment model. In
addition, by announcing our intention
to include the Refined 30-Day Stroke
Mortality Rate measure in the Hospital
IQR Program in advance of
implementation for FY 2023 payment
determination and subsequent years,
and by describing the proposed
additional testing, dry run, and our
intent to re-submit the measure to NQF
once the NIH Stroke Scale data become
available in claims, we are providing
information that hospitals should begin
to plan and alter their clinical
workflows and billing processes in
order to capture the NIH Stroke Scale
score and include it in Medicare claims.
Further, this notice will allow hospitals
to complete collecting NIH Stroke Scale
data over the three-year time period
needed for measure calculation and
implementation prior to any payment
adjustment. The measure, as refined, is
described in more detail below.
(2) Overview of Refined Measure
The measure cohort is aligned with
the currently adopted Stroke 30-Day
Mortality Rate measure. In addition, the
data sources (Medicare fee-for-service
(FFS) claims), three-year reporting
period, inclusion and exclusion criteria,
as well as the assessment of the outcome
of mortality (assessed using Medicare
enrollment data) would all align with
the currently adopted measure (78 FR
50798). Only the measures’ riskadjustment models differ, as described
in detail below. For the new refined
Stroke 30-Day Mortality Rate measure,
we proposed the first measurement
period would include discharges
between July 1, 2018 and June 30, 2021
for public reporting in FY 2022 and for
the FY 2023 payment determination.
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(3) Risk Adjustment
The Stroke 30-Day Mortality Rate
measure that is currently adopted in the
Hospital IQR Program adjusts for
differences in patients’ level of risk for
death in one hospital relative to patients
receiving care in another hospital but
not for stroke severity. For details about
the risk-adjustment model for the
currently adopted measure, we refer
readers to the Technical Report (78 FR
50798).151
However, in developing the proposed,
refined Stroke 30-Day Mortality Rate
measure, we re-selected risk variables,
resulting in a final model with 20 riskadjustment variables, including the NIH
Stroke Scale risk variable as an
assessment of stroke severity. The NIH
Stroke Scale is a 15-item neurologic
examination stroke scale used to
provide a quantitative measure of
stroke-related neurologic deficit. The
NIH Stroke Scale evaluates the effect of
acute ischemic stroke on a patient’s
level of consciousness, language,
neglect, visual-field loss, extra-ocular
movement, motor strength, ataxia (the
loss of full control of bodily
movements), dysarthria (difficult or
unclear articulation of speech), and
sensory loss. The NIH Stroke Scale was
designed to be a simple, valid, and
reliable assessment tool that can be
administered at the bedside consistently
by neurologists, physicians, nurses, or
therapists, and is Class I recommended
in the AHA/ASA guidelines.152 The NIH
Stroke Scale is a publicly available
standardized tool, the results of which
should be assessed by a clinician when
first examining a patient presenting to
the hospital with a stroke and
subsequently documented in the
patient’s medical record. Once this
information has been documented by a
clinician, it can then be recorded in the
claim for that hospital admission using
ICD–10–CM codes through the
hospital’s normal coding practices.
We sought to develop a riskadjustment model that included the NIH
Stroke Scale variable and other key
variables which we believe are
clinically relevant and demonstrate a
strong statistical association with 30-day
mortality. To select candidate variables,
we considered those 42 risk-adjustment
variables in the currently adopted
measure, plus the NIH Stroke Scale as
151 Bernheim S WC, Want Y, et al. Hospital 30Day Mortality Following Acute Ischemic Stroke
Hospitalization Measure Methodology Report. 2010.
152 Jauch EC, Saver JL, Adams HP, Jr., et al.
Guidelines for the early management of patients
with acute ischemic stroke: A guideline for
healthcare professionals from the American Heart
Association/American Stroke Association. Stroke.
Mar 2013;44(3):870–947.
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candidate variables. We then performed
a bootstrapping simulation method for
variable selection. This bootstrapping
simulation method is a means of
creating multiple samples to determine
which risk variables are most important
to include in a model. We selected the
best model using the logistic regression
model with the stepwise selection
method based on 1,000 bootstrapping
samples for each copy of the multiple
imputed (MI) data. Variable selection
rate for all the variables selected into the
best model was calculated for each copy
of the MI data, and variables were
included into the final model if the
minimum variable selection rate among
the 5 copies of MI was 90 percent or
more. This method resulted in 20 riskadjustment variables that were included
more than 90 percent of the time for all
the copies of the imputed data were
retained in the final model, including
the NIH Stroke Scale. For more details
on the risk-adjustment variable selection
process, we refer readers to the measure
methodology report and measure riskadjustment statistical model in the AMI,
HF, PN, COPD, and Stroke Mortality
Update zip file on our Web site at:
https://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html.
Refining the risk adjustment model of
the Stroke 30-Day Mortality Rate created
a modestly higher c-statistic with fewer
risk variables, meaning the proposed,
refined measure’s risk-adjustment
model better distinguishes among
patients with a low risk and high risk of
mortality following ischemic stroke
compared with the Stroke 30-Day
Mortality Rate measure that is currently
implemented in the Hospital IQR
Program. Including the NIH Stroke Scale
in the risk-adjustment model allows the
measure to more accurately account for
patients’ status upon arrival at the
hospital, which is responsive to clinical
guidelines and feedback from the
medical community and other
stakeholders, as discussed above.
In order to use the NIH Stroke Scale
data in the proposed, refined Stroke 30Day Mortality Rate measure, many
hospitals that have not routinely
captured these data on patients with
ischemic stroke will need to implement
new workflows to ensure that their
clinicians measure and record stroke
severity. In addition, hospital coders
will need to include the appropriate
ICD–10 code for the clinician’s
documented NIH Stroke Scale score in
the Medicare claim. By proposing this
measure, we are providing hospitals the
information and advanced notice that
they would be required to submit this
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38345
information in their Medicare claims for
this proposed, refined Stroke 30-Day
Mortality Rate measure.
(4) Effect of ICD–10
New ICD–10 codes for the NIH Stroke
Scale were implemented on October 1,
2016; these codes were included so that
hospitals could characterize the severity
of their patients’ strokes using a
rigorously validated and standardized
approach and include that information
in claims and for quality measurement
purposes.153 However, because there
were previously no ICD–9 or ICD–10
CM codes for the NIH Stroke Scale
scores, hospitals have not previously
included this information on claims
they submit to CMS. In order to have
information on the severity of patients’
ischemic stroke included in the
calculation Stroke 30-Day Mortality
Rate, some hospitals that do not
currently capture or record the NIH
Stroke Scale would have to create
workflows and processes to do this.
This additional work, however, is
consistent with current clinical
guidelines for the care of ischemic
stroke patients, and are consistent with
the standard of care. Implementation of
the proposed, refined Stroke 30-Day
Mortality Rate with the refined risk
adjustment would require hospitals to
document in the medical record the first
NIH Stroke Scale on every eligible
patient who is admitted for treatment of
acute ischemic stroke and provide that
information among the ICD–10–CM
code recorded on the claim. The new
ICD–10–CM code representing the NIH
Stroke Scale will be included in the risk
adjustment model for the Stroke 30-Day
Mortality Rate measure.
Because many hospitals would have
to create new clinical workflows to
assess and document the NIH Stroke
Scale in patients’ medical records as
well as include the appropriate ICD–10–
CM code for the documented NIH
Stroke Scale score in the claim they
submit, we would provide hospitals
with dry run results of this proposed,
refined measure in their confidential
hospital-specific feedback reports prior
to implementation of the proposed,
refined measure for the FY 2023
payment determination. For example,
we anticipate using claims data, which
would include ICD–10–CM codes for
the NIH Stroke Scale, for discharges
occurring between October 1, 2017
through June 30, 2020, to calculate
measure results for the dry run
153 ICD–10–CM Official Guidelines for Coding
and Reporting. Available at: https://www.cdc.gov/
nchs/data/icd/10cmguidelines_2017_final.pdf.
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anticipated in CY 2021.154 The data in
the confidential hospital-specific
feedback reports would not be publicly
reported.
We invited public comment on our
proposal to adopt a refinement of the
Stroke 30-Day Mortality Rate in the
Hospital IQR Program for the FY 2023
payment determination and subsequent
years as discussed above.
Comment: Many commenters
supported the proposed refinement to
the Hospital 30-Day, All-Cause, RiskStandardized Mortality Rate following
Acute Ischemic Stroke Hospitalization
(Stroke Mortality Measure) measure to
include the NIH Stroke Scale as a
measure of stroke severity beginning
with the FY 2023 payment
determination. One commenter believed
the proposed refinements would
provide an opportunity to better
evaluate hospital performance and
would not add additional reporting
burden to providers. Another
commenter believed the proposed
refinements represent a significant
improvement of the measure as it is
currently reported because the more
parsimonious and discriminating risk
model would greatly enhance the
accuracy of reporting and classifying the
performance of hospitals.
Response: We thank the commenters
for their support.
Comment: Some commenters
acknowledged that while switching
from ICD–9 to ICD–10 codes allowed for
more robust coding, they were
concerned about reliability and
accuracy of ICD–10 coding, and
comparability across sites. They
requested CMS field test the measure
using the new ICD–10 codes. Many
commenters recommended that CMS
fully test the refined measure using
ICD–10 codes that included the NIH
Stroke Scale and resubmit the measure
for NQF-endorsement prior to
implementation. Several commenters
supported the proposed refinements to
the Stroke Mortality measure, but asked
that CMS not adopt this measure until
it was endorsed by NQF.
Response: Regarding the commenters’
concern about the reliability and
accuracy of ICD–10 coding and the
comparability across sites, the refined
stroke measure which includes stroke
severity was developed and tested
exclusively with ICD–9-coded claims.
154 We note that we have made a correction to the
date provided here. In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20043), a typographical error
resulted in the date of June 1, 2020; however, we
have corrected the date within the preamble of this
final rule to reflect the correct time period that will
be used to calculate measure results for the dry run.
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However, we note that we have
completed extensive testing of the
current stroke mortality measure
specifications in ICD–10 coded claims
and of measure performance in the 3year measurement period, which
includes a combination of ICD–9 and
ICD–10 coded claims.155 The measure
cohort sizes and number of hospitals
with publicly reported results are
similar, and the national and hospitallevel measure results as well as the
performance of the risk-adjustment
model are similar to the results observed
when calculating the measure with only
ICD–9 coded-claims in previous
reporting years. Results of some of this
testing are described in the publicly
available 2017 Annual Updates and
Specifications Report Hospital-Level 30Day Risk-Standardized Mortality
Measures.156 In addition, consistent
with the commenters’ request, we do
plan to further test the refined measure
using ICD–10 codes. The ICD–10–CM
codes for the NIH Stroke Scale were
implemented in October 2016, so we
were not able to test the ICD–10–CM
codes for NIH Stroke Scale score during
measure development. However, since
the ICD–10–CM codes for the NIH
Stroke Scale have been available since
October 2016 for use in claims, it will
be possible for us to examine these data
under the refined Stroke 30-Day
Mortality Rate measure before both the
measure dry run and implementation in
the Hospital IQR Program.
Similarly, because the ICD–10 code
system was implemented in October
2015, there were insufficient claims
coded with ICD–10 (and the NIH Stroke
Scale) submitted by hospitals to provide
any testing results to NQF during the
endorsement process in 2016.
We will submit testing results in
claims data coded using ICD–10 codes
in future cycles of NQF endorsement, as
discussed in our proposal above. We
plan to re-submit this measure to NQF
for endorsement once we have adequate
NIH Stroke Scale data from hospitals,
which we anticipate will be prior to the
FY 2023 payment determination. In
addition, we will continue to assess the
measure, including risk adjustment and
model performance, as part of annual reevaluation as the three-year
measurement period includes a greater
155 Testing results found in the ‘‘AMI, HF, PN,
COPD and Stroke Mortality Update’’ zip file,
available at: https://www.cms.gov/Medicare/
Quality-Initiatives-Patient-Assessment-Instruments/
HospitalQualityInits/Measure-Methodology.html.
156 2017 Condition-Specific Mortality Measures
Updates and Specifications Report. Available at:
www.qualitynet.org > Hospitals—Inpatient >
Claims-Based Measures > Mortality Measures >
Measure Methodology.
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proportion of ICD–10 coded data over
time. However, we did not want to
delay finalization of the refined measure
beginning with the FY 2023 payment
determination because this provides
hospitals with additional time to
prepare for the implementation, which
is generally perceived as an
improvement in the measure by the
stakeholder community.
Furthermore, as discussed above in
our proposal, we note that section
1886(b)(3)(B)(IX)(bb) of the Act provides
that in the case of a specified area or
medical topic determined appropriate
by the Secretary for which a feasible and
practical measure has not been endorsed
by the entity with a contract under
section 1890(a) of the Act, the Secretary
may specify a measure that is not so
endorsed as long as due consideration is
given to measures that have been
endorsed or adopted by a consensus
organization identified by the Secretary.
Although the proposed refined measure
and the existing Stroke 30-Day mortality
measure are not currently NQFendorsed, we considered other available
measures which have been endorsed or
adopted by the NQF, and we were
unable to identify any other NQFendorsed measures that assess stroke
mortality with a standard period of
follow-up.
Comment: Some commenters believed
delaying implementation would allow
hospitals time needed to implement
new workflows to ensure that clinicians
measure and record stroke severity, as
many hospitals have not routinely
captured the NIH Stroke Scale data.
Response: We acknowledge hospitals
need time prior to implementation of
this measure since they have not
previously included the NIH Stroke
Scale information on claims they submit
to CMS, and many hospitals will have
to create new clinical workflows to
assess and document the NIH Stroke
Scale in patients’ medical records as
well as include the appropriate ICD–10–
CM code in their administrative claims.
In an effort to provide hospitals with
more time to prepare for the use of ICD–
10 stroke severity codes, in FY 2017
IPPS/LTCH PPS final rule (81 FR
57161), we included a detailed
discussion of the refined Stroke 30-Day
Mortality Rate measure, which included
the NIH Stroke Scale as a measure of
stroke severity, as a measure for future
consideration. In addition, in the FY
2018 IPPS/LTCH PPS proposed rule (82
FR 20043), we proposed the refined
measure for the FY 2023 payment
determination and subsequent years,
affording hospitals multiple years to
prepare. We also discussed conducting
a dry run prior to implementation, in
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which hospitals would receive dry run
results in their confidential hospitalspecific feedback reports a year prior to
the measure being implemented and
publicly reported in the Hospital IQR
Program. For the dry run anticipated in
CY 2021, we intend to calculate the
measure by using discharges occurring
between October 1, 2017 through June
30, 2020.
Comment: One commenter requested
clarification on which NIH Stroke Scale
assessment to use, since clinical
personnel can record stroke scale scores
at regular intervals on each patient
should the NIH Stroke Scale be
implemented.
Response: The intent of the risk
adjustment for stroke severity is to
account for patients’ clinical status at
the time they are admitted to the
hospital. Therefore, the refined Stroke
30-Day Morality Rate measure would
utilize only the initial NIH Stroke Scale
score, which is administered upon
admission. We refer readers to the
current clinical guidelines describing
the qualifications and appropriate
administration of the NIH Stroke Scale.
Comment: One commenter was
concerned that since registry data was
used as a proxy for EHR data, CMS
should test whether the measure
captures valid data.
Response: We would like to clarify
that while this measure was developed
using data from Medicare administrative
claims and GWTG-Stroke Registry, the
Stroke 30-Day Mortality Rate measure
uses the NIH Stroke Scale obtained from
ICD–10 codes, and not from
electronically submitted EHR data. In
addition, we intend to conduct at least
one dry run prior to the measure being
implemented in order to ensure that
enough hospitals are submitting data on
stroke severity to be used in measure
risk adjustment given that the original
measure testing was done using registry
data as a surrogate source of NIH Stroke
Scale.
Comment: One commenter
encouraged CMS to recognize the value
of the NIH Stroke Scale in future
measures for the Hospital IQR Program,
including measures that promote the
use of the tool throughout the stages of
care of a patient. Another commenter
suggested if a measure of stroke
mortality is proposed for any other CMS
program, CMS require use of the NIH
Stroke Scale in that measure. One
commenter recommended CMS
consider this refined stroke mortality
measure for the Hospital VBP Program.
Response: We thank the commenters
for their suggestions. We will take these
suggestions for future measures and
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other CMS programs into consideration
in future rule-making.
Comment: Several commenters
recommended that CMS consider
moving up the proposed year of
implementation for the refinement of
the Stroke Mortality measure from the
FY 2023 payment determination to the
FY 2022 payment determination. The
commenters believed that one year of
preparation for hospitals to put the
processes in place for documenting and
coding for the NIH Stroke Scale is
adequate. In addition, the commenters
requested that CMS generate a parallel
report that includes the NIH Stroke
Scale for hospitals to track their
progress on achieving completeness of
documentation and coding beginning in
FY 2018.
Response: We thank the commenters
for their support, however, we want to
allow hospitals sufficient time to adjust
their clinical workflows to capture the
NIH Stroke Scale and include it in their
claims. We believe adopting the Stroke
30-Day Mortality Rate measure in the
Hospital IQR Program beginning with
the FY 2023 payment determination
(using discharges occurring between
July 1, 2018 through June 30, 2021)
appropriately balances the need to
implement this substantive
improvement to the measure with
allowing time for hospitals to prepare
for the use of ICD–10 stroke severity
codes if they are not already doing so.
With regards to a parallel report that
includes the NIH Stroke Scale for
hospitals to track their progress, we
believe the confidential hospitalspecific feedback reports will achieve
this. The hospital-specific report (HSR)
generally includes a hospital’s results,
summary results from other hospitals in
the State and the nation, discharge-level
data for all eligible discharges, and the
prevalence of risk factors for a hospital’s
patients compared to State and national
averages. In addition, we intend that the
reports for the refined measure will
include an enumeration of each hospital
discharge with a principal diagnosis of
ischemic stroke along with the NIH
Stroke Scale code included in the
Medicare claim sent to CMS, as well as
each hospital discharge if no NIH Stroke
Scale code is included. This will allow
hospitals to explore processes and
workflows involving capture and
reporting of NIH Stroke Scale codes in
their claims, and avoid having an
additional, separate report run during
the same time period specifically for the
hospital’s NIH Stroke Scale.
Comment: Several commenters
requested the measure add risk
adjustments for tPA (tissue plasminogen
activator) administration or
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38347
thrombectomy, and for sociodemographic (SDS) factors.
Response: We thank the commenters
for their input. The measure seeks to
adjust for case mix differences among
hospitals based on the clinical status of
the patient at the time of the index
admission. We do not generally adjust
the measures for actions taken by the
hospital, such as administration of tPA,
as such factors may be related to the
quality of care rather than patient
factors.
In addition, we understand social risk
factors such as income, education, race
and ethnicity, employment, disability,
community resources, and social
support (certain factors of which are
also sometimes referred to as
socioeconomic status (SES) factors or
socio-demographic status (SDS) factors)
play a major role in overall health. As
noted in the FY 2017 IPPS/LTCH PPS
final rule (81 FR 57124), the NQF has
undertaken a 2-year trial period in
which new measures, measures
undergoing maintenance review, and
measures endorsed with the condition
that they enter the trial period can be
assessed to determine whether risk
adjustment for selected social risk
factors is appropriate for these
measures. This trial entailed
temporarily allowing inclusion of social
risk factors in the risk-adjustment
approach for these measures. This
measure was considered for
endorsement during the trial period.
The results of the analyses presented to
the committee demonstrated that the
SES variables that could be feasibly
incorporated into this model only have
a small, though statistically significant,
relationship with the outcome in
multivariable modeling and that adding
them in the risk model did not change
hospitals’ mortality rates.157 Although
the measure was not recommended for
endorsement, the exclusion of social
risk factors from the risk-adjustment
model was not among the concerns
raised by the committee.158 We also
refer readers to section IX.A.1.d. of the
preamble of this final rule where SDS is
discussed in more detail.
Comment: One commenter noted this
measure excludes patients under age 65,
which impacts its generalizability to all
stroke patients.
Response: The measure only includes
admissions of Medicare FFS
beneficiaries aged 65 years or older who
were discharged from an inpatient stay
157 https://www.qualityforum.org/ProjectMaterials.
aspx?projectID=80601.
158 Ibid.
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at a short-term acute care hospital.159
The measure does not include Medicare
patients who are younger than 65
because these patients usually qualify
for the program due to severe disability
and, thus, are considered to be clinically
distinct from Medicare patients 65 and
over. Furthermore, this refined measure
has not been tested on a population
under 65. With respect to the
generalizability of the measure to all
stroke patients, we are unable to
comment on the appropriateness of the
use of the measure in data other than
the Medicare data for which it was
developed.
After consideration of the public
comments we received, we are
finalizing our proposal to refine the
Hospital 30-Day, All-Cause, RiskStandardized Mortality Rate following
Acute Ischemic Stroke Hospitalization
(Stroke Mortality Measure) measure for
the FY 2023 payment determination and
subsequent years as proposed.
c. Summary of Previously Adopted and
Finalized Hospital IQR Program
Measures for the FY 2020 Payment
Determination and Subsequent Years
The table below outlines the Hospital
IQR Program measure set (including
previously adopted measures and
finalized refinements from this final
rule) for the FY 2020 payment
determination and subsequent years.
The refined measures, as discussed
above, are denoted with a superscript as
defined in the legend below the table.
PREVIOUSLY ADOPTED HOSPITAL IQR PROGRAM MEASURES FOR THE FY 2020 PAYMENT DETERMINATION AND
SUBSEQUENT YEARS
Short name
Measure name
NQF #
Healthcare-Associated Infection Measures
CAUTI ..............................................
CDI ...................................................
CLABSI ............................................
Colon and Abdominal Hysterectomy
SSI.
HCP .................................................
MRSA Bacteremia ...........................
National Healthcare Safety Network (NHSN) Catheter-associated Urinary Tract Infection
(CAUTI) Outcome Measure.
National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome Measure.
National Healthcare Safety Network (NHSN) Central Line-Associated Bloodstream Infection (CLABSI) Outcome Measure.
American College of Surgeons—Centers for Disease Control and Prevention (ACS–
CDC) Harmonized Procedure Specific Surgical Site Infection (SSI) Outcome Measure.
Influenza Vaccination Coverage Among Healthcare Personnel ...........................................
National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset
Methicillin-resistant Staphylococcus aureus (MRSA) Bacteremia Outcome Measure.
0138
1717
0139
0753
0431
1716
Claims-Based Patient Safety Measures
Hip/knee complications ....................
PSI 04 ..............................................
PSI 90 ..............................................
Hospital-Level Risk-Standardized Complication Rate (RSCR) Following Elective Primary
Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA).
Death Rate among Surgical Inpatients with Serious Treatable Complications ....................
Patient Safety for Selected Indicators Composite Measure, Modified PSI 90 (Updated
Title: Patient Safety and Adverse Events Composite).
1550
0351
0531
Claims-Based Mortality Outcome Measures
MORT–30–AMI ................................
MORT–30–CABG ............................
MORT–30–COPD ............................
MORT–30–HF ..................................
MORT–30–PN .................................
MORT–30–STK ...............................
Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Acute
Myocardial Infarction (AMI) Hospitalization.
Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Coronary Artery Bypass Graft (CABG) Surgery.
Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Chronic
Obstructive Pulmonary Disease (COPD) Hospitalization.
Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Heart
Failure (HF) Hospitalization.
Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Pneumonia Hospitalization.
Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Acute Ischemic
Stroke *.
0230
2558
1893
0229
0468
N/A
Claims-Based Coordination of Care Measures
READM–30–AMI ..............................
READM–30–CABG ..........................
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READM–30–COPD ..........................
READM–30–HF ...............................
READM–30–HWR ...........................
READM–30–PN ...............................
READM–30–STK .............................
Hospital 30-Day All-Cause Risk-Standardized Readmission Rate (RSRR) Following
Acute Myocardial Infarction (AMI) Hospitalization.
Hospital 30-Day, All-Cause, Unplanned, Risk-Standardized Readmission Rate (RSRR)
Following Coronary Artery Bypass Graft (CABG) Surgery.
Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate (RSRR) Following
Chronic Obstructive Pulmonary Disease (COPD) Hospitalization.
Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate (RSRR) Following
Heart Failure (HF) Hospitalization.
Hospital-Wide All-Cause Unplanned Readmission Measure (HWR) ...................................
Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate (RSRR) Following
Pneumonia Hospitalization.
30-Day Risk-Standardized Readmission Rate Following Stroke Hospitalization .................
159 Schwartz J, Wang Y, et al. Hospital 30-Day,
All-Cause, Risk-Standardized Mortality Rate
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(RSMR) Following Acute Ischemic Stroke
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0505
2515
1891
0330
1789
0506
N/A
Hospitalization with Claims-Based Risk Adjustment
for Stroke Severity Technical Report. 2016.
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38349
PREVIOUSLY ADOPTED HOSPITAL IQR PROGRAM MEASURES FOR THE FY 2020 PAYMENT DETERMINATION AND
SUBSEQUENT YEARS—Continued
Short name
Measure name
READM–30–THA/TKA .....................
Hospital-Level 30-Day, All-Cause Risk-Standardized Readmission Rate (RSRR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty
(TKA).
Excess Days in Acute Care after Hospitalization for Acute Myocardial Infarction ...............
Excess Days in Acute Care after Hospitalization for Heart Failure .....................................
Excess Days in Acute Care after Hospitalization for Pneumonia ........................................
AMI Excess Days ............................
HF Excess Days ..............................
PN Excess Days ..............................
NQF #
1551
2881
2880
2882
Claims-Based Payment Measures
AMI Payment ...................................
HF Payment .....................................
PN Payment .....................................
THA/TKA Payment ..........................
MSPB ...............................................
Cellulitis Payment ............................
GI Payment ......................................
Kidney/UTI Payment ........................
AA Payment .....................................
Chole and CDE Payment ................
SFusion Payment ............................
Hospital-Level, Risk-Standardized Payment Associated with a 30-Day Episode-of-Care
for Acute Myocardial Infarction (AMI).
Hospital-Level, Risk-Standardized Payment Associated with a 30-Day Episode-of-Care
For Heart Failure (HF).
Hospital-Level, Risk-Standardized Payment Associated with a 30-day Episode-of-Care
For Pneumonia.
Hospital-Level, Risk-Standardized Payment Associated with an Episode-of-Care for Primary Elective Total Hip Arthroplasty and/or Total Knee Arthroplasty.
Payment-Standardized Medicare Spending Per Beneficiary (MSPB) ..................................
Cellulitis Clinical Episode-Based Payment Measure ............................................................
Gastrointestinal Hemorrhage Clinical Episode-Based Payment Measure ...........................
Kidney/Urinary Tract Infection Clinical Episode-Based Payment Measure ..........................
Aortic Aneurysm Procedure Clinical Episode-Based Payment Measure .............................
Cholecystectomy and Common Duct Exploration Clinical Episode-Based Payment Measure.
Spinal Fusion Clinical Episode-Based Payment Measure ...................................................
2431
2436
2579
N/A
2158
N/A
N/A
N/A
N/A
N/A
N/A
Chart-Abstracted Clinical Process of Care Measures
ED–1 ** .............................................
ED–2 ** .............................................
Imm–2 ..............................................
PC–01 ** ...........................................
Sepsis ..............................................
VTE–6 ..............................................
Median Time from ED Arrival to ED Departure for Admitted ED Patients ...........................
Admit Decision Time to ED Departure Time for Admitted Patients .....................................
Influenza Immunization .........................................................................................................
Elective Delivery ....................................................................................................................
Severe Sepsis and Septic Shock: Management Bundle (Composite Measure) ..................
Incidence of Potentially Preventable Venous Thromboembolism ........................................
0495
0497
1659
0469
0500
(+)
EHR-Based Clinical Process of Care Measures (That is, Electronic Clinical Quality Measures (eCQMs))
AMI–8a .............................................
CAC–3 .............................................
ED–1** .............................................
ED–2** .............................................
EHDI–1a ..........................................
PC–01** ...........................................
PC–05 ..............................................
STK–02 ............................................
STK–03 ............................................
STK–05 ............................................
STK–06 ............................................
STK–08 ............................................
STK–10 ............................................
VTE–1 ..............................................
VTE–2 ..............................................
Primary PCI Received Within 90 Minutes of Hospital Arrival ...............................................
Home Management Plan of Care Document Given to Patient/Caregiver ............................
Median Time from ED Arrival to ED Departure for Admitted ED Patients ...........................
Admit Decision Time to ED Departure Time for Admitted Patients .....................................
Hearing Screening Prior to Hospital Discharge ....................................................................
Elective Delivery ....................................................................................................................
Exclusive Breast Milk Feeding ..............................................................................................
Discharged on Antithrombotic Therapy ................................................................................
Anticoagulation Therapy for Atrial Fibrillation/Flutter ............................................................
Antithrombotic Therapy by the End of Hospital Day Two ....................................................
Discharged on Statin Medication ..........................................................................................
Stroke Education ...................................................................................................................
Assessed for Rehabilitation ..................................................................................................
Venous Thromboembolism Prophylaxis ...............................................................................
Intensive Care Unit Venous Thromboembolism Prophylaxis ...............................................
(+)
(+)
0495
0497
1354
0469
0480
0435
0436
0438
0439
(+)
0441
0371
0372
Patient Experience of Care Survey Measures
HCAHPS ..........................................
Hospital Consumer Assessment of Healthcare Providers and Systems *** (including Care
Transition Measure (CTM-3) and Communication About Pain composite measure).
0166
(0228)
Structural Patient Safety Measures
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Patient Safety Culture ......................
Safe Surgery Checklist ....................
Hospital Survey on Patient Safety Culture ...........................................................................
Safe Surgery Checklist Use ..................................................................................................
N/A
N/A
* Measure refinement of the Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Acute Ischemic Stroke, for the FY 2023
payment determination and for subsequent years, as described in section IX.A.6.b. of the preamble of this final rule.
** Measure listed twice, as both chart-abstracted and electronic clinical quality measure.
*** Measure refinement of the HCAHPS measure’s Pain Management questions for the FY 2020 payment determination and for subsequent
years, as described in section IX.A.6.a. of the preamble of this final rule.
(+) NQF endorsement has been removed.
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7. Voluntary Hybrid Hospital-Wide
Readmission Measure With Claims and
Electronic Health Record Data (NQF
#2879)
a. Background
In the FY 2016 IPPS/LTCH PPS final
rule (80 FR 49698), we stated that we
are considering the use of a set of core
clinical data elements extracted from
hospital EHRs for each hospitalized
Medicare FFS beneficiary over the age
of 65 years. The core clinical data
elements are data which are routinely
collected on hospitalized adults,
extraction from hospital EHRs is
feasible, and can be utilized as part of
specific quality outcome measures. One
way in which we envisioned using core
clinical data elements in conjunction
with other sources of data, such as
administrative claims, is to calculate
‘‘hybrid’’ outcome measures, which are
quality measures that utilize more than
one source of data. For more detail
about core clinical data elements, we
refer readers to our discussion in the FY
2016 IPPS/LTCH PPS final rule (80 FR
49698 through 49704). In addition, we
note an important distinguishing factor
about core clinical data elements and
the hybrid measures: Hybrid measure
results must be calculated by CMS to
determine hospitals’ risk-adjusted rates
relative to national rates used in public
reporting. With a hybrid measure,
hospitals can submit data extracted from
the EHR, and we can perform the
measure calculations. This was the
approach that was finalized for the
calculation of the Hybrid Hospital 30Day, All-Cause, Risk-Standardized
Mortality Rate (RSMR) Following Acute
Myocardial Infarction (NQF #2473),
which was incorporated into the
Advancing Care Coordination Through
Episode Payment Models as a voluntary
measure for patients admitted for AMI
in the AMI Model (82 FR 354 through
356).
In the FY 2016 IPPS/LTCH PPS final
rule, we stated we developed two
hybrid measures: (1) Hospital 30-Day
Risk-Standardized Acute Myocardial
Infarction (AMI) Mortality eMeasure
(NQF #2473) (now called the Hybrid
Hospital 30-Day All Cause RiskStandardized Mortality Rate Following
Acute Myocardial Infarction (AMI)
(NQF #2473)); and (2) a hybrid hospitalwide 30-day readmission measure now
called the Hybrid Hospital-Wide
Readmission Measure with Claims and
Electronic Health Record Data (NQF
#2879). Although the Hybrid HospitalWide Readmission Measure with Claims
and Electronic Health Record Data (NQF
#2879) (hereinafter referred to as Hybrid
HWR measure) was not originally
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endorsed when the MAP considered the
measure, the MAP encouraged further
development (80 FR 49698),160 and the
measure has since been endorsed by the
NQF.
In the FY 2016 IPPS/LTCH PPS final
rule (80 FR 49702), commenters noted
either outright or conditional support
for the development of hybrid measures,
and for the collection of additional
administrative linkage variables to
merge data from EHRs with claims. A
few commenters noted collection of the
core clinical data elements would not
impose additional burden on hospitals
(80 FR 49702). A few commenters
recommended the hybrid measures
should go through NQF review or be
endorsed by NQF prior to inclusion in
a quality reporting program, which we
have done, as the Hybrid HWR measure
was endorsed by NQF on December 9,
2016. Other commenters recommended
that before we require the submission of
the core clinical data elements, we
should conduct further testing and
analysis to ensure the accuracy and
completeness of the data being
submitted; specifically, one commenter
suggested a testing period (80 FR
49703). We conducted further testing,
which is further described below. We
refer readers to the FY 2016 IPPS/LTCH
PPS final rule (80 FR 49702 through
49704) for a full discussion of all public
comments and our responses related to
core clinical data elements.
Since the FY 2016 IPPS/LTCH PPS
final rule, in keeping with our goal to
move toward greater use of data from
EHRs for quality measurement, and in
response to stakeholder feedback to
include clinical data in outcome
measures (80 FR 49702 through 49703),
we have further developed the proposed
voluntary Hybrid HWR measure. This
measure would incorporate a
combination of claims data and EHR
data submitted by hospitals, and
because of these combined data sources,
it is referred to as a hybrid measure. The
Hybrid HWR measure cohort and
outcome are identical to those in the
Hospital-Wide All-Cause Unplanned
Readmission measure (NQF #1789),
which was adopted into the Hospital
IQR Program for the FY 2015 payment
determination and subsequent years (77
FR 53521).
The Hybrid HWR measure was
presented on the List of Measures under
Consideration for December 1, 2014.
The MAP encouraged further
160 National Quality Forum. Measure Application
Partnership, MAP Hospital Programmatic
Deliverable—Final Report. Available at: https://
www.qualityforum.org/Publications/2015/02/MAP_
Hospital_Programmatic_Deliverable_-_Final_
Report.aspx. Accessed on March 10, 2017.
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development of the Hybrid HWR
measure in December 2014.161 The
Hybrid HWR measure (NQF #2879) was
endorsed by NQF on December 9, 2016.
This measure aligns with the National
Quality Strategy (NQS) priorities of
making care safer by reducing harm
caused in the delivery of care and
promoting effective communication and
coordination of care.
Measure development followed the
same scientific approach and rigorous
process as other Hospital IQR Program
outcome measures. To align the core
clinical data elements with other
measures that utilize EHR data, we
developed and tested a Measure
Authoring Tool and identified value sets
for extraction of the core clinical data
elements. As stated in the FY 2016
IPPS/LTCH PPS final rule, the core
clinical data elements use existing value
sets where possible in an effort to
harmonize with other measures and
reporting requirements and we
completed testing of the electronic
specifications for the core clinical data
elements used in the Hybrid HWR
measure (80 FR 49703). The electronic
specifications were tested in four
separate health systems that used three
separate EHR systems. During Hybrid
HWR measure development and testing
we demonstrated that the core clinical
data elements were feasibly extracted
from hospital EHRs for nearly all adult
patients admitted. We also
demonstrated that the use of the core
clinical data elements to risk-adjust the
Hybrid HWR measure improves the
discrimination of the measure, or the
ability to distinguish patients with a low
risk of readmission from those at high
risk of readmission, as assessed by the
c-statistic.162 163 164 In addition,
inclusion of clinical information from
patient EHRs is responsive to
stakeholders who find it preferable to
161 National Quality Forum. Measure Application
Partnership, MAP Hospital Programmatic
Deliverable—Final Report. Available at: https://
www.qualityforum.org/Publications/2015/02/MAP_
Hospital_Programmatic_Deliverable_-_Final_
Report.aspx. Accessed on March 10, 2017.
162 Hybrid 30-day Risk-standardized Acute
Myocardial Infarction Mortality Measure with
Electronic Health Record Extracted Risk Factors
(Version 1.1). Available at: https://www.cms.gov/
Medicare/Quality-Initiatives-Patient-AssessmentInstruments/HospitalQualityInits/MeasureMethodology.html.
163 Hybrid Hospital-Wide Readmission Measure
with Electronic Health Record Extracted Risk
Factors (Version 1.1). Available at: https://
www.cms.gov/Medicare/Quality-Initiatives-PatientAssessment-Instruments/HospitalQualityInits/
Measure-Methodology.html.
164 2013 Core Clinical Data Elements Technical
Report (Version 1.1). Available at: https://
www.cms.gov/Medicare/Quality-Initiatives-PatientAssessment-Instruments/HospitalQualityInits/
Measure-Methodology.html.
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use clinical information that is available
to the clinical care team at the time
treatment is rendered to account for
patients’ severity of illness rather than
relying solely on data from claims (80
FR 49702). The Hybrid HWR measure is
now fully developed and tested and
NQF-endorsed (NQF #2879).
b. Voluntary Reporting of Electronic
Health Record Data for the Hybrid HWR
Measure (NQF #2879)
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20045 through
20049), in accordance with, and to the
extent permitted by, the HIPAA Privacy
Rule and other applicable law, we
proposed the Hybrid HWR measure as a
voluntary measure for the reporting of
data on discharges over a 6-month
period in the first two quarters of CY
2018 (January 1, 2018 through June 30,
2018). A hospital’s annual payment
determination would not be affected by
this voluntary measure. As we stated
when we adopted the Hospital-Wide
All-Cause Unplanned Readmission
measure (NQF #1789) that is currently
used in the Hospital IQR Program, a
hospital’s readmission rate is affected by
complex and critical aspects of care
such as communication between
providers or between providers and
patients; prevention of, and response to,
complications; patient safety; and
coordinated transitions to the outpatient
environment, such that a hospital-wide,
all-condition readmission measure
could portray a broader sense of the
quality of care in hospitals and promote
hospital quality improvement (77 FR
53522). We believe this would also be
the case with using the Hybrid HWR
measure (NQF #2879) that we proposed
for voluntary data collection in the
proposed rule.
Hospitals that voluntarily submit data
for this measure would receive
confidential hospital-specific reports
that detail submission results from the
performance reporting period, as well as
the Hybrid HWR measure results
assessed from merged files created by
our merging of the EHR data elements
submitted by each participating hospital
with claims data from the same set of
index admission. We note that in the
proposed rule (82 FR 20047), we stated
we are only seeking to collect data for
the Hybrid HWR measure that are in
accordance with the measure’s
electronic specifications, available on
the CMS Web site at: https://cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/
HospitalQualityInits/MeasureMethodology.html. Hospitals that
volunteer to submit data would also
increase their familiarity with
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submitting data for hybrid quality
measures from their EHR systems.
Participating hospitals would receive
information and instruction on the use
of the electronic specifications for this
measure, would have an opportunity to
test extraction and submission of data to
CMS, and would receive reports from
CMS, downloadable from QualityNet,
with details on the success of their
submission, such as the completeness
and accuracy of the data. This would
allow us to refine this measure if
necessary to provide meaningful
information on outcomes for
hospitalizations for Medicare FFS
beneficiaries with the intent to propose
this as a required measure in future
rulemaking. For example, we would
consider feedback from hospitals when
making refinements to improve the
utility of the measure specifications. In
addition, we would examine the
completeness and accuracy of the data
received to determine its adequacy for
calculation of the measure’s risk
adjustment model and measure results.
EHR data or measure results for this
proposed voluntary Hybrid HWR
measure would not be publicly
reported. However, if we propose to
require mandatory reporting of the
Hybrid HWR measure in future
rulemaking, such a proposal would
include public reporting of the measure
results. Consistent with estimates for
previous voluntary measure reporting,
such as the Hospital IQR Program eCQM
voluntary reporting (79 FR 50346), we
believe up to approximately 100
hospitals would voluntarily submit data
for the Hybrid HWR measure. Details
about the measure and our proposal for
voluntarily reporting certain data
elements for this measure are discussed
below.
c. Data Sources
We proposed to use two sources of
data for the calculation of the proposed
voluntary Hybrid HWR measure:
Medicare Part A claims and core clinical
data elements for Medicare FFS
beneficiaries who are 65 years or older,
comprising the measure cohort. Claims
data would be used to identify index
admissions included in the measure
cohort, to create a risk-adjustment
model, and to assess the 30-day
unplanned readmission outcome. This
data would be merged with core clinical
data elements from each participant
hospital’s EHRs collected at
presentation (discussed in more detail
below) and used for risk-adjustment of
patients’ severity of illness (for
Medicare FFS beneficiaries who are 65
years or older), in addition to data from
claims. Medicare enrollment data, from
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38351
the Medicare Enrollment Database, are
used to confirm Medicare enrollment for
at least 30 days post hospital discharge
for the unplanned readmission outcome
assessment. For this proposed voluntary
Hybrid HWR measure, in accordance
with, and to the extent permitted by, the
HIPAA Privacy Rule and other
applicable law, the EHR data
submission process would align as
much as possible with existing
electronic Clinical Quality Measure
(eCQM) standards and data reporting
procedures for hospitals, as further
discussed below. We refer readers to
section IX.A.10.e. of the preamble of
this final rule for details on the
Submission Form and Method for the
Voluntary Hybrid Hospital-Wide
Readmission Measure. The electronic
specifications for the proposed
voluntary Hybrid HWR measure, which
include the electronic specifications for
extraction of the core clinical data
elements from hospital EHRs (the
Measure Authoring Tool output and
value sets) for all included data
elements, are available on the CMS Web
site at: https://cms.gov/Medicare/
Quality-Initiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html.
d. Outcome
As stated above, the proposed
voluntary Hybrid HWR measure
outcome is aligned with the currently
adopted, publicly reported, HospitalWide All-Cause Unplanned
Readmission measure (NQF #1789),
which was adopted into the Hospital
IQR Program for the FY 2015 payment
determination and subsequent years (77
FR 53521 through 53528). The proposed
voluntary Hybrid HWR measure
outcome assesses unplanned
readmissions for any cause within 30
days of discharge from the index
admission. It does not consider planned
readmissions as part of the readmission
outcome and identifies them by using
the CMS Planned Readmission
Algorithm, which is a set of criteria for
classifying readmissions as planned
using Medicare claims, and is currently
used in the previously adopted,
Hospital-Wide All-Cause Unplanned
Readmission measure (77 FR 53521).165
This algorithm identifies admissions
that are typically planned and may
occur within 30 days of discharge from
the hospital.166 The algorithm was most
165 2017 All-Cause Hospital-Wide Measure
Updates and Specifications Report. Available at:
https://www.cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/
HospitalQualityInits/Measure-Methodology.html.
166 Ibid.
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recently refined in the FY 2015 IPPS/
LTCH PPS final rule (79 FR 50211
through 50216) for the previously
adopted, claims-based measure. The
same algorithm is used for this proposed
voluntary Hybrid HWR measure.167 A
complete description of the CMS
Planned Readmission Algorithm, which
includes lists of planned diagnoses and
procedures, can be found on the CMS
Web site at: https://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/
HospitalQualityInits/MeasureMethodology.html.
e. Cohort
As noted above, the proposed
voluntary Hybrid HWR measure cohort
is aligned with the currently adopted,
Hospital-Wide All-Cause Unplanned
Readmission measure.168 The measure
cohort consists of Medicare FFS
beneficiaries, aged 65 years or older,
discharged from non-Federal acute care
hospitals. Hospitals would only submit
data for this cohort, and the measure
would only be calculated for this cohort.
The proposed voluntary Hybrid HWR
measure includes admissions for nearly
all Medicare FFS beneficiaries over the
age of 65 years who are discharged alive
from acute care non-Federal hospitals.
However, during measure calculation, a
small number of these admissions are
excluded under the measure
specifications. Excluded admissions
include those for principal discharge
diagnoses indicating some psychiatric
disorders. These exclusions are only a
small proportion of all index admissions
and are identified during the measure
calculation process.
f. Inclusion and Exclusion Criteria
The proposed voluntary Hybrid HWR
measure inclusion and exclusion
criteria are also aligned with the
currently adopted Hospital-Wide AllCause Unplanned Readmission
measure.169 For both measures, the
index admission is the hospitalization
to which the readmission outcome is
attributed. Both the claims-based,
Hospital-Wide All-Cause Unplanned
Readmission measure and the proposed
voluntary Hybrid HWR measure include
the following index admissions for
patients:
• Enrolled in Medicare FFS Part A for
the 12 months prior to the date of
admission and during the index
admission.
• Aged 65 or older.
• Discharged alive from a non-Federal
acute care hospital.
• Not transferred to another acute
care facility.
This measure excludes the following
index admissions for patients:
• Admitted to prospective payment
system (PPS)-exempt cancer hospitals.
• Without at least 30 days of postdischarge enrollment in Medicare FFS.
• Discharged against medical advice.
• Admitted for primary psychiatric
diagnoses.
• Admitted for rehabilitation.
• Admitted for medical treatment of
cancer.
For both measures, each index
admission is assigned to one of five
mutually exclusive specialty cohort
groups: medicine; surgery/gynecology;
cardiorespiratory; cardiovascular; and
neurology. The cohorts reflect how care
for patients is organized within
hospitals. To assign admissions to
cohorts, admissions are first screened
for the presence of an eligible Agency
for Healthcare Research and Quality
(AHRQ) Clinical Classifications
Software (CCS) 170 surgical procedure
category. Admissions with an eligible
surgical procedure category are assigned
to the surgical cohort, regardless of the
principal discharge diagnosis code of
the admission. All remaining
admissions are assigned to cohorts
based on the AHRQ CCS diagnosis
category of the principal discharge
diagnosis.
g. Risk-Adjustment
The proposed voluntary Hybrid HWR
measure adjusts both for case mix
differences (clinical status of the
patient, accounted for by adjusting for
age and comorbidities, and the core
clinical data elements from patients’
EHRs) and service-mix differences (the
types of conditions and procedures
cared for and procedures conducted by
the hospital, accounted for by adjusting
for the discharge condition category).
Patient comorbidities are based on the
index admission, the admission
included in the measure cohort, and a
full year of prior history. The core
clinical data elements are derived from
information captured in the EHR during
the index admission only, and are listed
below.
Time window for
first captured values
(hours)
Units of measurement
Heart Rate ................................................................................
Systolic Blood Pressure ............................................................
Respiratory Rate .......................................................................
Temperature .............................................................................
Oxygen Saturation ....................................................................
Weight .......................................................................................
Hematocrit .................................................................................
White Blood Cell Count ............................................................
Potassium .................................................................................
Sodium ......................................................................................
Bicarbonate ...............................................................................
Creatinine ..................................................................................
Glucose .....................................................................................
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Data elements
Beats per minute ......................................................................
mmHg .......................................................................................
Breath per minute ....................................................................
Degrees Fahrenheit .................................................................
Percent .....................................................................................
Pounds .....................................................................................
% red blood cells .....................................................................
Cells/mL ...................................................................................
mEq/L .......................................................................................
mEq/L .......................................................................................
mmol/L ......................................................................................
mg/dL .......................................................................................
mg/dL .......................................................................................
167 Hybrid Hospital-Wide Readmission Measure
with Electronic Health Record Extracted Risk
Factors (Version 1.1). Available at: https://
www.cms.gov/Medicare/Quality-Initiatives-PatientAssessment-Instruments/HospitalQualityInits/
Measure-Methodology.html.
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168 2017 All-Cause Hospital-Wide Measure
Updates and Specifications Report. Available at:
https://www.cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/
HospitalQualityInits/Measure-Methodology.html.
169 2017 All-Cause Hospital-Wide Measure
Updates and Specifications Report. Available at:
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0–2.
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0–24.
0–24.
0–24.
0–24.
0–24.
0–24.
0–24.
0–24.
https://www.cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/
HospitalQualityInits/Measure-Methodology.html.
170 Clinical Classifications Software (CCS) for
ICD–9–CM Fact Sheet. Accessed at: https://
www.hcup-us.ahrq.gov/toolssoftware/ccs/
ccsfactsheet.jsp.
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The risk-adjustment variables
included in the development and testing
of the proposed voluntary Hybrid HWR
measure are derived from both claims
and clinical EHR data. The variables are:
(1) 13 Core clinical data elements
derived from hospital EHRs; (2) the
Clinical Classification Software (CCS)
categories for the principal discharge
diagnosis associated with each index
admission derived from ICD–10 codes
in administrative claims data; and (3)
comorbid conditions of each patient
identified from inpatient claims in the
12 months prior to and including the
index admission derived from ICD–10
codes and grouped into the CMS
condition categories (CC).
All 13 core clinical data elements
were shown to be statistically
significant predictors of readmission in
one or more risk-adjustment models of
the five specialty cohort groups used to
calculate the proposed voluntary Hybrid
HWR measure.171 The proposed
voluntary Hybrid HWR measure
specialty cohort groups are further
defined in section IX.A.7.e. of the
preamble of this final rule, below. The
testing results demonstrate that the core
clinical data elements enhanced the
discrimination (assessed using the cstatistic) when used in combination
with administrative claims data.172 For
additional details regarding the riskadjustment model, we refer readers to
the proposed voluntary Hybrid HWR
Measure technical report, which is
posted on the CMS Web site at: https://
cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/
HospitalQualityInits/MeasureMethodology.html.
We note this measure was developed
using claims coded in ICD–9. However,
we have identified and tested ICD–10
specifications for all information used
in the measure derived from Medicare
claims for both the claims-based,
Hospital-Wide All-Cause Unplanned
Readmission measure and for the
proposed voluntary Hybrid HWR
Measure. The ICD–10 specifications are
identical for both measures. Only the
use of the core clinical data elements in
the risk-adjustment models differs
between the two measures. Those data
elements are not affected by ICD–10
171 Hybrid Hospital-Wide Readmission Measure
with Electronic Health Record Extracted Risk
Factors (Version 1.1). Available at: https://
www.cms.gov/Medicare/Quality-Initiatives-PatientAssessment-Instruments/HospitalQualityInits/
Measure-Methodology.html.
172 Hybrid Hospital-Wide Readmission Measure
with Electronic Health Record Extracted Risk
Factors (Version 1.1). Available at: https://
www.cms.gov/Medicare/Quality-Initiatives-PatientAssessment-Instruments/HospitalQualityInits/
Measure-Methodology.html.
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implementation. For additional details
regarding the measure specifications
that accommodate ICD–10-coded
claims, we refer readers to the 2017 AllCause Hospital-Wide Measure Updates
and Specifications Report, which is
posted on the CMS Web site at: https://
cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/
HospitalQualityInits/MeasureMethodology.html.
h. Calculating the Risk-Standardized
Readmission Rate (RSRR)
The methods used for calculation of
the proposed voluntary Hybrid HWR
measure align with the methods used to
calculate the currently adopted,
Hospital-Wide All-Cause Unplanned
Readmission measure. Index admissions
are assigned to one of five mutually
exclusive specialty cohort groups
consisting of related conditions or
procedures. The five specialty cohort
groups are: Surgery/gynecology, general
medicine, cardiorespiratory,
cardiovascular, and neurology. For each
specialty cohort group, the standardized
readmission ratio (SRR) is calculated as
the ratio of the number of ‘‘predicted’’
readmissions to the number of
‘‘expected’’ readmissions at a given
hospital. For each hospital, the
numerator of the ratio is the number of
readmissions within 30 days predicted
based on the hospital’s performance
with its observed case mix and service
mix, and the denominator is the number
of readmissions expected based on the
nation’s performance with that
hospital’s case mix and service mix.
This approach is analogous to a ratio of
‘‘observed’’ to ‘‘expected’’ used in other
types of statistical analyses.
The specialty cohort SRRs are then
pooled for each hospital using a
volume-weighted geometric mean to
create a hospital-wide composite SRR.
The composite SRR is multiplied by the
national observed readmission rate to
produce the RSRR. For additional
details regarding the measure
specifications to calculate the RSRR, we
refer readers to the 2017 All-Cause
Hospital-Wide Measure Updates and
Specifications Report, which is posted
on the CMS Web site at: https://cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/
HospitalQualityInits/MeasureMethodology.html.
i. Data Submission and Reporting
Requirements
We proposed hospitals use QRDA I
files for each Medicare FFS beneficiary
who is 65 years and older. Submission
of data using QRDA I files is the current
EHR data and measure reporting
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standard adopted for electronic clinical
quality measures (eCQMs) implemented
in the Hospital IQR Program. This same
standard would be used for reporting
the core clinical data elements to the
CMS data receiving system. We refer
readers to the FY 2016 IPPS/LTCH PPS
final rule (80 FR 49706) where we have
previously discussed QRDA I standards
for use in the Hospital IQR Program. We
also refer readers to section IX.A.10.e. of
the preamble of this final rule for
discussions of additional proposals
related to data submission and reporting
requirements for the Hybrid HWR
measure.
We also proposed to use the following
criteria to determine if a hospital has
successfully submitted voluntary
Hybrid HWR measure data:
• Submission of only the firstcaptured values, which are data
collected routinely on each Medicare
FFS beneficiary who is 65 years or older
upon presentation to the hospital, for
each of the 13 core clinical data
elements used in risk adjustment to
assess the patient’s severity of illness.
• Hospitals would be expected to
successfully submit data values from
hospital EHRs for vital signs (heart rate,
respiratory rate, temperature, systolic
blood pressure, oxygen saturation,
weight), and six linking variables
required to merge with the CMS claims
data (CCN, HIC Number or Medicare
Beneficiary Identifier, date of birth, sex,
admission date, and discharge date).
When we tested the electronic
specifications for extraction of the core
clinical data elements in hospital
systems, we also tested the use of these
linking variables to merge data from
claims and from hospitals’ EHRs from
several health systems, and achieved
match rates over 90 percent accounting
for missing or erroneous data. In order
to calculate results for the Hybrid HWR
measure, hospitals would need to
submit these data on more than 95
percent of on all Medicare FFS patients
who are 65 years and older discharged
from the hospital.
• Participating hospitals would be
requested to submit values for
laboratory test results (hematocrit, white
blood cell count, sodium, potassium,
bicarbonate, creatinine, and glucose) for
Medicare FFS beneficiaries, 65 years or
older, included in the measure cohort.
In order to calculate measure results for
the Hybrid HWR measure, hospitals
would need to submit these data
elements on more than 80 percent of
these beneficiaries. However, for the
proposed voluntary measure for the CY
2018 reporting period (January 1, 2018
through June 30, 2018) we would
request the data elements on at least 50
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percent of these patients discharged
over the same time period. Data
submission to the CMS data receiving
system would occur in the fall of 2018.
• The measurement period would
include discharges occurring over a 6month period in the first two quarters of
CY 2018 (January 1, 2018 through June
30, 2018). However, for hospitals that
choose to report this measure, we would
request submission of these data
elements on at least 50 percent of these
patients. As we noted above, in our
proposal for voluntary data collection of
the Hybrid HWR measure, we are only
seeking to collect data for this measure
on applicable Medicare FFS
beneficiaries in accordance with the
measure’s electronic specifications,
available on the CMS Web site at: https://
cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/
HospitalQualityInits/MeasureMethodology.html.
sradovich on DSK3GMQ082PROD with RULES2
j. Confidential Hospital-Specific Reports
Hospitals that voluntarily submit data
for this measure would receive
confidential hospital-specific reports
that detail submission results from the
reporting period, including detailed
information about the completeness and
accuracy of the EHR data they submit,
as well as the Hybrid HWR measure
results assessed from merged files
created by our merging of the EHR data
elements submitted by each
participating hospital with claims data
from the same set of index admission.
We would calculate and provide each
participating hospital with their riskstandardized readmission rate for the
voluntary Hybrid HWR measure. This
would provide each hospital with an
indication of their performance relative
to the other hospitals that participate in
the voluntary measure. In addition, we
would create a hospital-specific report
for each participating hospital which
would include detailed information
about their Medicare FFS beneficiaries
who are 65 and older who had an
unplanned readmission within 30-days
of hospital discharge, including the
patients’ clinical risk factors from
claims and EHR data. This information
would allow hospitals to identify the
factors that increase patients’ risk of
readmission and would inform quality
improvement strategies to reduce
unplanned readmissions. In addition,
the reports would include the match
rate between the hospital’s submitted
EHR data and corresponding claims
data, as well as the proportion of patient
data submitted relative to all qualifying
admissions for each of the 13 core
clinical data elements.
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We note that we are considering
proposing the Hybrid HWR (NQF
#2879) measure as a required measure
as early as the FY 2023 payment
determination and requiring hospitals to
submit the core clinical data elements
and linking variables used in the
measure as early as CY 2020 to support
a dry run of the measure during which
hospitals would receive a confidential
preview of their results in 2021. Any
requirement for mandatory reporting on
this measure would be proposed
through future rulemaking. We invited
public comment on our proposal to
adopt the Hybrid HWR measure (NQF
#2879) for the Hospital IQR Program as
a voluntary measure for the CY 2018
reporting period as described above.
Comment: A few commenters
expressed that they would support the
proposed voluntary reporting of the
Hybrid HWR measure should it obtain
NQF endorsement.
Response: We thank the commenters
for their support. As stated in the
proposed rule (82 FR 20046) and above,
the Hybrid Hospital-Wide Readmission
Measure with Claims and Electronic
Health Record Data (NQF #2879) was
endorsed by NQF on December 9, 2016.
Comment: Many commenters
recommended that CMS focus efforts on
using data elements from EHRs to riskadjust condition specific measures that
are currently being used in the Medicare
performance or penalty programs.
Specifically, commenters urged CMS to
take steps to test the feasibility of using
non-clinical EHR-derived elements,
such as education, location, and other
factors, to develop appropriate sociodemographic adjustments.
Response: We understand the
important role that socio-demographic
factors play in the care of patients,
however, we believe the Hybrid HWR
measure’s risk-adjustment methodology
is appropriate and reliable. The measure
already incorporates a risk-adjustment
methodology that accounts for age and
comorbidities, as well as vital signs and
laboratory values at the start of the
inpatient encounter. We will take under
consideration potential future inclusion
of additional non-clinical EHR-derived
elements, such as education, location,
and other socio-demographic factors,
however, we continue to have concerns
about holding hospitals to different
standards for the outcomes of their
patients of diverse socio-demographic
factors because we do not want to mask
potential disparities or minimize
incentives to improve the outcomes of
disadvantaged populations. In addition,
as discussed in section V.J.3. of the
preamble of this final rule, the Hybrid
HWR measure recently underwent
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successful NQF endorsement during the
NQF’s trial period for sociodemographic factors. We refer readers to
section IX.A.1.d. of the preamble of this
final rule for more details on accounting
for social risk factors in the Hospital
IQR Program. The NQF trial period
considered the analyses and
interpretations as well as performance
scores with and without sociodemographic factors in the riskadjustment model for this measure. In
accordance with the NQF’s trial criteria,
NQF’s evaluation indicated that SDS
adjustment was not necessary for this
measure.173 We routinely monitor the
impact of socio-demographic status on
hospitals’ results on our measures and
will assess the appropriateness of
further risk adjustment in the future, as
well as the availability and feasibility of
collecting social risk factor data
elements from EHRs. We will also
continue to consider using data
elements from EHRs to risk-adjust
condition specific measures, the claimsbased versions of which are currently
being used in the Medicare pay for
performance programs (sometimes
referred to as penalty programs).
Comment: Two commenters
encouraged CMS to incentivize both
hospitals and vendors to participate in
voluntary reporting either through
recognition or reduction in other
requirements to offset the resources
required to fully participate.
Response: We thank the commenter
for their suggestion. We will continue to
consider ways to reduce burden on
hospitals as well as to incentivize
participation in the voluntary reporting
of this measure.
Comment: One commenter expressed
concern about the proposed voluntary
reporting of the Hybrid HWR measure,
because merging clinical data derived
from electronic health records (EHRs)
with claims data is especially difficult
and extremely complex.
Response: We will merge the EHR
data submitted by hospitals as outlined
in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20049) with the
claims files and calculate the measure
results. To clarify, participating
hospitals or vendors are not expected to
merge these data files themselves. We
have successfully tested this process
using EHR data and claims data
submitted by three separate hospital
systems during measure development.
The additional experience we gain
through voluntary data collection on
173 NQF All-Cause Admissions and Readmissions
2015–2017 Technical Report: https://
www.qualityforum.org/Publications/2017/04/AllCause_Admissions_and_Readmissions_2015-2017_
Technical_Report.aspx.
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this measure will allow us to refine the
data merging process as necessary
without affecting payment or public
reporting, since this voluntary measure
will not be publicly reported. For
hospitals that participate in the
voluntary reporting of the Hybrid HWR
measure, we will provide each hospital
with a confidential hospital specific
report that details submission results, as
well as a description of the merged data
set with both EHR and claims data
included for the measure reporting
period.
After consideration of the public
comments we received, we are
finalizing our proposal to adopt the
Hybrid HWR measure (NQF #2879) as a
voluntary measure for the CY 2018
reporting period, as proposed.
8. Changes to Policies on Reporting of
eCQMs
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a. Background
For a discussion of our previously
finalized eCQMs and policies, we refer
readers to the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50807 through 50810;
50811 through 50819), the FY 2015
IPPS/LTCH PPS final rule (79 FR 50241
through 50253; 50256 through 50259;
and 50273 through 50276), the FY 2016
IPPS/LTCH PPS final rule (80 FR 49692
through 49698; and 49704 through
49709), and the FY 2017 IPPS/LTCH
PPS final rule (81 FR 57150 through
57161; and 57169 through 57172). In the
FY 2017 IPPS/LTCH PPS final rule (81
FR 57172), we finalized that hospitals
must submit eCQM data by the end of
two months following the close of the
calendar year for the CY 2017 reporting
period/FY 2019 payment determination
and subsequent years.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20049 through
20051), we proposed two modifications
to our finalized eCQM reporting policies
for the CY 2017 reporting period/FY
2019 payment determination and the CY
2018 reporting period/FY 2020 payment
determination. Specifically, we
proposed to: (1) Decrease the number of
eCQMs for which hospitals must submit
data; and (2) decrease the number of
calendar quarters for which hospitals
are required to submit data, as further
detailed below. These proposals were
made in conjunction with our proposals
discussed in sections IX.E.2.b. of the
preamble of this final rule to align
requirements for the Hospital IQR
Program and the Medicare and
Medicaid EHR Incentive Programs for
hospitals and CAHs.
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57150 through 57159), we
finalized a policy to require hospitals to
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submit one full calendar year of data
(consisting of four quarterly data
reporting periods) for 8 self-selected
eCQMs out of the available eCQMs for
both the CY 2017 reporting period/FY
2019 payment determination and the CY
2018 reporting period/FY 2020 payment
determination.
Since the conclusion of the public
comment period for the FY 2017 IPPS/
LTCH PPS final rule, we have continued
to receive frequent feedback (via email,
webinar questions, help desk questions,
and conference call discussions) from
hospitals and EHR vendors about
ongoing challenges of implementing
eCQM reporting. A summary of the
main concerns identified by these data
submitters are as follows:
• The timing of the transition to a
new EHR system during 2017 (or system
upgrades or new EHR vendor) affects
hospitals’ ability to report on an
increased number of measures in a
timely manner;
• There is a need for at least one year
between new EHR requirements due to
the varying 6- to 24-month cycles
needed for vendors to code new
measures, test and institute measure
updates, train hospital staff, and rollout
other upgraded features;
• Hospitals have had difficulty
identifying applicable measures that
reflect their patient population, given
the reduction in the number of available
eCQMs (from 28 to 15) for CY 2017
reporting;
• Hospitals have had challenges with
data mapping (aligning the information
available in an electronic health record
(EHR), particularly if the information is
not located in a structured field (for
example, PDF attachment, free text
section) to the required fields in a
QRDA Category I (QRDA I) file), and
workflow (the process of extrapolating
the pertinent patient data from an EHR,
transferring that data to a QRDA I file,
and submission of the QRDA I file to
CMS) because hospitals still need to
collect CY 2017 data while reporting CY
2016 data; and
• Hospitals have identified challenges
in implementing annual updates and
new editions of certified health IT
because of significant impacts on
workflow, staffing, and connected
technology systems. (We note that this
information was inadvertently omitted
in the proposed rule at 82 FR 20050.)
In response to these issues, we
proposed to modify the eCQM reporting
requirements for both the CY 2017
reporting period/FY 2019 payment
determination and the CY 2018
reporting period/FY 2020 payment
determination as discussed in more
detail below.
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b. Modifications to the eCQM Reporting
Requirements for the Hospital IQR
Program for the CY 2017 Reporting
Period/FY 2019 Payment Determination
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20050), for the CY
2017 reporting period/FY 2019 payment
determination, we proposed to modify
eCQM reporting requirements, such that
hospitals: (1) Report on at least 6 of the
available eCQMs, instead of 8 as
previously finalized; and (2) submit
two, self-selected quarters of data,
instead of one full calendar year of data
as previously finalized.
We stated in the proposed rule that
although the publication of the FY 2018
IPPS/LTCH PPS final rule will not occur
until on or about August 1, 2017, the
data submission deadline for the CY
2017 reporting period/FY 2019 payment
determination is not until February 28,
2018 which should provide hospitals
with ample time to adjust to these
modified policies. Hospitals that were
prepared to submit one full calendar
year of data for 8 eCQMs in accordance
with the previously finalized CY 2017
eCQM reporting requirements should be
able to submit two, self-selected
quarters of data for 6 eCQMs in
accordance with the modified CY 2017
reporting requirements. Reducing the
number of data reporting periods to two
quarters, rather than four, and allowing
hospitals to self-select which two
quarters of CY 2017 to report also offers
greater reporting flexibility and allows
hospitals and their vendors more time to
plan for reporting and to account for
and schedule hospital-specific
scenarios, such as EHR upgrades or
system transitions.
We believe these modified reporting
requirements directly address
stakeholder concerns while remaining
consistent with our goal to
incrementally transition to electronic
reporting (80 FR 49694).
We note we proposed similar policies
in the EHR Incentive Program and refer
readers to section IX.E.2.b. of the
preamble of this final rule. Our policies
to modify the CY 2017 eCQM reporting
requirements in the Hospital IQR
Program continue to align with the
requirements of the CQM electronic
reporting requirements in the Medicare
and Medicaid EHR Incentive Programs
for eligible hospitals and CAHs to
reduce confusion and reporting burden.
In addition, in the proposed rule (82 FR
20050), we did not propose any changes
to the February 28, 2018 submission
deadline for CY 2017 reporting (81 FR
57172) to ensure that APU
determinations for FY 2019 are not
affected and to maintain the established
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alignment with the Medicare EHR
Incentive Program’s submission
deadline (81 FR 57255).
We invited public comment on our
proposals to modify the eCQM reporting
requirements for the CY 2017 reporting
period/FY 2019 payment determination
for the Hospital IQR Program as
described above.
Comment: Several commenters
supported the proposed policies for the
CY 2017 reporting period/FY 2019
payment determination that reduce the
reporting period from one full calendar
year of data to two, self-selected
quarters of data and the number of
eCQMs required to report from 8 to 6,
but recommended that CMS further
reduce the CY 2017 reporting
requirements by retaining the
previously finalized CY 2016 policies
that required the reporting of 4 eCQMs
for one quarter of data. The commenters
indicated that maintaining the CY 2016
eCQM reporting requirements would
provide certified health IT vendors and
CMS additional time to work on
measure specification and, data
validation, while giving hospitals more
time to focus on incorporating system
upgrades, data mapping, staff training,
and planning for data processing for
CMS reporting. In addition, some
commenters expressed concern
regarding the increase in eCQM
reporting requirements impacting the
ability of hospitals to effectively execute
current eCQM reporting requirements
and prepare for potential future
increases in eCQM reporting
requirements, thus placing an additional
burden on hospitals by limiting
available time for testing prior to
production file submission. These
commenters indicated that recent
updates to measure specifications have
required labor-intensive updates to
complete terminology mapping, which
has reduced hospitals’ ability to expand
eCQM reporting to additional eCQMs.
The commenters noted that
implementation of eCQM reporting is a
multi-year process that requires
significant capital and operating
expenditures and requires close
collaboration with clinical and other
operations staff. The commenters
encouraged CMS to continue to take
into account the operational
implications of eCQM data submission
requirements for smaller hospitals that
have resource limitations. One
commenter indicated that even if
facilities were already collecting data on
8 eCQMs, the reduction in the number
of eCQMs required to report and the
decreased reporting period would give
facilities that have limited resources or
difficulties reporting for an entire
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calendar year the opportunity to be
more successful.
Response: We appreciate commenters
expressing their concerns and providing
more details regarding their challenges
associated with eCQM reporting. Based
on commenter feedback, we are
finalizing a modification to our
proposals for eCQM reporting
requirements for the CY 2017 reporting
period/FY 2019 payment determination.
Instead of requiring submission of one
calendar year of data, for 8 eCQMs, as
previously finalized in the FY 2017
IPPS/LTCH PPS final rule (81 FR 57150
through 57159), or submission of two,
self-select calendar quarters of data, for
6 eCQMs, as proposed in the FY 2018
IPPS proposed rule (82 FR 20050), we
are finalizing a modification of our
proposal to further reduce the eCQM
reporting requirements, such that
hospitals are required to submit only
one, self-selected calendar quarter of
data for 4 eCQMs. This retains reporting
requirements similar to the CY 2016
reporting period/FY 2018 payment
determination (80 FR 49698) with one
change, such that hospitals will be able
to submit data for any one of the 4
quarters for the CY 2017 reporting
period/FY 2019 payment determination,
whereas hospitals were only able to
submit data for either Q3 or Q4 for the
CY 2016 reporting period/FY 2018
payment determination.
In determining the modified number
of eCQMs to report for the CY 2017
reporting period, we decided to
continue the CY 2016 reporting period/
FY 2018 payment determination
requirements to give hospitals more
time to gain experience reporting
eCQMs. While we believe many
hospitals are ready to successfully
report on at least 6 eCQMs beginning
with the CY 2017 reporting period/FY
2019 payment determination, as
proposed, we also want to be responsive
to feedback that many hospitals,
especially small, rural, and IHS and
tribal hospitals, as well as hospitals
with fewer financial resources, need
additional time and flexibility to
successfully implement all of the eCQM
reporting requirements. We intend to
review the results of the first year of
required eCQM data collection prior to
increasing requirements for subsequent
years.
We believe these modified, reduced
reporting requirements directly address
stakeholder concerns while remaining
consistent with our goal to gradually
transition toward more robust electronic
quality measure reporting. Further, we
believe reducing the number of eCQMs
required to be reported and reducing the
quarters of data to be reported eases the
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burden on data submitters, allowing
them to shift resources to support
system upgrades, data mapping, and
staff training related to eCQMs.
Successful reporting in CY 2016 should
streamline CY 2017 reporting because
hospitals can re-use the same measures
submitted to satisfy the CY 2016
reporting requirements. In addition, we
believe that these modified, reduced
reporting requirements will provide
hospitals and health IT vendors more
time to report quality data to CMS,
including more time to submit test
QRDA files before submitting
production QRDA files for program
credit. We also believe the reduction in
the number of required eCQMs lessens
the burden of identifying new measures
to report; under the modified policy,
hospitals are not required to identify
any additional measures between CY
2016 and CY 2017. We will continue to
assess the progress of hospitals in
implementing eCQM reporting
requirements and engage in discussions
with hospitals and health IT vendors
regarding their experiences as we
consider eCQM policies in future
rulemaking.
Although we are not finalizing our
original proposal to require reporting on
6 eCQMs, we encourage hospitals to
continue refining their electronic
reporting implementation activities to
successfully achieve electronic data
capture and reporting. In addition, we
encourage early testing and the use of
pre-submission testing tools to reduce
errors and inaccurate data submissions
in eCQM reporting. Over time, we
anticipate hospitals will continue to
build and refine their EHR systems and
gain more familiarity with reporting
eCQM data, resulting in more accurate
data submissions with fewer errors.
We note that we made similar
proposals in the Medicare and Medicaid
EHR Incentive Programs and refer
readers to section IX.E.2.b. of the
preamble of this final rule, where we
also are finalizing a modification to our
proposals. Our policies to modify and
reduce the CY 2017 reporting period/FY
2019 payment determination eCQM
reporting requirements in the Hospital
IQR Program will continue to align with
requirements in the Medicare and
Medicaid EHR Incentive Programs. We
also refer readers to section IX.A.10.d. of
the preamble of this final rule for our
eCQM submission policies.
Comment: A majority of commenters
supported the proposed reduction from
8 required eCQMs to 6 eCQMs and the
reduction from one full calendar year of
data to two, self-selected quarters of
data for the CY 2017 reporting/FY 2019
payment determination. The
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commenters noted that as proposed, the
requirements align with the CY 2017
Joint Commission reporting standards.
A few commenters requested CMS
finalize the proposed requirements as
soon as possible in order for hospitals
to prepare and educate appropriate staff.
Several commenters indicated that the
modified reporting period from one full
year to two quarters of data would
provide hospitals with sufficient time to
adequately transition their EHR systems
and allow them to avoid a reporting
period that overlaps with the quarter in
which they transition EHR systems.
Response: We thank the commenters
for their support. At this time, we
believe that continuing the CY 2016
reporting requirements for hospitals to
report one, self-selected calendar
quarter of data for 4 eCQMs, as
discussed above, balances stakeholder
concerns while remaining consistent
with our goal to gradually transition
toward more robust electronic quality
measure reporting. As previously stated,
we believe the electronic collection and
reporting of quality data using health IT
will ultimately simplify and streamline
reporting for various CMS quality
reporting programs and hospitals will
experience decreased financial and
administrative burden as we continue to
align program reporting requirements
and adopt a more streamlined set of
clinical quality measures with
electronic specifications.
Comment: One commenter believed
the current methodology of collecting
information for more eCQMs, over a
greater period of time, relies too heavily
upon the entry of ‘‘hardcoded’’
documentation by physicians and
nurses within certain timing constraints.
Response: We interpret the
commenter’s concern about eCQMs
relying too heavily upon entry of
‘‘hardcoded’’ documentation to mean
that the commenter believes clinical
staff may have difficulty inputting
patient information in ‘‘real time’’ into
the appropriate structured fields during
the patient encounter due to competing
clinical demands. The EHR may allow
the clinician to update the patient
information at a later time in the event
that clinical staff need to provide crisis
care and cannot record patient
information at the time of the encounter
without compromising patient care or in
the case that additional information
needs to be added to the medical record
after the patient encounter. We
recommend hospitals and their EHR
vendors work together to implement
EHR functionalities that will
successfully support clinical activities,
documentation, and quality measure
reporting that are also consistent with
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each hospital’s policies and procedures.
We believe that recording patient
information in structured fields for the
purpose of reporting eCQMs is more
accurate, less prone to errors because it
relies less on interpretation, and
ultimately reduces burden on hospitals
because it does not require manual
abstraction, as compared with
conventional chart-abstracted data
reporting.
Comment: One commenter did not
support the proposal to reduce the
eCQM submission requirements and
recommended that the number of
measures and the reporting window be
kept the same, if not increased. The
commenter indicated that capturing and
exporting the data for a QRDA I file is
part of the ONC EHR certification
program, and if a hospital is not
capturing data in such a way that a
QRDA I file can be generated, then this
implies that either the EHR is violating
its certification or the hospital is not
using its EHR appropriately. Rather than
modifying the Hospital IQR Program
eCQM reporting requirements to make it
acceptable for EHRs to violate their
certification, the commenter suggested
that the existing regulations be enforced
and penalties be applied to these health
IT vendors.
In addition, the commenter suggested
measure specifications could be
published in advance to enable
hospitals to view them before the
reporting period begins; this does not
require the total number of measures to
be reduced. The commenter recognized
the challenges some hospitals are
having, but argued that these issues
should be addressed directly with
individual hospitals instead of through
indirect mechanisms like changing the
number of measures for all hospitals.
The commenter expressed support for
the creation of new eCQMs as a more
appropriate approach to addressing
concerns regarding the lack of measures
rather than simply reducing the
requirements.
Response: We thank the commenter
for their support of the eCQM reporting
requirements for the CY 2017 reporting
period/FY 2019 payment determination
as previously finalized in the FY 2017
IPPS/LTCH PPS final rule (81 FR 57150
through 57161; and 57169 through
57172). We note that hospitals have
reported data electronically for several
years to both the Medicare and
Medicaid EHR Incentive Programs and
the Hospital IQR Program (3 prior years
of pilot reporting and 3 prior years of
voluntary reporting), and thus we
believe most hospitals are able to
successfully meet our previously
finalized eCQM reporting requirements
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38357
to report on additional measures for the
CY 2017 reporting period/FY 2019
payment determination. However, as
discussed above, we also want to be
sensitive and responsive to feedback
that a number of hospitals, especially
small, rural, and IHS and tribal
hospitals as well as hospitals with fewer
financial resources, need additional
time and flexibility to successfully
implement all of the eCQM reporting
requirements. At this time, we believe
that continuing the CY 2016 reporting
requirements for hospitals to report one,
self-selected calendar quarter of data for
4 eCQMs, as discussed above, better
balances stakeholder concerns while
remaining consistent with our goal to
gradually transition toward more robust
electronic quality measure reporting.
We appreciate the commenter’s
suggestion that measure specifications
could be published further in advance
to enable hospitals to view them before
the reporting period begins as well as
the suggestion to find and develop
better measures. We will take these
suggestions into consideration. We note
that, generally, each year we issue a call
for new measures, including eCQMs and
other types of electronic measures, to be
considered for adoption in the Hospital
IQR Program. We also refer readers to
section IX.A.9. of the preamble of this
final rule for discussion of future
potential eCQMs under consideration
for the Hospital IQR and Medicare and
Medicaid EHR Incentive Programs.
Interested stewards and/or developers
may submit measures for consideration
by NQF. Submission guidance for
eCQMs are available at:
www.qualityforum.org/Electronic_
Quality_Measures.aspx.
Comment: A few commenters
recommended that CMS clarify the
definitions used for the terms
‘‘workflow’’ and ‘‘data submission,’’ in
the context of electronic measure
reporting. Specifically, the commenters
suggested that while ‘‘workflow’’ is
related to technical challenges, the term
is not appropriate in defining the
process of data extraction and QRDA I
submission.
Response: We thank the commenters
for their suggestion. Our references to
the terms ‘‘data submission’’ and
‘‘workflow’’ depend on the context in
which the terms are used, which party
is providing data to which party, and for
what purpose. In the context of eCQM
reporting, hospitals may experience
challenges modifying workflow in
regards to clinical care, corresponding
documentation, and data capture, such
that clinical staff enter patient
information into the appropriate fields
of the EHR at the time of the patient
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encounter. Sometimes the clinician,
medical assistant, scribe, or other staff
member entering data into the EHR may
find it easier or more expeditious to
enter patient information in the ‘‘free
text’’ section of the EHR, even though
specific fields exist in the EHR where
that data should be recorded so that it
maps appropriately when the eCQMs
pull data from the EHRs. To clarify,
when we suggested that hospitals need
to make changes to workflow, we meant
hospitals should focus additional time
and effort on training the appropriate
staff to effectively capture patient data
within the EHR. We further encourage
hospitals to innovate and design
workflows that fit their unique needs to
make the best use of both clinical and
non-clinical staff resources to maintain
patient health information in the EHR.
In addition, when the staff enter
patient information in the ‘‘free text’’
section of the EHR, it is also sometimes
the case that staff or hospital
administrators go back after the patient
encounter has completed and manually
enter that information into the
appropriate fields. This also could be
considered part of the ‘‘workflow’’
under the definition provided by the
commenter. Data submission in the
context of eCQM reporting would refer
to the sending and subsequent receiving
of that documented clinical data
corresponding to eCQM specifications
through the QualityNet Secure Portal for
purposes of the Hospital IQR Program
eCQM submissions.
Comment: One commenter urged
CMS to begin allowing hospitals to
select eCQMs as their official Hospital
IQR Program performance metric and
opt out of the manual submission of the
same quality metric; the commenter
noted that it would encourage
organizations to begin the transition
towards eCQMs by relieving the burden
of dual abstraction when the
organization is comfortable with the
accuracy of its eCQM data.
Response: We thank the commenter
for their suggestion to allow hospitals to
elect to report eCQMs as their official
Hospital IQR Program performance
metric and opt out of manual
submission for chart-abstracted
measures, and will take the suggestion
under consideration for future policies
on quality measure reporting for the
Hospital IQR Program. At this time, as
we are planning to validate eCQM data
starting with CY 2017 data and not
publicly displaying the eCQM data, we
believe it is important for chartabstracted measure data to continue to
be collected and publicly displayed to
provide important information to
consumers and providers.
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Comment: One commenter urged
CMS to suspend all regulatory
requirements that mandate submission
of eCQMs given that hospitals have
spent significant time and resources to
revise certified EHRs to meet eCQM
requirements for the CY 2016 reporting
period/FY 2018 payment determination,
with no benefit for patient care.
Response: We thank the commenter
for their recommendations, but disagree
that eCQM reporting does not benefit
patients. While we recognize the current
burden associated with implementing
the necessary infrastructure and EHR
technology as well as training and
refinement of work flows for
transitioning to electronic quality
reporting and understand that there are
operational shortcomings that need to
be further reconciled to streamline the
process, we do not believe that
suspending all eCQM reporting would
be the best way to advance the Hospital
IQR Program’s goals of improving the
quality of care and transparency through
quality measurement while also
reducing the associated operational,
administrative, and financial burdens
associated with manual chartabstraction. In addition, suspending all
eCQM reporting in the Hospital IQR
Program would result in misalignment
with the EHR Incentive Program’s CQM
reporting policies.
We believe electronic reporting
furthers CMS and HHS policy goals to
promote quality through performance
measurement and, in the long-term, will
both improve the accuracy of the data
and reduce reporting burden for
providers. Moreover, we believe it is
appropriate to require reporting and
validation of eCQM data given that
measures available now and those being
developed for the future are based
increasingly on electronic standards (80
FR 49696).
We encourage hospitals to work
closely with health IT vendors to ensure
that a contract is in place that supports
the hospital’s quality reporting
requirements and the annual update of
quality measures. We understand that
hospitals have spent resources to update
certified EHRs to meet eCQM
requirements, but we believe eCQMs
will promote better quality of care as
hospitals and health IT vendors
continue to refine EHR systems to
appropriately structure them
commensurate with the clinical work
flow. Further, we believe these updates
will lead to improved accuracy,
reliability, and completeness of the
eCQM data, which will promote higher
quality outcomes and lower costs while
ultimately decreasing reporting burden
on hospitals as compared with chart-
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abstraction of quality measure data. We
will continue to monitor the progress of
hospitals implementing eCQM reporting
requirements and encourage hospitals to
share their experiences in preparing for
and meeting reporting requirements. In
addition, we will evaluate the eCQMs
available to report as part of routine
measure maintenance as well as
consider new electronic measures as
they become available for potential use
in the Hospital IQR and Medicare and
Medicaid EHR Incentive Programs.
After consideration of the public
comments we received, we are
finalizing a modification of our
proposal. Instead of reporting two, selfselected quarters of data for 6 eCQMs as
proposed, we are further reducing
requirements, such that hospitals are
required to report only one, self-selected
calendar quarter of data for 4 selfselected eCQMs for the CY 2017
reporting period/FY 2019 payment
determination. We refer readers to
section IX.E.2.b. of the preamble of this
final rule where we are finalizing a
similar modified policy under the
Medicare and Medicaid EHR Incentive
Programs.
c. Modifications to the eCQM Reporting
Requirements for the Hospital IQR
Program for the CY 2018 Reporting
Period/FY 2020 Payment Determination
As stated above, in the FY 2017 IPPS/
LTCH PPS final rule (81 FR 57150
through 57159), we finalized a policy
requiring submission of 8 self-selected
eCQMs out of the available eCQMs in
the Hospital IQR Program for both the
CY 2017 reporting period/FY 2019
payment determination and CY 2018
reporting period/FY 2020 payment
determination. In addition, for the CY
2018 reporting period/FY 2020 payment
determination, hospitals are required to
submit the data by February 28, 2019
(the end of two months following the
close of the calendar year, as set out in
the FY 2017 IPPS/LTCH PPS final rule
(81 FR 57172)). For the same reasons as
discussed above, we proposed similar
modifications for the CY 2018 reporting
period/FY 2020 payment determination
in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20050 through
20051). Specifically, we proposed to
require hospitals to report on at least six
of the available eCQMs for the CY 2018
reporting period/FY 2020 payment
determination, instead of eight as
previously finalized. These six eCQMs
may be the same or a different set of six
eCQMs a hospital reports for the CY
2017 reporting period. In addition, we
proposed to decrease the number of
required reporting periods, from four
quarters as previously finalized, to the
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first three quarters of the CY 2018
reporting period (that is, Q1, Q2, and Q3
of CY 2018). We noted that this differs
from our proposal for the CY 2017
reporting period as discussed above,
which would only require two selfselected quarters of data.
In crafting this proposal, we
considered several alternatives.
Specifically, we considered aligning the
CY 2018 reporting period requirements
with the proposed CY 2017 reporting
period requirements, such that hospitals
would report on at least six of the
available eCQMs and submit two selfselected quarters of data for both years.
We also considered retaining the
reporting requirements finalized in the
FY 2017 IPPS/LTCH PPS final rule (81
FR 57150 through 57159), such that
hospitals would submit one full
calendar year of data for 8 self-selected
eCQMs for the CY 2018 reporting
period/FY 2020 payment determination.
Ultimately, we believe that our
proposals as stated above balance our
goal to progressively shift towards
electronic reporting of quality measure
data with hospitals’ concerns of the
burden this increase may cause. In
addition, hospitals will have had several
years to report data electronically for the
Hospital IQR and Medicare and
Medicaid EHR Incentive Programs.
Therefore, we believe that hospitals will
be better prepared to submit an
additional quarter of data for the CY
2018 reporting period compared to the
number of quarterly reporting periods
we are proposing for the CY 2017
reporting period. We also believe that
hospitals will be better prepared to
submit additional eCQMs in the future,
since hospitals will have had a
sufficient number of cycles of eCQM
reporting.
Our proposals for the CY 2018
reporting period/FY 2020 payment
determination were made in
conjunction with proposals discussed in
section IX.E.3. of the preamble of the
proposed rule that fully align
requirements for the Hospital IQR
Program with the requirements for the
CQM electronic reporting option in the
Medicare EHR Incentive Program for
eligible hospitals and CAHs. We noted
that the deadline for submission would
be the same as previously finalized, two
months following the end of the
reporting period calendar year,
specifically February 28, 2019 (81 FR
57172).
We invited public comment on our
proposals to modify the CY 2018
reporting period/FY 2020 payment
determination eCQM reporting
requirements for the Hospital IQR
Program as described above.
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Comment: Several commenters
supported the proposed policies for the
CY 2018 reporting period/FY 2020
payment determination that would
reduce the reporting period from one
full calendar year of data to the first
three quarters of data and the number of
eCQMs required to report from 8 to 6,
for the CY 2018 reporting period/FY
2020 payment determination as a step in
the right direction, but recommended
that CMS further reduce the
requirements by continuing the CY 2016
eCQM reporting requirement of one,
self-selected calendar quarter of data for
4 eCQMs. The commenters indicated
that maintaining the CY 2016 eCQM
reporting requirements would provide
certified health IT vendors and CMS
additional time to work on measure
specification and data validation, while
giving hospitals more time to focus on
incorporating system upgrades, data
mapping, staff training, and planning for
data processing for CMS reporting.
Some commenters remained
concerned with the pace of the
expansion of eCQM reporting
requirements impacting the ability of
hospitals to effectively execute current
eCQM reporting requirements and
prepare for potential future increases in
eCQM reporting requirements, thus
placing an additional burden on
hospitals by limiting available time for
testing prior to production file
submission. These commenters
indicated that recent updates to measure
specifications have required laborintensive updates to complete
terminology mapping, which has
hindered hospitals’ ability to expand
reporting to additional eCQMs. The
commenters noted that implementation
of eCQM reporting is a multi-year
process that requires significant capital
and operating expenditures and requires
close collaboration with clinical and
other operations staff.
A few commenters expressed concern
about the considerable burden required
to map the necessary data elements from
the EHR to the appropriate QRDA file
format given that some vendors are not
properly equipped to collect and
transmit such data through the CMS
QualityNet Secure Portal. The
commenters stated that until these
issues are sufficiently addressed, CMS
should not increase the required eCQM
reporting requirements for the Hospital
IQR Program.
Response: We appreciate commenters
expressing their concerns and providing
more detail regarding their challenges
associated with eCQM reporting. Based
on commenter feedback we are
finalizing a modification to our
proposals for eCQM reporting
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38359
requirements for the CY 2018 reporting
period/FY 2020 payment determination.
Instead of requiring submission of one
calendar year (four quarters) of data, for
8 eCQMs, as previously finalized in the
FY 2017 IPPS/LTCH PPS final rule (81
FR 57150 through 57159), or submission
of two, self-selected calendar quarters of
data, for 6 eCQMs, as proposed in the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 20050), we are modifying our
proposal to further reduce the eCQM
reporting requirements, such that
hospitals are required to submit only
one, self-selected calendar quarter of
data for 4 eCQMs. This continues
reporting requirements similar to the CY
2016 reporting period/FY 2018 payment
determination (80 FR 49698) with one
change, such that hospitals will be able
to submit data for any one of the 4
quarters for the CY 2018 reporting
period/FY 2020 payment determination,
whereas hospitals are only able to
submit data for either Q3 or Q4 for the
CY 2016 reporting period/FY 2018
payment determination.
We believe reducing the number of
eCQMs required to be reported and
reducing the quarters of data to be
reported offers greater reporting
flexibility and eases the burden on data
submitters, allowing them to shift
resources to support system upgrades,
data mapping, and staff training related
to eCQM documentation and reporting.
In addition, we believe that these
modified reporting requirements will
provide hospitals and health IT vendors
more time to report quality data to CMS,
including more time to submit test
QRDA files before submitting
production QRDA files for program
credit. We note we are aligning the
requirement for hospitals to submit data
on one, self-selected calendar quarter of
data for 4 eCQMs between the Hospital
IQR Program and the Medicare and
Medicaid EHR Incentive Programs in
order to streamline the electronic
submission of quality data for hospitals.
Further, successful reporting in CY
2016 and CY 2017 should streamline CY
2018 reporting because hospitals can reuse the same measures with which they
already have gained familiarity. Once
hospitals have become comfortable
submitting data for 4 eCQMs in CY 2016
and CY 2017, the requirements we are
finalizing will also allow greater
flexibility if hospitals wish to select
different eCQMs from those they
submitted for CY 2016 or CY 2017
reporting. In addition, hospitals will
have flexibility to select which quarter
of data to report data based upon their
individual quality improvement needs
and electronic reporting capabilities.
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Our decision to finalize the same
requirements for both the CY 2017 and
CY 2018 reporting periods is in an effort
to be responsive to the feedback we
have received about the challenges of
eCQM reporting and recommendations
to allow more time to become familiar
with and improve upon electronic
reporting capabilities. While we believe
most hospitals will be ready to
successfully report on at least 6 eCQMs
beginning with the CY 2018 reporting
period/FY 2020 payment determination,
we also want to be responsive to
feedback that a number of hospitals,
especially small, rural, and IHS and
tribal hospitals as well as hospitals with
fewer financial resources, need
additional time and flexibility to
successfully implement all of the eCQM
reporting requirements. We intend to
review the results of the first year of
required eCQM data collection prior to
increasing requirements for subsequent
years. We believe these modified,
reduced reporting requirements directly
address stakeholder concerns while
remaining consistent with our goal to
gradually transition to more robust
electronic quality measure reporting. In
addition, we believe that these
modified, reduced reporting
requirements will provide hospitals
more time and flexibility to address
measure specification updates, data
validation, technology readiness, system
issues, and future requirements
generally. We will continue to assess the
progress of hospitals implementing
eCQM reporting requirements and
engage in discussions with hospitals
regarding their experiences as we
consider eCQM policies in future
rulemaking. We intend to determine
requirements for the CY 2019 reporting
period/FY 2021 payment determination
and subsequent years in future
rulemaking.
Although we are not finalizing our
original proposal to require reporting on
6 eCQMs, we encourage hospitals to
continue refining their electronic
reporting implementation activities to
successfully achieve electronic data
capture and reporting. In addition, we
encourage early testing and the use of
pre-submission testing tools to reduce
errors and inaccurate data submissions
in eCQM reporting. Over time, we
anticipate hospitals will continue to
build and refine their EHR systems and
gain more familiarity with reporting
eCQM data, resulting in more accurate
data submissions with fewer errors. We
note that we made similar proposals in
the Medicare and Medicaid EHR
Incentive Programs and refer readers to
section IX.E.2.b. of the preamble of this
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final rule where we also are finalizing
the same modification of our proposal
and is a continuation of our policy to
align the eCQM reporting requirements
of the Hospital IQR Program with the
CQM electronic reporting requirements
in the Medicare and Medicaid EHR
Incentive Programs in order to reduce
confusion and reporting burden for all
hospitals. We also refer readers to
section IX.10.d. of the preamble of this
final rule for our eCQM submission
policies for the Hospital IQR Program.
In arriving at this modified finalized
policy, we considered several
alternatives. Specifically, we considered
aligning the CY 2018 reporting period
requirements with the proposed CY
2017 reporting period requirements,
such that hospitals would report on at
least 6 of the available eCQMs and
submit two, self-selected quarters of
data. We also considered retaining the
reporting requirements finalized in the
FY 2017 IPPS/LTCH PPS final rule (81
FR 57150 through 57159), such that
hospitals would submit one full
calendar year of data for 8 self-selected
eCQMs for the CY 2018 reporting
period/FY 2020 payment determination.
Ultimately, based on commenter
feedback and for the reasons articulated
above, we have decided to modify our
policy to further reduce the eCQM
reporting requirements for the CY 2018
reporting period/FY 2020 payment
determination, such that hospitals are
required to submit one, self-selected
calendar quarter of data for 4 eCQMs.
Our decision to keep the same eCQM
reporting requirements for the CY 2017
reporting period/FY 2019 payment
determination and the CY 2018
reporting period/FY 2020 payment
determination was also based on
commenter feedback recommending
additional time and flexibility to
successfully implement electronic
reporting capabilities. As previously
stated, we believe the electronic
collection and reporting of quality data
using health IT will ultimately simplify
and streamline reporting for various
CMS quality reporting programs and
hospitals will experience decreased
financial and administrative burden as
we continue to align program reporting
requirements and adopt a more
streamlined set of clinical quality
measures with electronic specifications.
Comment: Many commenters
supported the proposed reduction from
8 required eCQMs to 6 required eCQMs
and the reduction from one full calendar
year of data to the first three calendar
quarters of data for the CY 2018
reporting period/FY 2020 payment
determination. A few commenters
suggested CMS maintain the
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requirement to report 6 eCQMs beyond
the CY 2018 reporting period, while
increasing the performance period to
one year and then gradually increasing
the number of required eCQMs in future
years.
The commenters believed this
approach would allow hospitals to
adapt to more robust eCQM
requirements. Other commenters
supported the proposed reduction from
8 required eCQMs to 6 for the CY 2018
reporting period/FY 2020 payment
determination, but suggested that CMS
retain the proposed CY 2017 reporting
period/FY 2019 payment determination
requirement, such that hospitals are
required to report two, self-selected
quarters of data for the CY 2018
reporting period/FY 2020 payment
determination. Some commenters noted
smaller hospitals, with fewer resources,
require more time to become proficient
in all of the parameters (mapping, new
work flows, staff education, etc.)
associated with electronic reporting.
A few commenters indicated that if
hospitals were allowed to self-select two
quarters of data (instead of three or four
quarters of data) for the CY 2018
reporting period/FY 2020 payment
determination, it would provide the
necessary time for quality, health IT,
and clinical teams to more effectively
utilize change management processes to
improve scores until such time as
alternative and more advanced
techniques are more commonplace and
tested without significantly impairing
CMS’ ability to review and analyze data
generated by eCQMs.
Response: We thank the commenters
for their support. While we believe that
most hospitals would be ready to
successfully report on at least 6 eCQMs
for the CY 2018 reporting period/FY
2020 payment determination, we also
want to be responsive to feedback that
a number of hospitals, especially small,
rural, and IHS and tribal hospitals as
well as hospitals with fewer financial
resources, need additional time and
flexibility to successfully implement all
of the eCQM reporting requirements.
Therefore, at this time, we believe
finalizing the modified, reduced
requirements for hospitals to report one,
self-selected calendar quarter of data for
4 eCQMs, as discussed above, better
balances stakeholder concerns while
remaining consistent with our goal to
gradually transition toward more robust
electronic quality measure reporting.
Although we are not finalizing our
original proposal to require reporting on
the first three calendar quarters of data
for 6 eCQMs, we encourage hospitals to
continue refining their electronic
reporting implementation activities to
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successfully achieve electronic data
capture and reporting. In addition, we
encourage early testing and the use of
pre-submission testing tools such as the
PSVA to reduce errors and inaccurate
data submissions in eCQM reporting. As
time passes, we anticipate that hospitals
will continue to build and refine their
EHR systems and gain more familiarity
with reporting eCQM data, resulting in
more accurate data submissions with
fewer errors.
Comment: Several commenters
supported the proposed reduction from
8 required eCQMs to 6 for the CY 2018
reporting period/FY 2020 payment
determination, but suggested that CMS
allow hospitals to self-select the three
quarters for which they provide data.
The commenters noted that the
comprehensive process at the start of
the calendar year is still very time
consuming and cumbersome with
changing/updating eCQM logic
definitions, vendor relations, schemas
for running reports, and XML files
occurring at the same time. Some
commenters indicated that they would
support reporting data from the first
quarter performance period when this
year-end process is more established
and predictable.
Response: We refer readers to our
reduced requirements as discussed
above. We acknowledge the burden
associated with eCQM logic definitions,
implementation of report schemas and
reconciliation of XML files, which is
why we have further reduced the
reporting requirements for both the CY
2017 and CY 2018 reporting periods. In
addition, we refer readers to section
IX.A.10.d.(2)(b)(ii) of the preamble of
this final rule, in which we discuss our
policy to require EHRs to be certified to
all available eCQMs. We believe that
satisfying this requirement will offset
the burden associated with health IT
vendor relations, as hospitals will not
have to certify individual electronic
measures at the time electronic
reporting is increased. Furthermore, we
will take these comments into
consideration for future policies. We
believe that with time, as hospitals
continue to gain more experience with
eCQM reporting, the challenges
hospitals encounter at the beginning of
each calendar year will be reduced.
Comment: One commenter supported
the reduction in the number of required
eCQMs from 8 to 6 for the CY 2018
reporting period/FY 2020 payment
determination, but suggested that CMS
retain the requirement to report one full
calendar year of data. Further, the
commenter suggested gradually
increasing the number of required
eCQMs in future years. The commenter
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believed that this approach would allow
hospitals to adapt to more robust eCQM
requirements.
Response: We thank the commenter
for their support. We refer readers to our
modified policies as discussed above.
For future years, we will consider
requiring hospitals to report more
quarters of data and gradually increase
the electronic reporting of quality
measure data in the Hospital IQR
Program. In the meantime, we will
continue to assess the progress of
implementing eCQM reporting
capabilities and engage in discussions
with hospitals regarding their
experiences as we consider the
establishment of eCQM policies in
future rulemaking.
Comment: One commenter sought
clarification on whether or not the CY
2018 eCQM data would be publicly
reported.
Response: In the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50815 through
50818), we adopted a policy under
which we would only publicly report
eCQM data in the Hospital IQR Program
if we deem that the data are accurate
enough to be publicly reported (78 FR
50816). As described in the FY 2017
IPPS/LTCH PPS final rule (81 FR
57176), we will not conduct the first
validation of eCQM data until spring of
2018 to validate data from the CY 2017
reporting period. Validation of CY 2017
data during spring of 2018 affects the FY
2020 payment determination (81 FR
57177).
We believe it is important to confirm
the validity of quality performance data
before it is publicly reported on the
Hospital Compare Web site. A number
of commenters have expressed concerns
about the accuracy of eCQM data or the
comparability of eCQM data to nonelectronic CQMs, and a full validation
of the CY 2017 data will allow us to
assess the merit of these concerns. Once
we have analyzed the first year of eCQM
data validation results, we will
determine whether the data should be
publicly reported the Hospital Compare
Web site.
After consideration of the public
comments we received, we are
finalizing a modification of our
proposal, such that instead of requiring
submission of 6 eCQMs for the first
three calendar quarters (Q1–Q3) of CY
2018, we are further reducing
requirements, such that hospitals are
required to report only one, self-selected
calendar quarter of data for 4 eCQMs for
the CY 2018 reporting period/FY 2020
payment determination. We also refer
readers to section IX.E.2.b. of the
preamble of this final rule where we are
finalizing the same modified policy for
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CQM electronic reporting requirements
under the Medicare and Medicaid EHR
Incentive Programs.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20051), we stated
that the proposals related to the CY
2017 reporting period/FY 2019 payment
determination and CY 2018 reporting
period/FY 2020 payment determination,
if finalized, would also have
implications for eCQM validation in the
Hospital IQR Program. Validation of
eCQM data under the Hospital IQR
Program is set to begin using CY 2017
reported data for the FY 2020 payment
determination, as finalized in the FY
2017 IPPS/LTCH PPS final rule (81 FR
57153 through 57181). We refer readers
to section IX.A.11. of the preamble of
this final rule where we discuss our
finalized validation policies.
9. Possible New Quality Measures and
Measure Topics for Future Years
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53510 through 53512), we
outlined considerations to guide us in
selecting new quality measures to adopt
into the Hospital IQR Program.
Specifically, we seek to adopt measures
for the Hospital IQR Program that
would: (1) Promote better, safer, more
efficient care; (2) expand the pool of
measures to include measures that aim
to improve patient safety; (3) support
the NQS’ three-part aim of better health
care for individuals, better health for
populations, and lower costs for health
care by creating transparency around
the quality of care at inpatient hospitals
to support patient decision-making and
quality improvement; (4) collect data in
a manner that balances the need for
information related to the full spectrum
of quality performance and the need to
minimize the burden of data collection
and reporting; (5) weigh the relevance
and utility of the measures compared to
the burden on hospitals in submitting
data under the Hospital IQR Program;
(6) to the extent practicable, consider
measures that have been nationally
endorsed by a multi-stakeholder
organization, developed with the input
of providers, purchasers/payers, and
other stakeholders, and aligned with
best practices among other payers and
the needs of the end users of the
measures; (7) in the case of a specified
area or medical topic determined
appropriate by the Secretary for which
a feasible and practical measure has not
been endorsed, give due consideration
to measures that have been endorsed or
adopted by a consensus organization
identified by the Secretary; (8) give
priority to measures that assess
performance on conditions that result in
the greatest mortality and morbidity in
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the Medicare population, are high
volume and high cost for the Medicare
program, and for which wide cost and
treatment variations in the Medicare
population have been reported across
populations or geographic areas despite
established clinical guidelines; (9) focus
on selecting measures that will also
meet the Hospital VBP Program measure
inclusion criteria and advance the goals
of the Hospital VBP Program by
targeting hospitals’ ability to improve
patient care and patient outcomes; and
(10) align with the HHS Strategic Plan
and Initiatives 174 and the CMS Strategic
Plan.175
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20051 through
20064), in keeping with these
considerations, we invited public
comment on the potential future
inclusion of the following seven
measures in the Hospital IQR Program
(one measure related to the quality of
informed consent documents, four
measures that evaluate end-of-life
processes and outcomes for cancer
patients, and two measures that evaluate
nursing skill mix):
• Quality of Informed Consent
Documents for Hospital-Performed,
Elective Procedures measure;
• Proportion of Patients Who Died
from Cancer Receiving Chemotherapy in
the Last 14 Days of Life measure (NQF
#0210);
• Proportion of Patients Who Died
from Cancer Not Admitted to Hospice
measure (NQF #0215);
• Proportion of Patients Who Died
from Cancer Admitted to the ICU in the
Last 30 Days of Life measure (NQF
#0213);
• Proportion of Patients Who Died
from Cancer Admitted to Hospice for
Less Than Three Days measure (NQF
#0216);
• Skill Mix (Registered Nurse [RN],
Licensed Vocational/Practical Nurse
[LVN/LPN], Unlicensed Assistive
Personnel [UAP], and contract) (Nursing
Skill Mix) Measure (NQF #0204); and
• Nursing Hours per Patient Day
Measure (NQF #0205).
We also are considering newly
specified eCQMs for possible inclusion
in future years of the Hospital IQR and
Medicare and Medicaid EHR Incentive
Programs. These measures are listed and
these topics are further discussed below.
• Safe Use of Opioids—Concurrent
Prescribing;
174 HHS Strategic Plan, available at: https://
www.hhs.gov/about/strategic-plan/.
175 CMS Strategy: The Road Forward 2013–2017,
available at: https://www.cms.gov/About-CMS/
Agency-Information/CMS-Strategy/Downloads/
CMS-Strategy.pdf.
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• Completion of a Malnutrition
Screening within 24 Hours of
Admission;
• Completion of a Nutrition
Assessment for Patients Identified as AtRisk for Malnutrition within 24 Hours of
a Malnutrition Screening;
• Nutrition Care Plan for Patients
Identified as Malnourished after a
Completed Nutrition Assessment;
• Appropriate Documentation of a
Malnutrition Diagnosis;
• Tobacco Use Screening (TOB–1);
• Tobacco Use Treatment Provided or
Offered (TOB–2)/Tobacco Use
Treatment (TOB–2a);
• Tobacco Use Treatment Provided or
Offered at Discharge (TOB–3)/Tobacco
Use Treatment at Discharge (TOB–3a);
• Alcohol Use Screening (SUB–1);
• Alcohol Use Brief Intervention
Provided or Offered (SUB–2)/Alcohol
Use Brief Intervention (SUB–2a); and
• Alcohol & Other Drug Use Disorder
Treatment Provided or Offered at
Discharge (SUB–3)/Alcohol & Other
Drug Use Disorder Treatment at
Discharge (SUB–3a).
a. Potential Inclusion of the Quality of
Informed Consent Documents for
Hospital-Performed, Elective Procedures
Measure
(1) Background
The process and documentation of
informed consent for surgical
procedures is an ethical obligation and
legal mandate intended to uphold
patient autonomy. It is also a standard
part of clinical practice performed prior
to most procedures and therapies with
material risks. This process provides
information to patients about the
associated risks and benefits, alternative
treatment options, and what to expect
during and after the procedure. As
described in the literature and reported
by patients, comprehensive informed
consent documents can improve patient
comprehension and satisfaction, and
support patients in making decisions
that are aligned with their expectations,
preferences, and
goals.176 177 178 179 180 181 182
176 Arnold SV, Decker C, Ahmad H, et al.
Converting the informed consent from a perfunctory
process to an evidence-based foundation for patient
decision making. Circ Cardiovasc Qual Outcomes.
2008;1(1):21–28.
177 Zuckerman MJ, Shen B, Harrison ME, et al.
Informed consent for GI endoscopy. Gastrointestinal
endoscopy. 2007;66(2):213–218.
178 Wu HW, Nishimi RY, Page-Lopez CM, Kizer
KW. Improving Patient Safety Through Informed
Consent for Patients with Limited Health Literacy.
An implementation report. National Quality Forum;
2005. Available at: https://www.qualityforum.org/
Publications/2005/09/Improving_Patient_Safety_
Through_Informed_Consent_for_Patients_with_
Limited_Health_Literacy.aspx. Accessed: July 5,
2016.
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Despite their importance, and our
regulations in the Conditions for
Participation Guidelines,183 informed
consent documents are frequently
generic, lack information that is relevant
to the procedure, and include illegible,
hand-written information. Moreover,
patients are often given and asked to
sign the informed consent document
minutes before the start of a procedure
when they are most vulnerable and least
likely to ask questions.
Therefore, we developed the Measure
of Quality of Informed Consent
Documents for Hospital-Performed,
Elective Procedures (hereinafter referred
to as, Quality of Informed Consent
Documents measure). This measure was
developed in conjunction with feedback
from patients and patient advocates
convened by the measure developers, all
of whom affirmed the measure captured
the most salient elements of informed
consent documents, and represented a
minimum, though significant, standard
all hospitals should meet. We recognize
the Quality of Informed Consent
Documents measure does not capture all
aspects of the informed consent process
or all aspects of quality related to
patient engagement in shared decision
making. However, we view the Quality
of Informed Consent Documents
measure as a critical first step to
incentivize hospitals to improve the
informed consent process and to ensure
patients receive basic information in a
written format which is understandable,
legible and presented with sufficient
time allowed for questions and
deliberation. The members of the
patient workgroup involved in measure
development also agreed with this
determination and supported the
measure.
179 Schenker Y, Fernandez A, Sudore R,
Schillinger D. Interventions to improve patient
comprehension in informed consent for medical
and surgical procedures: a systematic review.
Medical decision making: an international journal
of the Society for Medical Decision Making.
2011;31(1):151–173.
180 Tait AR, Voepel-Lewis T, Malviya S, Philipson
SJ. Improving the readability and processability of
a pediatric informed consent document: effects on
parents’ understanding. Archives of pediatrics &
adolescent medicine. 2005;159(4):347–352.
181 Kinnersley P, Phillips K, Savage K, et al.
Interventions to promote informed consent for
patients undergoing surgical and other invasive
healthcare procedures. The Cochrane database of
systematic reviews. 2013;7:Cd009445.
182 Lorenzen B, Melby CE, Earles B. Using
principles of health literacy to enhance the
informed consent process. AORN journal.
2008;88(1):23–29.
183 Electronic Code of Federal Regulations,
available at: Part 482—Conditions of Participation
for Hospitals, § 482.24, § 482.51, § 482.90, § 482.98,
§ 482.102. https://www.ecfr.gov/cgi-bin/textidx?SID=faac625d3284209cb805fb0b44c941fa&mc=
true&node=pt42.5.482&rgn=div5#se42.5.482_124.
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In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20052 through
20055), we stated that we are
considering including the Quality of
Informed Consent Documents measure
in the Hospital IQR Program in future
rulemaking.
sradovich on DSK3GMQ082PROD with RULES2
(2) Overview of Measure
Improving the quality of informed
consent documents is a fundamental
step for advancing patient-centered
decision making.184 185 186 187 188 189 The
written quality of informed consent
documents is a critical component of
the informed consent process, and
hospitals have a role in ensuring their
patients have the information they need
in a readable form and with time to
consider their options. We expect the
Quality of Informed Consent Documents
measure will help to pave the way for
future measures which evaluate other
components of the informed consent
process, including shared decisionmaking.
The measure focuses on the quality of
informed consent documents for
elective procedures. Further, with a
focus on ensuring that each person and
family is engaged as partners in their
care, this measure addresses the NQS
priority of promoting effective
communication and coordination of
care. Elective procedures were chosen
as the focus of the measure because all
elective procedures have informed
consent documents as standard practice.
In addition, we believe patients
undergoing elective, rather than
emergent surgery, will benefit from a
measure aimed at optimizing
communications about the risk, benefits,
and purpose of the procedure because
there are typically reasonable
alternatives to elective procedures and
184 Spatz ES, Krumholz HM, Moulton BW. The
new era of informed consent: Getting to a
reasonable-patient standard through shared
decision making. JAMA. 2016;315(19):2063–2064.
185 Kinnersley P, Phillips K, Savage K, et al.
Interventions to promote informed consent for
patients undergoing surgical and other invasive
healthcare procedures. The Cochrane database of
systematic reviews. 2013;7:Cd009445.
186 Robb WJ, Carroll C, Kuo C. Orthopaedic
Surgical Consent: The First Step in Safety.
American Academy of Orthopaedic Surgeons
(AAOS) Now. 2015;9(9).
187 Arnold SV, Decker C, Ahmad H, et al.
Converting the informed consent from a perfunctory
process to an evidence-based foundation for patient
decision making. Circ Cardiovasc Qual Outcomes.
2008;1(1):21–28.
188 The Joint Commission. Quick Safety: An
advisory on safety and quality issues. Informed
consent: More than getting a signature. February
2016. Available at: https://www.jointcommission.
org/assets/1/23/Quick_Safety_Issue_Twenty-One_
February_2016.pdf. Accessed: July 5, 2016.
189 Krumholz HM. Informed consent to promote
patient-centered care. JAMA. 2010;303(12):1190–
1191.
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different patients may choose different
options depending on their preferences,
values, and goals. Further, elective
procedures usually allow ample
decision time and do not require
expedited explanations and decisions
due to life threatening situations.
The measure would require hospitals
to evaluate a sample of their informed
consent documents from elective
procedures performed among Medicare
FFS patients aged 18 years and older
hospitalized at acute care hospitals. The
measure uses administrative claims to
select a stratified random sample of
elective procedures across specialties
that are performed in hospitals. The
informed consent documents associated
with these procedures are reviewed and
abstracted by trained personnel using a
validated Abstraction Tool. Abstractors
are trained using standard instructions,
videos, and test documents with audit
review we have developed. For
additional information about the
training materials and procedures, see
the measure methodology report on our
Web site available at: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html. After
completing this training, we estimate
the abstraction time is approximately
four minutes per document and the
inter-rater reliability is high. The tool
captures 10 items which are
fundamental to informed consent
document quality. Documents are
scored on a scale of 0 to 20, with 20
representing a better quality document.
Document scores are then aggregated to
calculate hospital-level performance on
the measure. The measure is not risk
adjusted because patient characteristics
should not impact informed consent
document quality. We invited public
comment on how the measure would be
reported and implemented.
We developed the Quality of Informed
Consent Documents measure in 8
hospitals, and demonstrated the
measure to be valid, reliable, feasible
and of minimal hospital burden. We
then tested the measure among a sample
of 25 additional hospitals, which also
showed feasibility and low burden on
hospitals. In both the development and
testing samples, we observed overall
low performance on the measure, with
intra-hospital and inter-hospital
variation in the quality of consent
documents. The Quality of Informed
Consent Documents measure aligns with
our goal to increase opportunities for
shared decision making with patients
and the NQS priorities of: (1) Ensuring
person- and family-centered care; and
(2) promoting effective communication
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38363
and coordination of care. For details on
development and testing, we refer
readers to the measure methodology
report on our Web site at: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html.
(3) Data Sources
The measure uses two sources of data
to calculate the Quality of Informed
Consent Documents measure: Medicare
Part A administrative claims, specified
below, to generate a random sample of
qualified elective procedures performed
at each hospital; and a sample of each
hospital’s informed consent documents
and the first page of the procedure/
operative report for those elective
procedures. Basing the sample selection
on administrative data to identify
medical records of elective procedures
ensures a diversity of informed consent
documents on a range of procedures
will be reviewed, and minimizes
selection bias.
(4) Outcome
The outcome for the Quality of
Informed Consent Documents measure
is a quality score which is calculated by
aggregating the scores for individual
informed consent documents from each
hospital assessed with the Abstraction
Tool. The items selected for inclusion in
the Abstraction Tool were important to
patients, supported by evidence in the
literature and published standards and
guidelines, applicable to the cohort of
elective procedures, easily abstracted
from medical records without undue
burden on patients and hospitals, and
feasibly and reliably measured. These
elements are also meaningful
components of informed consent
document quality from the patient
perspective. Further, we received
consistent feedback from all
participating hospitals during testing of
this measure that this information was
useful for hospitals’ efforts to improve
their informed consent documents and
processes by identifying important gaps
in existing documentation. Quality
scores on each informed consent
document will be aggregated to derive a
hospital-level performance score.
The measure outcome does not
overlap with our current regulations
holding hospitals accountable for
informed consent pursuant to our
Conditions of Participation or The Joint
Commission 2009 Requirements Related
to the Provision of Culturally Competent
Patient-Centered Care Hospital
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Accreditation Program (HAP),190 and
fully aligns with State laws within the
few States which have more specified
informed consent rules. Current
Conditions of Participation regulations
focus on whether informed consent
occurred and emphasize informed
consent documents should include the
name of the hospital, procedure, and
practitioner performing the procedure
along with a statement certifying the
procedure, anticipated benefits, material
risks, and alternative treatment options
were explained to the patient or the
patient’s legal representative.191 The
Joint Commission offers additional
guidance for best practices.192 However,
there are no regulations to ensure
hospitals provide patients with
adequate written information about the
procedure. We believe the use of this
measure would supplement and
augment existing standards by
incentivizing hospitals to provide a
minimum set of critical information
about an elective procedure to the
patient within a reasonable time before
the patient undergoes the procedure and
to enable the patient to receive and
process the information prior to signing
and providing informed consent.
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(5) Cohort
The cohort for the Quality of Informed
Consent Documents measure includes
informed consent documents for a
randomly selected sample of qualifying
elective surgical procedures performed
within non-federal acute care hospitals
performed on Medicare FFS
beneficiaries, aged 18 years and over
who are enrolled in Part A at the time
of the procedure. The list of qualifying
elective procedures includes procedures
for which informed consent is standard
practice. The list of qualifying
procedures is broad, capturing 10
specialties and various levels of
invasiveness. For example, electivelyperformed knee replacements and
coronary artery bypass surgeries are
both included. For more information
about the list of qualifying procedures,
190 The Joint Commission. Quick Safety: An
advisory on safety and quality issues. Informed
consent: More than getting a signature. February
2016. Available at: https://www.jointcommission.
org/assets/1/23/Quick_Safety_Issue_Twenty-One_
February_2016.pdf. Accessed: July 5, 2016.
191 Department of Health & Human Services.
Centers for Medicare & Medicaid Services (CMS).
CMS Manual System. Regulations and Interpretive
Guidelines for Hospitals—Condition of
Participation: Medical Record Services. Sections
482.13(b), 482.24(b), 482.51(b)(2). 2008. Available
at: https://www.cms.gov/Regulations-andGuidance/Guidance/Transmittals/downloads/
R37SOMA.pdf. Accessed: July 5, 2016.
192 https://www.jointcommission.org/assets/1/23/
Quick_Safety_Issue_Twenty-One_February_
2016.pdf.
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we refer readers to the measure
methodology report on our Web site
available at: https://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/Hospital
QualityInits/MeasureMethodology.html.
(6) Inclusion and Exclusion Criteria
Qualifying electively-performed
procedures were identified using the
AHRQ Clinical Classification Software
(CCS) codes 193 from the list of
potentially planned procedures and the
list of acute discharge diagnosis AHRQ
CCS codes in the CMS Planned
Readmission Algorithm. The Planned
Readmission Algorithm used for
existing CMS readmission measures was
refined in the FY 2015 IPPS/LTCH PPS
final rule (79 FR 50211 through 50216).
A complete description of the CMS
Planned Readmission Algorithm, which
includes lists of potentially planned
procedures and acute discharge
diagnoses, can be found on the CMS
Web site at: https://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/Hospital
QualityInits/MeasureMethodology.html.
The CMS Planned Readmission
Algorithm identifies a list of potentially
planned procedures and a list of acute
discharge diagnosis codes. Admissions
that have a potentially planned
procedure without an acute discharge
diagnosis code are considered planned
according to the CMS Planned
Readmission Algorithm. The Quality of
Informed Consent Documents measure
does not use the Planned Readmission
Algorithm to identify planned versus
unplanned readmissions. The measure
builds upon the established approach of
the Planned Readmission Algorithm to
identify only electively-performed
procedures because planned procedures
are also commonly electivelyperformed. We used clinical expert
review to further narrow the list of
potentially planned procedures from the
Planned Readmission Algorithm to
those which are consistently electiveperformed and likely to have informed
consent obtained prior to every
procedure.
The measure excludes highly
specialized procedures, such as organ
transplantation because they typically
use unique informed consent processes;
non-invasive radiographic diagnostic
tests because informed consent
standards may be different than
193 Clinical Classifications Software (CCS) for
ICD–9–CM Fact Sheet. Accessed at: https://
www.hcup-us.ahrq.gov/toolssoftware/ccs/
ccsfactsheet.jsp.
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standards for invasive procedures and
surgeries; and procedures that are
conducted over several encounters since
informed consent is likely only
conducted prior to the first procedure.
For more information about the list of
qualifying procedures and excluded
procedures, we refer readers to the
measure methodology report on our
Web site available at: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html.
(7) Abstraction Tool
The Abstraction Tool is an instrument
used to evaluate the quality of a
hospitals’ informed consent documents
based on a score of 0–20; a higher score
indicates better quality. The Abstraction
Tool is a checklist evaluating the
presence of the following items in the
consent document: A description of the
procedure; how the procedure will be
performed; the rationale for why the
procedure will be performed; and the
risks, benefits, and alternatives to the
procedure. The Abstraction Tool also
includes an item to assess whether
patients received the document at least
one calendar day in advance of the
procedure date. Inclusion of the timing
item ensures informed consent
documents are not shared for the first
time with patients on the day of the
procedure. The Abstraction Tool
provides an option for hospitals to note
if a patient chose to opt out of signing
their informed consent document 24 or
more hours before surgery, enabling full
credit to be given to the hospital for this
item in that scenario. In addition, the
tool gives credit for sharing the
document prior to the day of the
procedure, even if the patient does not
sign the document until the day of the
procedure. These aspects were raised
with the patient and patient advocate
workgroup and deemed to be more
flexible to a range of scenarios and
contexts, and therefore more patientsensitive. To assess the reliability of the
Abstraction Tool, we examined the
inter-rater reliability (the degree of
agreement among abstractors) of each
item on the Abstraction Tool as well as
the document scores produced by the
Abstraction Tool for 80 of the 800
documents tested from the pilot project
hospitals. For additional information
about testing refer to our Web site at:
https://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html.
Abstractors enter responses for each
item evaluated in each informed
consent document. We would provide
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comprehensive standardized training
materials including an instruction
manual with guidance and examples of
what meets criteria for each item in the
Abstraction Tool, a training video, and
sample test documents. This process has
previously been piloted and found to be
effective and efficient. For more
information about the Abstraction Tool
and instructions manual, we refer
readers to our Web site at: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html.
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(8) Calculating the Measure Score
The measure will be calculated by
aggregating the scores of the sample of
hospitals’ informed consent documents,
as assessed using the Abstraction Tool.
Based on input from stakeholders
during the measure development stage,
including the Technical Expert Panel
convened by the measure developer,
and feedback from patients and patient
advocates, we are considering reporting
the proportion of a hospital’s sampled
informed consent documents that
achieve a pre-specified threshold score.
For example, the proportion of a
hospital’s sampled informed consent
documents which meet a minimum,
patient-centered standard. We are
considering setting the threshold score
at 10 (out of 20 total points), and
increasing the threshold over time. The
stakeholders we sought input from
during the measure development
process agreed with incrementally
increasing the threshold score over time.
This would establish an initial target
that hospitals could feasibly meet in a
short period of time, and allow for
further informed consent improvement.
Ultimately, we envision this measure
would either evolve to include
additional components or could
complement a measure of shared
decision making when an appropriate
measure becomes available for potential
use in the Hospital IQR Program.
Using this scoring approach,
performance scores among the 25
hospitals in the testing sample were
poor. The median hospital level score,
based on evaluation of 100 informed
consent documents, ranged from 0 (95
percent CI: 0–5) to 12 (95 percent CI:
10–12) out of a total of 20 points. The
proportion of documents achieving a
threshold score of at least 10 (out of 20
points) per hospital, ranged from 0
percent to 70 percent, demonstrating
that the quality of informed consent
documents varies both within and
between hospitals.
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(9) Implementation
We are considering two
implementation approaches. One
approach implements the measure in a
centralized fashion where hospitals
send their sample of informed consent
documents directly to CMS or to an
entity contracted by us for central
abstraction and measure score
calculation. Another approach is local;
hospitals abstract their own informed
consent documents and transmit the
abstraction results to CMS for measure
calculation.
During measure development, we
worked closely with hospitals to
evaluate the burden associated with
each approach. The greatest burden was
associated with copying and
electronically sending informed consent
documents, making centralized
abstraction a more burdensome option
for hospitals. Using a brief formal
training process and materials to
prepare abstractors, we found hospital
abstractors can reliably abstract
documents at a rate of 15–20 documents
per hour or 3–4 minutes per document.
The final sample size required for
measure reporting has not been
determined but will not exceed 100
documents per hospital and may be
substantially fewer than 100 documents
per hospital.
Implementation would entail
identifying a hospital’s elective
procedures which meet eligibility for
the Quality of Informed Consent
Documents measure using
administrative claims data. We would
then provide hospitals with a list of
procedures and encounter dates selected
from a hospital’s eligible elective
procedures, along with the HIC number
and date of birth of the patient who had
the procedure in order to identify the
medical record, the qualifying
procedure, and the corresponding
informed consent document and
operative report. Hospitals would then
locally evaluate the informed consent
documents for these procedures using
the Abstraction Tool and transmit the
results of the abstraction through a
secure data file transfer or similar
process, such as the QualityNet Secure
Portal or the External File Online Tool.
We would then calculate and report the
results as the proportion of a hospital’s
sampled informed consent documents
achieving the threshold score of 10 out
of 20. Hospitals could submit data on
the prior year’s informed consent
documents on an annual basis or more
frequently, such as quarterly or every
six months, allowing for more rapid
cycle improvements in measure
performance. If we were to pursue a
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local abstraction approach, we would
also consider expanding the data
validation process in the Hospital IQR
Program to ensure hospitals’ abstraction
work was accurate, requiring hospitals
to submit select informed consent
documents to us or an entity contracted
by us via a secure mechanism for review
and validation.
The Quality of Informed Consent
Documents for Hospital-Performed,
Elective Procedures (MUC16–262)
measure is included in a publicly
available document entitled ‘‘2016–2017
Spreadsheet of Final Recommendations
to HHS and CMS,’’ which is available
on the NQF Web site.194 The MAP did
not support this measure, indicating
concern about the lack of evidence that
implementation will affect hospital
practices and the complexity of existing
guidelines, regulations and State laws
related to informed consent. Further, the
MAP noted that this measure captures
the quality of informed consent
documents rather than the quality of
communication between patients and
their providers.195 However, the MAP
noted that this measure concept is
critical for shared decision making, and
recommended that future measures on
informed consent be patient-centered. In
addition, the MAP noted that this
measure should demonstrate reliability
and validity, at the facility level, in the
hospital setting, prior to being suitable
for inclusion in the Hospital IQR
Program measure set. Lastly, the MAP
recommended the measure be submitted
to NQF for review and endorsement.196
We invited public comment on
multiple aspects of the measure.
Specifically, we sought public comment
on the potential scoring approach
described above, reporting the
proportion of a hospital’s sampled
informed consent documents, and
setting a threshold score of 10 out of 20.
In addition, we sought input on how the
measure should be implemented, either
through local abstraction where
hospitals provide us with the results of
their own abstraction work or by
transmitting informed consent
documents to us for centralized
abstraction. We also sought public
comment on the frequency of measure
reporting for this measure, whether
annually, quarterly, or at some other
interval. More frequent reporting
updates would require hospitals to
abstract documents and submit the
194 ‘‘2016–2017 Spreadsheet of Final
Recommendations to HHS and CMS, available at:
https://www.qualityforum.org/map/.
195 ‘‘2017 Considerations for Implementing
Measures Hospitals-Final Report,’’ available at:
https://www.qualityforum.org/map/.
196 Ibid.
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results more often than less frequent
reporting. Finally, we sought input on a
potential validation process for the
Quality of Informed Consent Documents
measure.
Comment: Many commenters
supported the future inclusion of the
‘‘Quality of Informed Consent Measure.’’
The commenters noted that this
measure is critical to patient care
because it would establish standards for
informed consent that would help to
alleviate confusion patients have about
their care (by awarding credit for the use
of lay terms on the consent document)
and provide opportunities for patients
to ask questions (because the consent
documents that are shared with patients
in advance of a procedure are given
credit). The commenters also stated that
the more patients are empowered to be
proactive and educated in their own
care, the more the care provided will
align with their preferences and goals.
In addition, the commenters noted that
measurement of informed consent
documents is important because
communication about care is essential
to patients and their families since
written information, when provided in
advance, can be reviewed and shared.
Further, the commenters suggested that
implementing this measure would
instate new standard operating
procedures that could improve the
patient experience. To that end, the
commenters recommended that the
consent forms be tailored to patientcentered care by indicating diagnosis,
procedure, and alternative methods of
treatment. Lastly, the commenters
suggested that the document also
include any/all known harmful drug
and/or procedural side effects so
patients are fully informed of what to
expect.
Response: We thank the commenters
for their support. The current version of
the Abstraction Tool evaluates the
informed consent document for the
presence, readability, and legibility of
the procedure name and a description of
how the procedure is performed. It also
assesses whether the document includes
the rationale for the procedure
(including the diagnosis), a quantitative
and qualitative description of the risks
associated with the procedure, patientoriented benefits of the procedure (in
other words, the physical impact of the
procedure on patients), and alternatives
to the procedure. The Tool also assesses
whether the document was shared with
the patient at least one calendar day
prior to the procedure. These elements
of informed consent documents were
selected and developed for the measure
in close partnership with a patient
workgroup; they represent priority
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quality standards that are feasible to
abstract reliably. The Tool gives credit
for each item, and gives a score of 0 to
20; as such, the measure would
demonstrate variation in quality
between informed consent documents
within a single hospital, and would
illuminate overall quality differences
between hospitals. In addition to
illuminating quality, the measure is
intended to incentivize hospitals to
produce more patient-centered informed
consent documents that meet, at a
minimum, the standards set forth in this
tool.
Comment: Many commenters
supported the future inclusion of the
‘‘Quality of Informed Consent’’ measure
in the Hospital IQR Program measure
set, but provided several
recommendations for CMS to consider.
Specifically, the commenters suggested
being more prescriptive about the
content and form of the description of
alternative treatments, noting that this
content should contain comparative
benefits versus risks and a disclosure of
any financial incentives in place. In
addition, the commenters noted that the
provided scoring standard is limited in
the number of elements that are
essential for an informed consent
document. Commenters noted that
facilities could develop a standardized
consent form that meets the criteria of
all elements that are specified in the
measure.
Response: We thank the commenters
for their support and will consider these
recommendations in planning for any
potential future proposal of this
measure. We acknowledge that although
the Abstraction Tool captures many
aspects of informed consent documents
which commenters noted were
important, it does not currently require
a description of the comparative
benefits versus risks associated with
different treatment options or a
disclosure of any financial incentives in
place. While we believe the current
Abstraction Tool effectively and
concisely captures key elements of
informed consent document quality that
represent a minimum standard for
informed consent documents that are
meaningful to patients, we will continue
to collect and evaluate feedback from
stakeholders and consider commenters’
suggestions to refine the Abstraction
Tool during ongoing measure reevaluation work. The measure is
intended to evaluate quality and
illuminate deficiencies in the current
informed consent process. We hope this
measure would lead hospitals to
produce more patient-centered informed
consent documents that meet, at a
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minimum, the standards set forth in this
measure.
Comment: Other commenters
encouraged CMS to require shared
decision making for its hospital elective
procedures and for all conditions that it
has identified under its Beneficiary
Engagement models. Many commenters
suggested that informed consent should
be a shared process when the patient
has a partner or spouse. Other
commenters also recommended that the
measure developer consider
incorporating the American College of
Surgeons (ACS) principles in the
development of the informed consent
document and capture the informed
consent discussion, not simply the
timing of when the legal document is
shared. Other commenters were
concerned that this measure focused on
documentation rather than the actual
communication process.
Response: This measure evaluates one
aspect of the quality of informed
consent and is not intended to be a
comprehensive measure of the informed
consent process or shared decisionmaking. It is intended as an initial step
toward improving the informed consent
process and represents a minimum
requirement for optimal informed
consent and shared decision-making.
The measure assesses basic elements of
the informed consent document and
captures when the document is shared
with the patient, a signal of when an
informed consent discussion took place.
We did not consider the elements of the
Beneficiary Engagement models, as they
pertain to shared-decision making and
not specifically to the informed consent
document. Additional information
about Beneficiary Engagement models
can be found on the CMS Innovation
Center Web site at: https://
innovation.cms.gov/initiatives/
Beneficiary-Engagement/. Regarding
commenters’ concern that the focus of
the measure is on documentation rather
than the actual communication process,
there are significant challenges in both
the methods and feasibility of assessing
whether shared decision-making
occurred prior to a broad range of
elective procedures. While we
acknowledge that this measure of
informed consent does not assess all
aspects of decision-making quality, we
believe the informed consent document
is a critical part of the informed consent
process. Patients and families have
observed and experienced that many
informed consent documents are of poor
quality and in need of improvement.
They have encouraged policymakers to
work towards a more patient-centered
standard. We have worked closely with
patients, patient advocates, and families
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to develop this measure, which provides
a mechanism for assessing the quality of
informed consent documents and the
timing in relation to the procedure in
which they are shared, as two aspects of
the communication needed for informed
decision-making. We received broad
stakeholder support for the concept of
measuring the quality of informed
consent documents, and we believe this
measure represents an important first
step forward in improving high-quality
decision-making. The measure would
fill a significant gap in evaluating the
quality of current informed consent
documents. We will consider
incorporating the American College of
Surgeons (ACS) principles 197 and other
aspects of shared decision-making in
future versions of the measure.
Comment: A few commenters urged
CMS to require that patient decision
aids are certified pursuant to the
certification criteria adopted by the
NQF.
Response: We recognize commenters’
desire to capture the use of patient
decision aids, which are tools designed
for patients who have certain conditions
to help them think about what is
important to them when discussing with
their clinician the options for health
management. While standards exist for
what defines a decision aid, pamphlets
about a procedure and patient
instructions are frequently labeled as
decision aids 198 despite not meeting the
standards. As such, without the
certification of decision aids, there is a
risk of incentivizing the use of lowquality tools. While certification may be
feasible in the future, at the current
time, no national certification program
exists. The NQF has put forth criteria for
certifying decision aids, though the
process for doing so has yet to be
defined. We refer readers to the NQF
Web site for more information regarding
the decision aids project at: https://
www.qualityforum.org/Decision_
Aids.aspx. We will continue to evaluate
the inclusion of decision aids as well as
other elements of high-quality informed
consent documents, as suggested above.
Comment: Several commenters
expressed concerns about the Quality of
Informed Consent measure’s lack of
NQF endorsement.
Response: Although the Quality of
Informed Consent measure has yet to
undergo NQF endorsement review, the
measure was developed according to
197 American College of Surgeons Principles and
Practice 7th Edition, available at: https://
booksmedicos.org/acs-surgery-principles-andpractice-7th-edition/.
198 Herrin J, Harris K, K K, Hines M, Frosch D.
Patient and family engagement: a survey of US
hospital practices. BMJ Qual Saf. 2016;25:182–9.
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and adhering to the guidelines and
standards from NQF. NQF provides
measure evaluation criteria on its Web
site at: https://www.qualityforum.org/
Measuring_Performance/Submitting_
Standards/Measure_Evaluation_
Criteria.aspx. We plan to submit the
measure for NQF endorsement during
the next appropriate call for measures.
Comment: Several commenters
expressed concern the Quality of
Informed Consent measure fails to
account for patient variables, such as
health literacy and additional
education.
Response: We recognize that patients
of different levels of English language
proficiency and health literacy may
require tailored informed consent
documents. The current measure
assesses lay language in English. Future
measure development efforts may
consider adapting the Abstraction Tool
used to evaluate the quality of informed
consent documents in non-English
languages and the technical capacity for
literacy support (for example, text
readers, large print, health coaches,
etc.).
Comment: Several commenters stated
that if hospitals are not communicating
information necessary to achieve
informed consent, the issue should be
addressed through existing processes as
opposed to layering on a new quality
metric.
Response: We believe the Quality of
Informed Consent measure would fill a
gap in existing processes, which may
not be sufficient to ensure high quality
informed consent documentation.
Guidelines do not specify which details
should be included in the written
informed consent document, despite the
documents’ design to support patientand procedure-specific information.
Research has shown there is no
standardization of informed consent
documents and often the most
important information about the
procedure is missing, illegible, or
incomprehensible.199 The Quality of
Informed Consent measure is designed
to set a basic standard for the quality of
informed consent documents
administered by hospitals and, as such,
is an important quality improvement
tool.
Comment: Several commenters
indicated they did not believe this
measure would lead to improved patient
engagement. The commenters
encouraged CMS to work with hospitals,
patient advocates, Congress, and States
199 Shahu A, Schwartz J, Perez M, Bernheim SM,
Krumholz HM, Spatz ES. Discerning quality: an
analysis of informed consent documents for
common cardiovascular procedures. BMJ Qual Saf.
2016.
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to streamline the amount of paperwork
that patients, patient advocates, and
their families are required to sign prior
to or upon admission.
Response: We collaborated closely
with patients in developing this
measure in order to identify the
essential elements of informed consent
documents. We designed the measure to
illuminate deficiencies with informed
consent and to incentivize improved,
patient-centered informed consent
documents that are shared with patients
ahead of the procedure, which we and
our patient collaborators believe would
lead to improved patient engagement
and more meaningful informed consent
documents. The measure is a first step
towards increasing the attention and
effort that hospitals dedicate to
providing high-quality informed
consent, a critical aspect of patientcentered decision making.
We appreciate the commenters’
concerns about the burden of paperwork
on patients. This measure assesses a
practice that is already in place;
informed consent documents are signed
and scanned into patients’ medical
charts as routine medical care making
them feasible to review without the
need for further data collection.
Comment: Some commenters
expressed concern about the future
inclusion of the Quality of Informed
Consent measure in the Hospital IQR
Program. Specifically, the commenters
were concerned about the
administrative burden of abstraction or
transmission of informed consent
documents to CMS for centralized
abstraction in order to report the Quality
of Informed Consent measure, especially
for large academic medical hospitals.
The commenters requested that CMS
allow hospitals ample time to review
and implement each abstracted element
prior to the data collection period.
Further, the commenters stated that
additional testing should be performed
and workable solutions identified prior
to implementation. In addition, the
commenters believed the collective
administrative burden of reporting this
measure would be immense, costly, and
would not commensurately improve
value for the patient. Several
commenters did not support the future
inclusion of the Quality of Informed
Consent measure, indicating that the
measure does not assess quality of care
and is significantly burdensome.
Response: We have performed testing
across a diverse spectrum of hospitals
and those findings indicate the measure
would not be significantly burdensome.
In developing this measure, we have
worked with 33 hospitals to assess the
feasibility of the abstraction process and
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have determined it presents a low
burden to hospitals. While abstraction
was conducted centrally for the
development and testing of the measure,
we would recommend local abstraction
of informed consent documents by
hospital personnel, eliminating the
transfer of documents. We have
developed training materials and a
process for easily identifying the
informed consent document in the
medical record and for rating the quality
of informed consent documents. Among
our test hospitals, experienced
abstractors required less than 1 hour of
training to be able to abstract documents
accurately, with high inter-rater
reliability, at a rate of approximately 3
minutes per document. We will
continue to consider this feedback and
would inform stakeholders about the
abstraction process if we decide to move
forward with proposing to adopt the
Quality of Informed Consent measure in
the Hospital IQR Program through
future rulemaking. With regard to the
comment that the Quality of Informed
Consent measure does not assess quality
of care, we have received positive
feedback from patients, patient
advocates, and patient’ families, both
during measure development and
during this public comment period in
support of this measure as a meaningful
metric of quality of care.
Comment: Some commenters
expressed concern with the scoring
standard used for determining a highquality informed consent document,
noting that the current threshold score
is too low, and recommended that CMS
raise the threshold to ensure overall
form improvement via the inclusion of
information on the suggested items of
alternative treatments and comparative
benefits versus risks. These commenters
strongly recommended that CMS raise
the minimum passing score of 10 out of
20 points substantially, to 18 out of 20
points. The commenters noted that
changing a singular document at
multiple intervals to improve the score
requires unnecessary, repeated
corporate and legal review and may also
confuse providers as well as patients.
Setting the threshold at a higher level
from the beginning better serves both
patients and hospitals. Lastly, some
commenters noted that all the scores are
solely based on a ‘‘Yes’’ or ‘‘No’’
checklist completed by a healthcare
provider, and suggested that those
response options are insufficient to
adequately represent the patient
experience.
Response: The threshold approach
sets an external standard for quality.
The threshold score we sought comment
on (that is, the percentage of documents
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scoring at least 10 out of 20 points) was
supported by the patient working group
and TEP which was convened by a
contractor during measure development.
The patient working group and TEP felt
that an intermediate threshold would
reward hospitals in their efforts to
improve documents. While this
standard would need to be set by
consensus, the standard could increase
as hospitals gain more experience with
the measure, which would also decrease
the initial burden of training.
We do not believe that increasing the
threshold score over time would lead to
repeated corporate or legal review, or be
confusing to clinicians or patients,
because hospitals could work to revise
the content included in their informed
consent document at one time and then
focus on improving their score though
efforts to share the documents at least
one calendar day prior at a future time.
These efforts may take longer, as they
require changes in process and in some
cases, the use of technology, but not
necessarily corporate or legal review.
While we agree the ‘‘Yes’’ or ‘‘No’’
checklist does not capture the spectrum
of informed consent document quality,
we developed definitions and criteria
for what qualifies as ‘‘passing’’ based on
iterative review of consent forms from
33 hospitals, considering a range of
elective procedures and using feedback
from the patient workgroup. Thus, we
believe that the ‘‘Yes’’ or ‘‘No’’ approach
is a meaningful indicator of quality.
Nonetheless, we recognize that quality
exists on a spectrum, and we will take
into consideration the commenters’
feedback in future development of the
measure. We also will continue to
collect and evaluate feedback from
stakeholders and consider commenters’
suggestions to refine the threshold used
for initial measure implementation
during ongoing measure re-evaluation
work. We will inform stakeholders of
any changes to the Abstraction Tool
and/or minimum threshold in future
rulemaking, should we move forward
with proposing to adopt the Quality of
Informed Consent Document measure
for the Hospital IQR Program.
Comment: Several commenters also
recommended that the manual
abstraction process defined in the
Quality of Informed Consent measure be
converted to electronic extraction.
Several commenters recommended that
this be a voluntary measure in at least
the first year of reporting to determine
feasibility of being able to electronically
capture the data. Other commenters
suggested that manual abstraction
should remain an option for those
organizations that are not early
adopters. One commenter encouraged
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the use of Health Information
Technology (HIT) to facilitate the
informed consent process and suggested
the inclusion of the Advancing Care
Information requirements
complementary to certified HIT
standards (already in the 2015 Edition)
that support patient specific education
and clinical decision support selection
for use in the selection of patientspecific informed consent, and the
patient’s response incorporated into the
HIT using the existing clinical content
document (CCD–CCDA) standards.
Response: The measure currently
utilizes a manual abstraction process,
but we agree electronic extraction could
potentially improve efficiency and
decrease reporting burden in the future.
Specifically, we appreciate the
suggestion that this measure might be
appropriate for the Advancing Care
Information performance category under
the Merit-based Incentive Payment
System (MIPS), which is part of the
Quality Payment Program established
under the Medicare Access and CHIP
Reauthorization Act of 2015
(MACRA).200 We also recognize that
some hospitals already have in place
technology to assist with providing
informed consent documents to
patients. The purpose of the Quality of
Informed Consent measure is to improve
the quality of informed consent
documents rather than assessing the
methods by which hospitals choose to
provide their informed consent
documents to patients. We encourage
innovation in informed consent
development and delivery to patients.
This measure captures hospital quality
by assigning higher ratings to informed
consent documents that are patient- and
procedure-specific and that are shared
with patients ahead of their procedures.
We will consider additional abstraction
options prior to proposing to adopt this
measure for the Hospital IQR Program in
the future.
We thank the commenters and we
will consider their views as we develop
future policy regarding the use of a
Quality of Informed Consent Documents
for Hospital-Performed, Elective
Procedures measure in the Hospital IQR
Program.
b. Potential Inclusion of Four End-ofLife (EOL) Measures for Cancer Patients
(1) Background
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20055 through
20056), we discussed the potential use
of palliative and end-of-life care
measures in the Hospital IQR Program.
200 https://qpp.cms.gov/mips/advancing-careinformation.
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The quality of palliative and end-of-life
care has been identified as a
measurement gap in the Hospital IQR
Program.201 End-of-life care may be
defined as ‘‘comprehensive care that
addresses medical, emotional, spiritual,
and social needs during the last stages
of a person’s terminal illness.’’ 202 While
end-of-life care may include palliative
care, palliative care is generally defined
as multi-faceted, holistic care that
anticipates, prevents, and alleviates
suffering.203 Both palliative and end-oflife care can be provided when a patient
is receiving hospice services, but it is
not necessary for a patient to be
admitted to hospice to receive such
care. Hospitals are encouraged to
counsel patients about palliative and
end-of-life care; however, the National
Academy of Medicine (NAM) of the
National Academies has noted that ‘‘too
few patients and families receive this
help [palliative and end-of life care] in
a timely manner,’’ 204 despite evidence
that this care improves patient quality of
life. In the same report, the NAM
proposed a number of core components
of quality palliative and end-of-life care.
These proposals included offering a
referral to hospice if a patient ‘‘has a
prognosis of 6 months or less’’ and
regular revision of a patient’s care plan
to address the patient’s changing needs,
as well as the changing needs of the
patient’s caregivers.205 The four
palliative and end-of-life measures
described below seek to improve the
quality of care for cancer patients.
sradovich on DSK3GMQ082PROD with RULES2
(2) Overview of Measures
All four of these end-of-life measures
seek to assess the quality of end-of-life
care for patients who died of cancer in
order to improve the quality of end-oflife care for future cancer patients. As
such, the four palliative and end-of-life
measures all address the NQS priority of
communication and care coordination.
The Proportion of Patients Who Died
from Cancer Receiving Chemotherapy in
the Last 14 Days of Life (EOL-Chemo)
(NQF #0210) measure evaluates the
proportion of patients who died from
cancer who received chemotherapy in
the last 14 days of life. This measure
was finalized for CY 2017 for the MIPS
201 National Quality Forum, Final Report.
Palliative and End-of-Life Care 2015–2016,
available at: https://www.qualityforum.org/
Palliative_and_End-of-Life_Care_Project_20152016.aspx.
202 Ibid.
203 Ibid.
204 Committee on Approaching Death: Addressing
Key End of Life Issues, Institute of Medicine: Dying
in America: Improving Quality and Honoring
Individual Preferences Near the End of Life.
Washington, DC, National Academies Press, 2015.
205 Ibid.
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(81 FR 77672). The Proportion of
Patients Who Died from Cancer Not
Admitted to Hospice (EOL-Hospice)
(NQF #0215) measure assesses the
proportion of patients who died from
cancer who were not admitted to
hospice and evaluates whether or not
patients were admitted to hospice. The
Proportion of Patients Who Died from
Cancer Admitted to Hospice for Less
Than Three Days (EOL–3DH) (NQF
#0216) measure evaluates whether
patients who were admitted to hospice
were admitted to hospice late in the
course of their illness, defined as within
three days of their death. The
Proportion of Patients Who Died from
Cancer Admitted to the ICU in the Last
30 Days of Life (EOL–ICU) (NQF #0213)
measure assesses whether cancer
patients were admitted to the ICU in the
last 30 days of their lives.
These measures were reviewed by the
MAP in December of 2016 for the PPSExempt Cancer Hospital Quality
Reporting (PCHQR) Program (MUC16–
271, MUC16–273, MUC16–274, and
MUC16–275).206 The MAP Hospital
Workgroup supported the inclusion of
these measures in the PCHQR Program.
Specifically, the MAP stressed the
importance of end-of-life care as an area
of cancer care that needs improvement
and noted that these measures could
help improve the patient and caregiver
experience. The MAP also noted these
measures could help encourage the use
of hospice care and help avoid
aggressive treatment in the last days of
life, as unnecessary treatment at the end
of life has been found to negatively
impact a person’s quality of life.207 We
note that prior to implementation in the
Hospital IQR Program, these measures
would require a subsequent review from
the MAP to assess appropriateness for
programmatic inclusion.
With additional testing to assess the
appropriateness of these measure in the
acute care setting, we believe that these
measures may be suitable for the
Hospital IQR Program because they
provide insight on the quality of end-oflife care for cancer patients provided in
inpatient settings other than at PPSexempt cancer hospitals. Currently, the
Hospital IQR Program measure set does
not contain any measure that assesses
end-of-life care. As such, the future
inclusion of these measures could
promote the expansion of the Hospital
IQR Program measure set to include a
206 2016–2017 Spreadsheet of Final
Recommendations to HHS and CMS, Available at:
https://www.qualityforum.org/
ProjectMaterials.aspx?projectID=75367.
207 ‘‘2017 Considerations for Implementing
Measures Hospitals-Final Report,’’ available at:
https://www.qualityforum.org/map/.
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more robust set of measures that
evaluate end-of-life care and address the
NQS priority of improving person and
family engagement. In addition, because
these measures are specific to cancer
patients, future inclusion would
promote programmatic alignment
between the Hospital IQR and PCHQR
Programs should these measures be
finalized as discussed in section
IX.B.4.b. of the preamble of the final
rule for inclusion in the PCHQR
Program.
Additional information on these
measures is available at: https://
www.qualityforum.org/Publications/
2016/12/Palliative_and_End-of-Life_
Care_2015-2016.aspx.
We invited public comment on the
possible future inclusion of one or more
of these end-of-life measures in the
Hospital IQR Program.
Comment: Many commenters
supported the proposed future inclusion
of the End of Life Cancer measure set.
The commenters believed that these
measures represent a good start to
ensuring that patients with cancer, who
are at the end of life, receive appropriate
care that serves to protect quality of life.
The commenters indicated that the data
from these measures would be useful in
evaluating the impact of the use or lack
of use of hospice services, and
influential in improving the care of
those with advanced illness. The
commenters also stated there is a
pressing need to establish additional
quality measures that support evidencebased care for individuals with
advanced illness and recommended
CMS consider expanding measures to
include additional illnesses, provider
types, and use in additional care
settings. In addition, commenters
encouraged CMS to pair these
utilization measures with measures of
shared care planning, such as an
assessment of how closely care received
aligns with patient preferences and
goals. Lastly, commenters noted these
measures have been thoroughly tested
and are NQF-endorsed. Some
commenters suggested that CMS
consider adding additional measures
(‘‘Advance Care Plan’’ (NQF #0326) and
‘‘Patients Admitted to the ICU Who
Have Care Preferences Documented’’
(NQF #1626)) to the Hospital IQR
Program. The commenters stated these
two measures would help fill a gap in
the Program by ensuring that hospitals
have documented patients’ care
preferences and make efforts to revisit
and update these preferences as
conditions change and critical care is
needed.
Response: We thank the commenters
for their support. We will consider the
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possibility of pairing these measures
with measures of shared care planning
if we move forward with proposing one
or more these measures for future
adoption in the Hospital IQR Program.
Further, we will assess the suitability of
the suggested measures (‘‘Advance Care
Plan’’ (NQF #0326) and ‘‘Patients
Admitted to the ICU Who Have Care
Preferences Documented’’ (NQF
#1626)), and any other measures that
address patients with advance illness, as
we consider future measures the
Hospital IQR Program measure set. We
recognize that in order for these
measures to be considered for inclusion
in the Hospital IQR Program measure set
they would have to be re-specified for
the inpatient setting. If the measure
steward expands these end-of-life
measures to include additional illnesses
and provider types, we will examine
how these additional variables affect
their reliability and validity as we
consider whether to propose to adopt
these measures in the Hospital IQR
Program in the future.
Comment: Some commenters did not
support the proposed future inclusion of
the End of Life cancer measures in the
Hospital IQR Program. These
commenters expressed concern that
these measures are not adjusted to
exclude patients from the numerator
and denominator who have stated a
desire to pursue aggressive treatment
through the end of life.
Response: We acknowledge the
commenters’ concerns that these
measures are not adjusted to exclude
patients from the numerator and
denominator who have stated a desire to
pursue aggressive treatment through the
end of life. We note that prior to
proposing to adopt the End of Life
cancer measures in the Hospital IQR
Program, these measures would require
a subsequent review by the MAP to
assess appropriateness for programmatic
inclusion, which would include
feedback on the appropriateness of
numerator and denominator exclusion
criteria. Should we decide to move
forward with proposing to adopt these
measures for the Hospital IQR Program
in the future, we may consult the
measure steward to determine whether
patients who have undergone aggressive
treatment through the end of life should
be excluded from the measurement
cohort.
Comment: Some commenters
expressed concerns about the future
inclusion of the End of Life cancer
measure set in the Hospital IQR
Program, noting that the proposed
measures should remain only in the
PCHQR Program, where they are more
appropriate. The commenters expressed
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that patient mix and cancer stage at time
of diagnosis can greatly impact the
measures. In addition, the commenters
suggested that, although these are
inpatient measures, they are highly
dependent on access to ambulatory
services (for example, hospice,
palliative care, and supportive services),
which is in limited supply in many
geographic areas. Other commenters
stated that because measure
performance is predicated on the
physician, who is responsible for the
patient’s care, in instances where the
hospital does not employ the oncologist
(or primary care physician), the ability
to drive performance improvement is
limited. Further, these measures would
disadvantage community hospitals that
don’t employ the oncologists in their
community. Some commenters
recommended CMS test the measures
for use in both cancer hospitals and
IPPS acute hospitals and the measures
be reviewed for NQF endorsement in
those settings prior to proposing to
implement the measures in a public
quality reporting program. Other
commenters suggested these measures
be tested in facilities with cancer
patients and that CMS should adjust the
specifications as needed prior to
implementation.
Response: We acknowledge the
commenters’ concerns. We note that
prior to proposing to adopt the End of
Life cancer measures for the Hospital
IQR Program, these measures would
require testing in acute care hospitals by
the measure steward, which would
provide insight on the burden
associated with data collection in these
settings. Through testing the measure
steward could be able to better assess
the impact of factors such as patient mix
and cancer stage at time of diagnosis,
and determine if they should be a part
of numerator and/or denominator
exclusion criteria. Further, testing could
help determine the impact of factors
such as access to ambulatory services
(as the commenter described) and the
impact on quality of hospitals that have
an oncologist on staff versus hospitals
that do not. In addition, these measures
would be subject to review by the MAP
to assess appropriateness for Hospital
IQR Program inclusion, which would
include feedback on the appropriateness
of risk adjustment, and the degree of
specificity required in the measures’
components (for example, title,
numerator description, denominator
description, etc.) and to ensure no
unintended consequences result, such
as dis-incentivizing physicians to refer
terminally ill patients to appropriate
palliative care. We reiterate when the
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MAP reviewed these measures for the
PCHQR Program, it noted these
measures could help encourage the use
of hospice care and help avoid
aggressive treatment in the last days of
life, as unnecessary treatment at the end
of life has been found to negatively
impact a person’s quality of life.208
Further, we believe these measures may
be suitable for the Hospital IQR Program
as well, because they could provide
insight on the quality of end-of-life care
for cancer patients provided in inpatient
settings other than at PPS-exempt
cancer hospitals.
Comment: Some commenters also
expressed concerns about manual data
collection for these items affecting data
quality and reliability, and about
unintended consequences, such as
providers refraining from offering
treatment of potential value in the face
of prognostic uncertainty. The
commenters suggested since not all
cancer patients are terminal, at
minimum, CMS should add the word
‘‘terminal’’ before the word ‘‘cancer’’ in
each of the measures’ titles, which
would avoid undesired penalties and
incentivize physicians to refer
terminally ill patients to appropriate
palliative care. The commenters also
recommended CMS consider the NQF
palliative care measure for
Documentation of Preferences for
Patients Admitted to the ICU (NQF
#1626) instead.
Response: We acknowledge the
concerns about manual data collection
for these items affecting data quality and
reliability and about unintended
consequences. As we noted above, prior
to proposing to adopt the End of Life
Cancer measures for the Hospital IQR
Program in the future, these measures
would require testing in the inpatient
setting, which would provide insight on
the burden associated with data
collection in that setting. In addition,
testing could provide the measure
steward with data to be able to assess
potential unintended consequences.
We thank the commenter for their
suggested revision to the name of the
measure, and will consider this, as well
as the impact of terminally ill patients
being a part of the measurement cohort,
should we decide to move forward with
proposing to adopt these measures for
the Hospital IQR Program. We will
consider the suggested measure (for
Documentation of Preferences for
Patients Admitted to the ICU (NQF
#1626)) and any other measures that
208 2017 Considerations for Implementing
Measures Final Report—Hospitals, available at:
https://www.qualityforum.org/Publications/2017/02/
2017_Considerations_for_Implementing_Measures_
Final_Report_-_Hospitals.aspx.
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evaluate the quality of end-of-life care
for cancer patients if we move forward
with proposing adoption of these types
of measures for the Hospital IQR
Program in the future.
Comment: One commenter
recommended CMS consider a more
comprehensive approach to
measurement for end of life care and
advance care planning that is consistent
with the Institute of Medicine’s (IOM)
recommendations and sensitive to
patient preferences.
Response: We thank the commenter
for their suggestion and will consider
the National Academy of Medicine
(NAM’s) (formerly, the IOM)
recommendations 209 and the impact of
patient preferences should we move
forward with proposing to adopt the
End of Life cancer measures in the
Hospital IQR Program in the future.
We thank the commenters and we
will consider their views as we develop
future policy regarding the use of one or
more of these end-of-life measures in
the Hospital IQR Program.
c. Potential Inclusion of Two Nurse
Staffing Measures
sradovich on DSK3GMQ082PROD with RULES2
(1) Background
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20056 through
20059), we discussed the potential
inclusion of two nurse staffing measures
in the Hospital IQR Program. Nursing
care is a core service of hospitals, and
accordingly, hospital nurse staffing
practices are increasingly recognized as
a tool to improve the quality and value
of patient care.210 Studies have shown
there is a link between appropriate
nurse staffing and care quality and
patient outcomes. For example, the
AHRQ conducted a systematic review
and meta-analysis examining the
relationship between nurse staffing and
patient outcomes. The review of 96
studies, published between 1990 and
2006, found that increased nurse
staffing is associated with a reduction in
hospital-related mortality and adverse
patient events, such as respiratory
failure, cardiac arrest, and hospitalacquired conditions.211 A review of
studies examining the impact of nurse
staffing on hospital costs and patient
209 National Academy of Medicine Key Findings
and Recommendations available at: https://
www.nationalacademies.org/hmd/∼/media/Files/
Report%20Files/2014/EOL/Key%20Findings
%20and%20Recommendations.pdf.
210 Institute of Medicine. (2011). The future of
nursing: Leading change, advancing health.
Washington, DC: National Academies Press.
211 Kane, R.L., Shamliyan, T.A., Mueller, C.,
Duval, S., & Wilt, T.J. (2007). The association of
registered nurse staffing levels and patient
outcomes: systematic review and meta-analysis.
Medical Care, 45(12), 1195–1204.
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length of stay found that an increased
level of registered nurse (RN) staffing
may result in reduced patient length of
stay and hospital costs.212 Furthermore,
recent literature has demonstrated
appropriate nursing skill mix (including
licensure level and area of training for
specialty) and increased RN nursing
hours are associated with decreased
rates of patient falls, pressure ulcers,
urinary tract infections, and
bloodstream infections.213 214 215
We believe there is an opportunity for
hospitals to develop nurse staffing
strategies to improve quality and the
value of care. The inclusion of nurse
staffing measures in the Hospital IQR
Program would allow hospitals to assess
how their nurse staffing and skill mix
compare to similar hospitals and State
and national levels, as well as encourage
hospitals to develop optimal nurse
staffing plans that meet the needs of
their patients and improve quality of
care. Because of the important role of
nursing in providing high value care, we
sought public comment on including
two nurse staffing measures in the
Hospital IQR Program: (1) Skill Mix
(Registered Nurse [RN], Licensed
Vocational/Practical Nurse [LVN/LPN],
Unlicensed Assistive Personnel [UAP],
and Contract) (Nursing Skill Mix)
Measure (NQF #0204); and (2) Nursing
Hours per Patient Day Measure (NQF
#0205).
These two measures (Skill Mix
(Registered Nurse [RN], Licensed
Vocational/Practical Nurse [LVN/LPN],
Unlicensed Assistive Personnel [UAP],
and Contract) (Nursing Skill Mix)
Measure (NQF #0204) (MUCE0204) and
Nursing Hours per Patient Day Measure
(NQF #0205) (MUCEO205)), are
included in a publicly available
document entitled ‘‘Spreadsheet of MAP
2015 Final Recommendations,’’ which
212 Thungiaroenjul, P., Cummings, G.G.,
Embleton, A. (2007). The impact of nurse staffing
on hospital costs and patient length of stay: A
systematic review. Nursing Economics, 25(5).
213 Tzeng, H.-M., Titler, M.G., Ronis, D.L., & Yin,
C.-Y. (2012). The contribution of staff call light
response time to fall and injurious fall rates: an
exploratory study in four US hospitals using
archived hospital data. BMC Health Services
Research, 12, 84. Available at: https://doi.org/
10.1186/1472-6963-12-84.
214 Esparza, S.J., Zoller, J.S., White, A.W., &
Highfield, M.E.F. (2012). Nurse staffing and skill
mix patterns: Are there differences in outcomes?
Journal of Healthcare Risk Management: The
Journal of the American Society for Healthcare Risk
Management, 31(3), 14–23. Available at: https://
doi.org/10.1002/jhrm.20092.
215 Yang, P.-H., Hung, C.-H., Chen, Y.-M., Hu, C.Y., & Shieh, S.-L. (2012). The impact of different
nursing skill mix models on patient outcomes in a
respiratory care center. Worldviews on EvidenceBased Nursing/Sigma Theta Tau International,
Honor Society of Nursing, 9(4), 227–233. Available
at: https://doi.org/10.1111/j.1741-6787.2012.00246.x.
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is available on the NQF Web site.216
These measures address the NQS
priority of effective prevention and
treatment, and were reviewed by the
MAP in 2014. The MAP noted the need
for resolution of data issues, specifically
that hospitals participating in the
National Database of Nursing Quality
Indicators® (NDNQI®) program can have
their data directly shared with CMS
while those that do not currently
participate in that program have the
opportunity to send their data directly
to CMS. In addition, the MAP noted
that, at the time, there was no gold
standard for these measures, and thus it
is difficult to access relative
performance on these measures.217 The
final recommendation from that review
was to conditionally support the
inclusion of these measures, contingent
upon review and endorsement by the
NQF. We note these measures initially
obtained NQF endorsement on August
5, 2009, and after subsequent review by
the NQF for aggregation at the hospital
level, the measures retained their
endorsement as of December 10,
2015.218 Further, we note approximately
2,000 hospitals are already reporting
this information to the NDNQI®,219
founded by the American Nurses
Association (ANA).220 NDNQI® data are
not publicly reported.
We received a number of comments
applicable to both measures and will
respond to those first. A more detailed
discussion of each of the two measures,
along with comments and responses,
follows further below.
Comment: An overwhelming number
of commenters supported the proposed
future inclusion of the Nurse Staffing
measure set in the Hospital IQR
Program. The commenters stated that
nurses are critical to patient safety in
hospital settings and that inadequate
staffing is associated with increased
mortality and adverse events. The
commenters indicated that proper use of
support personnel improves workflow
and hospitals that invest in appropriate
216 Spreadsheet of MAP 2015 Final
Recommendations, available at: https://
www.qualityforum.org/ProjectMaterials.
aspx?projectID=75367.
217 MAP 2014–2015 Preliminary
Recommendations, available at: https://
www.qualityforum.org/ProjectMaterials.
aspx?projectID=75367.
218 NQF Measures Database, ‘‘Quality Positioning
System,’’ available at: https://www.qualityforum.org/
QPS/204 and https://www.qualityforum.org/QPS/
0205.
219 NDNQI® database is one of the nation’s largest
repositories of data on nurse-sensitive quality and
safety measure. Approximately 2000 hospitals
participate in the program.
220 Press Ganey Nursing Quality (NDNQI),
available at: https://www.pressganey.com/solutions/
clinical-quality/nursing-quality.
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nurse staffing and skill mix to meet the
needs of their patients will receive
higher ratings. The commenters also
noted that reporting these data is not
burdensome to hospitals, nurses, or
other clinicians because the information
is not being newly collected but rather,
newly reported. Further, the electronic
data collected for these measures is
already included in hospital databases,
as more than 2,000 hospitals in the U.S.
have already adopted these measures.
Finally, the commenters indicated the
measures are endorsed by the American
Nurses Association and the NQF, which
strengthens the argument for their
implementation in the Hospital IQR
Program.
Response: We thank the commenters
for their support. We are pleased to
learn that electronic data collection of
these measures is already widely in
effect, as increased electronic reporting
is an ongoing measurement goal for
CMS.
Comment: In addition to the support
received from stakeholders who
provided form letters, several additional
commenters supported the proposed
future inclusion of the nursing measure
set. These commenters noted that these
measures have been NQF-endorsed,
which is a positive testament to the
thoroughness of their reliability and
validity. The commenters stated that
skill mix is part of the formula for
appropriate staffing and that proper use
of support personnel improves nurses’
workflow, permitting nurses to fully
apply their professional knowledge and
skill. The commenters also noted that
better staffing results in better patient
care and that patients and their families
should have access to this data as tools
to make educated and informed care
decisions when selecting from
comparable hospitals. Further,
commenters noted that these measures
promote transparency, which empowers
patients.
Response: We thank the commenters
for their support. We recognize the
importance of transparency and nurse
staffing in the inpatient setting as it
relates to patient engagement and
quality of care.
Comment: A few commenters
particularly supported the provisions
that establish public reporting of the
two nurse staffing quality measures.
Currently, patients and their families
compare hospitals on several factors on
the Hospital Compare Web site, but they
are unable to access information on how
many nurses are staffing the unit to
which they may be admitted or the staff
skill mix, both of which ultimately
impact patient outcomes. The
commenters noted that public reporting
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would provide patients with
information on how prepared
comparable hospitals are to provide
high quality and safe care, because there
is a direct correlation between nurse
staffing, patient satisfaction,
readmissions, and adverse events. The
commenters urged CMS to consider
adding nurse staffing measures to the
Hospital Compare Web site to provide
greater transparency for patients and
their families.
Response: We thank the commenters
for their support, and share the
commenters’ opinion that public
reporting of these measures could better
equip patients to make more informed
decisions when selecting from
comparable hospitals. Transparency is a
facet of patient care that is often
overlooked and we will consider the
future inclusion of these nurse staffing
measures on the Hospital Compare Web
site, should we move forward with
proposing to adopt the nurse staffing
measures in the Hospital IQR Program
in the future.
Comment: One commenter supported
the future inclusion of the nursing
measures in the Hospital IQR Program if
the definitions continue to align with
National Database of Nursing Quality
Indicators.221 However, the commenter
noted the measures fail to reflect the
complexity of the patient population
and any staffing challenges in the local
environment (rural, labor supply, urban,
etc.). The commenter recommended
these measures not be linked to
payment (through the Hospital VBP
Program, for example) and that any
publication of these measures be
accompanied by explanations which
clarify for the reader that these are not
quality-of-care measures.
Response: We thank the commenter
for their support, and appreciate their
acknowledgement of other integral
components that help in the evaluation
of nursing care (that is patient
population complexity and staffing
challenges). These components are
elements that we will consider as we
continue to solicit feedback on clinical
quality measures that assess nurse
staffing practices. We disagree that these
are not quality of care measures. We
believe the potential future inclusion of
nurse staffing measures in the Hospital
IQR Program would allow hospitals to
assess how their nurse staffing and skill
mix compare to similar hospitals at the
State and national level, as well as
encourage hospitals to develop optimal
nurse staffing plans that meet the needs
221 National Database of Nurse Quality Indicators,
available at: https://www.pressganey.com/solutions/
clinical-quality/nursing-quality.
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of their patients and improve quality of
care. As such, there would be no need
to footnote publications of these
measures, as suggested by the
commenter. Should we move forward
with proposing to adopt these measures
for the Hospital IQR Program in the
future, we will consider the potential
benefit of linking these quality measures
to cost measures and/or linking them to
payment (via the Hospital VBP Program,
for example).
Comment: Some commenters
expressed concerns regarding the nurse
staffing measures. Specifically, the
commenters noted that the generalist
ideology expected by hospital
administration for its nursing staff,
when specialty care nursing is often best
for patient care, could be problematic.
Further, staffing should not only
encompass proper numbers but should
also encompass nursing proficiency,
education, and work environment. The
commenters suggested that CMS
conduct additional testing to ensure
there are not unintended consequences
associated with making information on
the nurse staffing measures available to
consumers. The commenters also
suggested that CMS should develop a
simple metric that can be understood by
consumers and is associated with care
outcomes. Lastly, other commenters
suggested CMS explore simpler metrics
that are meaningful to consumers.
Response: We acknowledge the
commenters’ concerns. In our continued
efforts to solicit clinical quality
measures that assess nurse staffing
practices, we will consider additional
factors (that is nurse education and
work environment) that influence an
appropriate nurse staffing plan as we
continue to review these measures for
future use in the Hospital IQR Program.
While we understand the importance of
developing a metric that is easily
understood by consumers, we want to
ensure that such a metric would
adequately convey the impact of the
varying facets that contribute to the
quality of patient care, in the context of
nurse staffing. We believe that to
provide comprehensive quality nursing
care, and to avoid unintended
consequences, there should be multiple
metrics that assess nurse staffing in the
Hospital IQR Program. Accordingly, we
will continue to consider additional
factors that the measure steward may
determine to be appropriate to include
in this measure and be vigilant about
potential unintended consequences
associated with sharing nursing staffing
information with consumers.
Comment: Some commenters did not
support future inclusion of the nurse
staffing measures in the Hospital IQR
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Program, indicating these measures are
already collected and used locally for
quality improvement, thus, there would
be no added value to reporting these
measures on a national level. In
addition, commenters stated that
manual web-based submission causes
undue burden in the form of labor
resources to enter the data, as hospitals
are duplicating the effort by submitting
to NDNQI and CMS. Further, the
commenters suggested that the
administrative burden of frequent
reporting far exceeds its value, as
quarterly reporting warrants
susceptibility to inaccurate data. The
commenters also expressed disapproval
of the American Nurses Association’s
dismissal of LPNs and LVNs as
members of the nursing staff. The
commenters recommended considering
inclusion of this subset of nurses as a
way of using all available resources in
provision and delivery of patient care.
Response: We appreciate the
commenters sharing their concerns. We
believe there is an opportunity for
hospitals to develop nurse staffing
strategies to improve quality and the
value of care, and that future inclusion
of nurse staffing measures in the
Hospital IQR Program would allow
hospitals to assess how their nurse
staffing and skill mix compare to similar
hospitals at the State and national level,
as well as encourage hospitals to
develop optimal nurse staffing plans
that meet the needs of their patients and
improve quality of care. We also note
numerous studies have demonstrated
that increased nurse staffing is
associated with a reduction in hospitalrelated mortality and adverse patient
events.222 We recognize that adding new
measures to for the Hospital IQR
Program could increase administrative
and reporting burden for hospitals;
however, as with any potential new
measure, we would weigh the benefits
of the measure with the burden. We
note according to the public comments
received, there are already over 2,000
hospitals nationwide that are reporting
these measures. We also note that the
Skill Mix measure includes LPNs and
LVNs as members of the nursing staff.
This measure acknowledges the
contributions of all members of the
nursing team, but notes that differing
levels of education and skill need to be
considered when making staffing
decisions for individual units.
We thank the commenters, and we
will consider their views as we develop
222 Safe Staffing Literature Review from the
American Nurses Association. March 2017.
Available at: https://www.nursingworld.org/
SafeStaffing-LiteratureReview.
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future policy regarding use of the nurse
staffing measures in the Hospital IQR
Program.
(2) Skill Mix (Registered Nurse [RN],
Licensed Vocational/Practical Nurse
[LVN/LPN], Unlicensed Assistive
Personnel [UAP], and Contract)
(Nursing Skill Mix) Measure (NQF
#0204)
(a) Overview of Measure
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20057 through
20058), we discussed the potential use
of the Skill Mix (Registered Nurse [RN],
Licensed Vocational/Practical Nurse
[LVN/LPN], Unlicensed Assistive
Personnel [UAP], and Contract)
(Nursing Skill Mix) Measure (NQF
#0204) in the Hospital IQR Program.
The NQF-endorsed Nursing Skill Mix
measure assesses the percentage of
productive nursing care hours worked
by nursing staff with direct patient care
responsibilities for each nursing
licensure category (RN, LPN/LVN, and
UAP) and staff employment status
(contract/agency versus hospital
employee), by eligible hospital unit. The
intent of this measure is to enable
hospitals to track and assess their
nursing skill mix, given that research
demonstrates a relationship between
skill mix and certain quality
outcomes.223
The measure focuses on the structure
of care quality and includes the skill
mix for adult and pediatric medicalsurgical hospital units. Medical-surgical
hospital units include hospitals areas
for the evaluation of patients with
medical and/or surgical conditions.
Eligible adult and pediatric medicalsurgical units can be mapped to the
CDC’s National Healthcare Safety
Network (NHSN) Healthcare Service
locations codes as defined in the NHSN
Patient Safety Component Manual.224
Additional unit types, such as adult and
pediatric critical-care, step-down,
medical, and surgical units could be
included in the future. At this time, we
believe limiting the measure to adult
and pediatric medical-surgical units
would allow hospitals to become
accustomed to collecting and reporting
staffing data while also providing
important staffing information to
consumers. However, we sought public
comment on how many inpatient units
223 Kane, R.L., Shamliyan, T.A., Mueller, C.,
Duval, S., & Wilt, T.J. (2007). The association of
registered nurse staffing levels and patient
outcomes: systematic review and meta-analysis.
Medical Care, 45(12), 1195–1204.
224 NHSN Patient Safety Component Manual
https://www.cdc.gov/nhsn/about-nhsn/
[under ‘‘Related Links’’].
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to include and which units should be
prioritized.
Productive nursing care hours are
defined as the hours worked by nursing
staff (RN, LPN/LVN, and UAP) with
direct patient care responsibilities,
including unbudgeted overtime or
scheduled hours. Direct patient care
responsibilities are nursing activities
performed by unit-based staff in the
presence of the patients and activities
that occur away from the patient that are
patient related, such as the following:
• Medication administration
• Nursing treatments
• Nursing rounds
• Admission, transfer, and discharge
activities
• Patient education
• Patient communication
• Coordination of patient care
• Documentation time
• Treatment planning
• Patient screening and assessment
Unlicensed assistive personnel (UAP)
are defined as individuals trained to
function in an assistive role to nursing
in the provision of patient care, as
delegated by and under the supervision
of a registered nurse. UAPs include
nursing assistants, patient care
technicians/assistants, and graduate
nurses not yet licensed who have
completed orientations.
The measure includes: All nursing
staff employed by the hospital;
temporary staff who are not employed
by the hospital (contract or agency); and
float staff who are hospital employees
temporarily assigned to provide direct
patient care on an eligible unit other
than their usual unit of employment.
(b) Data Source
Data collection for this structural
measure would occur quarterly for each
eligible unit from January 1 through
December 31 of each calendar year, with
data submission occurring 4.5 months
after the end of each reporting quarter.
An eligible unit must be open, with
patients present, at least one month
during the reporting period to be
included. These data would be collected
via a web-based tool available on the
QualityNet Web site.
(c) Measure Calculation
For staff with direct patient care
responsibilities, the measure assesses
the percentage of total productive
nursing hours worked by either
employee or contract RNs, LPN/LVNs,
and UAPs, as well as at the percentage
of total productive nursing hours
worked for contract or agency staff.
Accordingly, four rates (percentages) are
determined for each eligible hospital
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unit, one for each type of nursing staff,
and one for contract and agency nursing
staff. The four separate rates are as
follows: (1) RN hours—Productive
nursing care hours worked by RNs
(employee and contract) with direct
patient care responsibilities for each
eligible inpatient unit/the total number
of productive hours worked by
employee or contract nursing staff with
direct patient care responsibilities (RN,
LPN/LVN, and UAP) for each eligible
inpatient unit; (2) LPN/LVN hours—
Productive nursing care hours worked
by LPNs/LVNs (employee and contract)
with direct patient care responsibilities
for each eligible inpatient unit/the total
number of productive hours worked by
hospital employee or contract nursing
staff with direct patient care
responsibilities (RN, LPN/LVN, and
UAP) for each eligible inpatient unit; (3)
UAP hours—Productive nursing care
hours worked by UAP (employee and
contract) with direct patient care
responsibilities for each eligible
inpatient unit/the total number of
productive hours worked by hospital
employee or contract nursing staff with
direct patient care responsibilities (RN,
LPN/LVN, and UAP) for each eligible
inpatient unit; and (4) Contract or
agency hours—Productive nursing care
hours worked by contract or agency staff
nursing staff (RN, LPN/LVN, and UAP)
with direct patient care responsibilities
for each eligible inpatient unit/the total
number of productive hours worked by
employee or contract nursing staff with
direct patient care responsibilities (RN,
LPN/LVN, and UAP) for each eligible
inpatient unit. The data collected and
the rates calculated are aggregate
nursing care hours worked by each
licensure category, by unit type.
Hospital rates are weighted for patient
volume (patient days) to account for
differences in unit sizes.
(d) Cohort
Hospital employee, contract, or
agency RNs, LPN/LVNs, and UAPs with
direct patient care responsibilities are
included in the numerator and
denominator statements. The measure
numerator and denominator include
nursing staff assigned to the eligible unit
who have direct patient care
responsibilities for greater than 50
percent of their shift who are counted in
an eligible unit’s staffing matrix, are
replaced if they call in sick, and whose
work hours are charged to the unit’s cost
center. The measure numerator and
denominator exclude the following:
Nursing staff with no direct patient care
responsibilities whose primary
responsibility is administrative in
nature; specialty teams (for example,
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wound care), patient educators, or case
managers who are not assigned to a
specific unit; unit clerks, monitor
technicians, and secretaries with no
direct patient care responsibilities;
sitters not providing routine UAP
activities; therapy assistants; student
nurses fulfilling educational
requirements; and nursing staff
undergoing orientation who are not
included in the eligible units staffing
matrix. For more information regarding
the Nursing Skill Mix measure, we refer
readers to the NQF measure information
page available at: https://
www.qualityforum.org/QPS/0204.
We invited public comment on the
future inclusion of the Skill Mix
(Registered Nurse [RN], Licensed
Vocational/Practical Nurse [LVN/LPN],
Unlicensed Assistive Personnel [UAP],
and Contract) (Nursing Skill Mix)
measure for the Hospital IQR Program.
Specifically, we sought public
comments on narrowing the number of
hospital units included in the measures’
calculation, which units we should
consider for inclusion, and the burden
of data collection on hospitals.
Comment: One commenter requested
that CMS evaluate the Nursing Skill Mix
measure against the ever-increasing
pressure of reimbursement reductions
from CMS and other payers who follow
the CMS example. The commenter
noted that the metric of two events
seems counterproductive and that
increased skill mix and staffing ratios
will increase costs to the organization at
the same time reductions in
reimbursements will not allow for
additional funds to support this need.
As such, the commenter suggested that
where facilities can meet/exceed the
best practice measure, an incentive be
provided so that funding could continue
to support this measure as opposed to
negatively impacting organizations
trying to meet the needs of the patients
through increased skill mix and staffing
levels.
Response: We acknowledge the
commenter’s concern about costs
associated with increased skill mix and
staffing ratios and will take that under
consideration; however, existing
research shows improved patient
outcomes when the nursing skill mix
and number of RN hours are appropriate
for the level of care on the individual
unit.225 We appreciate the need to
balance long-term and short-term
considerations with respect to nurse
staffing decisions. We note the potential
225 Safe Staffing Literature Review from the
American Nurses Association. March 2017.
Available at: https://www.nursingworld.org/
SafeStaffing-LiteratureReview.
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long-term benefits of the improved
outcomes and reduction in adverse
events may outweigh the potential short
term goal of decreasing the immediate
costs of appropriate staffing ratios and
skill mix.
We thank the commenter, and we will
consider their views as we develop
future policy regarding the future
inclusion of the Skill Mix (Registered
Nurse [RN], Licensed Vocational/
Practical Nurse [LVN/LPN], Unlicensed
Assistive Personnel [UAP], and
Contract) (Nursing Skill Mix) measure
in the Hospital IQR Program.
(3) Nursing Hours per Patient Day
Measure (NQF #0205)
(a) Overview of Measure
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20058 through
20059), we discussed the potential use
of the Nursing Hours per Patient Day
Measure (NQF #0205) in the Hospital
IQR Program. The NQF-endorsed
Nursing Hours per Patient Day measure
assesses the number of productive hours
worked by both RNs and all nursing
staff (RN, LPN/LVN, and UAP) with
direct patient care responsibilities per
patient day, by eligible hospital
inpatient unit. The intent of this
measure is to enable hospitals to track
and assess the ratio of hours worked by
nursing staff per patient day, given that
research demonstrates a relationship
between increased nursing hours and
certain quality outcomes.
The measure focuses on the structure
of care quality and includes Nursing
Hours per Patient Day for eligible adult
and pediatric medical-surgical inpatient
hospital units. Medical-surgical hospital
units include hospitals areas for the
evaluation of patients with medical and/
or surgical conditions. Eligible adult
and pediatric medical-surgical units can
be mapped to the CDC’s National
Healthcare Safety Network (NHSN)
Healthcare Service locations codes as
defined in the NHSN Patient Safety
Component Manual. Similar to the
Nursing Skill Mix Measure, additional
unit types, such as adult and pediatric
critical-care, step-down, medical, and
surgical units could be included, but at
this time, we believe limiting the
measure to adult and pediatric medicalsurgical units would allow hospitals to
become accustomed to collecting and
reporting staffing data while also
providing important staffing
information to consumers. However, we
sought comment on how many inpatient
units to include and which units should
be prioritized.
Productive hours are defined as the
hours worked by nursing staff (RN,
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LPN/LVN, and UAP) with direct patient
care responsibilities, including
overtime, not budgeted, or scheduled
hours. Direct patient care
responsibilities are nursing activities
performed by unit-based staff in the
presence of the patients and activities
that occur away from the patient that are
patient related, such as the following:
• Medication administration
• Nursing treatments
• Nursing rounds
• Admission, transfer, and discharge
activities
• Patient education
• Patient communication
• Coordination of patient care
• Documentation time
• Treatment planning
• Patient screening and assessment
UAP are individuals trained to
function in an assistive role to nursing
staff in the provision of patient care, as
delegated by and under the supervision
of a registered nurse. UAPs include
nursing assistants, patient care
technicians/assistants, and graduate
nurses not yet licensed who have
completed orientations.
The measure includes all nursing staff
employed by the hospital; temporary
staff who are not employed by the
hospital (contract or agency); and float
staff who are hospital employees
temporarily assigned to provide direct
patient care on an eligible unit other
than their usual unit of employment.
(b) Data Source
Data collection for this structural
measure for hospitals occurs quarterly,
for each eligible unit, from January 1
through December 31 of each calendar
year, with data submission occurring 4.5
months after the end of each reporting
quarter. These data would be collected
via a web-based tool available on the
QualityNet Web site.
sradovich on DSK3GMQ082PROD with RULES2
(c) Measure Calculation
For staff with direct patient care
responsibilities, the measure assesses
the number of productive hours per
patient day worked by both RNs and by
total nursing staff (RNs, LPN/LVNs, and
UAPs). Accordingly, two rates are
determined for each eligible hospital
unit. The two separate rates are as
follows: (1) RN hours per patient day—
Total number of productive hours
worked by RN nursing staff (contract
and hospital employee) with direct
patient care responsibilities for each
eligible inpatient unit/total number of
patient days for each eligible inpatient
unit; and (2) Total nursing care hours
per patient day—Total number of
productive hours worked by RN, LPN/
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LVN, and UAP nursing staff (contract
and employee) with direct patient care
responsibilities for each eligible
inpatient unit/total number of patient
days for each eligible inpatient unit.
Patient days must be from the same unit
in which nursing care hours are
reported. The data collected and the
rates calculated are aggregate nursing
hours per patient day, by unit type.
Hospital rates are weighted for patient
volume (patient days) to account for
differences in unit sizes.
(d) Cohort
RNs, LPN/LVNs, and UAPs with
direct patient care responsibilities are
included in the numerator and
denominator statement. The measure
numerator includes nursing staff
assigned to the eligible inpatient unit
who have direct patient care
responsibilities for greater than 50
percent of their shift, who are counted
in an eligible unit’s staffing matrix, are
replaced if they call in sick, and work
hours are charted to the unit’s cost
center. The numerator excludes the
following: Nursing staff with no direct
patient care responsibilities whose
primary responsibility is administrative
in nature; specialty teams (for example,
wound care), patient educators, or case
managers who are not assigned to a
specific unit; unit clerks, monitor
technicians, and secretaries with no
direct patient care responsibilities;
sitters not providing routine UAP
activities; therapy assistants; student
nurses fulfilling educational
requirements; and nursing staff
undergoing orientation who are not
included in the eligible units staffing
matrix. The measure denominator
excludes patient days from ineligible
units. For more information regarding
the Nursing Hours Per Day measure, we
refer readers to the National Quality
Forum measure information page
available at: https://
www.qualityforum.org/QPS/0205.
We invited public comment on the
possible future inclusion of the Nursing
Hours per Patient Day measure for the
Hospital IQR Program. Specifically, we
sought comments on narrowing the
number of hospital units included in the
measures’ calculation, which units we
should consider for inclusion, and the
burden of data collection on hospitals.
Comment: One commenter cautioned
CMS that the complexity involved in
determining the hours and staffing for
the Nursing Hours Per Patient Days
measure could be burdensome for the
organizations. Further, the commenter
stated that if the intent is to evaluate the
impact of increased staffing in areas
with respect to quality outcomes, it
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38375
would seem more appropriate for an
organization to provide the total number
of patient days for a given unit
(denominator) divided into the total
hours (as categorized by the 4 groups
noted) of staffing on that unit. The
commenter suggested that this may be a
simpler, less burdensome approach that
would provide a better indication of the
total number of hours that are dedicated
to patient care in a given unit. In
addition, another commenter stated that
the management and oversight of the
reporting has an element of burden and
time commitment that is not easily
supported in today’s health care
environment in which resources should
be focused on the care of the patient.
Response: We appreciate the
commenter’s feedback, and will
consider the suggested approach on how
to calculate nursing hours per patient
day. It is our intent to promote
improved quality of care in the least
burdensome manner possible. This
measure is not meant to simply increase
RN staffing in the areas evaluated in the
measure, but also to evaluate the
number of hours provided to patients by
RNs as related to patient care
requirements and whether the current
staffing mix is appropriate. Studies have
demonstrated improved outcomes
especially in complex patients when the
nursing provider is an RN versus an
LPN/LVN or UAP.226
Comment: One commenter did not
support the future inclusion of the
Nursing Hours per Patient Day measure
in the Hospital IQR Program, citing a
concern that nurse staffing levels are
influenced by a variety of factors that,
in varying combinations, could
influence patient care outcomes and
may or may not be reflected in RN
Hours Per Patient Day (RN HPPD). The
commenter noted when nurse staffing is
examined in the nursing research
literature, no evidence exists that
identifies a nurse staffing configuration
or a process to use when making staffing
decisions. The commenter believed that
staffing decisions that influence RN
HPPD need to be based on evidence,
including patient need, the education
and skill level of staff, the geography
and size of units, the availability of
technology and support staff, and
multiple other factors. The commenter
noted their belief that one of the most
effective ways to attain superior patient
outcomes and enhance nurse
satisfaction is for nurse leaders and
nursing staff to openly and continually
communicate, assess, plan, execute, and
evaluate strategies used in the provision
of patient care.
226 Ibid.
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Response: We acknowledge the
commenter’s concerns. We recognize
the importance of having an evidence
base, rooted in empirical data, to
support any clinical quality measure
implemented in the Hospital IQR
Program. We also understand that there
are numerous factors that contribute to
the overall quality of nursing care. At
this time, we are interested in the
impact and effects of skill mix and
nursing hours per patient on quality of
nursing care, and we will consider
additional quality metrics that examine
nursing care using different factors in
the future. We agree that attaining
superior patient outcomes and
enhanced nurse satisfaction could be
achieved through enhanced
communication and the execution of
‘‘best practice’’ strategies in the
provision of patient care; however, we
are also concerned about the limitations
placed on nurse managers and nursing
staff when the hospital administration
does not provide the available resources
to adjust the staffing mix as appropriate
for optimal patient care and positive
outcomes. We refer readers to the
American Nurses Association’s
literature review 227 of evidence to
identify the proper nurse staffing
configuration and/or process to use
when making staffing decisions.
Comment: One commenter noted that
publicly reported RN HPPD to the lay
person or a regulating body does not
facilitate comparisons that are relevant
and meaningful.
Response: We believe that publicly
reporting RN hours per patient day,
coupled with the existing evidence that
shows improvement in patient and
nurse outcomes, based on workplace
environment 228 could be useful for the
lay person and regulating bodies to
make meaningful and relevant hospital
comparisons.
We thank the commenters and we
will take these comments into
consideration if we propose to adopt the
Nursing Hours per Patient Day Measure
(NQF #0205) in the future.
d. Potential Inclusion of Additional
Electronic Clinical Quality Measures
(eCQMs) in the Hospital IQR and
Medicare and Medicaid EHR Incentive
Programs
As we previously indicated in the FY
2013 IPPS/LTCH PPS final rule, EHR
technology continues to evolve and
additional infrastructure is being put in
place to afford us the capacity to accept
enhanced electronic reporting of many
of the clinical chart-abstracted measures
that are currently part of the Hospital
IQR Program (77 FR 53534). We
continue to believe that electronic
reporting of quality measure data
derived from the EHR will, in the long
run, reduce the burden on hospitals to
collect and submit data for the Hospital
IQR Program.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20059 through
20064), in keeping with this goal, we
solicited feedback on the potential
inclusion of additional eCQMs in the
Hospital IQR and Medicare and
Medicaid EHR Incentive Programs.
These measures assess opioid
prescribing practices, malnutrition,
tobacco use, and substance use among
the adult, inpatient population. As we
continue to advance electronic
reporting, we want to ensure that we
provide hospitals with a robust
selection of eCQMs. As we state in
section IX.A.8. of the preamble of this
final rule, hospitals have expressed
concerns with identifying applicable
measures that reflect their patient
population; thus, we believe that the
addition of new eCQMs in the future
will offer more clinically relevant
eCQMs with meaningful data that will
help drive quality improvement.
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57116 through 57120), we
removed 13 eCQMs from the Hospital
IQR Program measure set, beginning
with the CY 2017 reporting period/FY
2019 payment determination, in order to
enable hospitals to focus on a smaller,
more specific subset of eCQMs. In that
same rule, we indicated that we are
considering behavioral health measures
for inclusion in the Hospital IQR
Program to address an important gap in
understanding the quality of care given
to inpatient psychiatric patients treated
in the acute care hospital setting rather
than a distinct psychiatric unit or IPF
(81 FR 57166 through 51767). The
future inclusion of measures assessing
opioid prescribing practices, tobacco
use, and substance use will help to
inform how we can improve the quality
of care in these clinical domains, and
help to fill this identified gap area. The
table below lists the eCQMs being
considered for future inclusion in the
Hospital IQR and Medicare and
Medicaid EHR Incentive Programs and
for which we sought public feedback.
ELECTRONIC CLINICAL QUALITY MEASURES (ECQMS) FOR FUTURE CONSIDERATION IN THE HOSPITAL IQR AND MEDICARE
AND MEDICAID EHR INCENTIVE PROGRAMS
Measure name
NQF #
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Safe Use of Opioids—Concurrent Prescribing ....................................................................................................................................
Completion of a Malnutrition Screening within 24 Hours of Admission ..............................................................................................
Completion of a Nutrition Assessment for Patients Identified as At-Risk for Malnutrition within 24 Hours of a Malnutrition Screening .....................................................................................................................................................................................................
Nutrition Care Plan for Patients Identified as Malnourished after a Completed Nutrition Assessment .............................................
Appropriate Documentation of a Malnutrition Diagnosis .....................................................................................................................
Tobacco Use Screening (TOB–1) .......................................................................................................................................................
Tobacco Use Treatment Provided or Offered (TOB–2)/Tobacco Use Treatment (TOB–2a) .............................................................
Tobacco Use Treatment Provided or Offered at Discharge (TOB–3)/Tobacco Use Treatment at Discharge (TOB–3a) ..................
Alcohol Use Screening (SUB–1) .........................................................................................................................................................
Alcohol Use Brief Intervention Provided or Offered (SUB–2)/Alcohol Use Brief Intervention (SUB–2a) ...........................................
Alcohol & Other Drug Use Disorder Treatment Provided or Offered at Discharge (SUB–3)/Alcohol & Other Drug Use Disorder
Treatment at Discharge (SUB–3a) ..................................................................................................................................................
227 Ibid.
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228 Ibid.
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(1) Safe Use of Opioids-Concurrent
Prescribing Measure
(a) Background
Unintended opioid overdose fatalities
have reached epidemic proportions in
the last 20 years and are a major public
health concern in the United States.229
Reducing the number of unintended
opioid overdoses has become a priority
for numerous HHS agencies. Concurrent
prescriptions of opioids or opioids and
benzodiazepines put patients at greater
risk of unintended opioid overdose due
to increased risk of respiratory
depression.230 231 Despite this risk,
studies of multiple claims and
prescription databases have shown that
between 5 to 15 percent of patients
receive concurrent opioid prescriptions,
and 5 to 20 percent of patients receive
concurrent opioid and benzodiazepine
prescriptions across various
settings.232 233 234 In addition, an
analysis of more than 1 million hospital
admissions in the United States found
that over 43 percent of all patients with
nonsurgical admissions were exposed to
multiple opioids during their
hospitalization.235
sradovich on DSK3GMQ082PROD with RULES2
(b) Overview of Measure
The Safe Use of Opioids—Concurrent
Prescribing (MUC16–167) measure
assesses patients (excluding cancer
229 Rudd, R., Aleshire, N., Zibbell, J., et al.
‘‘Increases in Drug and Opioid Overdose Deaths—
United States, 2000–2014.’’ MMWR, Jan 2016.
64(50);1378–82 https://www.cdc.gov/mmwr/preview/
mmwrhtml/mm6450a3.htm.
230 Dowell, D., Haegerich, T., Chou, R. ‘‘CDC
Guideline for Prescribing Opioids for Chronic
Pain—United States, 2016.’’ MMWR Recomm Rep
2016;65. Available at: https://www.cdc.gov/media/
dpk/2016/dpk-opioid-prescription-guidelines.html.
231 Jena, A., et al. ‘‘Opioid prescribing by multiple
providers in Medicare: retrospective observational
study of insurance claims,’’ BMJ 2014; 348:g1393
doi: 10.1136/bmj.g1393. Available at: https://
www.bmj.com/content/348/bmj.g1393.
232 Liu, Y., Logan, J., Paulozzi, L., et al. ‘‘Potential
Misuse and Inappropriate Prescription Practices
Involving Opioid Analgesics.’’ Am J Manag Care.
2013 Aug;19(8):648–65. Available at: https://
www.ajmc.com/journals/issue/2013/2013-1-vol19n8/Potential-Misuse-and-InappropriatePrescription-Practices-Involving-OpioidAnalgesics/.
233 Mack, K., Zhang, K., et al. ‘‘Prescription
Practices involving Opioid Analgesics among
Americans with Medicaid, 2010,’’ J Health Care
Poor Underserved. 2015 Feb; 26(1): 182–198.
Available at: https://www.ncbi.nlm.nih.gov/pmc/
articles/PMC4365785/.
234 Park, T., et al. ‘‘Benzodiazepine Prescribing
Patterns and Deaths from Drug Overdose among US
Veterans Receiving Opioid Analgesics: Case-cohort
Study,’’ BMJ 2015; 350:h2698. Available at: https://
www.bmj.com/content/350/bmj.h2698.
235 Herzig, S., Rothberg, M., Cheung, M., et al.
‘‘Opioid utilization and opioid-related adverse
events in nonsurgical patients in US hospitals.’’
Nov 2013. DOI: 10.1002/jhm.2102. Available at:
https://onlinelibrary.wiley.com/doi/10.1002/
jhm.2102/abstract.
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23:27 Aug 11, 2017
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patients or patients receiving palliative
care), ages 18 years and older with
active, concurrent prescriptions for
opioids, or opioids and
benzodiazepines, at discharge.236 This
measure addresses the following NQS
priorities: (1) Making care safer by
reducing harm caused in the delivery of
care; (2) promoting effective
communication and coordination of
care; and (3) promoting the most
effective prevention and treatment
practices for the leading causes of
mortality, starting with cardiovascular
disease.
This measure was reviewed by the
MAP in December 2016 and received
the recommendation to refine and
resubmit for consideration for
programmatic inclusion. MAP
stakeholders acknowledged the
significant health risks associated with
concurrent prescribing of opioids, and
opioids and benzodiazepines, but
expressed concern with the measure
specifications, indicating the need for a
stronger evidence base for clinical
guidelines and refinement of the
measure exclusions to reduce the risk of
unintended consequences.237
Additional information on this
measure can be found in the 2016
Measures Under Consideration
Spreadsheet, available at: https://
www.qualityforum.org/
ProjectMaterials.aspx?projectID=75367.
We invited public comment on the
possible future inclusion of this opioid
prescribing measure in the Hospital IQR
Program.
Comment: Some commenters
supported the future inclusion of the
Safe Use of Opioids measure in the
Hospital IQR Program. The commenters
believed that there is a need for
measures that assess opioid follow-up,
prescription, and appropriate
prescribing, even though there are times
when concurrent prescriptions of
opioids and benzodiazepines are
appropriate. There are studies that
demonstrate that chronic pain patients
are unlikely to become addicts or abuse
their medication. Further, the addition
of this measure would encourage
appropriate pain management practices
by providers and patients. In addition,
commenters noted that adopting a
measure that calculates the proportion
of patients prescribed two or more
different opioids or opioids and
benzodiazepines concurrently has the
potential to reduce preventable
236 2016 Measures Under Consideration List
(PDF), available at: https://www.qualityforum.org/
ProjectMaterials.aspx?projectID=75367.
237 ‘‘2017 Considerations for Implementing
Measures Hospitals-Final Report,’’ available at:
https://www.qualityforum.org/map/.
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38377
mortality and reduce the costs
associated with adverse events. The
commenters encouraged CMS to
consider policies that promote
alternatives to opioids for pain
management, arguing that prescription
opioids are often prescribed in the
absence of affordable alternatives. The
commenters also urged CMS to take an
active role in educating prescribers
about alternatives such as exercise,
mindfulness, over-the-counter
medications, etc. Lastly, the
commenters suggested that
implementation of a system that flags
the surveys of frequent opioid users
could be used to prevent addicts
skewing hospital scores.
Response: We thank the commenters
for their support. We understand the
importance of provider education and
will work towards including ‘‘best
practices’’ for prescription protocols and
opioid alternatives in our education and
outreach efforts. We appreciate the
commenters’ suggestion of a survey
monitoring system and will consult
with the appropriate technological
entities to discuss the impact on
existing workflows and infrastructure,
and the feasibility of implementing such
a system. In addition, we will consider
the commenters’ suggestion to establish
policies that promote alternatives to
opioids for pain management in the
future.
Comment: Many commenters
indicated that they would support the
future inclusion of the Safe Use of
Opioids measure in the Hospital IQR
Program measure set if CMS refined the
measure in response to stakeholder
feedback and if the measure obtained
NQF endorsement. In addition, the
commenter recommended that CMS
prioritize the development and adoption
of measures designed to improve
identification of, and intervention with,
patients at risk for developing a
substance abuse disorder. Lastly,
commenters advised CMS to consider
the variation in States’ prescribing
requirements, citing concern that these
differences may make the measure more
complex and that in some cases, as
determined by the physician, it can be
appropriate for a patient to have
multiple prescriptions.
Response: We thank the commenters
for their support. We agree that the
development and adoption of measures
designed to improve identification of,
and intervention with, patients at risk
for developing a substance abuse
disorder is valuable. We will continue
to assess our measure set in alignment
with our evolving programmatic goals to
ensure we prioritize certain clinical
topical areas appropriately. We
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understand that NQF-endorsement
lends credibility to quality measures,
and we recognize that variation in State
prescribing practices could affect the
data extrapolated from hospitals that
report on this measure. We will
consider both of these factors, as well as
the provided stakeholder feedback on
suggested measure refinements, should
we propose to adopt this measure in the
Hospital IQR Program in the future.
Comment: A few commenters
supported the future inclusion of a
measure that assesses opioid prescribing
patterns, specifically for patients
already using an opioid or patients
using benzodiazepine. However,
commenters expressed concern that the
‘‘Safe Use of Opioids’’ measure may
introduce unintended consequences,
such as under treatment of pain and
placing undue accountability on acute
settings for long-term pain management.
Other commenters indicated that due to
existing infrastructure deficiencies, the
adoption of this measure would place
unnecessary burden related to
accountability upon acute care facilities.
Some commenters stated that inclusion
of this measure could encourage antiopioid sentiments to irrational extremes.
A few commenters noted that there are
circumstances in which it may be
appropriate for patients to be treated
concurrently with opioids and
recommended that the measure
provides for the exclusion of cases in
which polypharmacy may be warranted.
Response: We thank the commenters
for their support. We recognize the
heightened sensitivity associated with
opioid prescribing. We understand that
there are existing operational and
technological infrastructure hurdles that
should be addressed to reduce the
burden associated with electronically
extrapolating data for this measure. We
acknowledge that concurrent
prescribing is appropriate in certain
situations. We also note the intent of the
measure is to raise prescriber awareness,
when and if the patient requires
concurrent prescriptions, and to take
appropriate steps to provide education
regarding potential side effects and
alternative pain management techniques
to the patient, in an effort to reduce
adverse side effects and potentially
prevent dependence. Should we decide
to move forward with proposing to
adopt this measure in the Hospital IQR
Program in the future, we will be
vigilant about potential unintended
consequences, such as under treatment
of pain and undue accountability based
on care setting. We also note that the
intent of any future inclusion of this
measure in the Hospital IQR Program
would not be to stigmatize the use of
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opioids, but to evaluate through quality
measurement adherence to clinical
standards that could help improve
prescribing practices for these drugs and
combat current misuse.
Comment: One commenter supported
the future inclusion of all the eCQMs we
sought public comment for future
inclusion in the Hospital IQR Program,
including the Safe Use of Opioids
measure, noting that the addition of
these measures would give hospitals
more options in selecting eCQMs that
are applicable to their patient
populations.
Response: We thank the commenter
for their support.
Comment: Some commenters did not
support the proposed future inclusion of
the Safe Use of Opioids measure in the
Hospital IQR Program. The commenters
stated that the measure lacks sensitivity
to the needs of the specific patient (that
is, adequate patient education).
Specifically, the commenters also
expressed that until all facilities,
vendors, and pharmacies are required to
implement ePrescribing of controlled
substances, and given ample
development, testing, and
implementation time, there is a risk of
prescriptions not being included in data
transfer systems (that is, Sure Scripts,
Dr. First, etc.). The commenters noted
that these circumstances would allow
for continued risks associated with
overdose due to lack of information.
Response: We appreciate the
commenters’ concerns. We recognize
the heightened sensitivity associated
with opioid prescribing given the
current opioid epidemic in our nation.
We note again that the intent of the
measure is not to completely eliminate
concurrent prescriptions, but rather to
raise provider awareness of appropriate
prescribing practices and provide both
education and alternative treatments to
patients. In addition, we will monitor
the impact of ePrescribing on
streamlining hospital workflows as a
part of efforts to better assess how to
reduce the risk of overdose. Should we
decide to move forward with proposing
to adopt this measure in the Hospital
IQR Program in the future, we will
consider the impact of adequate patient
education on the measure results as well
as potential unintended consequences,
such as patient overdose.
We thank the commenters, and we
will consider their views as we develop
future policy regarding the use of an
eCQM version of the Safe Use of
Opioids—Concurrent Prescribing
(MUC16–167) measure in the Hospital
IQR Program.
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(2) Malnutrition Measures
(a) Background
Malnutrition is associated with many
adverse outcomes including depression
of the immune system, impaired wound
healing, muscle wasting, and increased
mortality.238 239 Patients who are
malnourished during a hospital stay
have an increased risk of complications,
readmissions, and length of stay. In
addition, evidence demonstrates an
association between malnutrition risk
and increased inpatient costs. One study
found that patients identified with
under-nutrition risk and high undernutrition risk experience increased costs
by 28.8 percent and 21.1 percent,
respectively, when compared to nonmalnourished patients.240 Malnutrition
risk screening, using a validated
screening tool, can be useful in
predicting certain patient outcomes
including length of stay, mortality, and
post-operative complications.241
Nutrition assessments for patients
identified as at-risk for malnutrition
have been associated with improved
patient outcomes including less weight
loss, reduced length of stay, improved
muscle function, better nutritional
intake, and fewer readmissions.242
Further, there is evidence of a
performance gap with regard to
nutrition screening and assessment. A
national survey of hospital-based
professionals in the United States
focused on nutrition screening and
assessment practices demonstrated that
out of 1,777 unique respondents, only
36.7 percent reported completing
nutrition screening at admission and
50.8 percent reported doing so within
24 hours.243 Thus, there is an
238 Corkins MR, Guenter P, Dimaria-ghalili RA, et
al. Malnutrition diagnoses in hospitalized patients:
United States, 2010. JPEN J Parenter Enteral Nutr.
2014;38(2):186–95.
239 Barker LA, Gout BS, Crowe TC. Hospital
malnutrition: prevalence, identification and impact
on patients and the healthcare system. Int J Environ
Res Public Health. 2011;8(2):514–27.
240 Guerra RS, Sousa AS, Fonseca I, et al.
Comparative analysis of undernutrition screening
and diagnostic tools as predictors of hospitalization
costs. J Hum Nutr Diet. 2016;29(2):165–73.
241 Mueller C, Compher C & Druyan ME and the
American Society for Parenteral and Enteral
Nutrition (A.S.P.E.N.) Board of Directors. A.S.P.E.N.
Clinical Guidelines: Nutrition Screening,
Assessment, and Intervention in Adults. J Parenter
Enteral Nutr. 2011;35: 16–24.
242 Mueller C, Compher C & Druyan ME and the
American Society for Parenteral and Enteral
Nutrition (A.S.P.E.N.) Board of Directors. A.S.P.E.N.
Clinical Guidelines: Nutrition Screening,
Assessment, and Intervention in Adults. J Parenter
Enteral Nutr. 2011;35: 16–24.
243 Patel V, Romano M, Corkins MR, et al.
Nutrition Screening and Assessment in
Hospitalized Patients: A Survey of Current Practice
in the United States. Nutr Clin Pract.
2014;29(4):483–490.
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opportunity for hospitals to improve
nutrition screening and assessment.
(b) Overview of Measures
The malnutrition measure set consists
of the following four measures:
• Completion of a Malnutrition
Screening within 24 Hours of
Admission (MUC16–294);
• Completion of a Nutrition
Assessment for Patients Identified as AtRisk for Malnutrition within 24 Hours of
a Malnutrition Screening (MUC16–296);
• Appropriate Documentation of a
Malnutrition Diagnosis (MUC16–344);
and
• Nutrition Care Plan for Patients
Identified as Malnourished after a
Completed Nutrition Assessment
(MUC16–372).
These malnutrition measures are new
eCQMs that collectively evaluate the
quality of care rendered to adult
patients that are identified as
malnourished. These measures address
the NQS priorities of: (1) Making care
safer by reducing harm caused in the
delivery of care; and (2) promoting
effective communication and
coordination of care. The Completion of
a Malnutrition Screening within 24
Hours of Admission measure (MUC16–
294) assesses whether patients age 18
years or older are screened for
malnutrition within 24 hours of
admission to the hospital. The
Completion of a Nutrition Assessment
for Patients Identified as At-Risk for
Malnutrition measure (MUC16–296)
assesses whether patients age 65 years
or older, who screen positive for being
at-risk for malnutrition, have a nutrition
assessment documented in the medical
record within 24 hours of the most
recent malnutrition screening. The
Appropriate Documentation of a
Malnutrition Diagnosis measure
(MUC16–344) assesses whether patients
age 65 years and older, who are found
to be malnourished on the nutrition
assessment, have adequate
documentation of a malnutrition
diagnosis in their medical record. This
measure is important because there is
often a disconnect between screening
for malnutrition and documentation of a
diagnosis of malnutrition, which is
necessary for appropriate follow-up
after hospital discharge. Data analyzed
from the Healthcare Cost and Utilization
Project (HCUP), a nationallyrepresentative data set describing U.S.
hospital discharges, indicated that
approximately 3.2 percent of hospital
discharges in 2010 included
malnutrition as a diagnosis. However,
this same research article notes that the
prevalence of a malnutrition diagnosis
may be significantly higher as past
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researchers, using validated screening
tools, indicate a significantly higher
prevalence of undiagnosed malnutrition
in the hospital, ranging from 33 to 54
percent.244 Lastly, the Nutrition Care
Plan for Patients Identified as
Malnourished after a Completed
Nutrition Assessment measure
(MUC16–372) assesses whether patients
age 65 years and older, who are found
to be malnourished on a completed
nutrition assessment, have a nutrition
care plan documented in their medical
record.
These measures were reviewed by the
MAP in December 2016 and received
mixed support. The Nutrition Care Plan
for Patients Identified as Malnourished
after a Completed Nutrition Assessment
(MUC16–372), Completion of a
Malnutrition Screening within 24 Hours
of Admission (MUC16–294), and
Completion of a Nutrition Assessment
for Patients Identified as At-Risk for
Malnutrition within 24 Hours of a
Malnutrition Screening (MUC16–296)
measures were recommended to be
refined and resubmitted for
consideration for programmatic
inclusion. For these three measures, the
MAP encouraged providing more
evidence to prove clinical importance
and recommended that the exclusions
continue to be tested for validity.245 The
Appropriate Documentation of a
Malnutrition Diagnosis measure
(MUC16–344) was not supported
because there was concern that there
was insufficient evidence to support the
link between documenting a
malnutrition diagnosis and improved
patient outcomes.
The MAP concluded that completing
a malnutrition assessment provided the
most potential value to the measure set
and quality of care. The MAP also
encouraged the measure developer to
test the individual malnutrition
measures as a composite in an effort to
balance the number of measures in the
Hospital IQR Program with the need to
fill the measure gap addressing
malnutrition.246 We note that we
received written support (formal letters
addressed to CMS) of these measures
from other stakeholders who noted that
addressing malnutrition among
244 Corkins, M.R., Guenter, P., DiMaria-Ghalili,
R.A., Jensen, G.L., Malone, A., Miller, S., Patel, V.,
Plogsted, S. and Resnick, H.E., 2014. Malnutrition
diagnoses in hospitalized patients: United States,
2010. Journal of Parenteral and Enteral Nutrition,
38(2), pp.186–195.
245 ‘‘2017 Considerations for Implementing
Measures Hospitals-Final Report,’’ available at:
https://www.qualityforum.org/map/.
246 Ibid.
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beneficiaries is an important clinical
issue.
Additional information on these
measures is available at: https://
www.qualityforum.org/
ProjectMeasures.aspx?projectID=80741.
We invited public comment on the
possible future inclusion of one or more
of these malnutrition measures in the
Hospital IQR Program. In addition, we
invited public comment on the possible
future inclusion of a composite measure
comprised of all or a subset of these
individual malnutrition measures in the
Hospital IQR Program.
Comment: Several commenters
supported the future inclusion of the
malnutrition measure set as individual
measures. These commenters stated
malnutrition is an ongoing healthcare
issue with demonstrated impacts on
patient outcomes and, as such, it is
imperative to have performance
measures that quantify the degree to
which established best practices are
carried out. The commenters noted poor
nutrition status is also associated with
poor functional and clinical outcomes
for patients and increased costs to
healthcare systems, and asserted taking
a systematic approach to increasing
awareness of malnutrition and
improving management of nutrition in
hospitals would improve health
outcomes and reduce the associated
costs imposed on healthcare systems.
The commenters also noted that the
measures are reliable and valid, and that
their implementation in the Hospital
IQR Program would satisfy a measure
gap area and incentivize the adoption of
evidence-based malnutrition care best
practices, thereby improving patient
outcomes. Several commenters also
noted that there is a need for more
validated malnutrition screening tools
to promote reliability between
practitioners and to reduce the number
of false-positive referrals that are being
made due to use of invalid tools. The
commenters indicated that the
malnutrition eCQMs reflect key
components of the recommended
malnutrition clinical workflow, and that
malnutrition intervention is a low-risk,
low-cost clinical strategy that would
help improve care coordination and the
quality of hospital care.
Commenters stated that Medicare
beneficiaries would benefit from the
adoption of malnutrition eCQMs that
support prompt malnutrition screening,
assessment, diagnosis, and development
of a care plan. In addition, the
commenters stated that because these
eCQMs have been specifically designed
and tested to be used with patient data
included directly in the EHR, the
burden of data collection and reporting
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will be minimal. Lastly, the commenters
stated that the inclusion of this measure
set in the Hospital IQR Program could
help improve outcomes and quality of
life for patients, especially seniors and
the disadvantaged. The commenters
therefore recommended CMS adopt
these measures into the Hospital IQR
Program as soon as possible to ensure
quality care for older adults.
Response: We thank the commenters
for their support. We agree that a
systematic approach to quality
improvement is essential and could
include increasing awareness of
malnutrition and improving
management of nutrition in hospitals.
We acknowledge the benefits and need
for inclusion of malnutrition measures,
as outlined by the commenters, and will
consider the feasibility of implementing
these measures in the Hospital IQR
Program in the future.
Comment: Some commenters
supported the future proposed inclusion
of the malnutrition measure set in the
Hospital IQR Program as a composite
measure, stating that this measure
format would optimize assessment of
nutrition care for those at risk of
malnutrition or who are already
malnourished in the hospital setting.
These commenters further
recommended that CMS adopt the
measures as a composite immediately,
as opposed to in the future.
Response: We thank the commenters
for their support. We note that as
discussed in the proposed rule (82 FR
20061), in the preliminary review of
these individual measures, both the
MAP and the NQF Health and WellBeing Standing Committee advocated
for the resubmission of the individual
measures as a composite. Moving
forward, we will weigh the benefits of
adopting these measures as a composite
versus as individual indicators.
However, because the measures have
not yet been evaluated by the MAP as
a composite, they would need to
undergo MAP review as a composite
measure before we could propose to
adopt it for the Hospital IQR Program in
the future. We also appreciate
commenters’ recommendation that we
adopt the measures immediately;
however, we are not able to adopt them
at this time because: (1) We are
considering the future inclusion of these
measures as a composite measure, but
they have not yet been submitted as a
Measure Under Consideration or
reviewed by the MAP as a composite;
and (2) the measures were not proposed
for adoption in the FY 2018 IPPS/LTCH
PPS proposed rule.
Comment: A few commenters
supported the future inclusion of the
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malnutrition eCQMs in the Hospital IQR
Program only if they received NQF
endorsement, to demonstrate that they
are clinically important or linked to
improved patient outcomes. A few
commenters noted that these measures
are not NQF-endorsed and did not
receive MAP support for inclusion in
Hospital IQR Program.
Response: We thank the commenter
for their support. We agree with
commenters regarding the importance of
adopting sound, evidence-based
performance measures, and will work to
ensure that any measure included in the
Hospital IQR Program is thoroughly
vetted prior to adoption. If the measure
steward submits this measure for NQF
endorsement review under the next
applicable call for measures, we will
consider the NQF’s endorsement status
prior to moving forward with proposing
to adopt these measures in the Hospital
IQR Program. However, we note that
NQF endorsement is not a requirement
for inclusion in the Hospital IQR
Program measure set. Section
1886(s)(4)(D)(ii) of the Act provides that,
in the case of a specified area or medical
topic determined appropriate by the
Secretary for which a feasible and
practical measure has not been endorse
by, the entity with a contract under
section 1890(a) of the Act, the Secretary
may specify a measure that is not so
endorsed as long as due consideration is
given to measures that have been
endorsed or adopted by a consensus
organization identified by the Secretary.
Comment: One commenter supported
the future inclusion of the malnutrition
eCQMs in the Hospital IQR Program,
and recommended that ‘‘Completion of
a Nutrition Assessment for Patients
Identified as At-Risk for Malnutrition
within 24 Hours of a Malnutrition
Screening’’ measure be extended to all
age groups.
Response: We thank the commenter
for their support. We note that these
measures are intended to operate as a
group, and as such, expanding the
patient population in one measure
would most likely require the expansion
of the patient population in all the
measures. We reiterate that the focus of
this set of measures as currently
specified is the assessment of
malnutrition care among elderly patient
populations (age 65 years and older), as
they have been identified as the most atrisk cohort. We offer that if future
testing of these measures yields results
that improve care for this designated
patient population, we could potentially
assess how patients in other age groups
are affected by malnutrition and
whether the observed improvements
could be broadly applied.
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Comment: A few commenters did not
support the inclusion of the
malnutrition measures in the Hospital
IQR Program because nutritional
screening is already a requirement
under the CMS Conditions of
Participation (CoP), therefore, these
commenters believed these measures
would provide no additional incentives
for performance improvement. Further,
the commenters stated that these
measures would create a distracting
documentation ‘‘checkbox’’ process
which is unlikely to advance
meaningful care improvement.
Response: We note the measure
steward is performing additional testing
on all four of the malnutrition measures.
Malnutrition is an ongoing healthcare
issue with demonstrated impacts on
patient outcomes. As such, we believe
there could be important benefits to
patients of having malnutrition
measures that quantify the degree to
which established best practices are
carried out, improve health outcomes,
and reduce cost burdens to healthcare
systems. By referring to ‘‘checkbox’’
practices, we interpret that commenters
have concerns about implementing
process measures. We will take the
concerns into consideration, however,
we also believe these measures could be
an important first step to incentivizing
hospitals to improve malnutrition
awareness and care.
Comment: Some commenters made
suggestions on how to improve the
malnutrition eCQM measures set.
Specifically, the commenters suggested
that the timeframe associated with the
‘‘Completion of a Nutrition Assessment’’
measure be modified such that hospitals
can define their own time-intensive
guidelines for documentation of
assessments, as well as determining
other patient populations who may be at
potential nutrition risk. Other
commenters suggested that the
components of each assessment should
be defined by each organization, arguing
that organizations should guide practice
based on their unique patient
populations. In addition, the
commenters recommended that
consideration be given to the follow-up
care provided for patients afflicted with
malnutrition. The commenters also
noted that nutrition assessment tools
should be validated via clinical trials.
Response: We appreciate the
commenters’ suggestions. If the measure
steward moves forward with additional
testing of these measures, both
individually and as a composite, we
will consider the impact of follow-up
care for patients afflicted with
malnutrition, should we move forward
with proposing to adopt these measures
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in the Hospital IQR Program in the
future. We understand the importance
of hospitals having the autonomy to
define their own guidelines related to
the timing of documentation, however,
we do not believe it is appropriate to
allow hospitals to establish uniquely
defined components for each measure
based on their specific patient
population because doing so introduces
an untenable degree of variability and
may mask disparities in patient care. It
is imperative to evaluate the patient
population as defined by the measures’
denominators, as opposed to an
individual hospital’s or organization’s
parameters, in order to retain
measurement integrity and not to skew
the observed results with information
bias. We agree with the commenters
about the importance of ensuring the
validity of tools and should we decide
to move forward with proposing to
adopt these measures for the Hospital
IQR Program in the future, we will
consider the feasibility of conducting a
clinical trial of the nutrition assessment
tools.
We thank the commenters and we
will consider their views as we develop
future policy regarding the use of eCQM
versions of one or more measures in the
malnutrition measure set and the
possible future inclusion of a composite
measure comprised of all or a subset of
these individual malnutrition measures
in the Hospital IQR Program.
(3) Tobacco Use Measures
(a) Background
sradovich on DSK3GMQ082PROD with RULES2
Tobacco use is the single greatest
cause of disease in the United States
today and accounts for more than
480,000 deaths each year.247 Tobacco
use creates a heavy cost to society as
well as to individuals. Smoking is a
known cause of multiple cancers, heart
disease, stroke, complications of
pregnancy, chronic obstructive
pulmonary disease, other respiratory
problems, poorer wound healing, and
many other diseases.248
Smoking-attributable health care
expenditures are estimated to cost at
least $130 billion per year in direct
medical expenses for adults and over
247 Centers for Disease Control and Prevention.
Current Cigarette Smoking Among Adults—United
States, 2005–2013. Morbidity and Mortality Weekly
Report (MMWR) 2014. 63(47); 1108–1112. Available
at: https://www.cdc.gov/mmwr/preview/mmwrhtml/
mm6347a4.htm?s_cid=mm6347a4.
248 U.S. Department of Health and Human
Services. The health consequences of smoking—50
years of progress: a report of the Surgeon General.
Atlanta, GA: U.S. Department of Health and Human
Services, CDC; 2014. Available at: https://
www.surgeongeneral.gov/library/reports/50-yearsof-progress/full-report.pdf.
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$150 billion in lost productivity.249
There is strong and consistent evidence
that tobacco dependence interventions,
if delivered in a timely and effective
manner, significantly reduce the user’s
risk of suffering from tobacco-related
disease and improve outcomes for those
already suffering from a tobacco-related
disease.250 251 252 253 Effective, evidencebased tobacco dependence interventions
have been clearly identified and include
brief clinician advice, individual, group,
or telephone counseling, and use of
FDA-approved medications. Tobacco
cessation treatments are clinically
effective and extremely cost-effective
relative to other commonly used disease
prevention interventions and medical
treatments.254 Performance on the chartabstracted versions of these measures, as
reported by The Joint Commission,
yields that the Tobacco Use Screening
(TOB–1) measure had a screening rate of
98.15 percent, based on a reporting
period of July 2015–June 2016.255 TOB–
1 is necessary to operationalize Tobacco
Use Treatment Provided or Offered
(TOB–2)/Tobacco Use Treatment (TOB–
2a) and Tobacco Use Treatment
Provided or Offered at Discharge (TOB–
3)/Tobacco Use Treatment at Discharge
(TOB–3a) measures. The goal of TOB–1
is to achieve 100 percent screening so
that all tobacco users are consistently
identified and offered appropriate
interventions, which are evaluated by
TOB–2/2a and TOB–3/3a. As noted in
the table 256 below, the performance
rates for the chart-abstracted versions of
TOB–2/2a and TOB–3/3a measures
suggest that there is an opportunity for
hospitals to improve tobacco use
treatment during the hospital stay and at
discharge.
249 Ibid.
250 U.S. Department of Health and Human
Services. Reducing tobacco use: a report of the
Surgeon General. Atlanta, GA, U.S. Department of
Health and Human Services, Centers for Disease
Control and Prevention, National Center for Chronic
Disease Prevention and Health Promotion, Office on
Smoking and Health, 2000.
251 Baumeister SE, Schumann A, Meyer C, et al.
Effects of smoking cessation on health care use: is
elevated risk of hospitalization among former
smokers attributable to smoking-related morbidity?
Drug Alcohol Depend. 2007 May 11;88(2–3):197–
203. Epub 2006 Nov 21.
252 Lightwood JM. The economics of smoking and
cardiovascular disease. Prog Cardiovasc Dis. 2003
Jul–Aug;46(1):39–78.
253 Rigotti, et al. Interventions for smoking
cessation in hospitalized patients. Cochrane
Database of Systematic Reviews. 2012. Available
from: https://onlinelibrary.wiley.com/doi/10.1002/
14651858.CD001837.pub3/abstract.
254 Ibid.
255 Joint Commission Quality Check Data,
available at: https://www.qualitycheck.org/. (Data
download.)
256 The Joint Commission Quality Check Data
available at: https://www.qualitycheck.org/.
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38381
TOBACCO USE MEASURES SCREENING
RESULTS JULY 2015–JUNE 2016
Measure name
Tobacco Use Treatment Provided or Offered (TOB–2) .....
Tobacco Use Treatment (TOB–
2a) .........................................
Tobacco Use Treatment Provided or Offered at Discharge
(TOB–3) ................................
Tobacco Use Treatment at Discharge (TOB–3a) ..................
Screening
rate
(%)
66.41
32.97
46.20
10.71
(b) Overview of Measures
The tobacco use measure set consists
of the following three measures:
• Tobacco Use Screening (TOB–1)
(MUC16–50);
• Tobacco Use Treatment Provided or
Offered (TOB–2)/Tobacco Use
Treatment (TOB–2a) (MUC16–51); and
• Tobacco Use Treatment Provided or
Offered at Discharge (TOB–3)/Tobacco
Use Treatment at Discharge (TOB–3a)
(MUC16–52).
The TOB measures are eCQMs that
assess tobacco use screening and
treatment for patients age 18 years or
older during the hospital stay and at
discharge. We note that these measures
were derived from the chart-abstracted
versions in use by The Joint
Commission. The Joint Commission has
been using the chart-abstracted versions
of these measures for voluntary
reporting since January 1, 2012.257 In
addition, the chart-abstracted versions
of these measures (TOB–1, TOB–2/
TOB–2a, and TOB–3/TOB–3a) are also
part of the IPFQR Program measure set
(81 FR 57246). These measures address
the NQS priority of promoting the most
effective prevention and treatment
practices for the leading causes of
mortality.
TOB–1 assesses the proportion of
hospitalized patients who are screened,
or refuse screening, within the three
days prior to admission through 1 day
after admission, for tobacco use during
the 30 days prior to the screening. TOB–
2 assesses the proportion of patients
who are light tobacco users who
received or refused practical counseling
to quit within 3 days prior to or anytime
during admission. TOB–2 also assesses
the proportion of heavy tobacco users
who received or refused practical
counseling to quit and received, had a
medical reason not to receive, or refused
FDA-approved cessation medications
within 3 days prior to or anytime during
257 The Joint Commission, Substance Use
Measures overview, available at: https://
www.jointcommission.org/core_measure_sets.aspx.
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admission. The subset measure TOB–2a
only assesses light tobacco users who
received practical counseling to quit
within 3 days prior to or anytime during
admission, and heavy tobacco users
who received practical counseling to
quit and received, or had a medical
reason not to receive, FDA-approved
cessation medications within 3 days
prior to or anytime during admission.
TOB–3 assesses the proportion of
patients who are light tobacco users
who were referred to or refused
counseling within 3 days prior to
admission through 1 day after discharge.
TOB–3 also assesses the proportions of
heavy tobacco users who were referred
to or refused evidence-based counseling
and received, had a medical reason not
to receive, or refused a prescription for
FDA-approved cessation medication
upon discharge. The subset measure
TOB–3a assesses light tobacco users
who were referred to counseling within
3 days prior to admission through one
day after discharge, and heavy tobacco
users who were referred to evidencebased counseling and received, or had a
medical reason not to receive, a
prescription for FDA-approved
cessation medication upon discharge.
We note that we previously solicited
comments on the future inclusion of
electronically-specified versions of the
tobacco use measures TOB–1, TOB–2/2a
and TOB–3/3a, previously referred to as
TAM–1, TAM–2, and TAM–3,
respectively, in the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53535).
Commenters equally supported and
opposed the future inclusion of the
tobacco use measures in the Hospital
IQR Program. Commenters highlighted
the importance of high validation rates
such as 95 percent, across the electronic
data capture method and manual chartabstraction (77 FR 53535). We note that
at the time we sought public comments
on these measure concepts related to
tobacco use, electronically-specified
measures were not yet developed.
In the most recent MAP deliberations
in December 2016, only the Tobacco
Use Screening (TOB–1) eCQM (MUC16–
50) was reviewed. The TOB–2/TOB–2a
(MUC16–51) and TOB–3/TOB–3a
(MUC16–52) eCQMs were on the
December 2016 MUC List, but were not
submitted for MAP review because they
were still undergoing field testing. We
anticipate these measures should be
ready for review by the MAP in the
winter of CY 2017.
The TOB–1 eCQM was recommended
to be refined and resubmitted for
consideration for programmatic
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inclusion.258 The MAP indicated that
the measure should be tested to ensure
that it returns accurate, reliable results.
In addition, the MAP Hospital
Workgroup noted that it will be
important to carefully assess feasibility
and burden of data collection.259 As
previously stated, the chart-abstracted
versions of the Tobacco Use Screening
measures (TOB–1, TOB–2/TOB–2a, and
TOB–3/TOB–3a) are part of the IPFQR
Program measure set (81 FR 57246);
thus, future inclusion of the eCQM
versions of these measures in the
Hospital IQR Program measure set
would promote programmatic alignment
across these quality reporting programs.
Additional information on the chartabstracted version of these measures is
available at: https://www.qualitynet.org/
dcs/ContentServer?c=Page&pagename=
QnetPublic%2FPage
%2FQnetTier3&cid=1228775749207.
We invited public comment on the
possible future inclusion of one or more
of the eCQM versions of these tobacco
use measures (TOB–1, TOB–2/2a and
TOB–3/3a) in the Hospital IQR Program.
In addition, we invited public comment
on the possible future inclusion of a
composite measure comprised of all or
a subset of these individual tobacco use
measures in the Hospital IQR Program.
Comment: Many commenters
supported the proposed future inclusion
of the tobacco eCQM measure set. The
commenters noted that hospitalizations
and readmission rates are high among
tobacco users, however, most hospitals
have not placed high priority on
systematically assessing (identifying,
noting status, offering cessation
methods and following-up with)
smokers. As such, the inclusion of these
measures would help address this lost
clinical care opportunity and decrease
the incidence of tobacco related illness.
In addition, the commenters noted that
the parameters evaluated by measures
TOB–2a and TOB–3a are patient
engagement activities that could help
promote the adjustment of quality
measures by social risk factors, as many
times smoking habits are related to SES
and/or SDS factors. Lastly, the
commenters noted that the tobacco use
measures address a gap area within the
Hospital IQR Program measure set. The
commenters recommended ensuring
programmatic alignment with other
regulatory bodies to align tobacco and
smoking code sets and requirements or
to provide mapping guidance because
258 ‘‘2016–2017 Spreadsheet of Final
Recommendations to HHS and CMS, available at:
https://www.qualityforum.org/map/.
259 Ibid.
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misalignment will result in increased
provider burden.
Response: We thank the commenters
for their support. We will continue to
work with other quality reporting
programs and regulatory bodies as
needed to align tobacco and smoking
code sets and requirements. We
appreciate the commenters input
regarding the potential impact of the
inclusion of these measures in the
Hospital IQR Program on the broader
CMS goal of accounting for social risk
factors in clinical quality measures.
Comment: A few commenters
supported the future inclusion of the
Tobacco Use eCQMs in the Hospital IQR
Program only if they receive NQF
endorsement to ensure they are
clinically important and linked to
improved patient outcomes.
Response: We note that currently, the
eCQM versions of the measures are
undergoing beta testing. Upon
completion of the testing, and the
availability of a suitable project
provided by the NQF, the eCQM
versions of these measures will be
submitted for endorsement
consideration via NQF’s consensus
development process. However, we note
that NQF endorsement is not a
requirement for inclusion in the
Hospital IQR measure set. Section
1886(s)(4)(D)(ii) of the Act provides that,
in the case of a specified area or medical
topic determined appropriate by the
Secretary for which a feasible and
practical measure has not been endorse
by the entity with a contract under
section 1890(a) of the Act, the Secretary
may specify a measure that is not so
endorsed as long as due consideration is
given to measures that have been
endorsed or adopted by a consensus
organization identified by the Secretary.
Comment: Some commenters urged
CMS to develop the protocols and
testing environments necessary to
validate eCQMs.
Response: We have previously
finalized a validation process for eCQM
data and we refer readers to section
IX.A.11. of the preamble of this final
rule for more details.
Comment: The commenters also
recommended that CMS convene a TEP
to identify eCQMs that are appropriate
for use across care settings.
Response: An existing TEP has
convened to assess these measures, and
we will share the results of the beta
testing of the eCQM versions prior to
submission to NQF.
Comment: A few commenters
expressed that the tobacco use measures
should be included as individual
indicators, as opposed to a composite
measure because the all-or-none scoring
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of a composite measure could
potentially dilute the quality
improvement aspect of the measures’
respective measurement domains. In
addition, the commenters noted that
combining multiple metrics into a
composite measure increases challenges
exponentially and does not allow the
level of granularity necessary to know
where improvements should be made.
Further, commenters suggested that it
would be less burdensome for hospitals
to identify where improvement is
required if the measures remain separate
as opposed to determining deficiencies
within a composite measure. The
commenters urged CMS not to consider
composite eCQMs until current single
measure eCQMs are proven to be
reliable and accurate.
Response: We thank the commenters
for their support. We acknowledge the
commenters’ concerns about the
importance of retaining the integrity of
the quality improvement aspect
garnered by scoring each measure
individually, as opposed to combining
them into a composite. In addition, we
recognize that there may be differences
in burden associated with data
collection and the level of granularity
associated with observed results for the
individual indicators, as opposed to a
composite measure. We will take these
factors into account if we move forward
with proposing to adopt these measures
in the Hospital IQR Program in the
future.
Comment: Some commenters did not
support the future inclusion of the
Tobacco measure set in the Hospital IQR
Program because these measures are
redundant and capturing these data
elements electronically has proven to be
a challenge. The commenters suggested
that these measures be combined and
reported as treatment provided/offered
at any time during the hospital stay.
Further, the commenters noted that
capturing these data elements
electronically has proven to be a
challenge and has required substantial,
time consuming electronic medical
record revisions. The commenters
acknowledged that while specifying the
measures as eCQMs may eliminate some
of the burden on hospitals, the measures
should be field tested as eCQMs in acute
care hospitals prior to consideration in
the Hospital IQR Program to ensure the
measures are accurately assessing
clinically relevant variations in care.
Finally, the commenters expressed
concern that it would be difficult to
submit information for TOB–2/2a in an
eCQM format and believed that
implementation of the TOB–1 as a
standalone measure outside of the
psychiatric setting would be most
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appropriate in the Hospital IQR
Program. In addition, the commenters
recommended that the tobacco use
measures be tested as eCQMs, to ensure
the measures are appropriately assessing
clinically relevant variations in care,
prior to being proposed for adoption in
the Hospital IQR Program. Finally, the
commenters recommended that CMS
wait to implement these measures as
eCQMs until the current core measures
are more mature.
Response: We note that the eCQM
versions of the measures are currently
undergoing beta testing, to ensure the
feasibility of electronic data abstraction
and to ensure that these measures are
appropriately assessing clinical
variations in care. In both the alpha and
beta testing phases we have not
observed any significant difficulty in
electronically capturing the data
elements for these measures. We will
continue to monitor the level of effort
associated with electronic data
extraction and make note of any
significant challenges (for example,
electronic medical record revisions) that
arise. We are considering combining
these measures into a composite,
however, we will continue to solicit
stakeholder feedback on how to
implement these measures (individually
or as composite) in the Hospital IQR
Program should we elect to move
forward with proposing to adopt them
in the future.
We disagree with commenters that the
measures are redundant, as there are
currently no measures of behavioral
health in the Hospital IQR Program. We
also disagree that only the Tobacco Use
Screening (TOB–1) measure is suitable
for inclusion in the Hospital IQR
Program. The performance rates for the
chart-abstracted versions of Tobacco
Use Treatment Provided or Offered
(TOB–2)/Tobacco Use Treatment (TOB–
2a) and Tobacco Use Treatment
Provided or Offered at Discharge (TOB–
3)/Tobacco Use Treatment at Discharge
(TOB–3a) measures suggest that there is
an opportunity for hospitals to improve
tobacco use treatment during the
hospital stay and at discharge. We
reiterate that these measures are
intended to be used as part of a linked
set. Specifically, the TOB–2/2a and
TOB–3/3a measures ensure hospitals are
not only screening patients for tobacco
use, but also offering evidence-based
interventions to improve the quality of
care for patients with tobacco use.
Lastly, to address the commenters’
statement regarding the maturity of the
core measures, we note that the chartabstracted versions of these measures
(TOB–1, TOB–2/TOB–2a, and TOB–3/
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38383
TOB–3a) are also part of the IPFQR
Program measure set (81 FR 57246).
Comment: One commenter
recommended that the Tobacco Use
Measures be included in ambulatory
quality reporting programs rather than
in the Hospital IQR Program.
Response: We thank the commenter
for their suggestion, and acknowledge
increased screening in ambulatory
settings could lead to increased overall
tobacco cessation success. We recognize
these results could be used by
researchers and health-care providers to
learn of opportunities for tobacco
cessation as a covered health benefit.
Currently, these measures are not
specified to assess care in ambulatory
settings, however, this may be
something we consider in future
rulemaking. We thank the commenters,
and we will consider their views as we
develop future policy regarding the use
of eCQM versions of one or more
measures in the tobacco use measure set
and the possible future inclusion of a
composite measure comprised of all or
a subset of these individual tobacco use
measures in the Hospital IQR Program.
(4) Substance Use Measures
(a) Background
Excessive alcohol consumption and
drug misuse or abuse have a significant
impact on the health of the U.S.
population.260 Excessive alcohol
consumption is a leading cause of
preventable death and disability
resulting in approximately 88,000
deaths per year with an estimated
economic cost of $249 billion, including
$28 billion (2010 dollars) in direct
health care costs.261 In 2015,
approximately 20.8 million individuals
were classified as having a substance
use disorder. Of those individuals with
substance use disorders, 13.1 million
had an alcohol use disorder, 5.1 million
had an illicit drug use disorder, and 2.7
million had an alcohol and illicit drug
260 Excessive alcohol consumption includes binge
drinking. heavy drinking, and any drinking by
pregnant women or people younger than age 21.
Definitions are available from the Centers for
Disease Control and Prevention at: https://
www.cdc.gov/alcohol/fact-sheets/alcohol-use.htm.
261 Centers for Disease Control and Prevention
Alcohol and Public Health: Alcohol-Related Disease
Impact available at: https://nccd.cdc.gov/DPH_
ARDI/Default/Report.aspx?T=AAM&P=f6d7eda7036e-4553-9968-9b17ffad620e&R=d7a9b303-48e94440-bf47-070a4827e1fd&M=8E1C5233-5640-4EE89247-1ECA7DA325B9&F=&D= ; Sacks JJ, Gonzales
KR, Bouchery EE, Tomedi LE, Brewer RD. 2010
national and state costs of excessive alcohol
consumption. American journal of preventive
medicine. 2015 Nov 30;49(5): e73–9.; Stahre M,
Roeber J, Kanny D, Brewer RD, Zhang X.
Contribution of Excessive Alcohol Consumption to
Deaths and Years of Potential Life Lost in the
United States. Prev Chronic Dis 2014;11:130293.
DOI: https://dx.doi.org/10.5888/pcd11.130293.
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use disorder.262 Excessive alcohol
consumption and substance use
disorders can increase the risk of
preventable injury, worsen existing
chronic diseases, such as mental illness,
and lead to the development of diseases,
such as heart disease, cancer, and liver
disease.263 Studies show the majority of
individuals who consume alcohol
excessively do not meet the clinical
criteria for diagnosis of a substance use
disorder; yet evidence demonstrates
screening and brief interventions,
especially prior to the onset of a
substance use disorder, can improve
health and reduce costs.264 Similar
benefits have been observed for
individuals with substance use
disorders who are identified and
referred to treatment.265 266 The table
below provides performance rates based
on the July 2015–June 2016 reporting
period for the chart-abstracted versions
of these measures, as reported by The
Joint Commission.267 The results show
that there is an opportunity for hospitals
to improve substance use screening,
brief intervention, and treatment.
SUBSTANCE USE MEASURES SCREENING RESULTS JULY 2015–JUNE 2016
Screening
rate
(%)
Measure name
Alcohol
Alcohol
Alcohol
Alcohol
Alcohol
Use Screening (SUB–1) .........................................................................................................................................................
Use Brief Intervention Provided or Offered (SUB–2) .............................................................................................................
Use Brief Intervention (SUB–2a) ............................................................................................................................................
& Other Drug Use Disorder Treatment Provided or Offered at Discharge (SUB–3) .............................................................
& Other Drug Use Disorder Treatment at Discharge (SUB–3a) ............................................................................................
85.30
62.68
57.43
65.46
54.27
The substance use measure set
consists of the following three measures:
• Alcohol Use Screening (SUB–1)
(MUC16–179);
• Alcohol Use Brief Intervention
Provided or Offered (SUB–2)/Alcohol
Use Brief Intervention (SUB–2a)
(MUC16–178); and
• Alcohol & Other Drug Use Disorder
Treatment Provided or Offered at
Discharge (SUB–3)/Alcohol & Other
Drug Use Disorder Treatment at
Discharge (SUB–3a) (MUC16–180).
The SUB–1, SUB–2/2a and SUB–3/3a
measures address the NQS priority of
promoting the most effective prevention
and treatment practices for the leading
causes of mortality. These measures are
intended to be used as part of a linked
set. Specifically, the SUB–2/2a and
SUB–3/3a measures will ensure
hospitals are not only screening patients
for excessive alcohol use, but also
offering evidence-based interventions to
improve the quality of care for patients
with excessive alcohol use or other use
disorders. The SUB–1 Alcohol Use
Screening measure assesses whether
hospital patients 18 years of age and
older are screened for alcohol use using
a validated screening questionnaire for
excessive drinking during their
inpatient stay. A validated screening
questionnaire is defined as an
instrument that has been
psychometrically tested for reliability
(the ability of the instrument to produce
consistent results), validity (the ability
of the instrument to produce true
results), and sensitivity (the probability
of correctly identifying a patient with
the condition).
As previously noted, these measures
are intended to be implemented as a set.
As such, it would be necessary to adopt
the SUB–1 measure in order to
implement the other two measures. The
SUB–2/2a measure assesses whether
hospital patients age 18 years of age or
older who screened positive for
excessive alcohol use or an alcohol use
disorder receive or refuse a brief
intervention during the hospital stay
(SUB–2). Subset measure SUB–2a
includes only those patients who
receive a brief intervention. A brief
intervention is defined as a single
session or multiple sessions conducted
by a qualified healthcare professional or
trained peer support person, which
includes motivational discussion
focused on increasing patient insight
and awareness regarding alcohol use
and motivating behavioral change. The
SUB–3/3a measures assess whether
hospitals patients 18 years of age or
older with a substance use disorder
(alcohol or drug) receive or refuse at
discharge a medication prescription for
treatment or receive or refuse a referral
for substance use disorder treatment
(SUB–3). Subset measure SUB–3a
includes only those patients who
receive a medication prescription or
treatment referral at discharge.
The chart-abstracted versions of these
three measures, not the eCQM versions,
were added to the MUC List in the
summer of 2016,268 and reviewed by the
MAP in December 2016 as discussed in
the MAP Pre-Rulemaking Report and
Spreadsheet entitled ‘‘2016–2017
Spreadsheet of Final Recommendations
to HHS and CMS.’’ 269 The MAP
recommended that the SUB–1 measure
(MUC16–179) be refined and
resubmitted. The MAP noted that the
measure encourages hospitals to screen
patients for excessive alcohol use and
can prevent life-threatening alcohol
withdrawal syndrome, but
recommended that the measure be
paired with an appropriate intervention
and follow-up measure. The MAP did
not support the SUB–2/2a measure
262 Substance Abuse and Mental Health Services
Administration (SAMHSA) Key Substance Use and
Mental Health Indicators in the United States:
Results from the 2015 National Survey on Drug Use
and Health available at: https://www.samhsa.gov/
data/sites/default/files/NSDUH-FFR1-2015/
NSDUH-FFR1-2015/NSDUH-FFR1-2015.pdf.
263 Excessive alcohol consumption includes binge
drinking. heavy drinking, and any drinking by
pregnant women or people younger than age 21.
Definitions are available from the Centers for
Disease Control and Prevention at: https://
www.cdc.gov/alcohol/fact-sheets/alcohol-use.htm.
264 Esser MB, Hedden SL, Kanny D, Brewer RD,
Gfroerer JC, Naimi TS. Prevalence of Alcohol
Dependence Among US Adult Drinkers, 2009–2011.
Prev Chronic Dis 2014;11:140329. DOI: https://
dx.doi.org/10.5888/pcd11.140329; American
Psychiatric Association. (1994). Diagnostic and
statistical manual of mental disorders (DSM–IV)
(4th ed.). Washington, DC.
265 Maciosek MV, Coffield AB, Edwards NM,
Flottemesch TJ, Goodman MJ, Solberg LI. Priorities
among effective clinical preventive services results
of a systematic review and analysis. Am J Prev Med
Jul 2006;31(1):52–61.
266 Saitz R, Palfai TP, Cheng DM, Horton NJ,
Freedner N, Dukes K, et al. Brief intervention for
medical inpatients with unhealthy alcohol use: a
randomized, controlled trial. Ann Intern Med. 2007;
146:167–76.
267 Joint Commission Quality Check Data,
available at: https://www.qualitycheck.org/. (Data
download.)
268 2016 Measures Under Consideration
Spreadsheet, available at: https://
www.qualityforum.org/ProjectMaterials.
aspx?projectID=75367.
269 ‘‘2016–2017 Spreadsheet of Final
Recommendations to HHS and CMS, available at:
https://www.qualityforum.org/map/.
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(MUC16–178) for adoption into the
Hospital IQR Program. Proponents of
the SUB–2/2a measure supported the
incorporation of behavioral health
measures into the Hospital IQR Program
and noted that hospitalization is a prime
opportunity to discuss harmful
substance use because patients may be
more amenable to a brief intervention
during a hospital stay. Other
stakeholders acknowledged the
significant health impact of screening
and brief intervention for substance use,
but cited the burden of chart-abstracted
data collection and encouraged the
continued development of an electronic
measure. MAP stakeholders also
expressed concern the use of the
measure in the hospital inpatient
setting, rather than a primary care
setting, was not strongly linked to
improved patient outcomes. The MAP
also did not support SUB–3/3a
(MUC16–180) due to similar concerns as
identified with the SUB–2/2a measure
regarding the measure’s link to
improved outcomes.270
With respect to MAP stakeholder
concerns regarding the evidence
supporting the use of the measures in
the inpatient setting, we note such
supporting evidence, including the
evidence of the generalizability of
studies to the acute inpatient setting,
was included as part of the endorsement
process and these measures received
NQF endorsement. Sufficient evidence
exists linking the measures to improved
patient outcomes 271 272 in the inpatient
setting.273 In addition, in light of the
significant health impact of harmful
substance use, and its associated
healthcare costs, we believe the benefits
of collecting these measure data from
hospitals and publicly reporting the
information outweigh the burden, and
address a critical topic impacting a
patient’s quality of care and health
outcomes.
We note that The Joint Commission
has been using these chart-abstracted
270 ‘‘2017 Considerations for Implementing
Measures Hospitals-Final Report,’’ available at:
https://www.qualityforum.org/map/.
271 Kaner EF, Dickinson HO, Beyer FR, Campbell
F, Schlesinger C, Heather N, Saunders JB, Burnand
B, Pienaar ED. Effectiveness of brief alcohol
interventions in primary care populations.
Cochrane Database of Systematic Reviews 2007,
Issue 2. Art. No.: CD004148. DOI: 10.1002/
14651858.CD004148.pub3.
272 Whitlock EP, Polen MA, Green CA, Orleans
CT, Klein J. Behavioral Counseling Interventions in
Primary Care to Reduce Risky/Harmful Alcohol Use
by Adults: A Summary of the Evidence for the U.S
Preventive Services Task Force. Ann Intern Med.
2004; 140:558–569.
273 McQueen J, Howe TE, Allan L, Mains D,
Hardy V. Brief interventions for heavy alcohol users
admitted to general hospital wards. Cochrane
Database Syst Rev. 2011 Jan 1;8(8).
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measures for optional reporting since
January 1, 2012.274 The chart-abstracted
versions of the Substance Use measures
(SUB–1, SUB–2/2a and SUB–3/3a) are
also part of the IPFQR Program measure
set (81 FR 57246); thus, future inclusion
of the eCQM versions of these measures
in the Hospital IQR Program measure set
would promote programmatic alignment
across these quality reporting programs.
Lastly, we note that electronic versions
of these measures are in development by
SAMHSA; we anticipate that the eCQM
versions will be ready for review within
the next 18–24 months.
Additional information on the chartabstracted versions of these measures is
available in TJC’s Specification Manual
for National Hospital Inpatient Quality
Measures at: https://www.joint
commission.org/specifications_manual_
for_national_hospital_inpatient_
quality_measures.aspx.
We invited public comment on the
possible future inclusion of one or more
of the eCQM versions of the Substance
Use measures (SUB–1, SUB–2/2a and
SUB–3/3a) in the Hospital IQR Program.
In addition, we invited public comment
on the possible future inclusion of a
composite measure comprised of all of
these individual substance use measures
in the Hospital IQR Program.
Comment: Many commenters
supported the proposed future inclusion
of the Substance Use eCQM measure set.
The commenters stated that substance
use disorders are health issues that
cause a great deal of illness in our
country, but are terribly underaddressed by the treatment system. The
commenters also stated that inclusion of
these measures would incentivize
screening, assessment, and evidencebased treatment for individuals with
opioid and other substance use
disorders. In addition, commenters
agreed that these measures fill a gap
area within the Hospital IQR Program
measure set.
Some commenters recommended that
the substance use measures should be
added as individual measures as
opposed to a composite because all-ornone scoring of a composite measure
could potentially dilute the quality
improvement aspect of the Substance
Use measures and diminish the integrity
of the quality improvement process.
Further, commenters suggested that it
would be less burdensome for hospitals
to identify where improvement is
required if the measures remain separate
as opposed to determining deficiencies
within a composite measure.
274 The Joint Commission, Substance Use
Measures overview, available at: https://
www.jointcommission.org/core_measure_sets.aspx.
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Response: We thank the commenters
for their support. We acknowledge the
commenters’ concerns about the
importance of retaining the integrity of
quality improvement aspect garnered by
scoring each measure individually, as
opposed to combining them into a
composite, and we will take these
factors into account if we move forward
with proposing to adopt these measures
in the Hospital IQR Program in the
future.
Comment: Some commenters
supported the future inclusion of the
Substance Use eCQMs in the Hospital
IQR Program only if they receive NQF
endorsement to ensure that they are
clinically important and linked to
improved patient outcomes.
Response: We thank the commenters
for their support. We note that currently
the eCQM versions of the measures are
undergoing beta testing. Upon
completion of the testing, and the
availability of a suitable project
provided by the NQF, the eCQM
versions of these measures will be
submitted for endorsement
consideration via NQF’s consensus
development process. However, we note
that NQF endorsement is not a
requirement for inclusion in the
Hospital IQR Program measure set.
Section 1886(s)(4)(D)(ii) of the Act
provides that, in the case of a specified
area or medical topic determined
appropriate by the Secretary for which
a feasible and practical measure has not
been endorse by the entity with a
contract under section 1890(a) of the
Act, the Secretary may specify a
measure that is not so endorsed as long
as due consideration is given to
measures that have been endorsed or
adopted by a consensus organization
identified by the Secretary.
Comment: Some commenters urged
CMS to develop the protocols and
testing environments necessary to
validate eCQMs.
Response: We have previously
finalized a validation process for eCQM
data and we refer readers to section
IX.A.11. of the preamble of this final
rule for more details.
Comment: Some commenters also
recommended that CMS convene a TEP
to identify eCQMs that are appropriate
for use across care settings.
Response: We also note that an
existing TEP has convened to assess
these measures and we will share the
results of the beta testing of the eCQM
versions prior to submission to NQF.
Comment: Some commenters
expressed concern with the proposed
future inclusion of the substance use
eCQM measures. Specifically, the
commenters noted that capturing these
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data elements electronically has proven
to be a challenge and has required
substantial, time consuming electronic
medical record revisions. The
commenters acknowledged that while
specifying the measures as eCQMs may
eliminate some of the burden on
hospitals, the measures should be field
tested as eCQMs in acute care hospitals
prior to consideration in the Hospital
IQR Program to ensure the measures are
accurately assessing clinically relevant
variations in care. Finally, the
commenters expressed concern that it
would be difficult to submit information
for SUB–2/2a in an eCQM format and
believed that implementation of the
SUB–1 as a standalone measure outside
of the psychiatric setting would be most
appropriate.
Response: We acknowledge the
commenters concerns. We note that
currently, the eCQM versions of the
measures are undergoing beta testing in
acute care hospitals to ensure the
feasibility of electronic data abstraction
and to ensure that these measures are
appropriately assessing clinical
variations in care. We also note that in
both the alpha and beta testing phases
we have not observed any significant
difficulty in electronically capturing the
data elements for any of these measures.
We disagree that the Alcohol Use
Screening (SUB–1) measure is more
suitable for implementation in the
Hospital IQR Program than the Alcohol
Use Brief Intervention Provided or
Offered (SUB–2)/Alcohol Use Brief
Intervention (SUB–2a) and Alcohol &
Other Drug Use Disorder Treatment
Provided or Offered at Discharge (SUB–
3)/Alcohol & Other Drug Use Disorder
Treatment at Discharge (SUB–3a)
measures. We reiterate that these
measures are intended to be used as part
of a linked set. Specifically, the SUB–2/
2a and SUB–3/3a measures ensure
hospitals are not only screening patients
for excessive alcohol use, but also
offering evidence-based interventions to
improve the quality of care for patients
with excessive alcohol use or other use
disorders.
Comment: One commenter
recommended that the Substance Use
Measures be included in ambulatory
quality reporting programs rather than
in the Hospital IQR Program.
Response: We thank the commenter
for their suggestion and acknowledge
that preventable substance use events
are common in ambulatory settings,
with many resulting in hospitalization.
Currently, these measures are not
specified to assess care in ambulatory
settings, however, this may be
something we consider in future
rulemaking. We note that quality
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improvement programs at large could
benefit from targeting substance use
disorders among patients.
We thank the commenters, and we
will consider their views as we develop
future policy regarding the use of a one
or more eCQM versions of the substance
use measures and the possible future
inclusion of a composite measure
comprised of all of these individual
substance use measures in the Hospital
IQR Program.
10. Form, Manner, and Timing of
Quality Data Submission
a. Background
Sections 1886(b)(3)(B)(viii)(I) and
(b)(3)(B)(viii)(II) of the Act state that the
applicable percentage increase for FY
2015 and each subsequent year shall be
reduced by one-quarter of such
applicable percentage increase
(determined without regard to sections
1886(b)(3)(B)(ix), (xi), or (xii) of the Act)
for any subsection (d) hospital that does
not submit data required to be
submitted on measures specified by the
Secretary in a form and manner, and at
a time, specified by the Secretary.
Previously, the applicable percentage
increase for FY 2007 and each
subsequent fiscal year until FY 2015
was reduced by 2.0 percentage points
for subsection (d) hospitals failing to
submit data in accordance with the
description above. In accordance with
the statute, the FY 2018 payment
determination will begin the fourth year
that the Hospital IQR Program will
reduce the applicable percentage
increase by one-quarter of such
applicable percentage increase.
In order to participate in the Hospital
IQR Program, hospitals must meet
specific procedural, data collection,
submission, and validation
requirements. For each Hospital IQR
Program payment determination, we
require that hospitals submit data on
each specified measure in accordance
with the measure’s specifications for a
particular period of time. The data
submission requirements, Specifications
Manual, and submission deadlines are
posted on the QualityNet Web site at:
https://www.QualityNet.org/. The annual
update of electronic clinical quality
measure (eCQM) specifications and
implementation guidance documents
are available on the eCQI Resource
Center Web site at: https://
ecqi.healthit.gov/. Hospitals must
register and submit quality data through
the secure portion of the QualityNet
Web site. There are safeguards in place
in accordance with the HIPAA Security
Rule to protect patient information
submitted through this Web site.
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b. Procedural Requirements for the FY
2020 Payment Determination and
Subsequent Years
The Hospital IQR Program’s
procedural requirements are codified in
regulation at 42 CFR 412.140. We refer
readers to these codified regulations for
participation requirements, as further
explained by the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50810 through
50811) and the FY 2017 IPPS/LTCH PPS
final rule (81 FR 57168). In the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
20064), we did not propose any changes
to these procedural requirements.
c. Data Submission Requirements for
Chart-Abstracted Measures
We refer readers to the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51640
through 51641), the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53536 through
53537), and the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50811) for details
on the Hospital IQR Program data
submission requirements for chart
abstracted measures. In the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
20064), we did not propose any changes
to the data submission requirements for
chart abstracted measures.
d. Changes to the Reporting and
Submission Requirements for eCQMs
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20064 through
20066), we proposed changes to the
Hospital IQR Program eCQM reporting
and submission requirements to align
them with the Medicare EHR Incentive
Program for eligible hospitals and
CAHs.
(1) Background
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57157 through 57159), we
finalized policies to require hospitals to
submit a full calendar year (four
quarterly reporting periods) of data on at
least 8, self-selected eCQMs from the
available eCQMs in the Hospital IQR
Program for the CY 2017 reporting
period/FY 2019 payment determination
and the CY 2018 reporting period/FY
2020 payment determinations. In this
final rule, we are finalizing modified
versions of our proposals regarding the
CY 2017 reporting period/FY 2019
payment determination and the CY 2018
reporting period/FY 2020 payment
determination eCQM reporting
requirements such that hospitals are
required to submit one, self-selected,
calendar quarter of data for 4 eCQMs.
We refer readers to section IX.A.8. of the
preamble of this final rule for more
detail on these policies. Consistent with
previous years, with these finalized
policies we have sought to align the
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Hospital IQR Program eCQM reporting
requirements and the CQM electronic
reporting requirements in the Medicare
EHR Incentive Program to the extent
feasible for the CY 2017 reporting
period/FY 2019 payment determination
and the CY 2018 reporting period/FY
2020 payment determination in order to
reduce reporting burden and confusion
for hospitals and their health IT
vendors. We refer readers to the
finalized policies for the Medicare and
Medicaid EHR Incentive Programs for
eligible hospitals and CAHs in section
IX.E.2.b. of the preamble of this final
rule. We are finalizing these changes for
both programs in order to assist
hospitals in their efforts as they
transition towards more robust
electronic reporting of quality measure
data and to be responsive to the
feedback we have received about the
challenges of eCQM reporting and
recommendations to allow more time to
become familiar with and improve upon
eCQM reporting capabilities.
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(2) Changes to the Reporting and
Submission Requirements for eCQMs
for the FY 2019 Payment Determination
and Subsequent Years
In the FY 2018 IPPS/LTCH PPS
proposed rule, we did not propose any
changes to our file format requirements
or reporting deadlines. However, we
proposed changes to our requirements
related to eCQM electronic specification
and certification. These are discussed in
more detail below.
(a) File Format
In the FY 2016 IPPS/LTCH PPS final
rule (80 FR 49705 through 49708), we
finalized that hospitals must submit
eCQM data via the Quality Reporting
Document Architecture Category I
(QRDA I) file format for the CY 2016
reporting period/FY 2018 payment
determination. In addition, we finalized
that for the CY 2016 reporting period/
FY 2018 payment determination,
hospitals may use third parties to
submit QRDA I files on their behalf and
can either use abstraction or pull the
data from non-certified sources in order
to then input these data into CEHRT for
capture and reporting QRDA I (80 FR
49706). Consistent with previously
finalized reporting requirements,
hospitals can meet the reporting
requirements by submitting data via
QRDA I files, zero denominator
declaration, or case threshold
exemption. In the FY 2017 IPPS/LTCH
PPS final rule (81 FR 57170), we
finalized our proposal to continue these
eCQM reporting policies for the CY
2017 reporting period/FY 2019 payment
determination and subsequent years.
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These finalized requirements align with
the CQM electronic reporting
requirements of the Medicare EHR
Incentive Program for eligible hospitals
and CAHs (81 FR 57255 through 57257).
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20065), we did not
propose any changes to these
requirements.
(b) Changes to the Certification
Requirements for eCQM Reporting
(i) Background and Changes to the CY
2018 Reporting Period/FY 2020
Payment Determination Certification
Requirements
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57170 through 57171), we
finalized policies that hospitals must:
(1) Report eCQM data using EHR
technology certified to either the 2014
or 2015 Edition certification criteria for
the CY 2017 reporting period/FY 2019
payment determination; and (2) report
eCQM data using EHR technology
certified to the 2015 Edition beginning
with the CY 2018 reporting period/FY
2020 payment determination and
subsequent years. As we discuss in
further detail in section IX.G.4. of the
preamble of this final rule where the
same considerations are discussed in
detail for the Medicare and Medicaid
EHR Incentive Programs, based on our
past experience with the transition from
the 2011 Edition to the 2014 Edition and
concerns expressed by stakeholders, we
understand that transitioning to
technology certified to a new Edition
can be complex and can require more
resources and time than anticipated,
including the time necessary to
effectively deploy the upgraded system
and make the necessary patient safety,
staff training, and workflow
investments. We understand and
appreciate these concerns and are
working in cooperation with our federal
partners at ONC to monitor progress on
the 2015 Edition upgrade. Nevertheless,
we believe that there are many benefits
of switching to EHR technology certified
to the 2015 Edition. We will work with
ONC to monitor the status of EHR
technology certified to the 2015 Edition
and the deployment and
implementation of such technology. In
the proposed rule (82 FR 20065), we
noted that if we identify a change in the
current trends and significant issues
with the certification and deployment of
the 2015 Edition, we will consider
additional methods to offer flexibility in
CY 2018 for those hospitals that are not
able to implement 2015 Edition
certification criteria for CEHRT,
including the flexibility to use
technology certified to the 2014 Edition
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38387
or the 2015 Edition in CY 2018. Another
option we noted is allowing a
combination of EHR technologies
certified to the 2014 Edition and 2015
Edition to be used in CY 2018, for those
hospitals that are not able to fully
implement EHR technology certified to
the 2015 Edition. We invited public
comment on these options for offering
flexibility in CY 2018 with regard to
EHR certification requirements.
Comment: A few commenters
supported CMS’ policy that eCQMs
must be submitted using the 2015
Edition certification criteria for CEHRT
for the CY 2018 reporting period/FY
2020 payment determination because it
offers increased interoperability which
would make both the sharing and usage
of data easier.
Response: We thank the commenters
for their support. We believe using the
most recent version of CEHRT, which
incorporates updated standards and
criteria, is important as it allows us to
collect more relevant and accurate
electronic data. We believe improved
systems interoperability and use of the
most current standards will facilitate
more robust and accurate quality data
reporting. One of the main tenets of the
ONC 2015 Edition final rule (80 FR
62601) is to facilitate greater
interoperability for several clinical
health information purposes and enable
health information exchange through
new and enhanced certification criteria,
standards, and implementation
specifications. We note that we have
worked closely with ONC to enhance
testing and validation of certified
technology’s ability to capture,
exchange, and report electronic patient
data, such as improved testing and
certification through the Cypress CQM
testing and certification tool.275 As
another example, we note that ONC
proposed a ‘‘CQM—report’’ certification
criterion at 45 CFR 170.315(c)(3) as part
of its 2015 Edition certification criteria
that we would then require as described
in the FY 2016 IPPS/LTCH PPS
proposed rule (80 FR 24613 through
24614).
Furthermore, we believe there are
many benefits associated with
upgrading to EHR technology certified
to the 2015 Edition. Specifically, the
2015 Edition includes updates to
standards for structured data capture as
well as data elements in the common
clinical data set which can be captured
in a structured format. The use of
relevant, up-to-date, standards-based
structured data capture with an EHR
certified to the 2015 Edition supports
275 Cypress Tool Overview, available at: https://
www.healthit.gov/cypress/.
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electronic clinical quality measurement.
Further, the 2015 Edition certification
criteria enables health information
exchange through new and enhanced
certification criteria standards, and
implementation specifications for
interoperability while incorporating
changes that are designed to spur
innovation and provide more choices to
health care providers and patients for
the exchange of electronic health
information including new application
access (API) certification criteria. For
example, a new ‘‘transitions of care’’
certification criterion rigorously assess a
product’s ability to create and receive an
interoperable Consolidated-Clinical
Document Architecture (C–CDA). ONC
also adopted certification criteria that
both support interoperability in other
settings and use cases, such as the
Common Clinical Data Set summary
record, data segmentation for privacy,
and care plan certification criteria (80
FR 62603). For additional details about
the updates to the 2015 Edition, we refer
readers to ONC’s Common Clinical Data
Set resource, available at: https://
www.healthit.gov/sites/default/files/
commonclinicaldataset_ml_11-4-15.pdf.
The 2015 Edition certification
criterion (that make up CEHRT) within
the certification testing process includes
features that are designed to improve
the functionality and quality of eCQM
data. Specifically, systems must
demonstrate they can import and allow
a user to export one or more QRDA files.
This allows systems to share files and
extract data for reporting into another
system or send to another system. In
addition, testing coverage is much more
robust; all measures have >80 percent of
test pathways tested in the test bundle
with most >95 percent. The 2015
Edition certification criteria for CEHRT
also includes optional certification
criteria and program specific testing
which can also support electronic
clinical quality reporting. The filter
criteria ensure a product can filter an
electronic file based on demographics
like sex or race, based on provider or
site characteristics like TIN/NPI, and
based on a diagnosis or problem. The
testing for this function checks that
patients are appropriately aggregated
and calculated for this new function
which supports flexibility, specificity
and more robust analysis of eCQM data.
Finally, the 2015 Edition provides
optional testing to CMS requirements
for reporting such as form and manner
specifications and implementation
guides. For these reasons, we encourage
hospitals to deploy the 2015 Edition
certification criteria as soon as
practicable.
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Comment: Many commenters did not
support CMS’ previously finalized
policy that eCQMs must be submitted
using the 2015 Edition certification
criteria for CEHRT for the CY 2018
reporting period/FY 2020 payment
determination.
Several commenters supported the
options described in the FY 2018 IPPS/
LTCH PPS proposed rule, such that
hospitals be permitted to use the 2014
Edition certification criteria for CEHRT
or a combination of 2014 and 2015
Editions for the CY 2018 reporting
period/FY 2020 payment determination.
A few commenters recommended
CMS delay the requirement for eCQMs
to be submitted using the 2015 Edition
certification criteria for CEHRT until the
CY 2019 reporting period/FY 2021
payment determination. The
commenters suggested that additional
time is necessary because the
requirements for the 2015 Edition
certification criteria for CEHRT are
extensive and expensive. In addition,
developers continue to struggle with
completing the certification process by
January 1, 2018.
One commenter mentioned that turn
over in the industry has caused a
backlog in the certification process.
Another commenter expressed concern
that the slow pace of certification, the
number of upgrades still to be
performed, and the number of trainings
yet to be held makes it highly unlikely
that health systems and medical
practices will be prepared to submit
eCQMs using the 2015 Edition
certification criteria for CEHRT for the
CY 2018 reporting period/FY 2020
payment determination. Another
commenter noted that implementing the
2015 Edition certification criteria for
CEHRT does not automatically create
the ability to submit ‘‘appropriate’’ or
complete quality data.
Response: We recognize there is
burden associated with the development
and deployment of each new version of
CEHRT, which may be labor intensive
and expensive for hospitals. We
understand that ONC considers trends
within the industry when projecting for
2015 Edition readiness and has
continued to update this tracking as the
testing and certification process
continues. This tracking, as of the end
of the second quarter of CY 2017,
indicates that overall progress is behind
the first quarter projections.276 ONC has
therefore updated the overall estimate to
reflect an estimate of greater than 75
percent of hospitals will be ready by the
end of CY 2017.277 We refer readers to
276 https://dashboard.healthit.gov/dev/ticker.php.
277 Ibid.
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section IX.G.4. of the preamble of this
final rule for more discussion of ONC’s
efforts on this matter.
We acknowledge commenter concerns
that vendor industry turnover may delay
hospitals’ ability to deploy the 2015
Edition certification criteria for CEHRT.
Since the conclusion of the public
comment period for the FY 2017 IPPS/
LTCH PPS final rule, we have continued
to receive frequent feedback (via email,
webinar questions, help desk questions,
and conference call discussions) from
hospitals and health IT vendors about
ongoing challenges of implementing
eCQM reporting. A summary of the
main concerns identified by these data
submitters are outlined in section
IX.A.8.a. of the preamble of this final
rule. One significant issue that
commenters specifically identified is
the timing of transitioning to new EHR
systems during CY 2017 (for example,
transition to a new EHR vendor or
system upgrades necessary to deploy the
2015 Edition certification criteria for
CEHRT) affects hospitals’ ability to
complete the certification process by
January 1, 2018.
Although we believe that the longerterm benefits of utilizing the 2015
Edition as discussed in the above
response outweigh these costs and
challenges, in response to stakeholder
concerns, in part about the burden
associated with upgrading EHR
technology certified to the 2015 Edition,
we will allow flexibility for hospitals to
use the 2014 Edition, the 2015 Edition,
or a combination of both for the CY
2018 reporting period/FY 2020 payment
determination only. This is a change to
our previously finalized policy that
required hospitals to use the 2015
Edition certification criteria for CEHRT
for the CY 2018 reporting period/FY
2020 payment determination (81 FR
57171).
We will continue to assess the
progress of hospitals implementing
certification requirements and engage in
discussions with hospitals regarding
their experiences as we consider
certification policies related to eCQM
reporting in future rulemaking. We
intend to determine requirements for
the CY 2019 reporting period/FY 2021
payment determination and subsequent
years in future rulemaking. We are
finalizing similar certification policies
for the Medicare and Medicaid EHR
Incentive Programs for hospitals and
CAHs and refer readers to sections
IX.E.2.b. of the preamble of this final
rule.
Furthermore, we refer readers to
section IX.A.8. of the preamble of this
final rule for details on our modified
eCQM reporting requirements for the CY
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2018 reporting period/FY 2020 payment
determination, such that hospitals will
be required to report on 4 eCQMs for
only one, self-selected calendar quarter
of data (instead of a full calendar year)
to reduce burden. By allowing providers
to self-select which quarter of data they
want to submit, they will have more
flexibility to determine implementation
timelines for EHR system upgrades,
such as transitioning to the 2015
Edition.
We acknowledge the commenter’s
concern that implementing the 2015
Edition certification criteria for CEHRT
may not automatically result in the
ability to submit ‘‘appropriate’’ or
complete quality data; however, as
described above, we believe the most
recent Edition of certification criteria for
CEHRT will help support eCQM data
capture and reporting in several ways.
Comment: Some commenters
expressed concern that their current
vendors will not be certifying to the
2015 Edition certification criteria for
CEHRT and worried that CMS would
not grant ECE requests for hospitals
experiencing vendor issues or
transitions. These commenters
suggested that CMS revise its eCQM
ECE policy to allow for EHR vendor
changes. One commenter requested
clarification on the statement that a
hospital is ‘‘not able to implement the
2015 Edition of CEHRT.’’ The
commenter noted the wide variety of
2015 Edition certified products that are
available and suggested waivers for the
requirement to use the 2015 Edition be
sparingly given, if at all, since use of the
updated edition is an important and
significant requirement.
Response: While we strive to move
forward in our electronic reporting
efforts and aim to stay abreast of
evolving infrastructure, we must
balance those goals with being
responsive to stakeholder concerns. We
refer readers to our change in policy
discussed above in order to provide
greater flexibility to hospitals
transitioning to 2015 Edition
certification criteria for CEHRT.
However, if a hospital still finds it is
unable to meet the eCQM submission
deadline or other submission
requirements, the hospital should
review our criteria for an eCQM-related
Extraordinary Circumstances Extension/
Exemption (ECE) (81 FR 57182) and
consider submitting an ECE request by
the ECE request deadline. Currently, the
deadline for the CY 2017 reporting
period/FY 2019 payment determination
is April 1st following the applicable
eCQM submission deadline (February
28, 2018) (82 FR 57172). Our current
policy allows hospitals to utilize the
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existing ECE form to request an
exception from the Hospital IQR
Program’s eCQM reporting requirement
for the applicable program year based
on hardships preventing hospitals from
electronically reporting (81 FR 57182).
Such hardships could include, but are
not limited to, infrastructure challenges
(hospitals must demonstrate that they
are in an area without sufficient internet
access or face insurmountable barriers
to obtaining infrastructure) or
unforeseen circumstances, such as
vendor issues outside of the hospital’s
control (including a vendor product
losing certification) (80 FR 49695 and
49713). ECE requests for the Hospital
IQR Program are considered on a case
by case basis (81 FR 57182). We will
assess the hospital’s request on a caseby-case basis to determine if an
exception is merited. Therefore, our
decision whether or not to grant an ECE
will be based on the specific
circumstances of the hospital. For
additional information about eCQMrelated ECE requests, we refer readers
to, ‘‘The ECE Policy Clarification
Questions and Answers’’ document
located online at: https://
www.qualitynet.org/dcs/
ContentServer?c=Page&pagename=
QnetPublic%2FPage
%2FQnetTier3&cid=1228775554109,
link to document: ECE Policy
Clarification Questions and Answers,
question #5).
Comment: One commenter believed it
unfair to double penalize hospitals
which may have excellent quality and
are able to submit the chart-abstracted
versions of the measure, but do not have
fully operational EHRs. The commenter
noted that only 5 percent of hospitals
failed meaningful use, however, feared
that number may increase with the
transition to 2015 Edition certification
criteria for CEHRT.
Response: With respect to the
commenter’s assertion that it is unfair to
double penalize hospitals that do not
have fully operational EHRs, we
disagree that the requirements for
electronic reporting in the Hospital IQR
Program duplicate penalties. In an effort
to align the Hospital IQR and EHR
Incentive Programs with regard to
electronic quality reporting, we have
specified that hospitals meeting eCQM
reporting requirements for the Hospital
IQR Program will be considered to have
successfully electronically reported
CQMs for the Medicare EHR Incentive
Program as well. As noted by the
commenter and as we previously stated
in the FY 2016 IPPS/LTCH PPS final
rule, our data show that 95 percent of
hospitals already attest to successful
eCQM reporting under the EHR
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38389
Incentive Program and, accordingly, we
believe that the majority of hospitals
will be able to successfully report
eCQMs to meet the Hospital IQR
Program requirements (81 FR 57156).
We do not believe that transition to the
2015 Edition certification criteria for
CEHRT will materially impact the
percentage of hospitals able to
successfully report eCQM data,
particularly in light of our change to
previously finalized policy, discussed
above, to allow flexibility for hospitals
to use the 2014 Edition, 2015 Edition, or
a combination of both for the CY 2018
reporting period/FY 2020 payment
determination.
Comment: One commenter expressed
concern that allowing flexibility on the
use of a combination of the 2014 and
2015 Editions of CEHRT for the CY 2018
reporting period/FY 2020 payment
determination might create more
problems than it could potentially solve.
Response: We interpret the
commenter’s concern to be that allowing
hospitals to use of a combination of the
2014 and 2015 Editions certification
criteria for CEHRT might make it more
difficult for them to meet the eCQM
reporting requirements. We
acknowledge the commenter’s concern
but do not share it; we have allowed
hospitals to use a combination of the
2014 and 2015 Editions of CEHRT for
the CY 2016 reporting period/FY 2018
payment determination and the CY 2017
reporting period/CY 2019 payment
determination, and we are not aware of
any specific issues in QRDA I file
creation or submission. Based on the
comments received, many hospitals and
health IT vendors indicated they would
prefer to have greater time and
flexibility to implement upgrades to the
2015 Edition and specifically suggested
we allow hospitals to use a combination
of the 2014 and 2015 Editions of CEHRT
to satisfy the eCQM certification
requirements for the CY 2018 reporting
period/FY 2020 payment determination.
If we interpret commenter’s concern to
mean that delaying full transition to the
2015 Edition might stall progress toward
more robust electronic data submission,
we believe that we must balance these
goals with other commenters’ concerns
about their ability to timely meet the
certification requirements in the face of
vendor issues and other challenges, as
discussed above. We believe our
changes, as discussed above, to the
previously finalized policy allowing
greater flexibility for hospitals
transitioning to the 2015 Edition best
achieves this balance. We will continue
to assess the progress of hospitals
implementing certification requirements
and engage in discussions with
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hospitals regarding their experiences as
we consider certification policies in
future rulemaking.
Comment: Several commenters noted
their support for the previously
finalized policy that eCQMs could be
submitted via the 2014 or 2015 Edition
certification criteria for CEHRT for the
CY 2017 reporting period/FY 2019
payment determination and
recommended that CMS extend this
option to allow use of the 2014 or 2015
Edition certification criteria for CEHRT
for the CY 2018 reporting period/FY
2020 payment determination, because it
allows hospitals additional flexibility
and enables facilities to spend
appropriate time on implementation,
testing, validation, and education of
EHR systems.
Response: We refer these commenters
and readers to our discussion above,
expanding these policies through the FY
2020 payment determination.
Comment: A few commenters
expressed concern that hospitals may be
penalized more than once for failing to
successfully report eCQMs in both the
Hospital IQR and EHR Incentive
Programs and thus a significant portion
of their annual payment update hinges
on the maturity of health IT vendor
capabilities and the ability of CMS’
QualityNet Secure Portal to manage and
appropriately support the volume of
incoming data submissions.
Commenters noted that hospitals
continue to report barriers to
successfully submitting eCQM data,
including health IT vendor failures
during the submission of production
data (which did not present during test
submissions) and limitations of the
QualityNet Secure Portal, such as: (1)
An inability to accept QRDA I files over
a certain size; (2) an inability to run
reports verifying that data have been
submitted to CMS; and (3) frequent
periods when the system is down
because it cannot accommodate more
than a certain number of users at one
time. Moreover, a commenter expressed
serious concerns about eCQM measure
specification and data validation.
Response: We disagree with
commenters that the requirements for
electronic reporting in the Hospital IQR
and Medicare EHR Incentive Programs
duplicate penalties. As we previously
stated in the FY 2017 IPPS/LTCH PPS
final rule (81 FR 57156), in an effort to
align with the Medicare and Medicaid
EHR Incentive Programs, we have
specified that hospitals meeting
electronic reporting requirements for the
Hospital IQR Program will be
considered to have successfully
reported the eCQM requirement to the
Medicare and Medicaid EHR Incentive
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Programs as well. Our data show that 95
percent of hospitals already attest to
successful electronic clinical quality
measure reporting under the EHR
Incentive Program and, accordingly, we
believe the majority of hospitals will be
able to successfully report electronic
clinical quality measures, meeting the
Hospital IQR Program requirements (81
FR 57156). In addition, if a hospital is
unable to meet the Hospital IQR
Program’s eCQM reporting requirements
due to extraordinary circumstances, the
hospital should review the Hospital IQR
Program’s ECE policy, available at:
https://www.qualitynet.org/dcs/
ContentServer?c=Page&pagename=
QnetPublic%2FPage%2FQnetTier3
&cid=1228775554109, and the EHR
Incentive Program’s hardship exception
policy, available at: https://
www.cms.gov/Regulations-andGuidance/Legislation/EHRIncentive
Programs/PaymentAdj_Hardship.html.
We also refer readers to section IX.A.15.
of the preamble of this final rule for
more details about our ECE policy.
Regarding the limitations of the
QualityNet Secure Portal and QRDA I
file submission difficulties that
commenters described, we acknowledge
that at certain times of high submission
volume leading up to the submission
deadline on February 28, 2017, some
data submitters reported longer file
processing times and inability to timely
run feedback reports. We are actively
taking steps to improve the data
submission experience for the CY 2017
reporting period (the next submission
deadline is February 28, 2018), such as
working with the infrastructure
contractor to increase system
throughput and increase responsiveness
to issues that arise. In addition, the
development contractor is working to
identify efficiencies that can be gained
in our Hospital Quality Reporting
system source code. These efficiencies
should reduce the time it takes to
receive submission confirmation and
run reports.
Regarding the comment that failures
during the submission of production
data were not identified during the test
file submission process, we note the
Pre-Submission Validation Application
(PSVA) tool 278 helps submitters to
assess the QRDA I file format, however,
hospitals and health IT vendors should
submit files for testing in the CMS data
receiving system via the QualityNet
Secure Portal to ensure that production
files are accepted prior to the
submission deadline. Hospitals and
278 https://ecqi.healthit.gov/ecqm-tools-keyresources/tool-library/pre-submission-validationapplication-psva.
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their health IT vendors were notified via
educational materials and presentations
that the utilization of the PSVA tool
assesses the format of the QRDA
Category I file; however, the CMS data
receiving system performs additional
checks, such as the Clinical Document
Architecture (CDA) schema, submission
period dates, and authorization for a
vendor to submit on a hospital’s behalf.
The PSVA tool is a good starting point
for initial validation and will help
hospitals and their vendors to work
through many file format issues. Both
validation methods provide value, but
ultimately the hospital should aim to
ensure that files are accepted through
the CMS data receiving system.
Regarding the QRDA file size
limitation, hospitals and vendors were
notified via education and outreach
efforts the file size limit of QRDA I files
is 5 MB for eCQM reporting. For the CY
2016 reporting period, we received a
relatively small number of files which
were greater than 5 MB. These few files
typically exceeded the file size limit due
to lack of linearization (in other words,
the files did not utilize XML tools to
remove unnecessary spaces and line
breaks) or contained excessive data
unrelated to eCQM reporting. We were
able to individually work with most
data submitters to help them reduce file
sizes over the 5 MB limitation. We are
evaluating the feasibility of expanding
the QRDA I file size for future eCQM
reporting activities.
In addition, as described in section
IX.A.11.b. of the preamble of this final
rule, we intend to address concerns
about the reliability and accuracy of
electronic data through validation. In
order to be able to effectively validate
eCQM data, we need to continuously
assess more data. Moreover, we believe
it is appropriate to require reporting and
validation of eCQMs given that
measures available now and those being
developed for the future are increasingly
based on electronic standards (80 FR
49696).
As discussed above, after review of
the comments received and in
alignment with the Medicare and
Medicaid EHR Incentive Programs, we
are offering greater flexibility and
finalizing a change to our previously
finalized CY 2018 reporting period/FY
2020 payment determination
certification requirements. Instead of
requiring that all EHR technology used
to report eCQM data be certified to the
2015 Edition for the CY 2018 reporting
period/FY 2020 payment determination,
we will allow hospitals to use: (1)
Technology certified to the 2014
Edition; (2) technology certified to the
2015 Edition; or (3) a combination of
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EHR technologies certified to the 2014
Edition and 2015 Edition for the CY
2018 reporting period/FY 2020 payment
determination. We note the previously
finalized certification requirements for
the CY 2017 reporting period/FY 2019
payment determination will remain
unchanged (81 FR 57170 through
57171). We intend to determine
requirements for the CY 2019 reporting
period/FY 2021 payment determination
and subsequent years in future
rulemaking. We refer readers to section
IX.G.4. of the preamble of this final rule,
where we are finalizing a similar policy
for the Medicare and Medicaid EHR
Incentive Programs.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20064 through
20065), we proposed two changes
related to certification requirements
with regard to eCQMs: (1) To require
EHR technology certified to all eCQMs
available to report; and (2) to note
certified EHR technology does not need
to be recertified each time it is updated
to a more recent version of the eCQM
specifications to align with the
Medicare EHR Incentive Program
requirements for eligible hospitals and
CAHs. These proposals are discussed in
more detail below.
(ii) Requirement for EHR Technology To
Be Certified to all eCQMs That are
Available To Report for the CY 2017
Reporting Period/FY 2019 Payment
Determination and the CY 2018
Reporting Period/FY 2020 Payment
Determination
We refer readers to the FY 2016 IPPS/
LTCH PPS final rule (80 FR 49705)
where we noted that although we
require CEHRT, eligible hospitals were
not required to ensure their CEHRT
products were recertified to the most
recent version of the electronic
specifications for the clinical quality
measures. In the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 20065
through 20066), we proposed new
policies regarding the Hospital IQR
Program eCQM specification
requirements to align with the Medicare
EHR Incentive Program’s CQM
electronic reporting requirements.
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57256) for the Medicare EHR
Incentive Program, we finalized the
continuation of a policy that electronic
submission of CQMs will require the
use of the most recent version of the
electronic specification for each eCQM
to which the EHR is certified. For the
Medicare EHR Incentive Program, we
previously finalized that in the event an
eligible hospital or CAH has EHR
technology which is certified to the
2014 Edition but not certified to all of
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the eCQMs that are available to
electronically report for the CY 2017
reporting period/FY 2019 payment
determination, we will require the
hospital to have its EHR technology
certified to all such eCQMs in order to
meet the reporting requirements for the
CY 2017 reporting period/FY 2019
payment determination (81 FR 57256).
Further, for the Medicare EHR Incentive
Program, we stated that for the CY 2017
reporting period eligible hospitals and
CAHs will be required to use the Spring
2016 version of the eCQM specifications
available on the eCQI Resource Center
Web site at: https://ecqi.healthit.gov/.
In order to align the Hospital IQR
Program’s eCQM certification
requirements and the Medicare EHR
Incentive Program CQM electronic
submission requirements for eligible
hospitals and CAHs, in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
20133), we proposed that for the CY
2017 reporting period/FY 2019 payment
determination, a hospital using EHR
technology certified to the 2014 or 2015
Edition, but for which such EHR
technology is not certified to all 15
available eCQMs, would be required to
have its EHR technology certified to all
15 eCQMs that are available to report
under the Hospital IQR Program. We
further proposed (at 82 FR 20066) that
for the CY 2017 reporting period/FY
2019 payment determination, hospitals
would be required to use the most
recent version of the eCQM electronic
specifications (in other words, the
Spring 2016 version of the eCQM
specifications and any applicable
addenda) available on the eCQI
Resource Center Web site at: https://
ecqi.healthit.gov/.
For the CY 2018 reporting period/FY
2020 payment determination, we
proposed to apply this same policy
regarding the reporting of eCQMs, such
that hospitals would be required to use
the most recent version of the eCQM
specifications for each eCQM to which
the EHR is certified (82 FR 20066). For
the CY 2018 reporting period/FY 2020
payment determination, this means
hospitals would be required to use the
most recent version of the eCQM
electronic specifications (in other
words, the Spring 2017 version of the
CQM electronic specifications and any
applicable addenda) available on the
eCQI Resource Center Web site at:
https://ecqi.healthit.gov/. In addition,
we proposed requiring that hospitals
need to have their EHR technology
certified to all 15 available eCQMs in
order to meet the reporting requirements
for the CY 2018 reporting period/FY
2020 payment determination.
Furthermore, we proposed that an EHR
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38391
certified for eCQMs under the 2015
Edition certification criteria would not
need to be recertified each time it is
updated to a more recent version of the
eCQMs. We believe it is not necessary
for EHRs certified for eCQMs under the
2015 Edition certification criteria to be
recertified each time it is updated to the
most recent version of the eCQMs. This
is because the EHR technology
continues to meet the 2015 Edition
certification criteria and any updates to
the eCQM specifications would not
impact any elements regarding
certification. Therefore, we proposed
that recertification would not be
necessary and would reduce the burden
associated with recertification. For
further discussion regarding EHR
certification requirements, we refer
readers to section IX.G.4. of the
preamble of this final rule.
We invited public comment on these
proposals.
Comment: Several commenters
supported the proposal to require EHR
technology to be certified to all eCQMs
for the CY 2017 reporting period/FY
2019 payment determination because all
15 eCQMs should be available for
submission to allow for reporting
flexibility to better reflect the
populations hospitals serve.
Response: We thank the commenters
for their support.
Comment: Several commenters did
not support the proposal to require that
EHRs be certified to all 15 eCQMs for
the CY 2017 reporting period/FY 2019
payment determination. A few of these
commenters noted there is no
requirement as a condition of ONC
certification for EHRs to support all
eCQM reporting options for hospitals,
leaving each hospital or health system
to work independently with vendors in
implementing their measures. The
commenters expressed concern these
conditions may result in additional
costs and hours of additional work for
providers, and cause a tremendous
waste of limited financial and personnel
resources.
Some commenters urged CMS to work
with ONC and health IT vendors to
ensure the 2015 Edition certified EHRs
are capable of supporting hospitals’
eCQM reporting, including the reporting
of any of the eCQMs available to report
in the Hospital IQR Program.
Response: We appreciate the
commenters’ concerns about the
proposal to require EHRs be certified to
all available eCQMs for the CY 2017
reporting period/FY 2019 payment
determination, and we recognize the
challenges associated with eCQM
reporting. Although there is no specific
requirement as a condition of ONC
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certification for EHR technology to
support all available eCQMs, ONC has
adopted certification criteria that both
support interoperability in other settings
and use cases, such as the Common
Clinical Data Set summary record, data
segmentation for privacy, and care plan
certification criteria (80 FR 62603).
Specifically, systems must demonstrate
they can import and allow a user to
export one or more QRDA files. For
additional details about certification
criteria, we refer readers to ONC’s
Common Clinical Data Set resource,
available at: https://www.healthit.gov/
sites/default/files/commonclinical
dataset_ml_11-4-15.pdf.
We believe requiring EHRs to be
certified to all available eCQMs for the
Hospital IQR Program would help to
streamline the process of collecting
electronic data by allowing hospitals
flexibility in the particular eCQMs they
want to select for data capture and
reporting. Having an EHR certified to all
available eCQMs would help prevent
hospitals from having to go back and
consult their health IT vendors and
certify individual measures each time
they want/need to report on a new or
different eCQM. The process of
individual measure certification could
potentially create a bottleneck in the
process, as hospitals would be reliant on
vendor availability and timelines. This
would inadvertently increase the overall
eCQM reporting burden. If EHRs are
certified to all available eCQMs,
however, hospitals would have greater
flexibility in selecting which eCQMs
they want to report for a given reporting
period up until the eCQM submission
deadline, and they would not need to
select which measures in advance based
upon availability of certified eCQMs
offered by the vendor.
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57256), we adopted policy
for the Medicare EHR Incentive Program
requiring that for an eligible hospital or
CAH that has EHR technology certified
to the 2014 Edition, the EHR technology
must be certified to all CQMs that
would be available for the Medicare
EHR Incentive Program CY 2017
reporting period. Requiring EHRs to be
certified to all available eCQMs in the
Hospital IQR Program would align the
Hospital IQR and EHR Incentive
Programs, which would help streamline
requirements across CMS programs,
thereby reducing electronic reporting
burden on hospitals. Because EHRs are
already required to be certified to all
available eCQMs for the EHR Incentive
Program, most hospitals should already
have EHR technology certified to all
available eCQMs at least for the 2014
Edition.
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With regard to commenters’
suggestion that CMS work with ONC
and health IT vendors to ensure
technology certified to the 2015 Edition
are capable of supporting hospitals’
eCQM reporting, we will continue to
seek stakeholder input and collaborate
with colleagues at ONC to define
standards for EHR organization and
structure which would allow for
documentation to fit into the clinical
workflow and to ensure our policies are
responsive to evolving electronic
standards to the greatest extent possible.
We will also work with ONC to monitor
the status of EHR technology certified to
the 2015 Edition and the deployment
and implementation of such technology,
including reporting of the eCQMs that
are available to report in the Hospital
IQR Program.
Comment: Some commenters
expressed concern the proposal to
require that EHRs be certified to all 15
eCQMs for the CY 2017 reporting
period/FY 2019 payment determination
inappropriately places the burden on
hospitals, rather than vendors, to meet
the requirement, especially for hospitals
transitioning from 2014 to 2015 certified
EHR technology and preparing for longplanned system upgrades.
Response: While we recognize that
requiring EHRs to be certified to all
available eCQMs initially creates some
burden for both hospitals and health IT
vendors, we disagree that it unduly
places the burden on hospitals, rather
than vendors, to meet the requirement.
We believe requiring EHRs to be
certified to all available eCQMs could
help alleviate some reporting burden by
offering hospitals greater flexibility to
report eCQM data most appropriate and
useful to internal quality improvement
efforts rather than being limited to only
those eCQMs selected and supported by
their vendors. In addition, requiring
EHRs to be certified to all eCQMs offers
greater certainty to hospitals that their
EHR systems will be capable of
reporting the particular eCQMs they
select and that they could decide to
select different eCQMs if and when
needed. Therefore, we believe the
burden will be offset by the flexibility
it allows hospitals to report on any
eCQMs they choose and to select those
most relevant for their purposes. Once
the initial process of certifying the EHR
to all available eCQMs has been
completed, we believe the burden will
be offset by the flexibility it allows
hospitals to report on any eCQMs they
choose, without having to potentially renegotiate with their health IT vendor for
additional work to certify measures
individually. Further, we note that, a
certified health IT module supporting
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eCQMs would not need to be recertified
each time it is updated to a more recent
version of the eCQMs as stated above,
under this policy, EHR technology
certified for reporting all available
eCQMs would not need to be recertified
each time it is updated to a more recent
version of the eCQM specifications.
Comment: One commenter argued
changes to certification requirements
should be made in rules published by
ONC, as this is the agency with
authority over EHR certification
standards.
Response: We believe changes to
certification requirements related to
electronic reporting of quality measure
data in the Hospital IQR Program
appropriately fall under the purview of
the Hospital IQR Program to specify the
‘‘form and manner’’ of quality data. In
addition, as we stated in the FY 2017
IPPS/LTCH PPS final rule (81 FR
57111), our goal is to align electronic
quality measure requirements of the
Hospital IQR Program with various
other Medicare and Medicaid programs,
including those authorized by the
Health Information Technology for
Economic and Clinical Health (HITECH)
Act, as much as feasible so that the
reporting burden on providers will be
reduced. We will continue to seek
stakeholder input and collaborate with
colleagues at ONC to define standards
for EHR organization and structure. If
we determine based upon stakeholder
feedback that the benefits of requiring
EHRs to be certified to all available
eCQMs, as outlined above, do not
outweigh the burden, we may revisit
this requirement in future rulemaking.
Comment: One commenter expressed
concern this policy eliminates the
opportunity for a specialty product to
focus on measures only applicable to its
domain, such as a surgical suite product
focusing on surgery measures. The
commenter also noted its concern that
this policy would reduce the availability
of certified HIT for hospitals or lead to
poorer workflows for capturing quality
data.
Response: We appreciate the
commenter’s interest in specialty health
IT products that may be even more
applicable to their specialty services or
patient population. We do not believe
our eCQM certification requirements
prevent health IT vendors from
developing and offering such products
or from providers asking for such
products. With regard to our current
eCQM measure set, adding new eCQMs
that address unique and individual
specialties, and incorporation of
electronic products that assess specific
clinical domains, is a consideration for
future rules once the capabilities of
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electronic reporting are more fully
established. We will continue to seek
stakeholder input and collaborate with
colleagues at ONC to monitor the
availability of certified health IT
products for quality measure reporting.
After consideration of the public
comments we received, for the CY 2017
reporting period/FY 2019 payment
determination, we are finalizing our
proposals as proposed to: (1) Require
EHR technology used for eCQM
reporting to be certified to all eCQMs,
but that such certified EHR technology
does not need to be recertified each time
it is updated to a more recent version of
the eCQM electronic specifications; and
(2) require hospitals to use the most
recent version of the eCQM electronic
specifications. In addition, for the CY
2018 reporting period/FY 2020 payment
determination, we are finalizing our
proposals, as proposed, to: (1) Require
EHR technology used for eCQM
reporting to be certified to all eCQMs,
but that such certified EHR technology
does not need to be recertified each time
it is updated to a more recent version of
the eCQM electronic specifications; and
(2) require hospitals to use the most
recent version of the eCQM electronic
specifications. We refer readers to
section IX.G.4. of the preamble of this
final rule where the EHR Incentive
Program is finalizing similar policies.
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(c) Electronic Submission Deadlines for
the FY 2020 Payment Determination
and Subsequent Years
We refer readers to the FY 2015 IPPS/
LTCH PPS final rule (79 FR 50256
through 50259) and the FY 2016 IPPS/
LTCH PPS final rule (80 FR 49705
through 49708) for our previously
adopted policies to align eCQM data
reporting periods and submission
deadlines for both the Hospital IQR
Program and the Medicare EHR
Incentive Program for eligible hospitals
and CAHs.
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57172), we established
eCQM submission deadlines for the
Hospital IQR Program. In the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
20066), we did not propose any changes
to the eCQM submission deadlines for
the FY 2020 payment determination or
subsequent years. Specifically, we are
not making any changes to the February
28, 2018 submission deadline for CY
2017 reporting or the February 28, 2019
submission deadline for CY 2018
reporting (81 FR 57172) to ensure that
APU determinations for FY 2019 and FY
2020 payment determinations are not
affected and to maintain the previously
established alignment with the
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Medicare EHR Incentive Program’s
submission deadline (81 FR 57255).
While we did not propose any
changes to these policies, we received a
few comments related to the submission
deadline and general eCQM data
submission and are addressing them
below.
Comment: One commenter
recommended the submission deadline
be moved to the end of the first quarter
of 2019 instead of February 28, 2019
because this would allow for final ICD–
10 coding and corrections potentially
needed after receiving final
documentation from physicians.
Response: We thank the commenter
for the recommendation to adjust the
eCQM submission deadline from
February 28, 2019 to the end of the first
quarter of 2019. We will take this
suggestion into consideration; however,
at this time, we do not plan to extend
the previously finalized submission
deadline.
Comment: One commenter
recommended that the CMS testing
tools, such as updates to the PSVA tool
and the QualityNet Secure Portal, need
to be available at least three months
before the start of the reporting year,
instead of halfway through the reporting
year, so that health IT developers can
test with the new specifications and
give healthcare organizations ample
time to implement before the reporting
period begins on January 1, 2018,
because without sufficient time for
adoption and testing, many
organizations would not be ready for
early submission.
Response: We thank the commenter
for their suggestion that updates to CMS
testing tools, such as the PSVA tool, and
availability of our data receiving system
via the QualityNet Secure Portal be
made available to developers before the
reporting period, but due to operational
constraints, earlier release of PSVA tool
updates and earlier availability of the
QualityNet Secure Portal is not possible.
We note that we did not develop the
PSVA tool specifically as a development
tool, but as a tool for data submitters to
test their QRDA I files before submitting
the files as production files for program
credit. In addition, we have designed
the QualityNet Secure Portal to allow
for test file submissions as well as
production file submissions. QualityNet
is the only CMS-approved Web site for
secure communications and healthcare
quality data exchange between: Quality
improvement organizations (QIOs),
hospitals, data vendors, and other
providers. We will look further into how
we may be able to release PSVA tool
updates and make the QualityNet
Secure Portal available sooner for
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38393
hospitals and health IT vendors. We
refer readers to section IX.A.8.b. of the
preamble of this final rule, where we
discuss the PSVA tool in more detail.
(d) Summary
As noted in the FY 2016 IPPS/LTCH
PPS final rule (80 FR 49759) and the FY
2017 IPPS/LTCH PPS final rule (81 FR
57257), we continue to encourage health
IT developers to test any updates on an
annual basis, including any updates to
the eCQMs and eCQM reporting
requirements for the Hospital IQR and
Medicare EHR Incentive Programs based
on the CMS Implementation Guide for
Quality Reporting Document
Architecture [QRDA] Category I and
Category III Eligible Professional
Programs and Hospital Quality
Reporting (HQR) (CMS Implementation
Guide for QRDA). The CMS
Implementation Guide for QRDA,
program specific performance
calculation guidance, and eCQM
electronic specifications and guidance
documents are available on the eCQI
Resource Center Web site at: https://
ecqi.healthit.gov/.
As noted in the FY 2017 IPPS/LTCH
PPS final rule (81 FR 57172), we also
continue to encourage all hospitals and
health IT vendors to submit QRDA I
files early, and to use one of the presubmission testing tools for electronic
reporting, such as the CMS PSVA tool,
to allow additional time for testing and
to make sure all required data files are
successfully submitted by the deadline.
The PSVA tool can be downloaded from
the Secure File Transfer (SFT) section of
the QualityNet Secure Portal at: https://
cportal.qualitynet.org/QNet/pgm_
select.jsp.
In summary, in section
IX.A.10.d.(2)(b)(ii) of the preamble of
the FY 2018 IPPS/LTCH PPS proposed
rule, for the CY 2017 reporting period/
FY 2019 payment determination, for the
Hospital IQR Program we proposed: (1)
A hospital using EHR technology
certified to the 2014 or 2015 Edition of
CEHRT, but for which such EHR
technology is not certified to all
available eCQMs, would be required to
have its EHR technology certified to all
eCQMs that are available to report; and
(2) EHR technology that is certified to
all available eCQMs would not need to
be recertified each time the eCQMs are
updated to a more recent version of the
eCQM specifications.
For the CY 2018 reporting period/FY
2020 payment determination, for the
Hospital IQR Program we proposed: (1)
A hospital using EHR technology
certified to the 2015 Edition
certification criteria for CEHRT, but for
which such EHR technology is not
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certified to all available eCQMs, would
be required to have its EHR technology
certified to all eCQMs that are available
to report; and (2) EHR technology that
is certified to all available eCQMs
would not need to be recertified each
time the eCQMs are updated to a more
recent version of the eCQM
specifications. Further, we proposed: (1)
For the CY 2017 reporting period,
hospitals would be required to use the
most recent version of the eCQM
electronic specifications (in other
words, the Spring 2016 version of the
eCQM specifications, and any
applicable addenda); and (2) for the CY
2018 reporting period, hospitals would
be required to use the most recent
version of the eCQM electronic
specifications (in other words, the
Spring 2017 version of the eCQM
specifications, and any applicable
addenda). These eCQM specifications
are available on the eCQI Resource
Center Web site at: https://
ecqi.healthit.gov/. We refer readers to
section IX.E.3.c. of the preamble of this
final rule, where similar policies are
described for the Medicare EHR
Incentive Program for eligible hospitals
and CAHs.
We are reiterating our policies we are
finalizing in this final rule related to the
reporting and submission requirements
of eCQM data for the Hospital IQR
Program: (1) For the CY 2017 reporting
period/FY 2019 payment determination
and for the CY 2018 reporting period/FY
2020 payment determination, we will
offer flexibility, such that hospitals may
use: (a) EHR technology certified to the
2014 Edition; (b) EHR technology
certified to the 2015 Edition; or (c) a
combination of EHR technologies
certified to the 2014 Edition and 2015
Edition; (2) for the CY 2017 reporting
period/FY 2019 payment determination
and the CY 2018 reporting/FY 2020
payment determination, EHR
technology certified to the 2014 or 2015
Edition must be certified to all 15
eCQMs available to report in the
Hospital IQR Program; (3) for the CY
2017 reporting period/FY 2019 payment
determination, hospitals will be
required to use the most recent version
of the eCQM electronic specifications
(in other words, the Spring 2016 version
of the eCQM specifications and any
applicable addenda); (4) for the CY 2018
reporting period/FY 2020 payment
determination, hospitals will be
required to use the most recent version
of the eCQM electronic specifications
(in other words, the Spring 2017 version
of the eCQM specifications and any
applicable addenda); and (5) an EHR
certified for eCQMs under the 2014 or
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2015 Edition certification criteria would
not need to be recertified each time it is
updated to a more recent version of the
eCQM electronic specifications.
e. Submission Form and Method for the
Voluntary Hybrid Hospital Wide
Readmission Measure With Claims and
Electronic Health Record Data (NQF
#2879)
(1) Background
In section IX.A.7. of the preamble of
the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 20045 through 20049), we
proposed voluntary reporting of the
Hybrid Hospital-Wide Measure with
Claims and Electronic Health Record
Data. In the FY 2016 IPPS/LTCH PPS
final rule (80 FR 49701 through 49704),
we signaled our intent to use core
clinical data elements in the Hospital
IQR Program and requested comment on
the use of the QRDA Category I (QRDA
I) file format for this purpose. In that
rule, we noted many commenters
supported submitting the core clinical
data elements using an EHR technology
certified by the ONC. In addition, some
commenters were supportive of our
suggested use of QRDA I specifically for
reporting core clinical data elements
and recommended aligning the
standards for data transmission
requirements with those used in other
reporting programs.
(2) Certification and File Format
Requirements for Core Clinical Data
Element Submissions
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20067), we
proposed that hospitals that voluntary
report data for the Hybrid HospitalWide Readmission measure use EHR
technology certified to the 2015 Edition.
We also referred readers to our
discussion of EHR certification
requirements for eCQM reporting above
and in section IX.G.4. of the preamble
of this final rule where the same
proposed requirements are discussed in
detail for the Medicare EHR Incentive
Program for eligible hospitals and
CAHs. In addition, we proposed that the
13 core clinical data elements and six
linking variables for the Hybrid
Hospital-Wide Readmission measure be
submitted using the QRDA I file format.
In order to ensure the data have been
appropriately connected to the
encounter, the core clinical data
elements specified for risk adjustment
need to be captured in relation to the
start of an inpatient encounter. The
QRDA I standard enables the creation of
an individual patient-level quality
report that contains quality data for one
patient for one or more quality
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measures. We note that as described in
section IX.A.7. of the preamble of this
final rule, participating hospitals are
expected to successfully submit data
values for vital signs and six linking
variables and are required to merge with
the CMS claims data on more than 95
percent of all Medicare FFS patients
who are 65 years and older and are
discharged from the hospital during the
voluntary data collection period. In
addition, participating hospitals are
expected to successfully submit values
for laboratory test results on more than
50 percent of these patients discharged
over the same time period. For further
detail on QRDA I, the most recently
available QRDA I specifications can be
found at: https://www.hl7.org/
implement/standards/product_
brief.cfm?product_id=35.
We invited public comment on our
proposals related to the reporting and
submission requirements of core clinical
data elements and linking variables for
the proposed, voluntary Hybrid
Hospital-Wide Readmission measure as
discussed above.
Comment: Several commenters
supported the proposed voluntary
reporting of the Hybrid Hospital-Wide
Readmission (HWR) measure, noting
that the inclusion of core clinical data
elements and laboratory test results may
provide additional clinical variables
that would enhance the administrative
coding data that is utilized currently in
the risk model variables. Other
commenters supported the measure,
because it is low burden and would
further efforts to harmonize core clinical
data elements with other measures and
reporting requirements, without
impacting payment. One commenter
noted it displayed good use of EHR data,
and testing this approach will develop
useful information that could apply to
other Medicare claims-based measures.
In addition, commenters noted testing a
measure through voluntary collection
could highlight any data collection
issues, while providing hospitals time
needed to redesign their EHRs to collect
and validate these data prior to
mandatory reporting. The commenters
noted reporting hybrid measure data
will add hospital burden as compared to
a measure using only claims, but
expressed support for use of a QRDA I
file when submitting electronic clinical
data for this measure. Specifically, the
commenters noted that use of a QRDA
I file would streamline the submission
process and enable hospitals to continue
to direct resources toward electronic
abstraction. One commenter believed
that requiring QRDA I files increased
the burden on hospitals.
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Response: We thank the commenters
for their support. We refer readers to
section IX.A.7. of the preamble of this
final rule for more information about the
voluntary Hybrid HWR measure that we
are finalizing. We note that there is
burden associated with the collection of
the electronic data for the Hybrid HWR
measure. We do not expect any
additional burden on hospitals to report
the claims-based portion of this
measure, because these data are already
reported to the Medicare program for
payment purposes. We refer readers to
section XIII.B.6.e. of the preamble of
this final rule for more detail on these
burden calculations.
Comment: Several commenters
supported the proposed voluntary
reporting of the Hybrid HWR measure,
but expressed concern that hospitals
need time to redesign their EHRs to
collect and validate these data, and
believed CMS should maintain
flexibility in the reporting requirements
for several years. One commenter
suggested CMS change the proposed
initial reporting period from January 1
through June 30, 2018, to July 1 through
December 31, 2018, or to require only a
single quarter of reporting for the initial
reporting year.
Response: We thank the commenters
for their support. We reiterate that
reporting on the Hybrid HWR measure
is voluntary; we will take into
consideration the commenter’s
suggestion that reporting requirements
should remain flexible for several years
as we consider adopting the Hybrid
HWR measure as mandatory for the
Hospital IQR Program in future
rulemaking. We do not anticipate that
hospitals will need to redesign their
EHR systems to accommodate reporting
of the Hybrid HWR measure, because
these data elements are currently
recorded in EHRs for nearly all
Medicare FFS beneficiaries admitted to
acute care hospitals, as the Hybrid HWR
measure cohort includes most hospital
admissions. However, hospitals will
need to map the data elements in their
stored EHR data, validate that they have
identified the first value captured at the
start of the episode of care, and populate
QRDA I templates for data reporting.
We acknowledge not all hospitals will
be able to submit data for the voluntary
Hybrid HWR measure as soon as July 1,
2018. We note that we proposed the first
two calendar quarters of 2018 as the
reporting period so as not to overlap
with the submission of eCQM data,
which is usually very active during the
winter up through the eCQM
submission deadline of February 28th.
We hope this July submission deadline
will increase participation in voluntary
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reporting of the hybrid measure. In
addition, during Hybrid HWR measure
development and testing, we
demonstrated the core clinical data
elements were feasibly extracted from
hospital EHRs for nearly all adult
patients admitted. The electronic
specifications were tested in four
separate health systems that used three
separate EHR systems, and were
successfully merged with our
administrative claims data.
We are encouraging hospitals to
participate in the voluntary reporting of
the Hybrid HWR measure to gain
experience validating the extracted EHR
data. Participating hospitals would
receive information and instruction on
the use of the electronic specifications
for this measure, have an opportunity to
test extraction and submission of data to
the QualityNet Secure Portal, and
receive confidential feedback reports,
downloadable from the QualityNet
Secure Portal, with details on the
success of their submission, such as the
completeness and accuracy of the data.
We will carefully consider these
suggestions and all lessons learned from
hospitals participating in the voluntary
reporting of the Hybrid HWR measure
before proposing any timeline for future
potential implementation of the
measure.
Comment: Some commenters
suggested instead of jumping from 50
percent for the voluntary Hybrid HWR
measure to 90 percent for the mandatory
Hybrid HWR measure, the amount of
data submitted should increase more
gradually over time.
Response: Based on our previous
testing of this measure, we believe
successful submission of the EHR data
used in the Hybrid HWR measure on at
least 90 percent of adult inpatient
admissions would be necessary in order
to calculate the risk-standardized
readmission rates and publicly report
measure results in the future. During the
voluntary phase of data submission,
there will be no strict requirement.
However, we will request that hospitals
submit the data elements on at least 50
percent and as many as 100 percent of
their admitted patients. Our intent in
setting this 50 percent threshold is to
mimic full reporting as closely as
possible while also encouraging
participation. We will carefully consider
the success of data submission during
the voluntary reporting period before
proposing a timeline and data reporting
expectations for mandatory measure
implementation through future
rulemaking.
Comment: One commenter
recommended that if added to the
Hospital IQR Program measure set as a
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38395
mandatory measure, the measure should
be considered an eCQM for reporting
purposes, allowing hospitals to choose
if they report this measure or other
eCQMs.
Response: We thank the commenter
for their suggestion and will take it into
consideration should we propose the
Hybrid HWR measure as mandatory for
the Hospital IQR Program and/or the
EHR Incentive Programs for electronic
reporting of CQMs in the future. We
strive to align the electronic quality
measure reporting requirements with
the EHR Incentive Programs in order to
reduce administrative burden and
confusion about different reporting
requirements in CMS programs to the
extent feasible.
Comment: Several commenters
suggested CMS explore developing
hybrid condition-specific readmission
measures for the Hospital Readmissions
Reduction Program.
Response: We thank commenters for
their suggestion and will take this under
consideration in crafting future policies
for other CMS programs.
Comment: Several commenters noted
they are dependent on their EHR vendor
to produce the necessary code to
capture and report in the QRDA I file
format, and urged CMS to encourage the
EHR vendor community to support this
initiative. The commenters suggested
CMS should solicit feedback from
hospitals and vendors that choose to
report the Hybrid HWR measure
voluntarily before this measure is
implemented as mandatory in the
Hospital IQR Program. To make the
reporting of this or any other hybrid
measure viable in the long run, the
commenters suggested that CMS would
need the input from stakeholders on the
feasibility of extracting the EHR data
and the accuracy of measure results.
The commenters also suggested CMS
should release results of the voluntary
collection efforts, including feedback on
measure implementation and measure
results from participating hospitals. The
commenters noted hospitals would need
to have sufficient experience prior to the
measure being in mandatory reporting.
Response: We will engage with
stakeholders, including hospitals and
health IT vendors, through educational
webinars and national provider calls
and welcome any feedback from
hospitals and vendors that participate in
voluntary submission of data for the
Hybrid HWR measure. One purpose for
voluntary reporting of this measure is so
that hospitals and health IT vendors can
become familiar with data extraction
and submission for hybrid quality
measures prior to any mandatory
reporting. We will consider feedback
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received from voluntary reporting to
inform the future process and the timing
for any proposals related to mandatory
reporting.
In addition, voluntary reporting of the
Hybrid HWR measure by participating
hospitals will allow us to calculate the
measure results, provide participating
hospitals with feedback about the
extracted data (including the success of
data submission and the measure results
calculated using their EHR data), and to
solicit input from participating hospitals
about any feasibility issues with
extracting the core clinical data
elements. Because hospitals do not
calculate the measure within the EHR
and do not therefore report measure
results to CMS, we will not provide
information about the accuracy of
measure results. Rather, we calculate
the measure using a combination of data
from claims and the EHR data that
hospitals submit and share these results
with participating hospitals. Hospitals
that voluntarily submit data for this
measure would receive confidential
hospital-specific reports that detail
submission results from the
performance reporting period, as well as
the Hybrid HWR measure results
assessed from merged files created by us
merging the EHR data elements
submitted by each participating hospital
with claims data from the same set of
index admissions. EHR data or measure
results for the voluntary reporting of the
Hybrid HWR measure will not be
publicly reported. However, if we
propose to require mandatory reporting
of the Hybrid HWR measure in future
rulemaking, we intend for such a
proposal to include a dry run, during
which hospitals could preview their
results. In addition, we will take into
consideration comments suggesting that
we inform stakeholders about lessons
learned from hospitals that participate
in the voluntary measure prior to
proposing to adopt the Hybrid HWR
measure as mandatory for the Hospital
IQR Program.
Comment: Some commenters
requested additional details related to
the proposed voluntary reporting of the
Hybrid HWR measure. Specifically,
commenters sought clarification on
whether QRDA I file format would be
required or whether participants could
submit data via QualityNet Secure File
Exchange or another method.
Response: Hospitals electing to
participate in voluntary reporting of the
Hybrid HWR measure will be required
to use QRDA I files for submission of
electronic data, which is the current
EHR data and measure reporting
standard for adopted eCQMs
implemented in the Hospital IQR
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Program. We refer readers to the
measure specifications at: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html. We will not
accept data via QualityNet Secure File
Exchange or any other method. As
discussed in our proposal above, in the
FY 2016 IPPS/LTCH PPS final rule (80
FR 49701 through 49704), we signaled
our intent to use core clinical data
elements in the Hospital IQR Program
and requested comment on the use of
the QRDA I file format for this purpose.
In that rule, we noted many commenters
supported submitting the core clinical
data elements using an EHR technology
certified by the ONC. In addition, some
commenters were supportive of our
suggested use of QRDA I specifically for
reporting core clinical data elements
and recommended aligning the
standards for data transmission
requirements with those used in other
reporting programs.
Comment: Some commenters
requested further guidance on whether
the start ‘‘0–24’’ hours timing window
for data capture for these data elements
would be based on arrival time or
admission time. Specifically,
commenters asked if the 0–24 hours
timeframe refers to the timeframe
allotted to collect specimens for an
ordered test or the timeframe to the
result of the test.
Response: For hospitals that choose to
voluntarily submit data, the Hybrid
HWR measure requires submission of
the first captured core clinical data
element values for each Medicare FFS
beneficiary who is 65 years or older and
discharged from an acute care hospital
during the measurement period.279 This
includes data values captured in any
department, including outpatient or
emergency department visits that end
inpatient admissions.
To clarify the ‘‘0–24’’ hours timeframe
for the core clinical data elements, they
represent the result of the first collected
data element (not the time of the order)
after arrival at the hospital for care (not
necessarily inpatient admission time).
For example, if a patient receives care
for several hours in the Emergency
Department and is later admitted to the
inpatient facility for additional
treatment, the measure requires the first
captured data value in the Emergency
Department. Vital signs (heart rate,
respiratory rate, temperature, systolic
279 Hybrid Hospital-Wide Readmission Measure
with Electronic Health Record Extracted Risk
Factors (Version 1.1). Available at: https://
www.cms.gov/Medicare/Quality-Initiatives-PatientAssessment-Instruments/HospitalQualityInits/
Measure-Methodology.html.
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blood pressure, oxygen saturation),
should be recorded within two hours
(‘‘0–2 hours’’). Laboratory results
(hematocrit, white blood cell count,
sodium, potassium, bicarbonate,
creatinine, and glucose) and weight
should be recorded within 24 hours
(‘‘0–24 hours’’). These time windows
were based on empirical analysis of
vital signs and laboratory test results
captured in EHRs for patients admitted
to acute care short stay hospitals. We
assessed the time to capture of an initial
set of vital signs and basic laboratory
test results from the time of arrival at
the facility for patients who were 65
years and older and subsequently
admitted during the same encounter for
treatment of a variety of medical
conditions. We refer readers to the
measure specifications 280 for more
details.
Comment: Some commenters sought
clarification on whether the expectation
would be that an EHR would only send
data on encounters that meet the
measure population requirements, since
an EHR might not be able to identify an
index admission.
Response: We understand that all or
nearly all hospitals maintain electronic
administrative records which identify
inpatient admissions to support billing
for Medicare FFS beneficiaries and
patients insured through other payers.
We understand that for many hospitals
these administrative systems are
separate from the clinical EHR and that
identifying inpatient admissions and
then extracting the EHR data elements
for those patients might require separate
queries in the two systems. However,
the testing we have performed in four
volunteer hospitals that developed and
deployed queries within their EHR and
successfully extracted the data elements
used in the voluntary Hybrid HWR
measure demonstrated that hospitals
were able to identify inpatient
admissions using stored electronic data
and were able to extract the EHR data
elements for those patients.
As we stated in the proposed rule (82
FR 20047), hospitals would only submit
data for index admissions that meet the
Hybrid HWR measure cohort inclusion
criteria, and the measure would only be
calculated for this cohort. The inclusion
and exclusion criteria of the Hybrid
HWR measure are also aligned with the
currently adopted Hospital-Wide AllCause Unplanned Readmission
measure, which can be found in the
2017 All-Cause Hospital-Wide Measure
Updates and Specifications Report,
available at: https://www.cms.gov/
Medicare/Quality-Initiatives-Patient280 Ibid.
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Assessment-Instruments/
HospitalQualityInits/MeasureMethodology.html.
Further, we developed and tested a
Measure Authoring Tool 281 that uses
existing value sets where possible,
which includes identifying inpatient
encounters (index admissions). As
stated in the proposed rule (82 FR
20046), the electronic specifications
were tested in multiple health systems,
and they all were able to appropriately
identify acute care hospital inpatient
encounters.
Comment: One commenter inquired
about the proposed deadline and
frequency for reporting.
Response: We refer readers to section
IX.A.7.b. of the preamble of this final
rule for details on reporting and
deadlines. To summarize, the voluntary
reporting of the Hybrid HWR measure
has a one-time measurement period for
discharges occurring over a 6-month
period in the first two quarters of CY
2018 (January 1, 2018 through June 30,
2018), with data being reported to CMS
in the fall of 2018. For this voluntary
reporting effort, we ask hospitals to
submit electronic data once on
applicable Medicare FFS beneficiaries,
on at least 50 percent of these patients.
Comment: Several commenters
requested that CMS not set any date for
either mandatory submission or public
reporting of the Hybrid HWR measure.
The commenters expressed concerns the
hybrid measure is incredibly
challenging to implement and CMS does
not have a robust infrastructure to
collect these data.
Several commenters requested that
CMS provide at least an eighteen-month
window, and as much as 24-months, to
organizations before a hybrid measure is
implemented. The commenters
recommended that CMS not require
mandatory reporting of the Hybrid HWR
measure until it has reviewed the
experience of hospitals submitting the
measure on a voluntary basis.
Response: We appreciate the
suggestions on the timing of future
implementation. Although, we
recognize there is some burden to
hospitals in identifying the data
elements required for the Hybrid HWR
measure, it is important to note that
these data elements are currently
recorded in EHRs for nearly all
Medicare FFS beneficiaries admitted to
acute care hospitals, as the Hybrid HWR
measure cohort includes most hospital
admissions. We do not anticipate
hospitals will need to alter clinical
workflows to capture these data.
281 CMS Measure Authoring Tool. Available at:
https://www.emeasuretool.cms.gov/.
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However, hospitals will need to map the
data elements in their stored EHR data,
validate that they have identified the
first value captured at the start of the
episode of care, and populate QRDA I
templates for data reporting.
We note reporting on the Hybrid HWR
measure is purposefully voluntary and
that we have not set any date for either
mandatory submission or public
reporting of the Hybrid HWR measure.
We intend to review the experience of
hospitals submitting the Hybrid HWR
measure data on a voluntary basis prior
to potentially proposing to adopt this
measure as mandatory in the future.
With respect to commenters’ concerns
that CMS does not have a robust
infrastructure to collect data for the
Hybrid HWR measure, we disagree.
Hybrid HWR measure data are derived
from both claims and clinical EHR data,
via submission of QRDA I files; we
already collect and utilize claims data
and QRDA I file data for other measures
in the Hospital IQR Program measure
set.
We refer readers to section
IX.A.10.d.(2)(b) of the preamble of this
final rule, where we are finalizing a
policy to allow hospitals greater
flexibility, such that hospitals may use
EHR technology that is: (1) Certified to
the 2014 Edition; (2) certified to the
2015 Edition; or (3) a combination of
both the 2014 Edition and 2015 Edition.
As a result, we are modifying our
proposal for the Hybrid HWR measure
from requiring use of EHR technology
certified to the 2015 Edition to giving
hospitals that elect to submit data
voluntarily the option to use EHR
technology that is: (1) Certified to the
2014 Edition; (2) certified to the 2015
Edition; or (3) a combination of both the
2014 Edition and 2015 Edition.
We recognize that these activities
require effort and collaboration with
health IT vendors and we will continue
to solicit feedback from stakeholders
throughout voluntary reporting of this
measure and carefully consider provider
burden before proposing any timeline
for mandatory adoption or public
reporting of hybrid measures.
Comment: One commenter requested
CMS delay implementation until further
improvements have been made related
to submitting data using the QRDA I file
format.
Response: We disagree that we should
delay implementation until further
improvements have been made related
to submitting data using the QRDA I file
format. We have experienced
widespread utility of the QRDA I format
among hospitals, dating back to
electronic reporting pilots from 2012
and 2013, which included electronic
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reporting via QRDA I, as the basis for
aligned reporting in 2014 for the
Medicare EHR Incentive and the
Hospital IQR Programs (79 FR 50905). In
addition, QRDA I is the current EHR
data and measure reporting standard for
adopted eCQMs implemented in the
Hospital IQR and Medicare EHR
Incentive Programs.
Comment: One commenter did not
support the voluntary Hybrid HWR
measure as they were concerned with
the standardization of values.
Response: We interpret this comment
to mean that the commenter had
concerns about how the core clinical
data elements were selected for
potential use in the voluntary Hybrid
HWR measure. To be feasible for use in
the measure, we applied a strict set of
criteria that the data elements must be:
(1) Consistently obtained in the target
population based on current clinical
practice; (2) captured with a standard
definition and recorded in a standard
format; and (3) entered in structured
fields that are feasibly retrieved from
current EHR systems. These criteria
align with those proposed by the NQF
for assessing the feasibility of EHR data
elements in quality measurement.282 We
established that the data elements used
in the voluntary Hybrid HWR measure
meet these criteria through empirical
analysis of data provided by hospitals
on patients who were 65 years and older
admitted for treatment of a variety of
conditions. This testing confirmed that
the data elements are consistently
obtained, captured as structured data,
and recorded in standard format across
different EHRs and different hospitals.
After consideration of the public
comments we received, we are
finalizing our proposals related to the
voluntary reporting and submission of
core clinical data elements and linking
variables for the Hybrid Hospital-Wide
Readmission measure as proposed, with
one modification. Instead of requiring
use of EHR technology certified to the
2015 Edition, we are allowing greater
flexibility and will accept use of EHR
technology that is: (1) Certified to the
2014 Edition; (2) certified to the 2015
Edition; or (3) a combination of both the
2014 Edition and 2015 Edition.
f. Sampling and Case Thresholds for the
FY 2020 Payment Determination and
Subsequent Years
We refer readers to the FY 2011 IPPS/
LTCH PPS final rule (75 FR 50221), the
FY 2012 IPPS/LTCH PPS final rule (76
282 NQF Measure Evaluation Criteria. Available
at: https://www.qualityforum.org/Measuring_
Performance/Endorsed_Performance_Measures_
Maintenance.aspx.
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FR 51641), the FY 2013 IPPS/LTCH PPS
final rule (77 FR 53537), the FY 2014
IPPS/LTCH PPS final rule (78 FR
50819), and the FY 2016 IPPS/LTCH
PPS final rule (80 FR 49709) for details
on our sampling and case thresholds for
the FY 2016 payment determination and
subsequent years. In the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 20067),
we did not propose any changes to our
sampling and case threshold policies.
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g. HCAHPS Administration and
Submission Requirements for the FY
2020 Payment Determination and
Subsequent Years
We refer readers to the FY 2011 IPPS/
LTCH PPS final rule (75 FR 50220), the
FY 2012 IPPS/LTCH PPS final rule (76
FR 51641 through 51643), the FY 2013
IPPS/LTCH PPS final rule (77 FR 53537
through 53538), and the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50819
through 50820) for details on
previously-adopted HCAHPS
requirements. We also refer hospitals
and HCAHPS Survey vendors to the
official HCAHPS Web site at: https://
www.hcahpsonline.org for new
information and program updates
regarding the HCAHPS Survey, its
administration, oversight, and data
adjustments. We refer readers to section
IX.A.6.a. of the preamble of this final
rule for details on our proposal to refine
the three questions of the Pain
Management measure in the HCAHPS
Survey. While we proposed to refine the
survey with respect to the questions
about pain management in section
IX.A.6.a. of the preamble of the
proposed rule, in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 20067),
we did not propose any changes to the
HCAHPS administration nor the
HCAHPS submission requirements.
h. Data Submission Requirements for
Structural Measures for the FY 2020
Payment Determination and Subsequent
Years
We refer readers to the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51643
through 51644) and the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53538
through 53539) for details on the data
submission requirements for structural
measures. In the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 20067), we
did not propose any changes to data
submission requirements for structural
measures.
i. Data Submission and Reporting
Requirements for HAI Measures
Reported via NHSN
For details on the data submission
and reporting requirements for HAI
measures reported via the CDC’s NHSN
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Web site, we refer readers to the FY
2012 IPPS/LTCH PPS final rule (76 FR
51629 through 51633; 51644 through
51645), the FY 2013 IPPS/LTCH PPS
final rule (77 FR 53539), the FY 2014
IPPS/LTCH PPS final rule (78 FR 50821
through 50822), and the FY 2015 IPPS/
LTCH PPS final rule (79 FR 50259
through 50262). The data submission
deadlines are posted on the QualityNet
Web site at: https://www.QualityNet.
org/. In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20067), we did not
propose any changes to data submission
and reporting requirements for HAI
measures reported via the NHSN.
11. Modifications to the Validation of
Hospital IQR Program Data
a. Background
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53539 through 53553), we
finalized the processes and procedures
for validation of chart-abstracted
measures in the Hospital IQR Program
for the FY 2015 payment determination
and subsequent years; the FY 2013
IPPS/LTCH PPS final rule also contains
a comprehensive summary of all
procedures finalized in previous years
that are still in effect. We refer readers
to the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50822 through 50835), the
FY 2015 IPPS/LTCH PPS final rule (79
FR 50262 through 50273), and the FY
2016 IPPS/LTCH PPS final rule (80 FR
49710 through 49712) for detailed
information on the modifications to
these processes finalized for the FY
2016, FY 2017, and FY 2018 payment
determinations and subsequent years.
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57173 through 57181), we
finalized our proposal to update the
validation procedures in order to
incorporate a process for validating
eCQM data for the FY 2020 payment
determination and subsequent years.
Specifically, we finalized a policy to: (1)
Validate eCQM data submitted by up to
200 hospitals selected via random
sample; (2) exclude any hospital
selected for chart-abstracted measure
validation as well as any hospital that
has been granted a Hospital IQR
Program Extraordinary Circumstances
Exemption for the applicable eCQM
reporting period; and (3) randomly
select 32 cases from the QRDA I files
submitted by each hospital selected for
eCQM data validation for the FY 2020
payment determination and subsequent
years. As described in the FY 2017
IPPS/LTCH PPS final rule (81 FR
57176), we will not conduct the first
validation of eCQM data until spring of
2018 to validate data from the CY 2017
reporting period. Validation of CY 2017
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data during spring of 2018 affects the FY
2020 payment determination (81 FR
57177). Accordingly, below we refer to
the CY 2017 reporting period/FY 2020
payment determination for validation of
data for encounters occurring during CY
2017 and the CY 2018 reporting period/
FY 2021 payment determination for
validation of data for encounters during
CY 2018.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20067 through
20070), we proposed to change these
previously finalized policies for eCQM
data validation for the FY 2020 payment
determination and subsequent years.
First, for hospitals selected to
participate in validation of eCQMs, we
proposed that we will select eight cases
per quarter for the CY 2017 reporting
period/FY 2020 payment determination
and subsequent years. We noted this
proposal was contingent upon whether
or not our proposed modifications to
eCQM reporting requirements for the CY
2017 reporting period/FY 2019 payment
determination and CY 2018 reporting
period/FY 2020 payment determination,
as described in section IX.A.8. of the
preamble of this final rule, were
finalized as proposed. Second, we
proposed to add additional exclusion
criteria to our hospital and case
selection process for eCQM data
validation for the CY 2017 reporting
period/FY 2020 payment determination
and subsequent years. Third, we
proposed to continue our previously
finalized medical record submission
requirements for the FY 2021 payment
determination and subsequent years as
well as to provide clarification of our
previously finalized policy.
For validation of chart-abstracted
measures data, we proposed to update
our educational review process for the
FY 2020 payment determination and
subsequent years. These proposals are
discussed in more detail below.
b. Changes to the Existing Processes for
Validation of Hospital IQR Program
eCQM Data for the FY 2020 Payment
Determination and Subsequent Years
(1) Number of Cases
We finalized in the FY 2017 IPPS/
LTCH PPS final rule that we would
select eight cases per quarter, for four
quarters, for a total of 32 cases
(individual patient-level reports), from
the QRDA I files submitted by each
hospital selected for eCQM data
validation (81 FR 57178). In the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
20068), we proposed to update that
requirement, such that we would select
eight cases per quarter, (the number of
quarters required would vary by specific
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FY payment determination) to complete
eCQM data validation for the FY 2020
payment determination and subsequent
years, instead of 32 cases, over all four
quarters, as previously finalized. This
proposal was made in conjunction with
our proposals to modify the number of
quarters required for eCQM data
submission from: (1) Four quarters to
two, self-selected quarters for CY 2017
(with validation of these data affecting
the FY 2020 payment determination);
and (2) four quarters to the first three
quarters for CY 2018 (with validation of
these data affecting the FY 2021
payment determination). If all of these
proposals were finalized as proposed,
hospitals selected for eCQM data
validation would be required to submit:
(1) 16 cases over two calendar quarters
(eight cases × two quarters) for the CY
2017 reporting period/FY 2020 payment
determination; and (2) 24 cases over
three quarters (eight cases × three
quarters) for the CY 2018 reporting
period/FY 2021 payment determination.
We invited public comment on the
proposals we made in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
20068) as discussed above.
Comment: Several commenters
supported the reduction to the number
of eCQM cases to be validated from 32
to 16 cases for the CY 2017 reporting
period, which would impact the FY
2020 payment determination, and to 24
cases for the CY 2018 reporting period,
which would impact the FY 2021
payment determination.
Response: We thank the commenters
for their support.
Comment: One commenter urged
CMS to consider reducing the number of
cases selected for validation each
quarter from 8 to a lower number in
order to minimize reporting burden for
hospitals.
Response: We consider a sample of
eight cases for each quarter to be the
minimum sample size needed to
accurately ascertain the quality of the
reported data by measure. We believe
using a sample size of eight cases per
quarter balances the burden on hospitals
of providing medical records for eCQM
data validation with our need for a
sufficient minimum number of cases to
be able to properly evaluate the data.
However, we refer readers to section
IX.A.8. of the preamble of this final rule,
where we are finalizing a modified
policy to further reduce the eCQM
reporting requirements, such that
hospitals are only required to submit
one, self-selected calendar quarter of
data for 4 eCQMs for both the CY 2017
reporting period/FY 2019 payment
determination and the CY 2018
reporting period/FY 2020 payment
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determination. This does not directly
change our proposal to select eight cases
per quarter for eCQM data validation for
the FY 2020 payment determination and
subsequent years (for validation of
eCQM data reported in CY 2017 data
and subsequent years). However, in
effect, due to these finalized
modifications to the eCQM reporting
requirements, hospitals selected for
validation will be required to submit
only 8 cases in total for each of the CY
2017 reporting period/FY 2020 payment
determination (8 cases × 1 quarter) and
CY 2018 reporting period/FY 2021
payment determination (8 cases × 1
quarter), instead of: (1) 16 cases over
two calendar quarters (8 cases × 2
quarters) for the CY 2017 reporting
period/FY 2020 payment determination;
and (2) 24 cases over 3 quarters (8 cases
× 3 quarters) for the CY 2018 reporting
period/FY 2021 payment determination
as discussed in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 20068).
After consideration of the public
comments we received, we are
finalizing our proposal, as proposed, to
reduce the number of cases selected for
eCQM data validation to eight cases per
quarter for the FY 2020 payment
determination and subsequent years.
(2) Selection of Hospitals and Cases
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20068 through
20069), for the CY 2017 reporting
period/FY 2020 payment determination
and subsequent years, we proposed
changes to our policies related to the
selection of hospitals and cases for
eCQM data validation to: (1) Expand the
types of hospitals that could be
excluded; and (2) expand the types of
cases excluded from selection. These
proposals are discussed in more detail
below.
(a) Selection of Hospitals
As previously finalized in the FY
2017 IPPS/LTCH PPS final rule (81 FR
57174 through 57178), we will validate
eCQM data submitted by up to 200
hospitals selected via random sample.
Further, we finalized that the following
hospitals may be excluded from this
random sample of 200 hospitals selected
for eCQM data validation (81 FR 57178):
• Any hospital selected for chartabstracted measure validation; and
• Any hospital that has been granted
a Hospital IQR Program Extraordinary
Circumstances Exemption for the
applicable eCQM reporting period.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20068), we
proposed to expand the types of
hospitals that could be excluded. For
the FY 2020 payment determination and
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38399
subsequent years, we proposed to also
exclude any hospital that does not have
at least five discharges for at least one
reported eCQM included among their
QRDA I file submissions. In addition,
we proposed that the three exclusions
described above would be applied
before the random selection of 200
hospitals for eCQM data validation, so
that hospitals meeting any of these
exclusions would not be eligible for
selection. We believe that these
proposals improve the likelihood that
there would be sufficient data for
validation obtained from the hospitals
selected for eCQM data validation.
We invited public comment on our
proposals to: (1) Exclude any hospital
that does not have at least five
discharges for at least one reported
eCQM included among their QRDA I file
submissions in eCQM data validation;
and (2) to exclude from selection
hospitals meeting either of the two
exclusion criteria finalized in the FY
2017 IPPS/LTCH PPS final rule (81 FR
57178) as discussed above. We note that
the proposed rule (at 82 FR 20068)
included a technical error stating ‘‘and/
or (2) to exclude from selection
hospitals meeting either of the two
exclusion criteria finalized in the FY
2017 IPPS/LTCH PPS final rule (81 FR
57178).’’ We have corrected the
language in this final rule to state
‘‘and,’’ instead of ‘‘and/or.’’
Comment: A few commenters
supported the exclusion of hospitals
from eCQM data validation selection
that have already been selected for
chart-abstracted measure validation or
that have been granted a Hospital IQR
Program Extraordinary Circumstances
Exemption because it provides relief of
undue burden on facilities and increases
the chance that selected hospitals will
have an adequate sample size for
validation.
Response: We thank the commenters
for their support.
After consideration of the public
comments we received, we are
finalizing our proposals, as proposed,
for the FY 2020 payment determination
and subsequent years: (1) To exclude
any hospital that does not have at least
five discharges for at least one reported
eCQM included among their QRDA I file
submissions; and (2) to exclude from
selection hospitals meeting either of the
two exclusion criteria finalized in the
FY 2017 IPPS/LTCH PPS final rule (81
FR 57178). This means that the three
exclusion criteria described would be
applied before random selection of 200
hospitals for eCQM data validation,
such that hospitals meeting one or more
of these exclusion criteria would not be
eligible for selection.
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(b) Selection of Cases
We have not previously specified
processes for the selection of cases for
eCQM data validation. For the FY 2020
payment determination and subsequent
years, we proposed to exclude the
following cases from validation for
those hospitals selected to participate in
eCQM data validation:
• Episodes of care that are longer than
120 days; and
• Cases with a zero denominator for
each measure.
We believe excluding episodes of care
that are longer than 120 days will
reduce the reporting burden on
hospitals selected for eCQM data
validation, as the volume of data
reported for longer cases is greater.
Further, we believe excluding cases
with zero denominators for each
measure would ensure we perform
validation only on cases with applicable
measure data. We note this proposed
exclusion applies to cases, rather than
measures. However, a measure would
not be validated if a hospital did not
have any applicable cases for the
measure.
We invited public comments on our
proposal to exclude: (1) Episodes of care
that are longer than 120 days; and (2)
cases with a zero denominator for each
measure from eCQM data validation for
the FY 2020 payment determination and
subsequent years as discussed above.
Comment: A few commenters
supported the proposed policy of
adding additional exclusion criteria to
the hospital and case selection process
for eCQM data validation to include: (1)
Episodes of care that are longer than 120
days; and (2) cases with a zero
denominator for each measure, because
these exclusions would decrease
hospital reporting burden.
Response: We thank the commenters
for their support.
After consideration of the public
comments we received, we are
finalizing our proposal, as proposed, for
the FY 2020 payment determination and
subsequent years, to add exclusion
criteria to the hospital and case
selection process for eCQM data
validation to include: (1) Episodes of
care that are longer than 120 days; and
(2) cases with a zero denominator for
each measure.
(3) Medical Record Submission
Requirements and Scoring
(a) Medical Record Submission
Requirements
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57179), we finalized that
hospitals participating in eCQM data
validation for the FY 2020 payment
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determination and subsequent years are
required to: (1) Submit data by 30
calendar days following the medical
records request date listed on the CDAC
request form; (2) provide sufficient
patient level information necessary to
match the requested medical record to
the original Hospital IQR Program
submitted eCQM measure data record;
and (3) submit records in PDF file
format through QualityNet using the
Secure File Transfer (SFT). We also
finalized for hospitals selected for
eCQM data validation (for the FY 2020
payment determination only): (1) We
require submission of at least 75 percent
of sampled eCQM measure medical
records in a timely and complete
manner; and (2) the accuracy of eCQM
data submitted for validation would not
affect a hospital’s validation score (81
FR 57180). In the FY 2018 IPPS/LTCH
PPS proposed rule, we did not propose
to make any changes related to these
operational procedures. However, we
proposed to continue these policies for
the FY 2021 payment determination and
subsequent years. In the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 20068
through 20069), we proposed to extend
to the FY 2021 payment determination
and subsequent years our previously
finalized medical record submission
policy for eCQM data validation, as
finalized in the FY 2017 IPPS/LTCH
PPS final rule (81 FR 57181), requiring
submission of at least 75 percent of
sampled eCQM measure medical
records in a timely and complete
manner. We also proposed to extend to
the FY 2021 payment determination our
previously finalized medical record
submission policy for eCQM data
validation, as finalized in the FY 2017
IPPS/LTCH PPS final rule (81 FR
57181), that the accuracy of eCQM data
submitted for validation would not
affect a hospital’s validation score. (We
note that this policy is discussed in
more detail in the next section and refer
readers below.) We noted that if our
proposals in section IX.A.8 of the
preamble of the FY 2018 IPPS/LTCH
PPS proposed rule, which proposed two
quarters of data for CY 2017 eCQM data
submission and eight cases per quarter
for hospitals selected for validation (16
total cases for the entire data collection
period), were finalized as proposed, and
hospitals selected for eCQM data
validation are required to submit
complete information for 75 percent of
requested cases as previously finalized,
then those hospitals would be required
to submit information for at least 12
records, or 75 percent of the requested
16 records for the FY 2020 payment
determination. Similarly, if our
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proposals: (1) To continue our medical
record submission policies for the FY
2021 payment determination and
subsequent years; (2) to require three
quarters of data for CY 2018 eCQM data
submission and eight cases per quarter
for hospitals selected for validation (24
total cases for the entire data collection
period) as detailed in section IX.A.8 of
the preamble of the FY 2018 IPPS/LTCH
PPS proposed rule; and (3) hospitals
selected for eCQM data validation are
required to submit complete
information for 75 percent of requested
cases, were all finalized as proposed,
then those hospitals would be required
to submit complete information for at
least 18 records, or 75 percent of the
requested 24 records for the FY 2021
payment determination.
Furthermore, as finalized in the FY
2017 IPPS/LTCH PPS final rule (81 FR
57180) for the FY 2020 payment
determination, in the proposed rule (82
FR 20069), we proposed, for the FY
2021 payment determination and
subsequent years, that any hospital that
fails any validation requirement, such as
submission of records in PDF file format
within 30 days of the date listed on the
CDAC medical records request, and/or
submission of complete information for
at least 75 percent of the requested
records, would be considered not to
have met the eCQM validation
requirements and would be subject to a
one-quarter reduction of the applicable
percentage increase for not meeting all
Hospital IQR Program requirements.
We invited public comment on the
proposals we made in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
20068 through 20069) as discussed
above.
Comment: One commenter
recommended CMS reconsider the
process of submitting PDF copies of the
medical records for validation,
suggesting that a more accurate method
would be for CMS to send an auditor
onsite to validate the data directly from
the EHR.
Response: We thank the commenters
for the input. At this time, we believe
the most feasible and less burdensome
approach to hospitals is to continue the
current process for medical record
submission for validation via PDF file
submission. In particular, we recognize
the significant time and resources that
hospitals would be required to address
CMS onsite validator needs and access
to onsite information. We strongly
believe that hospital resources would be
better devoted to caring for and
communicating with patients and their
caregivers. We also note that hospitals
are familiar with this method of
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reporting medical records for chartabstracted measure validation.
Comment: One commenter requested
clarification on which format (complete
medical record, including free text or
printout of the QRDA I file) CMS will
use to validate eCQM data.
Response: Per the FY 2017 IPPS/
LTCH PPS final rule (81 FR 57179), the
format will be a portable document
format (PDF) of the entire medical
record.
After consideration of the public
comments we received, we are
finalizing our proposals, as proposed,
for the FY 2021 payment determination
and subsequent years, that: (1) Hospitals
selected for eCQM data validation are
required to submit at least 75 percent of
sampled eCQM measure medical
records in a timely and complete
manner; and (2) any hospital that fails
any validation requirement would be
considered not to have met the eCQM
validation requirements and would be
subject to a one-quarter reduction of the
applicable percentage increase for not
meeting all Hospital IQR Program
requirements. As discussed in section
IX.A.8 of the preamble of this final rule,
we are finalizing a modification to the
eCQM reporting requirements such that
hospitals are required to submit one,
self-selected calendar quarter of data for
4 eCQMs for both the CY 2017 reporting
period/FY 2019 payment determination
and the CY 2018 reporting period/FY
2020 payment determination.
Furthermore, we refer readers to section
IX.A.11.b.(1) of the preamble of this
final rule where we are finalizing our
proposals to require hospitals selected
for eCQM data validation to submit
eight cases for the selected calendar
quarter. As applied to our finalized
policies here for the FY 2021 payment
determination, selected hospitals would
be required to submit complete
information for at least 6 records, or 75
percent of the requested 8 records.
(b) Scoring
As finalized in the FY 2017 IPPS/
LTCH PPS final rule (81 FR 57178) for
the FY 2020 payment determination
only, the accuracy of eCQM data (the
extent to which eCQM data reported for
validation matches the data previously
reported in the QRDA I files for eCQM
reporting) submitted for validation will
not affect a hospital’s validation score.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20069), we
proposed the continuation of this policy
for the FY 2021 payment determination,
such that the accuracy of eCQM data
submitted for validation would not
affect a hospital’s validation score. We
intend for the accuracy of eCQM data
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validation to affect validation scores in
the future and would propose any
changes related to this in future
rulemaking. The data submission
deadlines and additional details about
the eCQM data validation procedures
will be posted on the QualityNet Web
site at: https://www.QualityNet.org/. We
invited public comment on this
proposal as discussed above.
We did not receive any public
comments on our proposal. We are
finalizing our proposal, as proposed,
that the accuracy of eCQM data
submitted for validation will not affect
a hospital’s validation score for the FY
2021 payment determination. We also
received general comments about the
eCQM data validation process in the
Hospital IQR Program; these are
discussed below.
Comment: A few commenters did not
support the proposed modifications to
the eCQM data validation process in the
Hospital IQR Program. The commenters
noted that validation of eCQMs should
not be done until additional measures
are accepted and built by vendors to
allow hospitals the opportunity to
submit data which aligns with their
population and workflow rather than
those currently available from the
vendor. In addition, commenters stated
that small hospitals without pediatrics,
perinatal care, or stroke centers are very
limited in their ability to submit
eCQMs.
Response: We understand eCQM data
validation imposes some burden on
hospitals, but as we seek to evaluate the
established validation procedures and
expand electronic data reporting and
validation, we believe validating data
starting with the CY 2017 reporting
period is necessary. Furthermore,
because the accuracy of eCQM data
submitted for validation will not affect
a hospital’s validation score for the FY
2021 payment determination, as
finalized above, we believe this will
balance any hospital burden or need for
additional time to update their systems
with our need to evaluate the quality of
reported eCQM data. We disagree that
validation of eCQM data should be
delayed until additional measures are
built by health IT vendors to allow
hospitals the opportunity to submit data
which aligns with their population and
workflow because eCQM data
submission is already a requirement in
the Hospital IQR Program. Moreover, we
believe validation is a critical
component in the overall process of
electronic reporting, as it informs
hospitals about potential workflow
refinements to ensure efficient
extrapolation and enables us to ensure
the accuracy of eCQM data prior to
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38401
future public reporting of the data. We
encourage small hospitals that may be
experiencing difficulty meeting the
Hospital IQR Program’s eCQM reporting
requirements to review the Hospital IQR
Program’s ECE policy. We refer readers
to section IX.A.15 of the preamble of
this final rule for more information.
Finally, we note that hospitals are
able to select which eCQMs best align
with their population and workflow. We
also refer readers to section
IX.A.10.d.(2)(b)(ii) of the preamble of
this final rule, in which we are
finalizing a policy that requires EHRs to
be certified to all available eCQMs,
which will offer hospitals greater
flexibility to report eCQM data most
appropriate for their population and
workflow, rather than being limited to
those eCQMs selected and supported by
their vendors.
Comment: Some commenters
requested that CMS consider delaying
mandatory validation of eCQM data for
selected hospitals until the spring of
2020, using CY 2019 performance year
for the FY 2021 payment determination,
noting that this delay would allow
hospitals sufficient time to install the
2015 Edition certification criteria for
CEHRT, make necessary refinements
and workflow process improvements,
and complete internal validation to
ensure the data output from the certified
EHR technology’s eCQM calculation is
accurate.
Response: We do not believe that
delaying validation of eCQM data is
necessary at this time, because we are
finalizing several policies in this final
rule to help reduce the burden
associated with eCQM reporting
requirements. We refer readers to
section IX.A.10.d.(2)(b)(i) of the
preamble of this final rule, in which we
are finalizing greater flexibility to our
previously finalized certification policy
for the CY 2018 reporting period/FY
2020 payment determination, and
section IX.A.8. of the preamble of this
final rule, where we are finalizing
modified, reduced eCQM reporting
requirements. We believe validation is a
critical component in the overall
process of electronic reporting, as it
informs hospitals about potential
workflow refinements to ensure efficient
extrapolation and enables us to ensure
the accuracy of eCQM data prior to
future public reporting of the data.
Comment: One commenter suggested
that CMS develop a detailed plan for
how validation will be performed,
including which fields of structured
data will be used for validation and how
that will compare with medical record
review. The commenter stated that the
hospital and vendor communities
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should have an opportunity to comment
on this detailed plan, and then CMS
should undertake a second expanded
pilot to test and further refine the plan
in collaboration with stakeholders prior
to implementation.
Response: We thank the commenters
for their suggestion. More details on
eCQM data validation will be provided
at a later date, similar to the
specifications that are posted on the
QualityNet Web site for the validation of
chart-abstracted measures. In addition,
we encourage stakeholders to continue
sharing feedback with us, to provide
more information on their experience
with the eCQM data validation process.
This feedback will help us refine the
process moving forward.
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c. Modifications to the Educational
Review Process for Chart-Abstracted
Measures Validation
(1) Background
In the FY 2015 IPPS/LTCH PPS final
rule, we stated that we rely on hospitals
to request an educational review or
appeal cases to identify any potential
CDAC or CMS errors (79 FR 50260). We
also noted that a hospital may request
from CMS at any time an educational
review to better understand whether or
not we reached a correct conclusion
during validation; hospitals that fail to
meet Hospital IQR Program validation
requirements have 30 days to appeal
after this determination (79 FR 50260).
We have described our processes for
educational review on the QualityNet
Web site.283 We note that historically
this process functioned as an outreach
opportunity we provided hospitals, but
based on our experience, and more
robust validation requirements, we
believe that it would beneficial to
hospitals to propose formalizing this
process.
Under the current process, if the
results of an educational review indicate
that CDAC or CMS has incorrectly
scored a hospital, those scores are not
changed unless and until the hospital
submits a reconsideration request.
Therefore, In the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 20069
through 20070), we proposed: (1) To
formalize this process; and (2) to update
the process to specify that if the results
of an educational review indicate that
we incorrectly scored a hospital, the
corrected score would be used to
compute the hospital’s final validation
score whether or not the hospital
submits a reconsideration request.
283 QualityNet: Validation—Educational Review.
https://www.qualitynet.org/dcs/ContentServer?c=
Page&pagename=QnetPublic%2FPage
%2FQnetTier3&cid=1228775419006.
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These proposals are discussed in more
detail below. Stakeholder feedback,
provided via email, has indicated that
while the educational review process is
helpful to participating hospitals, it is
limited in its impact, given that a
hospital’s score is not corrected even
after an educational review determines
that CMS reached an incorrect
conclusion regarding a hospital’s
validation score for a given quarter.
Based on this feedback, we proposed to
change the Hospital IQR Program’s
chart-abstracted measure validation
educational review process. Our goal is
to reduce the number of reconsideration
requests by identifying and correcting
errors before the final yearly validation
score is derived. By identifying and
correcting any mistakes early on, this
process could help decrease the burden
during the annual reconsideration
process, both for hospitals and CMS.
(2) Educational Review Process
Modifications for the FY 2020 Payment
Determination and Subsequent Years
(a) Request for Educational Review
Under this proposal, the educational
review request process, as well as our
procedures for responding to requests,
remain the same. Specifically, under the
current process, hospitals may request
an educational review if they believe
they have been scored incorrectly or if
they have questions about their score.
We would provide the results of the
educational review, outlining the
findings of whether the scores were
correct or incorrect, to the requesting
hospital through secure file transfer.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20069), we
proposed to formalize this process. In
formalizing our current procedures, the
educational review request process, as
well as our procedures for responding to
requests, would remain the same. First,
we proposed that, for the FY 2020
payment determination and subsequent
years, a hospital may request from CMS
an educational review to better
understand whether or not CDAC or
CMS reached a correct conclusion
during validation for the first three
quarters of validation. Specifically,
upon receipt of an unsatisfactory score,
a hospital would have 30 calendar days
to contact the Validation Support
Contractor (VSC) to solicit a written
explanation of the provided score. We
note that currently hospitals receive
validation results on a quarterly basis,
and that would not change under this
proposed process. Accordingly, under
this proposal, an educational review
could be requested on a quarterly basis
for the first three quarters of validation.
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Results of the educational review would
be provided to hospitals via secure file
transfer.
Second, we proposed that the process
used to evaluate whether or not
validation results are correct would be
the same in both an educational review
and a reconsideration request.
Specifically, as finalized in the FY 2012
IPPS/LTCH PPS final rule for the
Hospital IQR Program’s reconsideration
request process, we proposed that upon
receipt of an educational review request,
we would review the data elements that
were labeled as mismatched, as well as
the written justifications provided by
the hospitals, and make a decision on
the educational review request.
(b) Scoring Update
For the FY 2020 payment
determination and subsequent years, we
proposed that if an educational review,
that is requested for any of the first 3
quarters of validation, yields incorrect
CMS validation results for chartabstracted measures, we would use the
corrected quarterly score, as
recalculated during the educational
review process, to compute the final
confidence interval (CI). These corrected
scores would be applicable to the
corresponding quarter, within the first 3
quarters of validation, for which a
request was submitted. We note that
under this proposal, the quarterly
validation reports issued to hospitals
would not be changed to reflect the
updated score due to the burden
associated with reissuing corrected
reports. Beginning with the FY 2020
payment determination, we proposed to
use the revised score identified through
an educational review when
determining whether or not a hospital
failed validation. Further, under this
proposal, as with the current
educational review process, corrected
scores identified through the
educational review would only be used
if they indicate that the hospital
performed more favorably than
previously determined.
Under this proposal, the educational
review request process, as well as our
procedures for responding to requests,
remain the same. We also note that, in
accordance with our previously
established policies, a hospital may still
request reconsideration even if an
educational review determined that a
hospital was scored correctly. Hospitals
that fail Hospital IQR Program
requirements, which include validation,
can request reconsideration at the end of
the year after the annual payment
update has been made. We refer readers
to section IX.A.14. of the preamble of
this final rule for a discussion about our
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reconsideration and appeals process.
We note that under this proposal,
corrected scores identified through the
educational review would only be used
if they indicate that the hospital
performed more favorably than
previously determined. In addition, we
note that for the last quarter of
validation, because of the need to
calculate the confidence interval in a
timely manner and the insufficient time
available to conduct educational
reviews, the existing reconsideration
process would be used to dispute an
unsatisfactory validation result. If a
hospital does not fail validation they
still would have the opportunity to
request an educational review within 30
days of receiving the results.
We invited public comment on our
proposals to formalize the educational
review process and use this process to
correct scores for the first three quarters
of chart-abstracted measure validation
as discussed above.
Comment: A few commenters
supported the proposal to formalize the
educational review process so that
incorrect validation scores may be
corrected for the first three quarters of
validation for chart-abstracted measures.
One commenter believed that this
change would make the process more
meaningful and valuable to hospitals
across the nation.
Response: We thank the commenters
for their support.
Comment: One commenter expressed
concern about the scoring metrics used
to validate the educational review
process of hospitals and emphasized the
need to do more than just obtain a
‘‘passing’’ score.
Response: We thank the commenters
for their input. We do not apply scoring
metrics to validate the educational
review process. If an error is found
during an educational review, then the
case reliability would be updated prior
to computing the overall confidence
interval. For example, if the provider
has 1 mismatch out of 10 total cases for
the quarter, therefore having a quarterly
case reliability of 9/10, and upon
educational review it is determined that
the mismatch should not have occurred,
we would update the quarterly case
reliability to 10/10 prior to computing
the overall confidence interval.
After consideration of the public
comments we received, we are
finalizing our proposals, as proposed,
for the FY 2020 payment determination
and subsequent years, to: (1) Formalize
the educational review process for
chart-abstracted measures; and (2) use
this process to correct quarterly scores
for any of the first 3 quarters of
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validation in order to compute the final
confidence interval (CI).
12. Data Accuracy and Completeness
Acknowledgement (DACA)
Requirements for the FY 2020 Payment
Determination and Subsequent Years
We refer readers to the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53554) for
previously-adopted details on DACA
requirements. In the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 20070),
we did not propose any changes to the
DACA requirements.
13. Public Display Requirements for the
FY 2020 Payment Determination and
Subsequent Years
a. Background
We refer readers to the FY 2008 IPPS/
LTCH PPS final rule (72 FR 47364), the
FY 2011 IPPS/LTCH PPS final rule (75
FR 50230), the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51650), the FY 2013
IPPS/LTCH PPS final rule (77 FR
53554), the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50836), the FY 2015
IPPS/LTCH PPS final rule (79 FR
50277), and the FY 2016 final rule (80
FR 49712 through 49713) for details on
public display requirements. The
Hospital IQR Program quality measures
are typically reported on the Hospital
Compare Web site at: https://
www.medicare.gov/hospitalcompare,
but on occasion are reported on other
CMS Web sites such as: https://
data.medicare.gov.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20070 through
20074), we did not propose any changes
to public display requirements;
however, we solicited public comment
on potential options for confidential and
public reporting of measures stratified
by patient dual eligibility status as early
as the summer of 2018 using data from
the FY 2019 reporting period (July 1,
2014 through June 30, 2017). We
previously sought public comment on
the potential public reporting of quality
measures data stratified by SES factors
and future hospital quality measures
that incorporate health equity in the FY
2017 IPPS/LTCH PPS final rule (81 FR
57167 through 57168). In the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
20071), we sought additional public
comment on the potential confidential
and public reporting of Hospital 30-day,
All-Cause, Risk-Standardized
Readmission Rate Following Pneumonia
Hospitalization (NQF #0506), (the
Pneumonia Readmission measure), and
the Hospital 30-Day, All-Cause, RiskStandardized Mortality Rate Following
Pneumonia Hospitalization (NQF
#0468), (the Pneumonia Mortality
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measure), data stratified specifically by
patient dual eligibility status. These are
discussed in more detail below.
b. Potential Options for Confidential
and Public Reporting of Hospital IQR
Measures Stratified by Patient Dual
Eligibility Status
(1) Background
In section IX.A.1.d. of the preamble of
the proposed rule, we discussed the
importance of improving beneficiary
outcomes including reducing health
disparities, and our commitment to
ensuring that medically complex
patients, as well as those with social
risk factors, receive excellent care. As
we noted in section IX.A.1.d. of the
preamble of the proposed rule, studies
show that social risk factors, such as
earning a low-income, belonging to a
racial or ethnic minority group, or living
with a disability, are associated with
poor health outcomes, some of which
are related to the quality of health
care.284 One of our core objectives is to
improve health outcomes for all
beneficiaries, and to ensure that
complex patients as well as those with
social risk factors receive excellent care.
Within this context, recent reports by
the Office of the Assistant Secretary for
Planning and Evaluation (ASPE) and the
National Academies of Sciences,
Engineering, and Medicine have
examined the influence of social risk
factors in CMS value-based purchasing
programs.285 In addition, as noted in the
FY 2017 IPPS/LTCH PPS final rule (81
FR 57185), the NQF has undertaken a 2year trial period in which certain new
measures and measures undergoing
maintenance review have been assessed
to determine if risk adjustment for social
risk factors is appropriate for these
measures.286 Since publishing the
proposed rule, we have verified that the
NQF trial period ended in April 2017
and a draft report is available at: https://
www.qualityforum.org/SES_Trial_
Period.aspx.
284 See, for example, United States Department of
Health and Human Services. ‘‘Healthy People 2020:
Disparities. 2014,’’ https://www.healthypeople.gov/
2020/about/foundation-health-measures/Disparities
or National Academies of Sciences, Engineering,
and Medicine. Accounting for Social Risk Factors
in Medicare Payment: Identifying Social Risk
Factors. Washington, DC: National Academies of
Sciences, Engineering, and Medicine 2016.
285 Department of Health and Human Services
Office of the Assistant Secretary for Planning and
Evaluation (ASPE), ‘‘Report to Congress: Social Risk
Factors and Performance Under Medicare’s ValueBased Purchasing Programs.’’ December 2016,
https://aspe.hhs.gov/pdf-report/report-congresssocial-risk-factors-and-performance-undermedicares-value-based-purchasing-programs.
286 https://www.qualityforum.org/SES_Trial_
Period.aspx.
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Also as part of this effort, we solicited
feedback on which social risk factors
provide information that is most
valuable to stakeholders. We also sought
public comment on confidential
reporting and future public reporting of
some of our measures, specifically the
Pneumonia Readmission measure (NQF
#0506) and the Pneumonia Mortality
measure (NQF #0468), stratified by
patient dual eligibility. There are two
potential purposes for providing
information on hospital results stratified
by dual eligibility. The approach we are
considering would illuminate
differences in outcome rates among
patient groups within a hospital and
would also allow for a comparison of
those differences, or disparities, across
hospitals. We also considered an
alternative approach that would
measure outcome rates for subgroups of
patients, such as the dual eligible
patients, across hospitals; however, this
alternative would not allow for an
examination of the difference in rates
between groups (for example dual
eligible patients compared to non-dual
eligible patients).
The goals of measuring and
monitoring disparities in patient
outcomes for specific sub-groups of
patients within hospitals is to reduce
health inequities, improve health care
quality for vulnerable populations, and
promote greater transparency for health
care consumers. This is in alignment
with the CMS Quality Strategy 287 and
the ASPE report 288 to Congress, which
stated performance rates, including
readmission rates, stratified by social
risk should be developed and
considered for hospital specific
confidential preview reports and public
reporting in places such as the Hospital
Compare Web site, so hospitals, health
systems, policymakers, and consumers
can see and address important
disparities in care.
Many levers exist for addressing and
improving disparities in care and
outcomes. The 21st Century Cures Act
(Pub. L. 114–255) addresses payment
penalty scoring in the Hospital
Readmissions Reduction Program by
identifying hospitals based on their
proportion of dual eligible patients and
supporting improvement efforts for
287 https://www.cms.gov/medicare/qualityinitiatives-patient-assessment-instruments/
qualityinitiativesgeninfo/cms-quality-strategy.html.
288 Department of Health and Human Services
Office of the Assistant Secretary for Planning and
Evaluation (ASPE), ‘‘Report to Congress: Social Risk
Factors and Performance Under Medicare’s ValueBased Purchasing Programs.’’ December 2016.
Available at: https://aspe.hhs.gov/pdf-report/reportcongress-social-risk-factors-and-performanceunder-medicares-value-based-purchasingprograms.
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hospitals caring for patients with social
risk factors by setting penalty thresholds
among similar peer hospitals.289 As
discussed in sections V.I.7. through
V.I.10. of the preamble of this final rule,
the Hospital Readmissions Reduction
Program, as required by the statute,
proposed to use dual eligibility as a
marker of poverty, one key patient
social risk factor, and we would like to
move in that direction for the Hospital
IQR Program as well in the future. In the
Hospital IQR Program, we are exploring
methods to distinguish vulnerable
patients with social risk factors, such as
poverty. As such, we intend to use dual
eligible status among the over 65 year
old patients included in the measures as
a marker of poverty.
Dual eligible status describes whether
Medicare beneficiaries are also enrolled
in Medicaid. We use dual enrollment in
Medicare and Medicaid as a marker for
a beneficiary having low income and/or
few assets. The recent report to Congress
by ASPE has shown that dual eligibility
was the most powerful predictor of poor
health care outcomes among the social
risk factors they tested.290
The Hospital Compare Web site
currently displays readmission rates for
each hospital, but does not specifically
highlight a hospitals quality of care for
vulnerable populations. We believe
stratifying data by social risk factors
would supplement the current reporting
of the Pneumonia Readmission measure
(NQF #0506) and the Pneumonia
Mortality measure (NQF #0468) by
highlighting disparities, that is,
differences in outcomes, within
hospitals that are not simply due to
differences in illness severity, to the
extent that such disparities exist for any
given hospital. To do so, we developed
a method to quantify the disparities of
readmission and mortality between
these groups within each hospital after
accounting for patient case mix. The
disparities indicator used in the hospital
specific confidential preview reports
would provide information assessing
the increased odds, or rates, of
readmission for dual eligible patients
admitted to the same hospital, after
accounting for differences in age and
comorbidities.
For the Hospital IQR Program, we are
considering options to improve health
disparities among patient groups within
hospitals by increasing the transparency
of disparities among patients within
hospitals and the ability to compare
these disparities across hospitals. This
would be accomplished by the methods
described below. Our alternative
289 Ibid.
290 Ibid.
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approach, also described below, to
measure outcome rates for subgroups of
patients, such as the dual eligible
patients, across hospitals, would
examine the performance of hospitals
on the subgroup of dual eligible
patients.
We previously sought public
comment on the potential public
reporting of quality measure data
stratified by race, ethnicity, sex, and
disability and future hospital quality
measures that incorporate health equity
in the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57167 through 57168). In
general, commenters supported the
development of health equity measures
and their inclusion in the Hospital IQR
Program (81 FR 57167). In particular,
stakeholders noted that stratified
measures could serve as tools for
hospitals to identify gaps in outcomes
for different groups of patients, improve
the quality of health care for all patients
and empower consumers to make
informed decisions about health care.
The stakeholders encouraged us to
stratify measures by other social risk
factors such as age, income, and
educational attainment (81 FR 57167);
however, commenters raised concerns
about the small denominator sample
size associated with measure
stratification by social risk factors,
which would skew the reliability of
stratified quality measures. Commenters
also expressed concern that it may not
be a simple task to stratify measures by
race, ethnicity, sex, and disability
because specific considerations are
required for every measure and each
reporting mechanism to implement such
a requirement (81 FR 57168). For more
details on the public comments, we
refer the readers to the FY 2017 IPPS/
LTCH PPS final rule (81 FR 57167
through 57168).
We acknowledge the complexity of
interpreting stratified outcome
measures. Due to this complexity, prior
to publicly reporting stratified outcome
measure data, as early as the summer of
2018 using data from the FY 2019
reporting period (July 1, 2014 through
June 30, 2017), we are considering first
providing hospitals with confidential
results showing outcomes stratified by
patient dual eligibility within the
hospital, or more specifically,
differences in outcome rates for the dual
eligible and non-dual eligible patients in
the measures. This would allow us to
obtain feedback on reporting options
and to ensure the information is
reliable, valid, and understandable prior
to any future public display on the
Hospital Compare Web site. Our goal in
producing stratified results is to provide
information about disparities in patient
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outcomes within hospitals to the extent
that they exist for a given hospital. This
information would supplement the
assessment of overall hospital quality
provided through the current measures
of readmission and mortality rates; these
measures would remain unchanged. We
discuss below the methods and results
of stratification for the current Hospital
30-day, All-Cause, Risk-Standardized
Readmission Rate Following Pneumonia
Hospitalization (NQF #0506) (the
READM–30–PN or Pneumonia
Readmission measure).
The stratified results would provide
hospitals with confidential reporting
with information that could illuminate
any disparities in care and outcome that
can be targeted through quality
improvement efforts. Then for the
future, we are considering publicly
posting both of these results on Hospital
Compare to allow consumers and other
stakeholders to view critical information
about the care and outcomes of
subgroups of patients, particularly those
with social risk factors. This
information could drive consumer
choice and spark improvement efforts
targeting dual eligible patients. In the
future, we would also consider
expanding this approach to other social
risk factors and other measures.
We invited public comment on: (1)
Which social risk factors provide
information that is most valuable to
stakeholders; (2) providing hospitals
with confidential preview reports
containing stratified results for certain
Hospital IQR Program measures,
specifically the Pneumonia Readmission
measure (NQF #0506) and the
Pneumonia Mortality (MORT–30–PN)
measure (NQF #0468); (3) a potential
methodology for illuminating
differences in outcomes rates among
patient groups within a hospital that
would also allow for a comparison of
those differences, or disparities, across
hospitals; (4) an alternative
methodology that compares
performance for patient subgroups
across hospitals but does not provide
information on hospital disparities and
any additional suggested methodologies
for calculating stratified results by
patient dual eligible status; and (5)
future public reporting of these same
measures stratified by patient dual
eligibility status on the Hospital
Compare Web site. These are discussed
in more detail below.
(2) Confidential Hospital Specific
Preview Reports Prior to Publicly
Reporting Stratified Data
We sought public comment on the
possibility of providing confidential
hospital specific preview reports
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containing the results of the Pneumonia
Readmission (NQF #0506) and
Pneumonia Mortality (NQF #0468)
measures stratified by patient dual
eligibility, as early as the summer of
2018 using data from the FY 2019
reporting period (July 1, 2014 through
June 30, 2017), prior to any future
potential public reporting of this data.
The current publicly reported measures
used in the Hospital IQR Program and
reported on the Hospital Compare Web
site would remain unchanged.
Following the time period during which
hospitals received confidential preview
reports, we may display stratified
results on the Hospital Compare Web
site solely for the purpose of
‘‘stratification,’’ that is, producing
results to describe differences between
subgroups within the hospital.
(3) Potential Methodology for
Calculating Stratified Results by Patient
Dual Eligibility Status
(a) Background
Under any future option to stratify
measure results by patient dual
eligibility status, we intend to focus on
disparities between dual eligible
patients and non-dual eligible patients,
because dual eligibility is an important
social risk factor among the Medicare
FFS population and is feasible to
measure.291 In order to provide
information about differences in
readmission outcomes for dual eligible
patients and non-dual eligible patients
within a hospital that may be due to
quality differences, we need a
methodology that accounts for any
differences in comorbidities, age, and
other risk factors between these groups
of patients. Such a methodology ensures
that differences in outcomes are not
simply due to differences in clinical
severity and comorbid conditions
among the patient groups. Therefore,
any approach to identifying withinhospital disparities for readmission
measures by patients’ dual eligibility
status would build on the methodology
used to calculate the currently
implemented RSRRs.292 As the
Pneumonia Readmission measure (NQF
#0506) is currently specified, riskadjusted rates are estimated using a
hierarchical logistic regression to
291 Department of Health and Human Services
Office of the Assistant Secretary for Planning and
Evaluation (ASPE), ‘‘Report to Congress: Social Risk
Factors and Performance Under Medicare’s ValueBased Purchasing Programs.’’ December 2016,
https://aspe.hhs.gov/pdf-report/report-congresssocial-risk-factors-and-performance-undermedicares-value-based-purchasing-programs.
292 https://www.qualitynet.org/dcs/Content
Server?cid=1219069855841&pagename=QnetPublic
%2FPage%2FQnetTier4&c=Page.
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38405
account for the clustering of
observations within hospitals and
differences in the number of admissions
across hospitals.293
(b) Option To Measure Difference in
Outcomes By Adding Three Additional
Factors to Current Statistical Models
There is both a hospital and patientlevel effect of dual eligibility on
readmission risk. We have considered
the hospital fixed effect in our
approaches to stratifications (described
in section IX.A.13.b.(3)(a) of the
preamble of this final rule), because
without it, we will introduce bias in the
patient-level dual eligibility, which
would produce misleading results. The
statistical approach we may employ in
the future would use current statistical
models and add three additional factors
to the statistical model for the purposes
of measuring differences in outcomes:
(1) An indicator for patient-level dual
eligibility; (2) a hospital-level dual
eligible factor 294 (for example,
percentage of dual eligible patients in
each hospital); and (3) a hospitalspecific indicator (random coefficient)
for dual eligibility. This third factor, the
hospital-specific random coefficient for
dual eligibility, assesses the disparity or
difference in readmissions for dual
eligible patients within a specific
hospital after accounting for other
factors, such as differences in clinical
disease or comorbid conditions. The
first two factors, (the patient-level dual
eligibility coefficient, which represents
the overall difference between dual and
non-dual groups in the entire country,
and the hospital-level dual eligible
factor, which reflects the difference in
readmission rate between hospitals with
different proportions of dual eligible
patients) are only included in order to
be able to interpret the third factor
random coefficient and ensure it is
specific to a particular hospital. It is the
third factor, the hospital-specific
indicator, which would be used to
calculate the differences in readmission
rates between the dual and non-dual
eligible patients within the hospital.
Using this method, within-hospital
disparities in readmissions between
293 Krumholz H, Normand SL, Keenan P, et al.
Hospital 30-Day Pneumonia Readmission Measure
Methodology: Report prepared for the Centers for
Medicare & Medicaid Services, 2008, https://
www.qualitynet.org/dcs/ContentServer?cid=
1219069855841&pagename=QnetPublic%2FPage
%2FQnetTier4&c=Page.
294 We note that although hospital-level dual
eligible effect was not of interest, it often mixed
with patient-level effect. Therefore, by breaking
down the dual eligible effect into patient-level and
hospital-level components, we were able to better
assess of relationship between readmission and
patient-level dual eligibility.
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dual eligible patients and non-dual
eligible patients would be included in
confidential hospital specific preview
reports in addition to the currently
calculated and displayed Pneumonia
Readmission (NQF #0506) and
Pneumonia Mortality (NQF #0468)
measures. We would provide
information in the form of odds ratios
(that is, the increased odds of
readmission for dual eligible patients at
a given hospital) or, alternatively, the
average difference in readmission rates
between dual and non-dual patients
after accounting for differences in other
risk-factors.
To calculate odds ratios, we would
convert hospital-specific coefficients for
dual eligibility into odds ratios. Odds
ratios compare dual eligible patients
relative to non-dual eligible patients in
terms of their risk of readmission,
assuming that the two groups have the
same case mix (that is, comorbidities). If
the readmission rate is the same in both
groups, the odds ratio is 1. If the odds
ratio is greater than 1, it would mean
that dual eligible patients have worse
readmission rates, and vice versa. To
estimate the average difference of
readmission rates between dual and
non-dual beneficiaries for each hospital,
we would first calculate the predicted
probabilities of being readmitted by
assuming all patients are dual eligible or
all patients are non-dual eligible in a
hospital. The difference between the
two predicted probabilities is the
average difference in the readmission
rates between the two groups of patients
at each hospital.
Rather than assuming a uniform
impact of dual eligible and non-dual
eligible status across hospitals, this
approach would assess the impact of
dual eligibility across all hospitals
separately, recognizing that
socioeconomic disparities of patients
may be greater or lesser at some
hospitals as compared with others. This
approach would allow quantification of
the difference in readmissions between
dual eligible patients and non-dual
eligible patients within each hospital, as
long as a hospital has a sufficient
number of cases to produce a reliable
estimate for both groups.
In summary, this statistical model
would uniquely identify disparities in
readmission rates for dual eligible
beneficiaries compared to non-dual
eligible beneficiaries, after controlling
for patients’ prior medical history and
age for each hospital. This random
coefficient for dual eligibility within the
statistical model would indicate how
readmission rates at the same hospital
would differ between two patients at
that hospital with exactly the same age
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and underlying risk factors (those
comorbid clinical conditions included
in the statistical model), but differ with
respect to dual eligibility.
(c) Option To Measure Difference in
Outcomes Using Current Statistical
Models
Depending on the information that is
most useful to stakeholders, an
alternative approach to examining
readmission rates among dual eligible
patients could be considered. To
examine the relative performance of
hospitals on readmission rates for their
dual eligible patients, rather than to
compare hospitals on within-hospital
disparities, we could calculate the
current measures’ statistical model
(without the additional factors
mentioned above) and include only dual
eligible patients. Similarly, this could be
done for non-dual eligible patients. This
approach of using two separate models
for the separate patient subgroups
would produce information on
readmission rates for dual eligible
patients at one hospital compared to
another (or non-dual eligible patients
across hospitals). Because of the use of
two separate statistical models, this
approach would not ensure consistent
treatment of risk factors across patient
groups and could not be used to
compare readmission rates for two
groups within a hospital.
(d) Summary of Statistical Method
Options
We intend to provide information on
the difference in readmission rates of
dual eligible and non-dual eligible
beneficiaries within hospitals and also
provide information for hospitals and
consumers on the relative disparities
across hospitals. We solicited public
comment on the information that
stakeholders would find most useful
and any additional suggested
methodologies for calculating stratified
results by patient dual eligible status.
The confidential hospital specific
preview reports containing data
stratified by patient dual eligibility
status would be modeled after current
confidential hospital specific preview
reports and include patient-level data
for hospitalizations included in the
measure. The current confidential
hospital specific preview reports would
be supplemented by information for
each patient on their dual eligible status
and a summary of the difference in
readmission rates for dual eligible
patients in the hospital as compared to
other hospitals in the State and nation.
We invited public comment on both
methodologies, as described above, to
produce stratified results by
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determining the differences in
readmission and mortality by dual
eligible status within a hospital, and a
comparison of those disparities across
hospitals, accounting for differences in
comorbidities, age, and other risk factors
between dual eligible and non-dual
eligible patients.
All comments received are
summarized under section IX.A.13.b.(6)
of the preamble of this final rule, below.
(4) Data Sources
To provide an example of the
statistical approach we could apply, we
describe stratified results by patient
dual eligibility for the Pneumonia
Readmission measure (NQF #0506),
using the first calculation method
described in section IX.A.13.b.(3)(b) of
the preamble of this final rule. To
calculate the example rate, we used the
CMS administrative claims data from
each index pneumonia hospitalization,
as well as from inpatient and outpatient
Medicare claims from the 12 months
prior to the hospitalization from July
2012 to June 2015 to calculate the
publicly reported RSRRs following
pneumonia hospitalization (NQF #0506)
in the July 2016 Hospital Compare
update. Both the cohort and the riskadjustment approach remain
unchanged. For more details on the
publicly reported RSRRs following
pneumonia as currently implemented,
we refer readers to its measure
methodology report and measure update
zip file on our Web site at: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html. The data
was then linked to CMS denominator
files 295 (2012 to 2015) to derive the
indicator of dual eligibility for each
patient admission (1.3 percent index
admissions were excluded because there
is no information available in the
denominator files).
We conducted preliminary analyses
on the Pneumonia Readmission measure
(NQF #0506) 296 and determined that
there is a total of 3,851 hospitals that
have at least 25 included index
hospitalizations overall, and at least 10
dual eligible and 10 non-dual eligible
index hospitalizations for which we
could report outcome disparity (82
percent of hospitals). The minimum
sample size for 25 hospitalizations is
consistent with the current publicly
295 https://www.cms.gov/research-statistics-dataand-systems/files-for-order/limiteddatasets/
denominatorlds.html.
296 1,456,289 hospitalizations (98.7 percent) were
linked to the denominator data and 24.4 percent of
those hospitalizations are from dual eligible
patients.
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reported outcomes measures. We
imposed an additional requirement of at
least 10 dual eligible and 10 non-dual
eligible index hospitalizations for this
example to ensure we had adequate
numbers to observe any meaningful
differences in outcome. We used this
requirement because if a hospital has
fewer than 10 patients in one subgroup
of patients, it is neither clear that
readmission rates for that group as
compared to others would be reliable,
nor that it is meaningful or has face
validity to measure stratified rates for
hospitals with very few of one of the
categories of patients. We welcomed
public comment on this sample size
determination.
The observed readmission rate within
30-days of index discharge for all
patients was 17.1 percent when we did
not adjust for patients’ prior medical
history, and dual eligible beneficiaries
had an approximately 3 percent higher
readmission rate. Results from the
hierarchical model 297 indicate that
there is a statistically significant
association between dual eligibility and
pneumonia readmission (adjusted odds
ratio, 1.07; 95 percent CI, 1.06–1.08). In
addition, there is substantial variation
in the relationship between dual
eligibility and readmission across
hospitals (Median odd ratio, 1.06; Min.,
0.95; Max., 1.22). Findings also revealed
that dual eligible patients are more
likely to get readmitted in 95 percent of
hospitals.
(5) Future Potential Public Display
sradovich on DSK3GMQ082PROD with RULES2
We invited public comment on the
potential future public reporting of
certain outcomes measures, such as the
Pneumonia Readmission measure (NQF
#0506) and the Pneumonia Mortality
measure (NQF #0468), stratified by
social risk factors, specifically dual
eligible status, to illuminate withinhospital disparities. If we decide to
display measure data stratified by dual
eligible status on the Hospital Compare
Web site, we would clearly differentiate
between the measure information we
currently display and the measure
information that is stratified by patients’
dual eligible status. In addition, as
discussed above, if we decide to display
measure data stratified by dual eligible
status on the Hospital Compare Web
site, hospitals would receive
297 Our hierarchical model is described in our
measure methodology reports. See, for example,
Krumholz H, Normand SL, Keenan P, et al. Hospital
30-Day Pneumonia Readmission Measure
Methodology: Report prepared for the Centers for
Medicare & Medicaid Services, 2008, https://
www.qualitynet.org/dcs/ContentServer?
cid=1219069855841&pagename=Qnet
Public%2FPage%2FQnetTier4&c=Page.
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information about their stratified
readmission rates for a certain period of
time through confidential hospital
specific preview reports prior to the
public reporting of any information.
We invited public comment on this
future consideration to display the
stratified measure results, in addition to
the current measure results, for certain
Hospital IQR Program measures in
future reporting years. We note that
public display of measure data stratified
by social risk factors such as dual
eligible status would not occur until
after a period of confidential reporting.
All comments received are
summarized under section IX.A.13.b.(6)
of the preamble of this final rule below.
(6) Summary
To summarize, we invited public
comment on: (1) Which social risk
factors provide the most valuable
information to stakeholders; (2)
providing hospitals with confidential
preview reports containing stratified
results for certain Hospital IQR Program
measures, specifically the Pneumonia
Readmission measure (NQF #0506) and
the Pneumonia Mortality measure (NQF
#0468); (3) a potential methodology for
illuminating differences in outcomes
rates among patient groups within a
hospital and would also allow for a
comparison of those differences, or
disparities, across hospitals; (4) an
alternative methodology that compares
performance for patient subgroups
across hospitals but does not provide
information on within hospital
disparities and any additional suggested
methodologies for calculating stratified
results by patient dual eligibility status;
and (5) future public reporting of these
same measures stratified by patient dual
eligibility status on the Hospital
Compare Web site as discussed above.
Comment: Several commenters
supported providing confidential
reports to hospitals for the Pneumonia
Readmission measure (NQF #0506) and
the Pneumonia Mortality measure (NQF
#0468) stratified by patient dual eligible
status and publicly reporting stratified
measure data in the future. The
commenters believed this information
would be informative to hospitals and
would drive improvement.
One commenter stated that this would
be a positive direction for CMS when
proposing new methodologies for
quality metrics whether it be population
stratification, risk adjustment, or any
other significant changes in reporting.
Response: We thank the commenters
for their support on stratifying outcome
measures. We believe that highlighting
disparities in outcomes between sub-
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38407
groups of patients could contribute to
improved care for vulnerable patients.
Comment: A few commenters urged
CMS to explore if additional factors
should be used to stratify or risk adjust
the measures beyond dual eligibility as
a marker of poverty and consider the
full range of differences in patients’
backgrounds that might affect outcomes
(such as readmission rates).
Response: We appreciate the
commenters’ suggestion to stratify
outcome measures by additional social
risk factors. Consistent with the findings
of the ASPE and National Academies of
Sciences, Engineering, and Medicine
reports, we will consider stratifying
outcome measures by appropriate
additional social risk factors in the
future as we continue to engage
stakeholders and determine the
availability of appropriate social risk
factors that might influence outcomes
such as readmission. Measure
stratification is intended to identify
disparities or differences by patient
subgroup to support hospitals’ efforts to
improve care. Stratified reporting would
allow us to provide measure data
stratified by patient subgroup or the
disparity between patient subgroups for
each measure, via confidential hospital
specific preview reports or public
display on the Hospital Compare Web
site.
We note that there are several
methods for stratification of patients by
dual eligible status, two of which are:
(1) Calculating the differences in
outcomes between dual and non-dual
eligible patients within hospitals, and
(2) stratifying by groups of patients so
that a given provider would receive a
score for each group (one for dual
eligible patients, one for non-dual
eligible patients, etc.). We will continue
to explore which of the two
methodologies is most appropriate and
how best to provide confidential reports
to hospitals for the Pneumonia
Readmission measure (NQF #0506), the
Pneumonia Mortality measure (NQF
#0468), or other outcome measures in
the Hospital IQR Program stratified by
patient dual eligible status in the future.
We will also continue to evaluate what
may be the best method or methods of
publicly displaying stratified outcome
measure information to ensure the
public’s understanding of the data.
Comment: Most commenters
expressed concern that CMS allow
hospitals sufficient time to review and
analyze stratified rates prior to publicly
reporting.
Response: We acknowledge the
commenters’ concern that hospitals
have sufficient time to review and
analyze stratified measure data prior to
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public reporting. We believe
confidential hospital specific preview
reports of stratified measure data will
allow us to obtain feedback on reporting
options and to ensure the information is
reliable, valid, and understandable prior
to any future public display on the
Hospital Compare Web site. We intend
to continue to engage with hospitals
about their experience with and
recommendations for stratified measure
data as we begin to provide confidential
hospital specific preview reports prior
to potentially proposing to publicly
display stratified measure data in the
future. Any display of stratified quality
measures on the Hospital Compare Web
site would be proposed through future
rulemaking.
Comment: One commenter agreed that
public reporting on the Hospital
Compare Web site should be considered
in the future, but urged CMS to devote
careful consideration to what type of
display would be most useful to the
public. The commenter suggested CMS
conduct focus groups to test messaging
and understanding of the data.
Response: We recognize the
importance of eventual public reporting
of stratified outcome measures
information. We will continue to
evaluate what may be the best method
or methods of publicly displaying
stratified outcome measure information
to ensure the public accurately
understands the data. We will consider
conducting focus groups or other
outreach efforts to collect public
feedback as part of this effort.
Comment: Another commenter
suggested that stratification and risk
adjustment be a measure-by-measure
consideration that is incorporated into
the measure specifications.
Response: We agree with the
commenter that stratification and risk
adjustment should be a measure-bymeasure consideration. During the NQF
SDS two-year trial period that ended in
April 2017, we assessed measures
individually to determine whether risk
adjustment for social risk factors was
warranted. Similarly, we are adopting a
measure-by-measure approach when
considering stratification of quality
measures. We plan to engage
stakeholders through future rulemaking
prior to any public reporting of stratified
quality measures.
Comment: One commenter did not
support providing confidential reports
to hospitals for the Pneumonia
Readmission measure (NQF #0506) and
the Pneumonia Mortality measure (NQF
#0468) stratified by patient dual eligible
status and publicly reporting stratified
measure data in the future, raising
concerns about the small sample size
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associated with measure stratification
by social risk factors, which would skew
the reliability of stratified quality
measures. The commenter believed the
proposed statistical approach using a
hospital-specific indicator (random
coefficient) for dual eligibility would
allow quantification of the difference in
readmissions between dual and nondual eligible patients within each
hospital only if a hospital has a
sufficient number of cases to produce a
reliable estimate for both groups. In
other words, this approach may not be
effective for hospitals with a small
sample size of cases, and results
reported for such hospitals may be
skewed and inaccurate. The commenter
suggested CMS study this issue further
to determine the appropriate size of the
patient pool to produce reliable results
and should consider not reporting
results for hospitals with an insufficient
number of cases.
Response: We agree with the
commenter that some hospitals may
have few dual eligible patients and that
small samples sizes can skew the
reliability of stratified quality measure
results. Small sample sizes could be
especially challenging for measure
stratification because some hospitals
might have few patients with social risk
factors. One of our described
stratification approaches (by patient
group) would report disparities only for
hospitals with at least 25 patients and
10 patients for each sub-group. The
same cut-off could be used for the
second stratification methodology
described in the proposed rule
(specifically, measuring differences in
outcomes for dual and non-dual
beneficiaries separately). We note the
overall sample size of 25 patients is
consistent with the quality outcome
measures currently implemented. This
sample size ensures our measure is
reliable and includes as many hospitals
as possible. This particular methodology
further adjusts for small sample sizes by
partially pooling the data so that
hospitals with a small sample size and,
therefore, less reliable estimates are
pulled to the overall mean. Using this
cut-off in sample size, preliminary
analysis using the first proposed
methodology (that is, measuring
disparities in outcomes between dual
and non-dual beneficiaries) suggests we
could report disparities for 3,851
hospitals (82.1 percent) for the
Pneumonia Readmission measure (NQF
#0506) and 3,844 hospitals (82.0
percent) for the Pneumonia Mortality
measure stratified by dual eligibility
status.
We note that these results would be
used under the first described
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stratification methodology (adding three
additional factors), as described in
section IX.A.13.b.(3)(b) of the preamble
of this final rule, above. We also note
that if we used the second described
methodology of calculating the
difference in current statistical models,
as described in section IX.A.13.b.(3)(c)
of the preamble of this final rule, above,
we anticipate the results would not be
as effective. We will continue to explore
alternative approaches to determine the
appropriate sample size to produce
reliable results. We note that we would
not provide disparities results or
differences in outcomes for different
patient groups if a given hospital has
fewer than the minimum number of
patients within a sub-group in the
measure.
Comment: One commenter requested
that CMS publicly release the analytic
file, model results, and research
findings related to the pneumonia
readmissions model with the added
dual-eligible variables and
recommended changes to the model
should be vetted during the MAP prerulemaking recommendation process.
The commenter stated that during the
NQF socio-demographic (SDS) trial
period, the measure steward for the
pneumonia readmission and mortality
models, Yale Center for Outcomes
Research and Evaluation (Yale CORE),
presented their results for accounting
for various SDS variables in the
condition-specific readmissions models
and the conclusion was that while there
was a statistically significant
relationship between dual-eligibility
and readmissions, the addition of dualeligible status did not improve the
model or meaningfully change hospital
results. Since this conflicts with the
ASPE findings, the commenter would
like to better understand the Yale CORE
model.
Response: Risk adjustment and
stratification are two distinct ways of
accounting for the importance of social
risk factors on health outcomes. In the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 20072 through 20074), we
detailed the findings of our modeling for
the Pneumonia Readmission measure
(NQF #0506) to share one example of
stratified results. We note, however, that
the approach presented for the
Pneumonia Readmission measure (NQF
#0506) stratification differs from the
approach presented in the conditionspecific readmission models described
in the NQF two-year SDS trial by the
measure steward. The analytical model
and results for the NQF SDS Trial of
these measures are publicly available on
the NQF Web site at: https://
www.qualityforum.org/Project_Pages/
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All-Cause_Admissions_and_
Readmissions_2015–2017.aspx.
As part of the SDS two-year trial, we
assessed the impact of the addition of
socioeconomic status, such as dual
eligibility, in the risk adjustment model
on readmissions on a case-by-case basis.
The measure steward’s results are
largely consistent with the findings of
the ASPE report. Both the ASPE report
and the measure steward’s findings
show a relationship between
socioeconomic factors and health
outcomes when there is no other riskadjustment. In the multi-variate, or fully
adjusted model, results indicate that the
effect of SES variables on readmission
rates was significant but small.
However, the measure steward has
shown that adjusting for patient dualeligible status in the overall measure
changes hospital performance on the
measure very little. Similarly, when
ASPE simulated the effect of risk
adjustment for patient dual eligible
status on Hospital Readmissions
Reduction Program penalties, they
found that it would have a small overall
impact on hospitals’ performance and
their ranking.
Comment: One commenter discussed
the two methodological approaches for
SES stratification presented in the FY
2018 IPPS/LTCH PPS proposed rule.
The commenter expressed a preference
for reporting two rates, one rate for dual
eligible patients and one rate for nondual eligible patients, for the
pneumonia readmission and mortality
measures (Approach 2). The commenter
encouraged CMS to adopt Approach 2
for now, because the commenter
believed it minimizes the risk of mixed
signals on measure performance. The
commenter noted that Approach 2 is
easier to understand for providers,
because it uses the same risk adjustment
model as our overall quality measures.
The commenter continued and stated
that on the other hand, Approach 1
calculates differences in outcomes by
adding three additional factors to the
statistical model currently used in our
outcome measures, including: (1) An
indicator for patient-level dual
eligibility; (2) a hospital-level dual
eligible factor (that is, percentage of
dual eligible patients in each hospital);
and (3) a hospital-specific indicator
(random coefficient) for dual eligibility.
The commenter stated it would support
Approach 1 if CMS decided to directly
risk adjust measures included in the
Hospital Readmissions Reduction
Program for patient level SES.
Response: We thank the commenter
for their recommendation. As noted in
the proposed rule and our responses
above, there are potential merits and
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limitations to each approach. We will
continue to explore multiple options
and will solicit further feedback from
stakeholders before deciding on a
specific method or approach for
providing confidential feedback reports
or potential future public reporting of
stratified measure data.
One example of these methods could
be noted in the efforts currently
underway in the Hospital Readmissions
Reduction Program under the 21st
Century Cures Act, as described in
section V.I.8. of the preamble of this
final rule. We distinguish stratified
reporting for the purposes of identifying
disparities from the approach in the
Hospital Readmissions Reduction
Program under the 21st Century Cures
Act that compares peers with peers
based on hospital’s share of patients
with risk factors for benchmarking
and/or calculation of payment
adjustment. Further, we distinguish that
the Hospital Readmissions Reduction
Program is using this method for
payment calculations and the Hospital
IQR Program would not be using the
data in this manner, but rather is
considering these approaches as options
for deriving confidential reports to
hospitals and potential public reporting
in the future.
To summarize, we invited public
comment on: (1) Which social risk
factors provide the most valuable
information to stakeholders; (2)
providing hospitals with confidential
preview reports containing stratified
results for certain Hospital IQR Program
measures, specifically the Pneumonia
Readmission measure (NQF #0506) and
the Pneumonia Mortality measure (NQF
#0468); (3) a potential methodology for
illuminating differences in outcomes
rates among patient groups within a
hospital and would also allow for a
comparison of those differences, or
disparities, across hospitals; (4) an
alternative methodology that compares
performance for patient subgroups
across hospitals but does not provide
information on within hospital
disparities and any additional suggested
methodologies for calculating stratified
results by patient dual eligibility status;
and (5) future public reporting of these
same measures stratified by patient dual
eligibility status on the Hospital
Compare Web site, as discussed above.
We thank the commenters, and we
will consider all of the comments
received as we develop policy regarding
potential options for confidential and
public reporting of Hospital IQR
Program measures stratified by patient
social risk factors, such as dual
eligibility status and, specifically, as we
develop policy regarding potential
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options on the future confidential and
public reporting of the Pneumonia
Readmission measure (NQF #0506) data
and the Pneumonia Mortality measure
(NQF #0468) data stratified specifically
by patient dual eligibility status.
After considering the public
comments we received, we will
continue to evaluate: (1) Which social
risk factors provide the most valuable
information to stakeholders; (2) which
Hospital IQR Program outcome
measures to provide stratified measure
data; (3) how best to display information
in the confidential hospital specific
preview reports; (4) when to begin
providing the confidential hospital
specific preview reports; (5) potential
methodologies for illuminating
differences in outcomes; and (6) ways to
most effectively publicly display this
data. We will continue to consider
beginning to provide confidential
hospital specific preview reports as
early as summer of 2018, using data
from the FY 2019 reporting period (July
1, 2014 through June 30, 2017),
however, it may take us longer in light
of our plans for continued evaluation as
described above and operational
considerations. If we make such a
determination to begin providing
confidential hospital specific preview
reports of measure data for the
Pneumonia Readmission measure, the
Pneumonia Mortality measure, or other
outcome measures in the Hospital IQR
Program stratified by patient dual
eligibility status to hospitals, we will
convey this decision through routine
communication channels to hospitals,
vendors, and QIOs, including, but not
limited to, issuing memos, emails, and
notices on the QualityNet Web site.
14. Reconsideration and Appeal
Procedures for the FY 2020 Payment
Determination and Subsequent Years
We refer readers to the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51650
through 51651), the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50836), and 42
CFR 412.140(e) for details on
reconsideration and appeal procedures
for the FY 2017 payment determination
and subsequent years. In the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
20074), we did not propose any changes
to the reconsideration and appeals
procedures.
15. Change to the Hospital IQR Program
Extraordinary Circumstances Exceptions
(ECE) Policy
a. Background
We refer readers to the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51651
through 51652), the FY 2014 IPPS/LTCH
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PPS final rule (78 FR 50836 through
50837), the FY 2015 IPPS/LTCH PPS
final rule (79 FR 50277), the FY 2016
IPPS/LTCH PPS final rule (80 FR
49713), the FY 2017 IPPS/LTCH PPS
final rule (81 FR 57181 through 57182),
and 42 CFR 412.140(c)(2) for details on
the current Hospital IQR Program ECE
policy.
We also refer readers to the
QualityNet Web site at: https://
www.QualityNet.org/ for our current
requirements for submission of a request
for an extension or exemption. In the FY
2018 IPPS/LTCH PPS proposed rule (82
FR 20075), we made one proposal and
a clarification in order to align the ECE
policy across CMS quality programs. We
also proposed updates to 42 CFR
412.140(c)(2) to reflect our ECE policy.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20074 through
20075), we stated that many of our
quality reporting and value-based
purchasing programs share common
processes for requesting an exception
from program reporting due to an
extraordinary circumstance not within a
provider’s control. The Hospital IQR
Program, Hospital OQR Program, IPFQR
Program, ASCQR Program, and PCHQR
Program, as well as the Hospital VBP
Program, HAC Reduction Program, and
the Hospital Readmissions Reduction
Program, share common processes for
ECE requests. We refer readers to the
Hospital IQR Program (76 FR 51651
through 51652, 78 FR 50836 through
50837, 79 FR 50277, 81 FR 57181
through 57182, and 42 CFR
412.140(c)(2)), Hospital OQR Program
(77 FR 68489, 78 FR 75119 through
75120, 79 FR 66966, and 80 FR 70524),
and ASCQR Program (77 FR 53642
through 53643 and 78 FR 75140 through
75141) along with the HAC Program (80
FR 49579 through 49581), Hospital
Readmissions Reduction Program (80
FR 49542 through 49543), IPFQR (77 FR
53659 through 53660 and 79 FR 45978),
and PCHQR Program (78 FR 50848) for
program specific information about
extraordinary circumstances exceptions
requests.
In reviewing the policies for these
programs, we recognized there are five
areas in which these programs have
variance regarding ECE requests. These
are: (1) Allowing the facilities or
hospitals to submit a form signed by the
facility’s or hospital’s CEO versus CEO
or designated personnel; (2) requiring
the form be submitted within 30 days
following the date the extraordinary
circumstance occurred versus within 90
days following the date the
extraordinary circumstance occurred;
(3) inconsistency regarding specification
of a timeline for us to provide our
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formal response notifying the facility or
hospital of our decision; (4)
inconsistency regarding specification of
our authority to grant ECEs due to CMS
data system issues; and (5) referring to
the program as ‘‘extraordinary
extensions/exemptions’’ versus as
‘‘extraordinary circumstances
exceptions.’’ We believe addressing
these five areas across programs, can
improve administrative efficiencies for
affected facilities or hospitals.
b. Proposals To Align the Hospital IQR
Program ECE Policy With Other CMS
Quality Programs
With the exception of the timeline for
us to provide our formal response (item
3 above) and the nomenclature used to
refer to the ECE process (item 5 above),
the Hospital IQR Program is aligned
with the ECE policies across the other
CMS quality programs described above.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20075), we
proposed to: (1) Update the
nomenclature to align with the ECE
policies across the other CMS quality
programs and update the regulatory text
to reflect this change; and (2) update our
regulatory text to reflect other existing
ECE policies. Also, we are clarifying the
timing of our response to ECE requests.
These proposals are discussed in more
detail below.
(1) ECE Policy Nomenclature
We have observed that while all
quality programs listed above have
developed similar policies to provide
exceptions from program requirements
to facilities that have experienced
extraordinary circumstances, such as
natural disasters, these programs refer to
these policies using inconsistent
terminology. Some programs refer to
these policies as ‘‘extraordinary
circumstances extensions/exemptions’’
while others refer to the set of policies
as ‘‘extraordinary circumstances
exceptions.’’ Several programs
(specifically, the Hospital VBP Program,
HAC Reduction Program, and the
Hospital Readmissions Reduction
Program) are not able to grant
extensions to required data reporting
timelines due to their reliance on data
external to their program, and thus the
term, ‘‘extraordinary circumstances
extensions/exemptions’’ is not
applicable to all programs. However, all
of the described programs are able to
offer exceptions from their reporting
requirements. Therefore, we proposed to
change the name of this policy from
‘‘extraordinary circumstances
extensions/exemptions’’ to
‘‘extraordinary circumstances
exceptions’’ for the Hospital IQR
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Program, beginning October 1, 2017,
and to revise section 412.140(c)(2) of
our regulations to reflect this change.
We note that changing the name of this
policy does not change the availability
for a hospital to request an extension
under the Hospital IQR Program.
We invited public comment on this
proposal as discussed above.
Comment: Several commenters
supported the proposed alignment of
the extraordinary circumstances
exceptions (ECE) policies in the
Hospital Readmissions Reduction
Program, the HAC Reduction, and the
Hospital IQR Programs.
Response: We thank the commenters
for their support.
Comment: A few commenters
supported the proposed alignment of
the extraordinary circumstances
exceptions (ECE) policies in the
Hospital Readmissions Reduction
Program, the HAC Reduction, and the
Hospital IQR Programs, but requested an
ECE specifically for Indian Health
Services (IHS) and tribal healthcare
programs.
Response: We thank the commenters
for their support. We note that ECE
requests for the Hospital IQR Program
are considered on a case by case basis
(81 FR 57182). We will assess the
hospital’s request on a case-by-case
basis to determine if an exception is
merited. Therefore, our decision
whether or not to grant an ECE will be
based on the specific circumstances of
the hospital. For additional information
about eCQM-related ECE requests, we
refer readers to section IX.A.15. of the
preamble of this final rule.
We will explore the feasibility of
creating a specific exemption policy for
IHS and tribal health programs as a part
of our future strategic initiatives.
After consideration of the public
comments we received, we are
finalizing our proposals to change the
name of this policy from ‘‘extraordinary
circumstances extensions/exemptions’’
to ‘‘extraordinary circumstances
exceptions’’ for the Hospital IQR
Program, beginning October 1, 2017,
and to revise section 412.140(c)(2) of
our regulations to reflect this change as
proposed.
(2) Timeline for CMS Response to ECE
Requests
We strive to provide our formal
response notifying the facility of our
decision within 90 days of receipt of the
facility’s ECE request. We believe that it
is important for facilities to receive
timely feedback regarding the status of
ECE requests. We strive to complete our
review of each ECE request as quickly
as possible. However, we recognize the
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number of requests we receive and the
complexity of the information provided
impacts the actual timeframe to make
ECE determinations. To improve
transparency of our process, we believe
it is appropriate to clarify that we will
strive to complete our review of each
request within 90 days of receipt.
(3) Updates to CFR
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20075), we
proposed to make conforming changes
to the regulations at 42 CFR
412.140(c)(2) to reflect our previously
finalized policy that the ECE request
form be submitted within 90 days
following the date the extraordinary
circumstance occurred (81 FR 57181
through 57182). In addition, we
proposed to make conforming changes
to the regulations to codify our other
existing policies in the Hospital IQR
Program: (1) At 42 CFR 412.140(c)(2)(i),
that a separate submission deadline of
April 1 following the end of the
reporting calendar year in which the
extraordinary circumstance occurred
and applies to a hospital that wishes to
request an extraordinary circumstances
exception with respect to the reporting
of electronic clinical quality measure
data (81 FR 57182); (2) at 42 CFR
412.140(c)(2)(ii), that at the discretion of
CMS, an exception may be granted to a
hospital if a systemic problem arises
with CMS data collection systems
which directly affected the ability of a
hospital to submit data (78 FR 50837),
and that CMS may also grant exceptions
to hospitals that have not requested
them if an extraordinary circumstance
affects an entire region or locale (76 FR
51651).
We invited public comments on these
proposals as discussed above.
We received no public comments on
our proposals to make conforming
changes to the regulations to codify
certain existing policies in the Hospital
IQR Program. Therefore, we are
finalizing our proposals to make
conforming changes to the regulations to
codify certain existing policies in the
Hospital IQR Program as proposed.
B. PPS-Exempt Cancer Hospital Quality
Reporting (PCHQR) Program
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1. Background
Section 3005 of the Affordable Care
Act added new sections 1866(a)(1)(W)
and (k) to the Act. Section 1866(k) of the
Act establishes a quality reporting
program for hospitals described in
section 1886(d)(1)(B)(v) of the Act
(referred to as ‘‘PPS-Exempt Cancer
Hospitals’’ or ‘‘PCHs’’) that specifically
applies to PCHs that meet the
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requirements under 42 CFR 412.23(f).
Section 1866(k)(1) of the Act states that,
for FY 2014 and each subsequent fiscal
year, a PCH must submit data to the
Secretary in accordance with section
1866(k)(2) of the Act with respect to
such fiscal year.
The PCHQR Program strives to put
patients first by ensuring they are
empowered to make decisions about
their own healthcare along with their
clinicians using information from datadriven insights that are increasingly
aligned with meaningful quality
measures. We support technology that
reduces burden and allows clinicians to
focus on providing high quality health
care for their patients. We also support
innovative approaches to improve
quality, accessibility, and affordability
of care while paying particular attention
to improving clinicians’ and
beneficiaries’ experience when
interacting with CMS programs. In
combination with other efforts across
the Department of Health and Human
Services, we believe the PCHQR
Program helps to incentivize hospitals
to improve healthcare quality and value,
while giving patients the tools and
information needed to make the best
decisions for them. We recognize that
the PCHQR Program represents a key
component of the way that we provide
patients with quality measurement data
for use in healthcare decision-making,
and we have made efforts to review
existing policies to identify how to
move the program forward in the least
burdensome manner possible while
continuing to incentivize improvement
in the quality of care provided to
patients. For additional background
information, including previously
finalized measures and other policies
for the PCHQR Program, we refer
readers to the following final rules: FY
2013 IPPS/LTCH PPS final rule (77 FR
53556 through 53561); the FY 2014
IPPS/LTCH PPS final rule (78 FR 50838
through 50846); the FY 2015 IPPS/LTCH
PPS final rule (79 FR 50277 through
50288); the FY 2016 IPPS/LTCH PPS
final rule (80 FR 49713 through 49723);
and the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57182 through 57193).
2. Criteria for Removal and Retention of
PCHQR Program Measures
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57182 through 57183), we
adopted policies for measure retention
and removal. We generally retain
measures from the previous year’s
PCHQR Program measure set for
subsequent years’ measure sets, except
when we specifically propose to remove
or replace a measure. We adopted the
following measure removal criteria for
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38411
the PCHQR Program, which are based
on criteria established in the Hospital
IQR Program (80 FR 49641 through
49642):
• Measure performance among PCHs
is so high and unvarying that
meaningful distinctions and
improvements in performance can no
longer be made (‘‘topped-out’’
measures);
• A measure does not align with
current clinical guidelines or practice;
• The availability of a more broadly
applicable measure (across settings or
populations) or the availability of a
measure that is more proximal in time
to desired patient outcomes for the
particular topic;
• Performance or improvement on a
measure does not result in better patient
outcomes;
• The availability of a measure that is
more strongly associated with desired
patient outcomes for the particular
topic;
• Collection or public reporting of a
measure leads to negative unintended
consequences other than patient harm;
and
• It is not feasible to implement the
measure specifications.
For the purposes of considering
measures for removal from the program,
we consider a measure to be ‘‘toppedout’’ if there is statistically
indistinguishable performance at the
75th and 90th percentiles and the
truncated coefficient of variation is less
than or equal to 0.10.
However, we recognized that there are
times when measures may meet some of
the outlined criteria for removal from
the program, but continue to bring value
to the program. Therefore, we adopted
the following criteria for consideration
in determining whether to retain a
measure in the PCHQR Program, which
also are based on criteria established in
the Hospital IQR Program (80 FR 49641
through 49642):
• Measure aligns with other CMS and
HHS policy goals;
• Measure aligns with other CMS
programs, including other quality
reporting programs; and
• Measure supports efforts to move
PCHs towards reporting electronic
measures.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20076), we did not
propose any changes to these policies.
3. Retention and Removal of Previously
Finalized Quality Measures for PCHs
Beginning With the FY 2020 Program
Year
a. Background
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53556 through 53561), we
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finalized five quality measures for the
FY 2014 program year and subsequent
years. In the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50837 through 50847),
we finalized one new quality measure
for the FY 2015 program year and
subsequent years and 12 new quality
measures for the FY 2016 program year
and subsequent years. In the FY 2015
IPPS/LTCH PPS final rule (79 FR 50278
through 50280), we finalized one new
quality measure for the FY 2017
program year and subsequent years. In
the FY 2016 IPPS/LTCH PPS final rule
(80 FR 49713 through 49719), we
finalized three new CDC NHSN
measures for the FY 2018 program year
and subsequent years, and finalized the
removal of six previously finalized
measures for fourth quarter (Q4) 2015
discharges and subsequent years. In the
FY 2017 IPPS/LTCH PPS final rule (81
FR 57183 through 57184), for the FY
2019 program year and subsequent
years, we finalized one additional
quality measure and updated the
Oncology: Radiation Dose Limits to
Normal Tissues (NQF #0382) measure.
We refer readers to the final rules
referenced in section IX.B.1. of the
preamble of this final rule for more
information regarding these previously
finalized measures.
b. Removal of Measures From the
PCHQR Program Beginning With the FY
2020 Program Year
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20076 through
20077), based on a review of the above
criteria, we proposed to remove the
following clinical process/cancer
specific treatment measures from the
PCHQR Program beginning with the FY
2020 program year because they are
topped-out:
• Adjuvant Chemotherapy is
Considered or Administered Within 4
Months (120 Days) of Diagnosis to
Patients Under the Age of 80 with AJCC
III (Lymph Node Positive) Colon Cancer
(PCH–01/NQF #0223);
• Combination Chemotherapy is
Considered or Administered Within 4
Months (120 Days) of Diagnosis for
Women Under 70 with AJCC T1c, or
Stage II or III Hormone Receptor
Negative Breast Cancer (PCH–02/NQF
#0559); and
• Adjuvant Hormonal Therapy (PCH–
03/NQF #0220).
We first adopted these three Clinical
Process/Cancer Specific Treatment
measures for the FY 2014 program year
in the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53556 through 53561). We
refer readers to that rule for a detailed
discussion of the measures. However,
based on an analysis of data from
January 1, 2014 through September 30,
2015, we have determined that these
three measures meet our topped-out
criteria. This analysis, performed by the
HCQIS Reports and Analytics Team,
evaluated data sets provided from
Program Data Management and
calculated the 5th, 10th, 25th, 50th,
75th, 90th, and 95th percentiles of
national facility performance for each
measure. For measures where higher
values indicate better performance, the
percent relative difference (PRD)
between the 75th and 90th percentiles
were obtained by taking their absolute
difference divided by the average of
their values and result multiplied by
100. To calculate the truncated
coefficient of variation (TCV), the lowest
5 percent and the highest 5 percent of
hospital rates were discarded before
calculating the mean and standard
deviation for reach measure.
The following criteria were applied to
the results:
• For measures ranging from 0–100
percent, with 100 percent being best,
national measure data for the 75th and
90th percentiles have a relative
difference of <=5 percent, or for
measures ranging from 0–100 percent,
with 100 percent being the best,
performance achieved by the median
hospital is >=95 percent, and national
measure data have a truncated
coefficient of variation <=0.10.
• For measures ranging from 0–100
percent, with 0 percent being best,
national measure data for the
complement of the 10th and 25th
percentiles have a relative difference of
<=5 percent, or for measures ranging
from 0–100 percent, with 0% being best,
national measure data for the median
hospital is <=5 percent, or for other
measures with a low number indicating
good performance, national measure
data for the 10th and 25th percentiles
have a relative difference of <=5
percent, and national measure data have
a truncated coefficient of variation
<=0.10.
The results for 2014 and 2015 are set
out in the tables below.
TOPPED-OUT ANALYSIS RESULTS FOR PCHQR MEASURES
[2014]
Measure
Mean
PCH–01 .......................
PCH–02 .......................
PCH–03 .......................
Median
.9680
.9501
.9714
75th Percentile
90th Percentile
1.0000
.9821
.9823
1.0000
1.0000
.9930
.9800
.9595
.9682
Relative
difference
(%)
0.0000
1.8018
1.0807
TCV
.0313
.0358
.0149
Topped-out
Yes
Yes
Yes
TOPPED-OUT ANALYSIS RESULTS FOR PCHQR MEASURES
[2015]
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Measure
Mean
PCH–01 .......................
PCH–02 .......................
PCH–03 .......................
Median
.9824
.9389
.9383
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90th Percentile
1.0000
.9750
.9556
1.0000
1.0000
.9703
1.0000
.9434
.9449
Based on this analysis, we have
concluded that these three measures are
topped-out and, as discussed below, we
believe that collecting PCH data on
VerDate Sep<11>2014
75th Percentile
these measures does not further program
goals.
We believe that continuing to collect
PCH data on these measures does not
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Relative
difference
(%)
0.0000
2.532
1.535
TCV
.0169
.0431
.0232
Topped-out
Yes
Yes
Yes
further program goals of improving
quality, given that measure performance
is so high and unvarying that
meaningful distinctions and
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improvements in performance can no
longer be made. We believe that these
measures also do not meet the criteria
for retention of an otherwise topped-out
measure, as they do not align with other
HHS and CMS policy goals, such as
moving toward outcome measures; do
not align with other CMS programs; and
do not support the movement to
electronic clinical quality measures due
to the chart abstraction required to
collect the data for these measures. If we
determine at a subsequent point in the
future that hospital adherence to these
practices has unacceptably declined, we
may propose to readopt these measures
in future rulemaking.
We invited public comment on our
proposal to remove these three measures
from the PCHQR Program beginning
with the FY 2020 program year.
Comment: Several commenters agreed
with the proposal to remove the three
cancer-specific measures from the
PCHQR Program because they meet
topped-out criteria. Commenters agreed
that, once topped-out, the measures no
longer add value to the program, and
removing them will remove the burden
of collecting and submitting the
performance data.
Response: We thank the commenters
for their support.
Comment: One commenter
recommended that the measures be
removed as quickly as possible, and to
cease public reporting of the data once
the last quarter of data is publicly
posted. The commenter stated that
waiting until the FY 2020 program year
would continue to impose an
unwarranted data burden on providers
to collect data for measures that are
known to be topped-out.
Response: We thank the commenter
for the recommendation. We understand
that continuing to submit performance
data on measures that meet topped-out
criteria while the measures are in the
process of being discontinued is
burdensome. At this time, we expect to
begin removing the measures beginning
with diagnoses occurring as of January
1, 2018 which will result in the last
reporting of the three measures in
February 2019.
Comment: One commenter expressed
concern that the removal of three
cancer-specific measures at once would
leave a gap in the measure set’s clinical
process domain.
Response: We appreciate the
commenter’s concern. As the PCHQR
Program evolves, it is necessary for us
to evaluate whether existing measures
continue to meet Program goals and
advance the Program. We have
concluded that these measures are
topped-out pursuant to our topped-out
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criteria and no longer advance the goals
of the program because measure
performance is so high and unvarying
that meaningful distinctions and
improvements in performance can no
longer be made; therefore, continued
data collection and public reporting
does not further program goals of
improving quality. In addition, these
measures do not meet our criteria for
retention because they do not align with
other HHS and CMS policy goals, such
as moving toward outcome measures; do
not align with other CMS programs; and
do not support the movement to
electronic clinical quality measures due
to the chart abstraction required to
collect the data for these measures. For
these reasons, we believe that their
removal is appropriate. We will
continue to evaluate the measure set on
an annual basis to ensure that we are
addressing gaps in the measure set.
Comment: One commenter stated that
the removal of the three measures
would result in the measure set no
longer addressing care provided to two
very common cancer types in the
elderly population: breast and colon
cancer.
Response: We appreciate the
commenter’s concern. We recognize that
breast and colon cancer are both
common cancer types, and we note that
our measure set also contains measures
specific to prostate cancer and to a
broader set of cancers. As we maintain
and evolve the PCHQR Program
measure cohort, we take into
consideration not just the specific
cancer types addressed under a
measure, but also whether the measures
meet program and CMS goals. In this
instance, we believe it is in the interest
of program goals to remove these three
topped-out clinical process measures
despite the cancers they address as they
do not meet the goal of moving toward
outcomes measures, do not align with
other CMS programs, and do not
support the movement to electronic
clinical quality measures due to the
chart abstraction required to collect the
data for these measures. We also do not
believe it is in the best interest of the
program to continue to require PCHs to
report on measures for which the
performance level is so high and
unvarying that meaningful distinctions
and improvements in performance can
no longer be made and therefore does
not further program goals of improving
quality.
Comment: One commenter disagreed
with the conclusion that the measures
are topped-out, citing data that it
gathered from its own clinical data
registry of over 1,300 reporting
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38413
programs that indicate disparities in
measure performance.
Response: We appreciate the
commenter’s views. We have proposed
to remove the measures from the
PCHQR Program because our analysis
shows that the measures are topped-out
for the cancer hospitals that participate
in the PCHQR Program. Measure
performance for the small group of
providers that make up the PCHs is,
unsurprisingly, different than that
gathered from a broader range of
providers in a much larger population of
1,300. As we stated, we will continue to
monitor performance in this area and
reserve the option to propose to
reintroduce these measures if we feel
that performance merits such
reintroduction.
Comment: One commenter
recommended retaining the three
measures as a composite measure to
continue to measure compliance,
particularly in sub-populations that
demonstrate disparities in care.
Response: We thank the commenter
for the suggestion. We have proposed to
remove the three measures from the
PCHQR Program because our analysis of
measure performance indicates that they
meet the program’s topped-out criteria,
and that measure performance is so high
or unvarying that no meaningful
distinctions can be drawn from
continued performance reporting. Given
the burden of the chart abstraction
required to collect these three measures,
it is not practicable to retain these
topped-out measures in the program as
a composite measure when performance
has been shown to be consistently high
over more than one performance period.
We also do not believe a composite
measure would address the issue of the
measures’ topped-out status, which is
an issue of lack of variation in
performance. We will continue to
evaluate the measure set in each
rulemaking cycle, and should we
determine that these measures should
be reintroduced in future rulemaking,
we will take commenter’s suggestion
under consideration.
After consideration of the public
comments we received, we are
finalizing our proposal to remove the
following clinical process/cancer
specific treatment measures from the
PCHQR Program beginning with the FY
2020 program year because they are
topped-out:
• Adjuvant Chemotherapy is
Considered or Administered Within 4
Months (120 Days) of Diagnosis to
Patients Under the Age of 80 with AJCC
III (Lymph Node Positive) Colon Cancer
(PCH–01/NQF #0223);
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• Combination Chemotherapy is
Considered or Administered Within 4
Months (120 Days) of Diagnosis for
Women Under 70 with AJCC T1c, or
Stage II or III Hormone Receptor
Negative Breast Cancer (PCH–02/NQF
#0559); and
• Adjuvant Hormonal Therapy (PCH–
03/NQF #0220).
4. New Quality Measures Beginning
With the FY 2020 Program Year
a. Considerations in the Selection of
Quality Measures
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53556), the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50837
through 50838), and the FY 2015 IPPS/
LTCH PPS final rule (79 FR 50278), we
indicated that we take a number of
principles into consideration when
developing and selecting measures for
the PCHQR Program, and that many of
these principles are modeled on those
we use for measure development and
selection under the Hospital IQR
Program. In the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 20077), we
did not propose any changes to the
principles we consider when
developing and selecting measures for
the PCHQR Program.
Section 1866(k)(3)(A) of the Act
requires that any measure specified by
the Secretary must have been endorsed
by the entity with a contract under
section 1890(a) of the Act (the NQF is
the entity that currently holds this
contract). Section 1866(k)(3)(B) of the
Act provides an exception under which,
in the case of a specified area or medical
topic determined appropriate by the
Secretary for which a feasible and
practical measure has not been endorsed
by the entity with a contract under
section 1890(a) of the Act, the Secretary
may specify a measure that is not so
endorsed as long as due consideration is
given to measures that have been
endorsed or adopted by a consensus
organization. Using the principles for
measure selection in the PCHQR
Program, we proposed four new
measures, described below.
sradovich on DSK3GMQ082PROD with RULES2
b. New Quality Measures Beginning
With the FY 2020 Program Year
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20077 through
20081), beginning with the FY 2020
PCHQR program year, we proposed to
adopt two clinical process measures and
two intermediate clinical outcome
quality measures. These measures meet
the requirement under section
1866(k)(3)(A) of the Act that measures
specified for the PCHQR Program be
endorsed by the entity with a contract
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under section 1890(a) of the Act
(currently the NQF). Although there is
no financial incentive or penalty
associated with the PCHQR Program, we
encourage participation to further the
goal of improving the quality of care for
the PCH patient population. The
proposed measures are:
• Proportion of Patients Who Died
from Cancer Receiving Chemotherapy in
the Last 14 Days of Life (NQF #0210);
• Proportion of Patients Who Died
from Cancer Admitted to the ICU in the
Last 30 Days of Life (NQF #0213);
• Proportion of Patients Who Died
from Cancer Not Admitted to Hospice
(NQF #0215); and
• Proportion of Patients Who Died
from Cancer Admitted to Hospice for
Less Than Three Days (NQF #0216).
In compliance with section
1890A(a)(2) of the Act, the proposed
measures were included on a publicly
available document entitled ‘‘List of
Measures under Consideration for
December 1, 2016,’’ 298 a list of quality
and efficiency measures under
consideration for use in various
Medicare programs, and were reviewed
by the MAP Hospital Workgroup. The
MAP Hospital Workgroup supported the
inclusion of these measures in the
PCHQR Program in final
recommendations it made in its
February 2017 report to HHS and CMS
for 2016 to 2017.299 Additional details
on MAP discussions of these measures
may be found in the ‘‘MAP PreRulemaking Report: 2016
Recommendations on Measures Under
Consideration by HHS,’’ with additional
discussion in the ‘‘MAP 2017
Considerations for Implementing
Measures in Federal Programs:
Hospitals (Draft Report).’’ 300 The
sections below outline our rationale for
proposing these measures.
298 Centers for Medicare and Medicaid Services,
List of Measures under Consideration for December
1, 2016. Available at: https://www.cms.gov/
Medicare/Quality-Initiatives-Patient-AssessmentInstruments/QualityMeasures/Downloads/
Measures-under-Consideration-List-for-2016.pdf.
299 National Quality Forum. Measures
Application Partnership Hospital Workgroup. MAP
2016–2017 Spreadsheet of Final Recommendations
to HHS and CMS. Available at: https://
www.qualityforum.org/MAP_Hospital_
Workgroup.aspx.
300 National Quality Forum. Measures
Application Partnership Hospital Workgroup. MAP
2016–2017 Preliminary Recommendations.
Available at: https://www.qualityforum.org/MAP_
Hospital_Workgroup.aspx. National Quality Forum.
Measures Application Partnership Hospital
Workgroup. Draft for Comment, MAP 2017
Considerations for Implementing Measures in
Federal Programs: Hospitals. Available at: https://
www.qualityforum.org/Project_Pages/MAP_
Hospital_Workgroup.aspx.
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(1) Background
The quality of end-of-life care has
been identified by the NQF as an area
of care that continues to need
improvement.301 End-of-life care may be
defined as ‘‘comprehensive care that
addresses medical, emotional, spiritual,
and social needs during the last stages
of a person’s terminal illness,’’ 302 and
may include palliative care. Palliative
care is generally defined as multifaceted, holistic care that anticipates,
prevents, and alleviates suffering.303
Both palliative and end-of-life care can
be provided when a patient is receiving
hospice services, but it is not necessary
to be admitted to hospice to receive
such care. The NQF notes that hospice
is both a type of care team and a care
philosophy, and is intended to enable
patients to prepare for death while
living as fully as possible.304 The
Institute of Medicine of the National
Academies (IOM) has noted that while
clinicians are encouraged to counsel
patients about palliative care, which
betters chances of maintaining a high
quality of life when dying, ‘‘too few
patients and families receive this help
in a timely manner.’’ 305 In the same
report, the IOM proposed a number of
core components of quality end-of-life
care. These proposals included offering
a referral to hospice if a patient ‘‘has a
prognosis of 6 months or less’’ and
regular revision of a patient’s care plan
to address the patient’s changing needs,
as well as the changing needs of the
family.306
In addition to all of the quality of care
benefits of end-of-life care to patients
and caregivers, there are financial cost
benefits as well. In its Technical Report
on palliative and end-of-life care, the
NQF cited research indicating that the
use of palliative care, including end-oflife care, results in various positive
outcomes, including a reduction of
301 National Quality Forum, Technical Report.
Palliative and End-of-Life Care 2015–2016.
(December 23, 2016).
302 National Quality Forum, Technical Report.
Palliative and End-of-Life Care 2015–2016.
(December 23, 2016).
303 National Quality Forum, Technical Report.
Palliative and End-of-Life Care 2015–2016.
(December 23, 2016).
304 National Quality Forum, Technical Report.
Palliative and End-of-Life Care 2015–2016.
(December 23, 2016).
305 Committee on Approaching Death: Addressing
Key End of Life Issues, Institute of Medicine: Dying
in America: Improving Quality and Honoring
Individual Preferences Near the End of Life.
Washington DC, National Academies Press, 2015.
306 Committee on Approaching Death: Addressing
Key End of Life Issues, Institute of Medicine: Dying
in America: Improving Quality and Honoring
Individual Preferences Near the End of Life.
Washington DC, National Academies Press, 2015.
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costs.307 For example, one study
evaluated the impact of hospice
enrollment at different time periods on
Medicare expenditures, and found that
regardless of when a patient was
enrolled in hospice, such patients’
subsequent Medicare costs were
significantly lowered.308
Despite the benefits attributed to the
use of palliative and end-of-life services
and the increase in their availability, the
NQF and others have noted that such
services remain underutilized. By
proposing to include two process
measures and two intermediate clinical
outcome measures related to end-of-life
care in the PCHQR Program, our intent
is to assess the quality of end-of-life care
provided to patients in the PCH setting.
We recognize that these measures may
also be used in the broader population
of all hospitals providing cancer care;
therefore, as discussed in section
IX.A.9.b. of the preamble of this final
rule, we invited public comment on the
future inclusion of these measures in
the Hospital IQR Program. These four
measures are described in more detail
below.
Comment: Several commenters
generally addressed all four measures.
Several commenters supported the
introduction of the end-of-life measures
into the PCHQR measure set, but
recommended that we also adopt
measures that focus on care planning to
ensure that patients are given
opportunity to engage in meaningful
end-of-life care discussions. Some
commenters expressed concern that
measuring end-of-life care processes and
outcomes could result in unintended
consequences and incentives to stint on
necessary care, and believed that patient
and family engagement is necessary to
ensure that patient preferences are
considered. Some commenters
recommended that we update the
measure specifications for all of the
proposed measures to incorporate
updates to the ICD–10 and CPT code
lists. Finally, several commenters agreed
that risk adjustment and risk
stratification are not necessary for the
end-of-life measures proposed.
Response: We appreciate the
commenters’ suggestions and concerns.
We believe that the inclusion of the
proposed measures in the program will
lead to more, not less, patient and
family engagement, because the
measures draw attention to the need to
307 NQF. Final Report, National Voluntary
Consensus Standards: Palliative Care and End-ofLife Care—A Consensus Report. 2012.
308 Kelley AS et al., Hospice Enrollment Saves
Money for Medicare and Improves Care Quality
Across a Number of Different Lengths-of-Stay,
Health Affairs (March 2013)32:3;552–561.
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understand and clarify patient wishes
regarding end-of-life care. Evidence
cited by the measure developers and in
other research indicates that when death
is imminent, providing less aggressive
care can improve quality of life for
patients. We believe that end-of-life care
that adapts to patient experience and
need does not result in stinted care, but
instead reshapes that care pursuant to
changing patient needs and
incorporation of patient wishes. We
note that these measures are a first step
that seeks to broadly assess what is
happening in PCHs at the end of life,
and will provide a baseline picture of
existing end-of-life care at those
hospitals. We will continue to consider
other measures for future introduction
into the program that can complement
the proposed measures, and we
welcome input from stakeholders as we
do so.
(2) Proportion of Patients Who Died
From Cancer Receiving Chemotherapy
in the Last 14 Days of Life (EOL-Chemo)
Measure (NQF #0210)
Chemotherapy is typically used to
treat cancer, but in patients with
incurable cancer it may also be used
with the goal of easing symptoms and
improving survival.309 One study
estimated that 6.2 percent of cancer
patients continue receiving
chemotherapy close to the end of their
lives (defined as within 2 weeks of
death).310 However, studies have shown
that administering palliative
chemotherapy to terminally ill cancer
patients may not be beneficial, as it may
be associated with higher rates of
interventions such as cardiopulmonary
resuscitation in the last week of life
without any difference in survival.311
Such patients may also be more likely
to die in the intensive care unit (ICU),
and less likely to die either at home or
in the place where they had expressed
preference to die.312 In addition,
research has shown that some patients
may receive chemotherapy for treatment
instead of palliative care at the end of
life, even when treatment has been
309 Wright A et al., Associations Between
Palliative Chemotherapy and Adult Cancer Patients’
End of Life Care and Place of Death: Prospective
Cohort Study, BMJ 2014;348:g1219.
310 Wright A et al., Associations Between
Palliative Chemotherapy and Adult Cancer Patients’
End of Life Care and Place of Death: Prospective
Cohort Study, BMJ 2014;348:g1219.
311 Wright A et al., Associations Between
Palliative Chemotherapy and Adult Cancer Patients’
End of Life Care and Place of Death: Prospective
Cohort Study, BMJ 2014;348:g1219.
312 Wright A et al., Associations Between
Palliative Chemotherapy and Adult Cancer Patients’
End of Life Care and Place of Death: Prospective
Cohort Study, BMJ 2014;348:g1219.
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38415
determined to be unnecessary.313 While
the impetus for continuing treatment
may vary from case to case,314 the
available evidence indicates continuing
to receive chemotherapy—for palliation
or treatment—toward the end of a
patient’s illness is associated with
increased hospitalization and may be
associated decreased experience of care.
Researchers have also observed that
patients receiving chemotherapy late
into the course of a terminal illness
tended to be referred to hospice later,
resulting in lower quality of life, distress
for caregivers, and increased cost.315
They noted that their results could
suggest that either less use
chemotherapy at the end of life or more
frequent end-of-life discussions could
improve the quality of those patients’
end-of-life care.316 Another study of
early engagement in palliative care in
patients diagnosed with metastatic lung
cancer found that patients who received
palliative care and less chemotherapy
survived longer, in addition to
experiencing improvement in quality of
life.317 In this study, palliative care was
integrated into standard oncologic care,
and included an assessment of physical
and psychosocial symptoms as well as
care decision assistance.318 Results from
this study showed significantly higher
quality of life in the patient cohort
receiving palliative care compared to
those receiving only the standard
oncologic care.319 In particular,
313 Mack JW et al., Patient Beliefs that
Chemotherapy May be Curative and Care Received
at the End of Life Among Patients with Metastatic
Lung and Colorectal Cancer, Cancer (June 1,
2015)121:11;1891–1897.
314 Mack JW et al., Patient Beliefs that
Chemotherapy May be Curative and Care Received
at the End of Life Among Patients with Metastatic
Lung and Colorectal Cancer, Cancer (June 1,
2015)121:11;1891–1897.
315 Wright A et al., Associations Between
Palliative Chemotherapy and Adult Cancer Patients’
End of Life Care and Place of Death: Prospective
Cohort Study, BMJ 2014;348:g1219.
316 Wright A et al., Associations Between
Palliative Chemotherapy and Adult Cancer Patients’
End of Life Care and Place of Death: Prospective
Cohort Study, BMJ 2014;348:g1219.
317 Committee on Approaching Death: Addressing
Key End of Life Issues, Institute of Medicine: Dying
in America: Improving Quality and Honoring
Individual Preferences Near the End of Life.
Washington DC, National Academies Press, 2015
(citing Temel JC et al. Early Palliative Care for
Patients with Metastatic Non-Small-Cell Lung
Cancer. NEJM. 2010; 363:733–742).
318 Temel JC et al. Early Palliative Care for
Patients with Metastatic Non-Small-Cell Lung
Cancer. NEJM. 2010; 363:733–742.
319 Temel JC et al. Early Palliative Care for
Patients with Metastatic Non-Small-Cell Lung
Cancer. NEJM. 2010; 363:733–742.
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clinically meaningful improvements in
quality of life and mood were noted.320
The proposed EOL-Chemo measure
addresses the NQS Communication and
Care Coordination and Affordable Care
domains, and aligns with the CMS
Quality Strategy goals of strengthening
person and family engagement as
partners in their care, and promoting
effective communication and
coordination of care. The proposed
measure is a process measure that
evaluates the proportion of patients who
died from cancer who received
chemotherapy in the last 14 days of life.
Similar to the other three end-of-life
measures we proposed, this proposed
measure seeks to assess the use of
chemotherapy at the end-of-life, a
practice advanced with the intent to
alleviate disease symptoms but which
has been shown to also be associated
with reduced quality of life and
increased costs. This measure was
finalized for use in the Merit-based
Incentive Payment System (MIPS) in the
FY 2017 MIPS final rule with comment
period (81 FR 77672). By introducing
this measure here, we are seeking to
evaluate how often chemotherapy is
administered near the end of life in
PCHs.
The proposed EOL-Chemo measure
cohort includes all Medicare
beneficiaries who died of cancer and
who received chemotherapy at a PCH
within the last 14 days of their lives.
The proposed measure uses Medicare
administrative claims data to derive the
numerator and denominator. The
numerator for this measure is defined as
cancer patients who received
chemotherapy (regardless of whether for
treatment or palliative purposes) in the
last fourteen days of life. The
denominator is defined as patients who
died from cancer. Patients for whom
numerator or denominator data cannot
be identified will not be included in the
calculation. The measure specifications
contain no exclusions, risk adjustments
or risk stratifications because the
measure is intended to evaluate the
quality of care provided to all cancer
patients at the end of life. The measure
will be calculated as the numerator
divided by the denominator. Measure
specifications for the proposed EOLChemo measure can be accessed on the
NQF’s Web site at: https://
www.qualityforum.org/Publications/
2016/12/Palliative_and_End-of-Life_
Care_2015-2016.aspx.
We invited public comment on our
proposal to adopt the Proportion of
320 Temel JC et al. Early Palliative Care for
Patients with Metastatic Non-Small-Cell Lung
Cancer. NEJM. 2010; 363:733–742.
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Patients Who Died from Cancer
Receiving Chemotherapy in the Last 14
Days of Life (NQF #0210) measure for
the FY 2020 program year and
subsequent years.
Comment: Many commenters
supported the introduction of the EOLChemo measure into the PCHQR
Program. Commenters stated that the
measure will improve care for cancer
patients by encouraging providers to
have difficult but necessary
conversations with their patients; that it
addresses treatment that could lead to
unnecessary and futile care; that in
concert with the other end-of-life
measures proposed, this measure will
promote accountability and drive
improvement; and because it addresses
a measurement gap. Commenters also
noted that the measure was recently reendorsed by the NQF.
Response: We thank the commenters
for their support.
Comment: Several commenters
recommended modification of the
measure specifications to incorporate
exclusions for patient preference,
patients in clinical trials, and palliative
chemotherapy, and urged recognition in
reporting that a performance rate of zero
is not the goal.
Response: The measure is intended to
gather information on the proportion of
patients who receive chemotherapy
close to the end of life regardless of the
purpose of that chemotherapy and, to
that end, does not distinguish between
curative and palliative chemotherapy, or
patients receiving chemotherapy as part
of a clinical trial. We appreciate that
commenters find it important to
distinguish between chemotherapy used
for palliative purposes as opposed to
curatively, as well as the fact that some
patients may choose to continue to
receive curative or experimental
chemotherapy until the end of life,
perhaps despite medical advice. We do
not believe, however, that it would be
appropriate to modify measure
specifications during the rule process
without sufficient data analysis and
clinical review to assess appropriateness
for the measures. As with all measures
adopted for the PCHQR Program, we
will monitor the measure and continue
to assess its use in the program as
specified over time. We agree that a
performance rate of zero is not a
reasonable goal, and note this is not the
intent of the measure. We will evaluate
ways to address this as part of publicly
reporting measure data in the future.
After consideration of the public
comments we received, we are
finalizing our proposal to adopt the
Proportion of Patients Who Died from
Cancer Receiving Chemotherapy in the
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Last 14 Days of Life (NQF #0210)
measure for the FY 2020 program year
and subsequent years.
(3) Proportion of Patients Who Died
From Cancer Admitted to the ICU in the
Last 30 Days of Life (EOL–ICU) Measure
(NQF #0213)
A number of research studies have
determined that cancer care can become
more aggressive at the end of life, which
can result in a lower quality of care and
lower quality of life.321 Care defined as
‘‘aggressive’’ may include the ‘‘possible
misuse of treatment resulting in high
rates of emergency room visits,
hospitalization, or ICU stays for
terminal patients’’ in addition to
overuse of chemotherapy close to death
and the underuse of hospice.322 In a
retrospective study of patients with
advanced lung cancer, researchers
found that between 1993 and 2002, the
number of patients being admitted to
the ICU near death increased, and while
in the ICU, one in four of those patients
received mechanical ventilation, despite
the likelihood that neither intervention
would necessarily have effect on the
advanced cancer.323 In this study, twothirds of the patients died within a
month of their admission to the ICU,
which the authors interpreted as
demonstrating that ICU admission in the
context of advanced lung cancer was
potentially ineffective.324 The authors
noted other studies that showed that inhospital mortality during ICU
admissions exact a toll on patients and
families in terms of ‘‘financial cost,
emotional burden, and failed
expectations.’’ 325 The impact of ICU
admission at the end of life is also
observed amongst caregivers, who
report excellent end-of-life care less
often for patients admitted to the ICU
within 30 days of death compared to
those who are not.326
321 Barbera L et al., Quality of End-of-Life Cancer
Care in Canada: A Retrospective Four-Province
Study Using Administrative Health Care Data,
Oncology (October 2015)22:5;341–355; Earle CC et
al. Aggressiveness of Cancer Care Near the End of
Life: Is It a Quality-of-Care Issue? Journal of Clinical
Oncology. 2008; 26:23, 3860–3866.
322 Earle CC et al. Aggressiveness of Cancer Care
Near the End of Life: Is It a Quality-of-Care Issue?
Journal of Clinical Oncology. 2003; 26:23, 3860–
3866.
323 Sharma G et al., Trends in End-of-Life ICU Use
Among Older Adults with Advanced Lung Cancer,
Chest (January 2008)133:1;72–78.
324 Sharma G et al., Trends in End-of-Life ICU Use
Among Older Adults with Advanced Lung Cancer,
Chest (January 2008)133:1;72–78.
325 Sharma G et al., Trends in End-of-Life ICU Use
Among Older Adults with Advanced Lung Cancer,
Chest (January 2008)133:1;72–78.
326 Wright AA et al., Family Perspectives on
Aggressive Cancer Care Near the End of Life, JAMA
(2016)315:3;284–292.
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Patients who are not admitted to the
ICU or involved in other aggressive
mechanisms of care in their final week
of life have been shown to experience a
higher quality of life via less physical
and emotional distress.327 Researchers
have theorized that while patients who
die at home are able to have care that
focuses on symptom management and
comfort; hospitals and ICUs focus
instead on keeping the patient alive.328
ICU admission at the end of life is
also costly,329 with ICU admissions
identified as one of the ‘‘key drivers of
resource use and expenditures.’’ 330
Studies of claims data indicate that
aggressiveness of care given to Medicare
beneficiaries with cancer at the end of
life continues to increase, with nearly
25 percent of Medicare expenditures in
the last month of such beneficiaries’
lives, despite limited evidence that such
an intervention improves patient
outcomes.331
The proposed EOL–ICU measure
addresses the NQS Communication and
Care Coordination and Affordable Care
domains, and addresses several CMS
Quality Strategy goals: making care safer
by reducing harm caused in the delivery
of care; strengthening person and family
engagement as partners in their care;
and promoting effective communication
and coordination of care. The proposed
EOL–ICU measure is an intermediate
clinical outcome measure that assesses
whether cancer patients were admitted
to the ICU in the last 30 days of their
lives. As with the other three proposed
end-of-life measures discussed in
section IX.B.4.b. of the preamble of this
final rule, this proposed measure seeks
to evaluate the end-of-life care provided
to patients at PCHs. In particular, we
seek to assess the frequency of end-oflife admissions to the ICU in this
setting, as the research has shown that
interventions provided in the ICU to
327 Zhang B et al., Factors Important to Patients’
Quality-of-Life at the End-of-Life, Arch. Intern. Med
(August 13, 2012)172:15;1133–1142; Wright AA et
al., Place of Death: Correlations with Quality of Life
of Patients with Cancer and Predictors of Bereaved
Caregivers’ Mental Health, J Clin Oncol (October 10,
2010)28:29;4457–4464.
328 Wright AA et al., Place of Death: Correlations
with Quality of Life of Patients with Cancer and
Predictors of Bereaved Caregivers’ Mental Health, J
Clin Oncol (October 10, 2010)28:29;4457–4464.
329 Wright AA et al., Place of Death: Correlations
with Quality of Life of Patients with Cancer and
Predictors of Bereaved Caregivers’ Mental Health, J
Clin Oncol (October 10, 2010)28:29;4457–4464.
330 Langton JL et al., Retrospective Studies of Endof-Life Resource Utilization and Costs in Cancer
Care Using Health Administrative Data: A
Systematic Review, Palliative Medicine
(2014)28:10;1167–1196.
331 Wright AA et al. Place of Death: Correlations
with Quality of Life of Patients with Cancer and
Predictors of Bereaved Caregivers’ Mental Health.
Journal of Clinical Oncology. (2010)28:4457–4464.
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patients with irreversible disease can be
futile and may negatively impact
patients’ quality of life. We recognize,
however, that in some cases ICU
admissions may be appropriate, and
note that this measure broadly assesses
how many patients are admitted to the
ICU close to death, without excluding
admissions for specific reasons.
The proposed EOL–ICU measure
cohort includes Medicare beneficiaries
who are PCH patients who died of
cancer and who were admitted to the
ICU within the last thirty days of their
lives. This proposed measure uses
Medicare administrative claims data to
derive the numerator and denominator.
The numerator for this measure is
defined as the number of patients who
died from cancer and who were
admitted to the ICU in the last 30 days
of life. The denominator is defined as
patients who died from cancer. The
measure specifications do not contain
exclusions from the denominator and do
not provide for risk adjustment or risk
stratification in order to assess the
quality of care provided to all cancer
patients at the end of life. The rate of
ICU admissions in the last 30 days of
life will be calculated from the
numerator divided by the denominator.
Measure specifications for the proposed
EOL–ICU measure can be accessed on
the NQF’s Web site at: https://
www.qualityforum.org/Publications/
2016/12/Palliative_and_End-of-Life_
Care_2015-2016.aspx.
We invited public comment on our
proposal to adopt the Proportion of
Patients Who Died from Cancer
Admitted to the ICU in the Last 30 Days
of Life (NQF #0213) measure for the FY
2020 program year and subsequent
years.
Comment: Many commenters
supported the introduction of the EOL–
ICU measure into the PCHQR Program.
Commenters expressed that the measure
will improve care for cancer patients by
encouraging providers to have difficult
but necessary conversations with their
patients as well as allowing PCHs to
identify where patients need additional
supportive care; that it addresses
treatment that could lead to unnecessary
and futile care; that in concert with the
other end-of-life measures proposed,
this measure will promote
accountability and drive improvement;
and because it addresses a measurement
gap. Commenters also noted that the
measure was recently re-endorsed by
the NQF and that the measure aligns
with NQF’s goal to improve end-of-life
care.
Response: We thank the commenters
for their support.
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38417
Comment: Several commenters
recommended modification of the
measure specifications to incorporate
exclusions for bone marrow transplants
with curative intent as well as
exclusions for other patient
characteristics. One commenter
recommended against public reporting
of the EOL–ICU measure or introducing
the measure into quality programs tied
to payment until adjustments to the
specifications are made to account for
patient characteristics.
Response: We thank the commenters
for these recommendations. The
measure is intended to gather
information on the proportion of
patients admitted to the ICU close to the
end of life and, to that end, does not
distinguish between reasons for
admission because the measure’s goal is
to assess such admissions overall for the
cancer population regardless of reason
for admission to the ICU. As the data is
reported, we can determine whether
there is a need to further evolve the
program and measure specifications to
account or exclude for specific reasons
for admission. We do not believe,
however, that it would be appropriate to
modify measure specifications during
the rule process without sufficient data
analysis and clinical review to assess
appropriateness for the measures.
Finally, we note that the PCHQR
Program is not tied to payment.
Comment: One commenter
recommended that PCHs be provided
with confidential performance data that
stratifies rates between ICU admission at
a PCH as compared to that at non-PCH
providers.
Response: We continue to evaluate
ways to report performance data that is
meaningful not only to providers for
their own quality improvement but also
to patients, so that they can make
informed choices about their healthcare
providers. At the present time, we are
unable to provide reports such as the
one recommended above due to the
operational concerns associated with
collecting and reporting this data to
PCHs. However, we welcome
suggestions from providers as to ways to
provide meaningful data to help them
improve their performance.
After consideration of the public
comments we received, we are
finalizing our proposal to adopt the
Proportion of Patients Who Died from
Cancer Admitted to the ICU in the Last
30 Days of Life (NQF #0213) measure for
the FY 2020 program year and
subsequent years.
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(4) Proportion of Patients Who Died
from Cancer Not Admitted to Hospice
(EOL-Hospice) Measure (NQF #0215)
A number of research studies have
determined that cancer care can become
more aggressive at the end of life, which
can result in a lower quality of care and
lower quality of life.332 Such aggressive
care has been identified to include the
underutilization of hospice,333 which is
either lack of referral or late referral to
hospice services.334 Patients with
advanced cancer who die while
admitted to the hospital have been
shown to have lower quality of life than
those who die at home with hospice
services.335
By contrast, studies have shown that
cancer patients enrolled in hospice were
hospitalized less frequently and
received fewer procedures than those
who were not receiving hospice care.336
In addition, cancer patients who were
enrolled in hospice 5 to 8 weeks prior
to their deaths demonstrated significant
cost savings, with savings decreasing as
the time period enrolled shortens.337
Researchers theorize that one reason
aggressive or ‘‘injudicious’’ treatment
occurs at the end of life is that end-oflife discussions are not being held with
patients, and note that it is ‘‘the
physician’s responsibility to counsel
patients and their families and . . .
focus on the need for effective palliative
care as patients approach the end of
life.’’ 338
The proposed EOL-Hospice measure
addresses the NQS Communication and
Care Coordination and Affordable Care
domains, as well as the CMS Quality
Strategy goals of strengthening person
332 Barbera L et al., Quality of End-of-Life Cancer
Care in Canada: A Retrospective Four-Province
Study Using Administrative Health Care Data,
Oncology (October 2015)22:5;341–355; Earle CC et
al. Aggressiveness of Cancer Care Near the End of
Life: Is It a Quality-of-Care Issue? Journal of Clinical
Oncology. 2008; 26:23, 3860–3866.
333 Earle CC et al. Aggressiveness of Cancer Care
Near the End of Life: Is It a Quality-of-Care Issue?
Journal of Clinical Oncology. 2003; 26:23, 3860–
3866.
334 Earle CC et al. Aggressiveness of Cancer Care
Near the End of Life: Is It a Quality-of-Care Issue?
Journal of Clinical Oncology. 2003; 26:23, 3860–
3866.
335 Wright AA et al., Place of Death: Correlations
with Quality of Life of Patients with Cancer and
Predictors of Bereaved Caregivers’ Mental Health, J
Clin Oncol (October 10, 2010)28:29;4457–4464.
336 Obermeyer Z et al., Association Between the
Medicare Hospice Benefit and Health Care
Utilization and Costs for Patients with PoorPrognosis Cancer, JAMA (2014)312:18;1888–1896.
337 Obermeyer Z et al., Association Between the
Medicare Hospice Benefit and Health Care
Utilization and Costs for Patients with PoorPrognosis Cancer, JAMA (2014)312:18;1888–1896.
338 Earle CC et al. Aggressiveness of Cancer Care
Near the End of Life: Is It a Quality-of-Care Issue?
Journal of Clinical Oncology. 2003; 26:23, 3860–
3866.
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and family engagement as partners in
their care and promoting effective
communication and coordination of
care. The proposed measure is a process
measure that assesses the proportion of
patients who died from cancer who
were not admitted to hospice. This
measure evaluates whether or not
patients were admitted to hospice, and
then ties in to the following measure
(EOL–3DH), which evaluates whether
patients who were admitted to hospice
were admitted to hospice late in the
course of their illness, defined as within
3 days of their death. We discuss this
proposed follow-on measure, EOL–3DH,
in more detail below in section
IX.B.4.b.(5) of the preamble of this final
rule. In summary, EOL-Hospice seeks to
evaluate, simply, whether patients were
admitted to hospice or not; the proposed
follow-on measure EOL–3DH will then
assess whether those patients admitted
to hospice were admitted in a timely
fashion to derive maximum benefit from
hospice services. We do not expect
PCHs to achieve perfect rates on the
EOL-Hospice measure because we
understand that some patients may
refuse hospice, or that there may be
additional intervening events or
circumstances that impact whether or
not a patient is admitted to hospice.
The proposed EOL-Hospice measure
cohort includes Medicare beneficiaries
who are PCH patients who died of
cancer. The proposed measure uses
Medicare administrative claims data to
derive the numerator and denominator.
The numerator in this proposed
measure is defined as the proportion of
PCH patients not enrolled in hospice.
The denominator is defined as patients
who died from cancer. The measure
specifications contain no denominator
exclusions nor any risk adjustment or
risk stratification. The proposed
measure is calculated by dividing the
numerator by the denominator. Measure
specifications for the proposed EOLHospice measure can be accessed on the
NQF’s Web site at: https://www.quality
forum.org/Publications/2016/12/
Palliative_and_End-of-Life_Care_20152016.aspx.
We invited public comment on our
proposal to adopt the Proportion of
Patients Who Died from Cancer Not
Admitted to Hospice (NQF #0215)
measure for the FY 2020 program year
and subsequent years.
Comment: Many commenters
supported the introduction of the EOLHospice measure into the PCHQR
Program. Commenters stated that the
measure will improve care for cancer
patients by encouraging providers to
have difficult but necessary
conversations with their patients as well
PO 00000
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Fmt 4701
Sfmt 4700
as allowing earlier referrals to hospice
care. Commenters noted that hospice
referrals often come too late to be of
benefit to patients, and that the measure
may help PCHs identify opportunities to
ensure appropriate care transitions and
planning. Commenters also expressed
that the measure addresses treatment
that could lead to unnecessary and
futile care; that in concert with the other
end-of-life measures proposed, this
measure will promote accountability
and drive improvement; and because it
addresses a measurement gap.
Commenters also noted that the measure
was recently re-endorsed by the NQF
and that the measure aligns with NQF’s
goal to improve end-of-life care.
Response: We thank the commenters
for their support.
Comment: One commenter
recommended adoption of the EOLHospice measure with modification of
the measure specifications to include
hospital-based palliative care services
into the measure numerator. Another
commenter recommended expansion of
the measure to include such services
because the ability of palliative care
services to provide symptom
management.
Response: We appreciate commenters’
recommendations. At this point, we are
interested in assessing whether or not
patients in PCHs are admitted to
hospice prior to death because patient
admission to hospice has been shown to
be an indicator of the aggressiveness of
care at the end of life and whether
discussions are being held with patients
to discuss choice and preference
regarding care at the end of life. We
believe that pairing this measure with
the EOL–3DH outcome measure,
discussed below, provides additional
insight into hospice admission at PCHs.
We recognize the importance of
palliative care services in alleviating
symptoms during the disease process,
and welcome recommendations as to
additional measures related to palliative
care for possible incorporation into the
PCHQR Program in the future.
Comment: One commenter did not
support the introduction of the EOLHospice measure. The commenter
instead recommended the adoption of a
process measure that evaluates if and
when terminally ill patients are timely
given the opportunity to consider
hospice.
Response: We appreciate the
commenter’s concern, and agree that it
is important to gauge whether and when
patients are alerted to their prognosis
and given an opportunity to make
decisions regarding their end-of-life
care. We intend to take under
advisement the commenter’s suggestion
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to adopt a process measure assessing if
and when a terminally ill cancer patient
is given an opportunity to consider
hospice; however, we would not view
such a measure as an alternative to the
proposed EOL-Hospice measure. We
believe that the proportion of patients
admitted to hospice is an important
metric, and is particularly valuable
when considered alongside the
proposed EOL–3DH measure, which
assesses the proportion of cancer
patients who died after being admitted
to hospice for less than three days.
After consideration of the public
comments we received, we are
finalizing our proposal to adopt the
Proportion of Patients Who Died From
Cancer Not Admitted to Hospice (NQF
#0215) measure for the FY 2020
program year and subsequent years.
sradovich on DSK3GMQ082PROD with RULES2
(5) Proportion of Patients Who Died
From Cancer Admitted to Hospice for
Less Than 3 Days (EOL–3DH) Measure
(NQF #0216)
Older studies of patient cohorts from
the mid-1990s have shown that, though
there was an increasing trend to admit
cancer patients to hospice, the number
of patients admitted close to death was
also increasing, about which the authors
surmised that hospice care was not
being used to mitigate symptoms but
only to manage death.339 Patients with
cancer have been identified as the
largest users of hospice, but are also the
cohort with the highest rates of hospice
stays of less than 3 days.340
In one study involving cancer
patients’ family members, patients’
loved ones were more likely to report
that the patients received excellent endof-life care when hospice was initiated
earlier than three days prior to death.341
The researchers indicated that
enhancing counseling of patients and
families and early referral to palliative
care services could result in more
‘‘preference-sensitive care for patients’’
and overall improvement in the quality
of care cancer patients receive at the end
of life.342 Because this and other
research indicates that earlier
339 Earle CC et al., Aggressiveness of Cancer Care
Near the End of Life: Is It a Quality-of-Care Issue?
Journal of Clinical Oncology. August 2008; 26:23;
3860–3866; Earle CC et al., Trends in the
Aggressiveness of Cancer Care Near the End of Life,
Journal of Clinical Oncology 22 no. 2 (January 2004)
315–321.
340 Obermeyer Z et al., Association Between the
Medicare Hospice Benefit and Health Care
Utilization and Costs for Patients with PoorPrognosis Cancer, JAMA (2014)312:18;1888–1896.
341 Wright AA et al., Family Perspectives on
Aggressive Cancer Care Near the End of Life, JAMA
(2016)315:3;284–292.
342 Wright AA et al., Family Perspectives on
Aggressive Cancer Care Near the End of Life, JAMA
(2016)315:3;284–292.
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discussion with patients about palliative
care can positively impact the care
received at the end of life, including
timely admission to hospice, we believe
including the proposed EOL–3DH
measure in the measure set will
incentivize timely discussions and
admissions to hospice within the PCH
setting. We believe that the emphasis on
timely admission to hospice may lead to
improved quality of care for cancer
patients at PCHs.
The proposed EOL–3DH measure
addresses the NQS Communication and
Care Coordination domain. It also
addresses two CMS Quality Strategy
goals: Strengthening person and family
engagement as partners in their care and
promoting effective communication and
coordination of care. The proposed
EOL–3DH measure is an intermediate
clinical outcome measure that assesses
the proportion of patients who died
from cancer who were admitted to
hospice late in the course of their
illness, within 3 days of their death. The
measure ties in to the proposed process
measure (EOL-Hospice) we discuss in
section IX.B.4.b.(4) of the preamble of
this final rule, above, and assesses
whether, if patients were admitted to
hospice, they were admitted prior to or
when death was immediately imminent.
As discussed, research has shown that
the longer patients receive hospice
services before the end of life, the more
improvements in their quality of life
and mood are observed.
The proposed EOL–3DH measure
cohort includes Medicare beneficiaries
who are PCH patients that died of
cancer and were admitted to hospice
within the last 3 days of their lives. The
proposed measure uses Medicare
administrative claims data to derive the
numerator and denominator. The
numerator is defined as the number of
patients who died from cancer and
spent fewer than 3 days in hospice. The
denominator is defined as the number of
patients who died from cancer and were
admitted to hospice. There are no
exclusions from the denominator in the
measure specifications, nor risk
adjustment or risk stratification, because
the goal of the measure is to assess the
quality of care provided to all cancer
patients at the end of life. Measure
specifications for the proposed EOL–
3DH measure can be accessed on the
NQF’s Web site at: https://
www.qualityforum.org/Publications/
2016/12/Palliative_and_End-of-Life_
Care_2015-2016.aspx.
We invited public comment on our
proposal to adopt the Proportion of
Patients Who Died From Cancer
Admitted to Hospice for Less Than 3
Days (NQF #0216) measure for the FY
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2020 program year and subsequent
years.
Comment: Many commenters
supported the introduction of the EOL–
3DH measure into the PCHQR Program.
Commenters stated that the measure
will improve care for cancer patients by
encouraging providers to have difficult
but necessary conversations with their
patients, promoting patient and family
engagement in decision-making, as well
as allowing earlier referrals to hospice
care. Commenters noted that hospice
referrals often come too late to be of
benefit to patients, and that the measure
may help PCHs identify opportunities to
ensure appropriate care transitions and
planning. Commenters also expressed
that the measure addresses treatment
that could lead to unnecessary and
futile care; that in concert with the other
proposed end-of-life measures, this
measure will promote accountability
and drive improvement; and because it
addresses a measurement gap.
Commenters also noted that the measure
was recently re-endorsed by the NQF
and that the measure aligns with NQF’s
goal to improve end-of-life care.
Response: We thank the commenters
for their support.
Comment: One commenter
recommended expansion of the measure
to include palliative care services
because of the ability of such services to
provide symptom management. Another
commenter recommended risk
adjustment of the measure for social risk
factors and comorbidities, such as
dementia, that could impact timely
admission to hospice.
Response: We appreciate commenters’
recommendations. At this time, we are
interested in adopting the EOL–3DH
outcome measure because it will enable
us to assess current hospice admitting
practices at PCHs. We recognize the
importance of palliative care services in
alleviating symptoms during the disease
process, and we welcome
recommendations as to additional
measures related to palliative care for
possible incorporation into the PCHQR
Program in the future. We also welcome
recommendations as to other aspects of
the measure specifications that could be
revised in the future, such as
consideration of comorbidities that
could delay timely admission, or
additional measures that address issues
related to timely admission to hospice,
for future rulemaking.
After consideration of the public
comments we received we are finalizing
our proposal to adopt the Proportion of
Patients Who Died From Cancer
Admitted to Hospice for Less Than 3
Days (NQF #0216) measure for the FY
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2020 program year and subsequent
years.
c. Summary of Previously Finalized and
Newly Finalized PCHQR Program
Measures for the FY 2020 Program Year
and Subsequent Years
PCHQR Program for the FY 2020
program year and subsequent years are
listed in the table below.
In summary, the previously finalized
and newly finalized measures for the
PREVIOUSLY FINALIZED AND NEWLY FINALIZED PCHQR MEASURES FOR THE FY 2020 PROGRAM YEAR AND SUBSEQUENT
YEARS
Short name
NQF number
Measure name
Safety and Healthcare-Associated Infection (HAI)
CLABSI .....................................
0139
CAUTI .......................................
0138
SSI ............................................
0753
CDI ............................................
1717
MRSA .......................................
1716
HCP ..........................................
0431
National Healthcare Safety Network (NHSN) Central Line-Associated Bloodstream Infection
Outcome Measure
National Healthcare Safety Network (NHSN) Catheter-Associated Urinary Tract Infections
Outcome Measure
American College of Surgeons—Centers for Disease Control and Prevention (ACS–CDC)
Harmonized Procedure Specific Surgical Site Infection (SSI) Outcome Measure [currently
includes SSIs following Colon Surgery and Abdominal Hysterectomy Surgery]
National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Clostridium
difficile Infection (CDI) Outcome Measure
National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset
Methicillin-resistant Staphylococcus aureus Bacteremia Outcome Measure
Influenza Vaccination Coverage Among Healthcare Personnel
Clinical Process/Oncology Care Measures
N/A
N/A
N/A
N/A
N/A
............................................
............................................
............................................
............................................
............................................
0382
0383
0384
0390
0389
EOL-Chemo ..............................
0210
EOL-Hospice ............................
0215
Oncology: Radiation Dose Limits to Normal Tissues
Oncology: Plan of Care for Pain—Medical Oncology and Radiation Oncology
Oncology: Medical and Radiation—Pain Intensity Quantified
Prostate Cancer: Adjuvant Hormonal Therapy for High Risk Prostate Cancer Patients
Prostate Cancer: Avoidance of Overuse of Bone Scan for Staging Low Risk Prostate Cancer
Patients
Proportion of Patients Who Died From Cancer Receiving Chemotherapy in the Last 14 Days
of Life*
Proportion of Patients Who Died From Cancer Not Admitted to Hospice*
Intermediate Clinical Outcome Measures
EOL–ICU ..................................
0213
EOL–3DH .................................
0216
Proportion of Patients Who Died From Cancer Admitted to the ICU in the Last 30 Days of
Life*
Proportion of Patients Who Died From Cancer Admitted to Hospice for Less Than Three
Days*
Patient Engagement/Experience of Care
HCAHPS ...................................
0166
HCAHPS
Clinical Effectiveness Measure
EBRT ........................................
1822
External Beam Radiotherapy for Bone Metastases
Claims Based Outcome Measure
N/A ............................................
N/A
Admissions and Emergency Department (ED) Visits for Patients Receiving Outpatient Chemotherapy
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± We note that the previously finalized measures finalized for removal in this final rule are not included in this table. These measures are: (1)
Adjuvant Chemotherapy is Considered or Administered Within 4 Months (120 Days) of Diagnosis to Patients Under the Age of 80 with AJCC II
(Lymph Node Positive) Colon Cancer; (2) Combination Chemotherapy is Considered or Administered Within 4 Months (120 Days) of Diagnosis
for Women Under 70 with AJCC T1c, or Stage II or III Hormone Receptor Negative Breast Cancer; and (3) Adjuvant Hormonal Therapy.
* This measure is finalized for adoption for the FY 2020 program year in section IX.B.4.b of the preamble of this final rule.
5. Accounting for Social Risk Factors in
the PCHQR Program
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20082 through
20083), we discussed the issue of
accounting for social risk factors in the
PCHQR Program. We understand that
social risk factors such as income,
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education, race and ethnicity,
employment, disability, community
resources, and social support (certain
factors of which are also sometimes
referred to as socioeconomic status
(SES) factors or socio-demographic
status (SDS) factors) play a major role in
health. One of our core objectives is to
improve beneficiary outcomes including
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reducing health disparities, and we
want to ensure that all beneficiaries,
including those with social risk factors,
receive high quality care. In addition,
we seek to ensure that the quality of
care furnished by providers and
suppliers is assessed as fairly as
possible under our programs while
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ensuring that beneficiaries have
adequate access to excellent care.
We have been reviewing reports
prepared by the Office of the Assistant
Secretary for Planning and Evaluation
(ASPE) 343 and the National Academies
of Sciences, Engineering, and Medicine
on the issue of measuring and
accounting for social risk factors in
CMS’ quality measurement and
payment programs, and considering
options on how to address the issue in
these programs. On December 21, 2016,
ASPE submitted a Report to Congress on
a study it was required to conduct under
section 2(d) of the Improving Medicare
Post-Acute Care Transformation
(IMPACT) Act of 2014. The study
analyzed the effects of certain social risk
factors of Medicare beneficiaries on
quality measures and measures of
resource use used in one or more of nine
Medicare value-based purchasing
programs.344 The report also included
considerations for strategies to account
for social risk factors in these programs.
In a January 10, 2017 report released by
the National Academies of Sciences,
Engineering, and Medicine, that body
provided various potential methods for
measuring and accounting for social risk
factors, including stratified public
reporting.345
As noted in the FY 2017 IPPS/LTCH
PPS final rule, the NQF undertook a
2-year trial period in which certain new
measures, measures undergoing
maintenance review, and measures
endorsed with the condition that they
enter the trial period were assessed to
determine whether risk adjustment for
selected social risk factors is appropriate
for these measures. This trial entailed
temporarily allowing inclusion of social
risk factors in the risk-adjustment
approach for these measures. We await
the recommendations of the NQF trial
on risk adjustment for quality measures.
As we continue to consider the
analyses and recommendations from
these reports and await the results of the
NQF pilot on risk adjustment for quality
measures, we are continuing to work
with stakeholders in this process. As we
have previously communicated, we are
concerned about holding providers to
different standards for the outcomes of
their patients with social risk factors
343 https://aspe.hhs.gov/pdf-report/reportcongress-social-risk-factors-and-performanceunder-medicares-value-based-purchasingprograms.
344 https://aspe.hhs.gov/pdf-report/reportcongress-social-risk-factors-and-performanceunder-medicares-value-based-purchasingprograms.
345 National Academies of Sciences, Engineering,
and Medicine. 2017. Accounting for social risk
factors in Medicare payment. Washington, DC: The
National Academies Press.
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because we do not want to mask
potential disparities or minimize
incentives to improve the outcomes for
disadvantaged populations. Keeping
this concern in mind, while we sought
input on this topic previously, we
continue to seek public comment on
whether we should account for social
risk factors in the PCHQR Program, and
if so, what method or combination of
methods would be most appropriate for
accounting for social risk factors.
Examples of methods include:
Confidential reporting to providers of
measure rates stratified by social risk
factors; public reporting of stratified
measure rates; and potential risk
adjustment of a particular measure as
appropriate based on data and evidence.
In addition, in the proposed rule, we
sought public comment on which social
risk factors might be most appropriate
for reporting stratified measure scores
and/or potential risk adjustment of a
particular measure. Examples of social
risk factors include, but are not limited
to, dual eligibility/low-income subsidy,
race and ethnicity, and geographic area
of residence. We also sought comments
on which of these factors, including
current data sources where this
information would be available, could
be used alone or in combination, and
whether other data should be collected
to better capture the effects of social
risk. We also welcomed comment on
operational considerations. Of note,
implementing any of the above methods
would be taken into consideration in the
context of how this and other CMS
programs operate (for example, data
submission methods, availability of
data, statistical considerations relating
to reliability of data calculations, among
others).
We received several comments in
response to our request for public
comment on whether we should
account for social risk factors in the
PCHQR Program and if so, what method
or combination of methods would be
most appropriate for accounting for
social risk factors.
Comment: Commenters were
generally supportive of implementing
an approach to account for social risk
factors in the PCHQR Program.
Commenters encouraged evaluation of
each measure for applicability of
adjustment for social risk factors, with
considerations given to type and
purpose of measure and whether or not
a measure is reported publicly.
Commenters also urged careful
balancing of the need to risk adjust for
social risk factors with the potential
burden of collecting more data to
perform such risk adjustment.
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Response: We appreciate the
comments and interest in this topic. As
we have previously stated, we are
concerned about holding providers to
different standards for the outcomes of
their patients with social risk factors,
because we do not want to mask
potential disparities or minimize
incentives to improve outcomes for
disadvantaged populations. We believe
that the path forward should incentivize
improvements in health outcomes for
disadvantaged populations while
ensuring that beneficiaries have access
to excellent care. We intend to consider
all suggestions as we continue to assess
each measure and the overall program.
We appreciate that some commenters
recommended risk adjustment as a
strategy to account for social risk
factors, while others noted the potential
increased burden of collecting
additional data for risk adjustment
purposes.
We will consider all suggestions as we
continue to assess each measure and the
overall program. We intend to conduct
further analyses on the impact of
strategies such as measure-level risk
adjustment and measure stratification
by social risk factors, including the
options suggested by commenters. As
we consider the feasibility of collecting
patient-level data and the impact of
strategies to account for social risk
factors through further analysis, we will
continue to evaluate the reporting
burden on providers. Future proposals
would be made after further research
and continued stakeholder engagement.
6. Possible New Quality Measure Topics
for Future Years
a. Background
We discussed future quality measure
topics and quality measure domain
areas in the FY 2015 IPPS/LTCH PPS
final rule (79 FR 50280), the FY 2016
IPPS/LTCH PPS final rule (80 FR4979),
and the FY 2017 IPPS/LTCH PPS final
rule (81 FR 25211). Specifically, we
discussed public comment and
suggestions for measure topics
addressing the following CMS Quality
Strategy domains: (1) Making care
affordable; (2) communication and care
coordination; and (3) working with
communities to promote best practices
of healthy living. In the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 20083),
we welcomed public comment and
specific suggestions for measure topics
that we should consider for future
rulemaking, including considerations
related to risk adjustment and the
inclusion of social risk factors in risk
adjustment for any individual
performance measures.
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In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20083 through
20084), we also sought public comment
on six measures for potential future
inclusion in the PCHQR Program:
• Localized Prostate Cancer: Vitality;
• Localized Prostate Cancer: Urinary
Incontinence;
• Localized Prostate Cancer: Urinary
Frequency, Obstruction, and/or
Irritation;
• Localized Prostate Cancer: Sexual
Function;
• Localized Prostate Cancer: Bowel
Function; and
• 30 Day Unplanned Readmissions
for Cancer Patients.
These measures are discussed in more
detail below.
b. Localized Prostate Cancer: Vitality;
Localized Prostate Cancer: Urinary
Incontinence; Localized Prostate Cancer:
Urinary Frequency, Obstruction, and/or
Irritation; Localized Prostate Cancer:
Sexual Function; and Localized Prostate
Cancer: Bowel Function
The Localized Prostate Cancer
measures are five related, patientreported outcome measures drawn from
the Expanded Prostate Inventory
Composite (EPIC), which is a survey
intended to gather input from patients
on their experience. The survey
questions are intended to be
administered to all non-metastatic
prostate cancer patients undergoing
radiation or surgical treatment for
prostate cancer at the reporting facility
(denominator); the numerator is patients
with clinically significant changes in
each of the listed areas from baseline to
follow-up. The goal of the measurement
is to identify issues of variation,
suboptimal performance, and disparities
in care. This measurement aligns with
recent initiatives to include patientreported outcomes and experience of
care into quality reporting programs, as
well as to incorporate more outcome
measures generally. Patient-centered
experience measures are also a
component of the 2016 CMS Quality
Strategy, which emphasizes patientcentered care by rating patient
experience as a means for empowering
patients and improving the quality of
their care and care experience.346
These measures were included on the
publicly available document entitled
‘‘List of Measures under Consideration
for December 1, 2016’’ 347 but were not
346 CMS Quality Strategy 2016. Available at:
https://www.cms.gov/medicare/quality-initiativespatient-assessment-instruments/qualityinitiatives
geninfo/downloads/cms-quality-strategy.pdf.
347 Centers for Medicare and Medicaid Services,
List of Measures under Consideration for December
1, 2016. Available at: https://www.cms.gov/
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reviewed by the MAP. We anticipate
that they will be included on a future
list of measures under consideration for
MAP review. For further information on
these measures, we refer readers to the
discussion from the Measures
Application Partnership’s Hospital
Workgroup Discussion at: https://
public.qualityforum.org/MAP/
MAP%20Hospital%20Workgroup/20162017%20Hospital%20MAP/MAP_
Hospital_Workgroup_Discussion_
Guide.html#MUC16-375PCHQ. We
requested public comment on the
possible inclusion of these measures in
future years of the program.
Comment: A number of commenters
expressed support for the future
introduction of the five Localized
Prostate Cancer measures. Commenters
noted the importance to patients of
measures that assess quality of life as
well as the ability of the measures to
support meaningful comparisons
between providers. Commenters stated
that such measures will enable patients
to make informed decisions as they will
have available quality of care
information. A commenter also stated
that the measures would improve
communications between hospitals and
patients.
Response: We appreciate the
commenters’ support and views on
these potential measures.
Comment: One commenter supported
the future introduction of the measures
and asked whether the tool mentioned
as the means for collection, the
Expanded Prostate Inventory
Composite, would be the only
mechanism for documenting patientreported outcomes.
Response: We thank the commenter
for its support. We welcome
recommendations and stakeholder input
into different mechanisms for collection
of patient-reported outcomes and will
take such suggestions into consideration
for future rulemaking. These measures
are being developed based on a single
data collection tool, although we
understand that there may be several
other tools that could potentially collect
this information. We will continue to
monitor the measures’ development and
testing to determine the best means of
data collection for these measures.
Comment: One commenter asked
whether the tool mentioned as the
means for collection, the Expanded
Prostate Inventory Composite, would
support the move to electronic quality
reporting.
Medicare/Quality-Initiatives-Patient-AssessmentInstruments/QualityMeasures/Downloads/
Measures-under-Consideration-List-for-2016.pdf.
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Response: At this time, we cannot say
with certainty whether the particular
tool described in the measure
specifications would support the move
to electronic quality reporting. We thank
the commenter for the inquiry and will
take this under consideration as we
continue to consider these and other
measures for possible inclusion in the
PCHQR Program in the future.
We thank the commenters and we
will consider their views as we develop
further measures for use in the PCHQR
Program.
c. 30-Day Unplanned Readmissions for
Cancer Patients
The 30-Day Unplanned Readmissions
for Cancer Patients measure would
measure the number of hospital-specific
30-day unscheduled and potentially
avoidable readmissions following
hospitalization among diagnosed
malignant cancer patients. The measure
numerator is the total number of
unscheduled readmissions within 30
days of index admission. The measure
denominator is total PCH admissions
within the reporting year for patients,
aged 18 years or older, who were
discharged alive from the facility with
an active malignant cancer diagnosis.
For further information on this
measure, we refer readers to the AHRQ
National Quality Measure Clearinghouse
at: https://www.qualitymeasures.
ahrq.gov/summaries/summary/50490/
cancer-30day-unplanned-readmissionrate-for-cancer-patients. We requested
public comment on the possible
inclusion of this measure in future years
of the program.
Comment: Several commenters
generally supported the future inclusion
of a 30-day, unplanned readmissions
measure for cancer patients, noting that
until recently no such measure existed
and that the potential measure would
take steps toward addressing a gap in
the measurement of cancer care. One
commenter supported the introduction
of a measure even without NQF
endorsement, stating that it believed the
measure meets the criteria for
introduction into the PCHQR Program
without endorsement. Another
commenter noted that the measure has
been shown to demonstrate reliability
and validity, and that the measure is
currently in use in several of the PCHs
for hospital-specific, non-Medicare
performance improvement or payment
programs. Finally, a commenter noted
that the measure incorporates risk
adjustment in a way that carefully
distinguishes preventable from nonpreventable readmissions in cancer
patients.
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Response: We thank the commenters
for their support.
Comment: One commenter supported
the future adoption of the measure and
encouraged additional consideration
and evaluation of a measure that would
report a five-year survival rate for
cancer.
Response: We appreciate the support
for the potential readmissions measure,
and we will take the suggestion to adopt
a survival rate measure into
consideration for future rulemaking.
We thank the commenters and we
will consider their views as we develop
further measures for use in the PCHQR
Program.
we periodically update those
specifications. The specifications may
be found on the QualityNet Web site at:
https://qualitynet.org/dcs/
ContentServer?c=Page&
pagename=QnetPublic%2
FPage%2FQnetTier2&
cid=1228774479863.
In the FY 2015 IPPS/LTCH PPS final
rule (79 FR 50281), we adopted a policy
under which we use a subregulatory
process to make nonsubstantive updates
to measures used for the PCHQR
Program. In the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 20084), we
did not propose any changes to this
policy.
7. Maintenance of Technical
Specifications for Quality Measures
8. Public Display Requirements
We maintain technical specifications
for the PCHQR Program measures, and
a. Background
Under section 1866(k)(4) of the Act,
we are required to establish procedures
38423
for making the data submitted under the
PCHQR Program available to the public.
Such procedures must ensure that a
PCH has the opportunity to review the
data that are to be made public with
respect to the PCH prior to such data
being made public. Section 1866(k)(4) of
the Act also provides that the Secretary
must report quality measures of process,
structure, outcome, patients’ perspective
on care, efficiency, and costs of care that
relate to services furnished in such
hospitals on the CMS Web site. In the
FY 2017 IPPS/LTCH PPS final rule (81
FR 57191 through 57192), we listed our
finalized public display requirements.
The measures we have finalized for
public display are shown in the table
below.
PREVIOUSLY FINALIZED PUBLIC DISPLAY REQUIREMENTS
Summary of previously finalized public display requirements
Measures
Public reporting
• Adjuvant Chemotherapy is Considered or Administered Within 4 Months (120 days) of Diagnosis to Patients Under the Age of 80 with AJCC III (lymph node positive) Colon Cancer (NQF #0223) x.
• Combination Chemotherapy is Considered or Administered Within 4 Months (120 days) of Diagnosis for
Women Under 70 with AJCC T1cN0M0, or Stage IB—III Hormone Receptor Negative Breast Cancer
(NQF #0559) x.
• Adjuvant Hormonal Therapy (NQF #0220) x ..................................................................................................
• Oncology: Radiation Dose Limits to Normal Tissues (NQF #0382) * ............................................................
• Oncology: Plan of Care for Pain—Medical Oncology and Radiation Oncology (NQF #0383).
• Oncology: Medical and Radiation—Pain Intensity Quantified (NQF #0384).
• Prostate Cancer: Adjuvant Hormonal Therapy for High Risk Prostate Cancer Patients (NQF #0390).
• Prostate Cancer: Avoidance of Overuse of Bone Scan for Staging Low Risk Prostate Cancer Patients
(NQF #0389).
• HCAHPS (NQF #0166).
• CLABSI (NQF #0139) ** .................................................................................................................................
• CAUTI (NQF #0138) **.
• External Beam Radiotherapy for Bone Metastases (NQF #1822) *** ............................................................
2014 and subsequent years.
2015 and subsequent years.
2016 and subsequent years.
Deferred.
Beginning at the first opportunity in
2017 and for subsequent years.
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* Update newly finalized for display for the FY 2019 program year and subsequent years in the FY 2017 IPPS/LTCH PPS final rule (81 FR
57192)—expanded cohort will be displayed as soon as feasible.
** Deferral finalized in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57192).
*** Measure newly finalized for public display in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57192).
x Measure finalized for removal beginning the FY 2020 program year in section IX.B.3.b of the preamble of this final rule.
As we strive to publicly display data
as soon as possible on a CMS Web site,
in the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57191 through 57192), we
finalized an update to our public
display polices. We believe it is best to
not specify in rulemaking the exact
timeframe during the year for
publication as doing so may prevent
earlier publication. Therefore, we
finalized our policy to make these data
available as soon as it is feasible during
the year, starting with the first year for
which we are publishing data for each
measure. We will continue to propose in
rulemaking the first year for which we
intend to publish data for each measure.
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We intend to make the data available on
at least a yearly basis.
As stated above, we are required to
give PCHs an opportunity to review
their data before the data are made
public. Because we will make the data
for this program available as soon as
possible, and the timeframe for this
publication may change year to year, we
will not propose to specify in
rulemaking the exact dates for review.
However, in that final rule, we stated
that the time period for review would be
approximately 30 days in length. We
will announce the exact timeframes on
a CMS Web site and/or on our
applicable listservs. In the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
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20084), we did not propose any changes
to this policy.
b. Deferment of Public Display of Two
Measures
In the FY 2015 IPPS/LTCH PPS final
rule (79 FR 50281 through 50282), we
finalized public display of the CLABSI
and CAUTI measures beginning no later
than 2017 and subsequent years.
However, in the FY 2017 IPPS/LTCH
PPS final rule (81 FR 57192), we
finalized a proposal to continue to defer
public reporting of the CLABSI and
CAUTI measures pending ongoing
collaboration with the CDC to identify
an appropriate timeframe for public
reporting and the analytic methods that
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will be used to summarize the CLABSI
and CAUTI data for public reporting
purposes. We continue to collaborate
with the CDC on these issues and
continue to defer the public reporting of
these two measures accordingly.
9. Form, Manner, and Timing of Data
Submission
a. Background
Section 1866(k)(2) of the Act requires
that, beginning with the FY 2014
PCHQR program year, each PCH must
submit to the Secretary data on quality
measures specified under section
1866(k)(3) of the Act in a form and
manner, and at a time, as specified by
the Secretary. There are no financial
incentives or penalties associated with
the PCHQR Program.
Data submission requirements and
deadlines for the PCHQR Program are
generally posted on the QualityNet Web
site at: https://www.qualitynet.org/dcs/
ContentServer?c=Page&pagename=
QnetPublic%2FPage%2FQnetTier3
&cid=1228772864228.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20085), we did not
propose any changes to previously
finalized data submission requirements.
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b. Reporting Requirements for the
Newly Finalized Measures
As further described above, we are
finalizing the adoption of four new
measures beginning with the FY 2020
program year: Proportion of Patients
Who Died From Cancer Receiving
Chemotherapy in the Last 14 Days of
Life (NQF #0210); Proportion of Patients
Who Died From Cancer Admitted to the
ICU in the Last 30 Days of Life (NQF
#0213); Proportion of Patients Who Died
From Cancer Not Admitted to Hospice
(NQF #0215); and Proportion of Patients
Who Died From Cancer Admitted to
Hospice for Less Than Three Days (NQF
#0216). All four measures are claimsbased measures. Therefore, there will be
no separate data submission
requirements for PCHs related to these
measures as CMS will calculate the
measures from data submitted for
reimbursement purposes. In the FY
2018 IPPS/LTCH PPS proposed rule (82
FR 20085), we proposed to calculate
these measures on a yearly basis
because we will be calculating them
using Medicare administrative claims
data. Specifically, we proposed that the
data collection period would be from
July 1 of the year 3 years prior to the
program year to June 30 of the year 2
years prior to the program year. Thus,
for the FY 2020 program year, we would
collect data from July 1, 2017 through
June 30, 2018.
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We invited public comment on this
proposal.
Comment: One commenter supported
the proposed time period for the
reporting of the EOL–ICU measure data
specifically, while another commenter
recommended against public reporting
of the EOL–ICU measure until
adjustments are made to the measure
specifications to account for patient
characteristics.
Response: We thank the commenters
for their thoughts. However, we do not
plan on altering the measure
specifications to account for patient
characteristics because the measure is
intended to assess the overall
proportion of patients receiving
chemotherapy within fourteen days of
the end of life and provide a broad
picture of end-of-life care.
Comment: One commenter sought
further direction on the plans for the
public reporting of the new end-of-life
measures.
Response: We thank the commenter
for expressing the request for additional
direction, and note that further
information will be available on
QualityNet in the future. We strive to
make data available as soon as it is
feasible during the year, starting with
the first year for which we are
publishing data for each measure, and
therefore believe it is best to not specify
in rulemaking the exact timeframe
during the year for publication as doing
so may prevent earlier publication.
After consideration of the public
comments we received we are finalizing
the data collection period, as proposed,
from July 1 of the year 3 years prior to
the program year to June 30 of the year
2 years prior to the program year. Thus,
for the FY 2020 program year, we will
collect data for the four new measures
from July 1, 2017 through June 30, 2018.
10. Extraordinary Circumstances
Exceptions (ECE) Policy Under the
PCHQR Program
a. Background
In our experience with other quality
reporting and performance programs,
we have noted occasions when
providers have been unable to submit
required quality data due to
extraordinary circumstances that are not
within their control (for example,
natural disasters). We do not wish to
increase their burden unduly during
these times. Therefore, in the FY 2014
IPPS/LTCH PPS final rule (78 FR
50848), we finalized our policy that, for
the FY 2014 program year and
subsequent years, PCHs may request
and we may grant exceptions (formerly
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referred to as waivers) 348 with respect
to the reporting of required quality data
when extraordinary circumstances
beyond the control of the PCH warrant.
The PCH may request a reporting
extension or a complete exception from
the requirement to submit quality data
for one or more quarters. Under our
current policy, PCHs can submit a
request form to CMS with the following
information:
• The PCH’s CCN;
• The PCH’s name;
• Contact information for the PCH’s
CEO and any other designated
personnel, including name, email
address, telephone number, and mailing
address (the address must be a physical
address, not a post office box);
• The PCH’s reason for requesting an
extension or exception;
• Evidence of the impact of
extraordinary circumstances, including
but not limited to photographs,
newspaper and other media articles; and
• A date when the PCH will again be
able to submit PCHQR Program data,
and a justification for the proposed date.
In addition, we finalized that the form
must be signed by the PCH’s CEO or
designee and submitted within 30 days
of the date that the extraordinary
circumstances occurred. Lastly, we
finalized that following the receipt of
the request form, we would: (1) Provide
a written acknowledgement; and (2)
provide a formal response notifying the
PCH of our decision.
We also clarified that the above policy
does not preclude us from granting
exceptions (including extensions) to
PCHs that have not requested them
when we determine that an
extraordinary circumstance has affected
an entire region or locale. We stated that
if we make the determination to grant
such an exception, we would
communicate this decision through
routine communication channels.
b. Modifications to the ECE Policy
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20085 through
20086), we proposed to modify the ECE
policy for the PCHQR Program by: (1)
Extending the deadline for a PCH to
submit a request for an extension or
exception from 30 days following the
date that the extraordinary circumstance
occurred to 90 days following the date
that the extraordinary circumstance
occurred; and (2) allowing CMS to grant
an exception or extension due to CMS
data system issues which affect data
submission. These proposed
348 ECEs were originally referred to as ‘‘waivers.’’
This term was changed to ‘‘exceptions’’ in the FY
2015 IPPS/LTCH PPS final rule (79 FR 50286).
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modifications will better align our ECE
policy with that adopted for the
Hospital IQR Program (76 FR 51651
through 51652, 78 FR 50836 through
50837, and 81 FR 57181 through 57182),
the Hospital OQR Program (77 FR 68489
and 81 FR 79795), as well as other
quality reporting programs that already
have such policies in place or have
proposed to modify their policies to
achieve alignment. We proposed that
these modifications would apply
beginning in FY 2018 as related to
extraordinary circumstances that occur
on or after October 1, 2017.
We also believe that it is important for
facilities to receive timely feedback
regarding the status of ECE requests. We
strive to complete our review of each
ECE request as quickly as possible.
However, we recognize that the number
of requests we receive, and the
complexity of the information provided
impacts the actual timeframe to make
ECE determinations. Therefore, to
ensure transparency and understanding
of our process, we are also taking this
opportunity to clarify that we will strive
to provide our response to an ECE
request within 90 days of receipt.
sradovich on DSK3GMQ082PROD with RULES2
(1) ECE Request Submission Deadline
In the past, we have allowed facilities
to submit an ECE request form within 30
calendar days following the occurrence
of an extraordinary circumstance that
causes hardship and prevents them from
providing data. In certain
circumstances, however, it may be
difficult for facilities to timely evaluate
the impact of a certain extraordinary
circumstance within 30 calendar days.
We believe that extending the deadline
to 90 calendar days would allow PCHs
more time to determine whether it is
necessary and appropriate to submit an
ECE request and to provide a more
comprehensive account of the
extraordinary circumstance in their ECE
request form to CMS. For example, if a
PCH has suffered damage due to a
hurricane on June 1, it would have until
August 30 to submit an ECE form via the
QualityNet Secure Portal, mail, email, or
secure fax as instructed on the ECE
form.
We invited public comments on this
proposal.
Comment: Commenters generally
supported the proposed amendments to
the ECE policy to align with other
quality reporting programs. One
commenter specifically noted that
providing additional time to request an
extension or exception after an
extraordinary event will enable PCHs to
focus on patient needs and service
recovery.
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Response: We thank the commenters
for their support.
After consideration of the public
comments we received, we are
finalizing our proposal to extend the
deadline for a PCH to submit a request
for an extension or exception from 30
days following the date that the
extraordinary circumstance occurred to
90 days following the date that the
extraordinary circumstance occurred.
(2) Exceptions or Extensions Due to
CMS Data System Issues
Although we do not anticipate this
situation will happen often, there may
be times where CMS experiences issues
with its data systems that directly affect
facilities’ abilities to submit data. In
these circumstances, in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
20086), we proposed to grant exceptions
or extensions to one or more data
reporting requirements. If we make the
determination to grant exceptions or
extensions to PCHs on this basis, we
proposed to communicate this decision
through routine communication
channels.
We invited public comment on this
proposal.
Comment: Commenters generally
supported the proposed amendments to
the ECE policy to align with other
quality reporting programs. One
comment specifically noted that
modifying the policy to allow an
exception for CMS data system issues
will avoid unfairly penalizing PCHs for
circumstances outside of their control.
Response: We thank the commenters
for their responses and comments.
Regarding our proposal to modify the
ECE policy to allow an exception for
CMS data system issues, we wish to
clarify that if CMS does not proactively
notify PCHs that it plans to provide an
exception to the policy after a data
system issue, PCHs may still submit a
request for an exception for CMS
consideration.
After consideration of the public
comments we received, we are
finalizing our proposal to allow CMS to
grant an exception or extension due to
CMS data system issues which affect
data submission.
C. Long-Term Care Hospital Quality
Reporting Program (LTCH QRP)
1. Background and Statutory Authority
Section 3004(a) of the Affordable Care
Act amended section 1886(m) of the Act
by adding paragraph (5), requiring the
Secretary to establish the Long-Term
Care Hospital Quality Reporting
Program (LTCH QRP). This program
applies to all hospitals certified by
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38425
Medicare as LTCHs. Beginning with the
FY 2014 LTCH QRP, the Secretary is
required to reduce any annual update to
the LTCH PPS standard Federal rate for
discharges occurring during such fiscal
year by 2 percentage points for any
LTCH that does not comply with the
requirements established by the
Secretary. Specifically, section
1886(m)(5) of the Act requires that
beginning with the FY 2014 LTCH QRP,
each LTCH submit data on quality
measures specified by the Secretary in
a form and manner, and at a time,
specified by the Secretary. For more
information on the statutory history of
the LTCH QRP, we refer readers to the
FY 2015 IPPS/LTCH PPS final rule (79
FR 50286).
When we use the term ‘‘FY [year]
LTCH QRP,’’ we are referring to the
fiscal year for which the LTCH QRP
requirements applicable to that fiscal
year must be met for an LTCH to receive
the full annual update when calculating
the payment rates applicable to it for
that fiscal year.
The Improving Medicare Post-Acute
Care Transformation Act of 2014
(IMPACT Act) (Pub. L. 113–185)
amended Title XVIII of the Act, in part,
by adding a new section 1899B of the
Act that requires the Secretary to
establish new data reporting
requirements for certain post-acute care
(PAC) providers, including LTCHs.
Specifically, sections 1899B(a)(1)(A)(ii)
and (iii) of the Act require LTCHs,
inpatient rehabilitation facilities (IRFs),
skilled nursing facilities (SNFs), and
home health agencies (HHAs), under the
provider-type’s respective quality
reporting program (which, for LTCHs, is
found at section 1886(m)(5) of the Act),
to report data on quality measures
specified under section 1899B(c)(1),
with respect to at least five domains,
and data on resource use and other
measures specified under section
1899B(d)(1) of the Act with respect to at
least three domains. Section
1899B(a)(1)(A)(i) of the Act further
requires each of these PAC providertypes to report under its respective
quality reporting program standardized
patient assessment data in accordance
with subsection (b) for at least the
quality measures specified under
subsection (c)(1) and that is with respect
to five specific categories: functional
status; cognitive function and mental
status; special services, treatments, and
interventions; medical conditions and
co-morbidities; and impairments.
Section 1899B(a)(1)(B) requires that all
of the data that must be reported in
accordance with section 1899B(a)(1)(A)
of the Act be standardized and
interoperable to allow for the exchange
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of the information among PAC providers
and other providers and the use of such
data in order to enable access to
longitudinal information and to
facilitate coordinated care. We refer
readers to the FY 2016 IPPS/LTCH PPS
final rule (80 FR 49723 through 49724)
for additional information on the
IMPACT Act and its applicability to
LTCHs.
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2. General Considerations Used for
Selection of Quality Measures for the
LTCH QRP
a. Background
We refer readers to the FY 2016 IPPS/
LTCH PPS final rule (80 FR 49728) for
a detailed discussion of the
considerations we apply in measure
selection for the LTCH QRP, such as
alignment with the CMS Quality
Strategy,349 which incorporates the
three broad aims of the National Quality
Strategy.350
As part of our consideration for
measures for use in the LTCH QRP, we
review and evaluate measures that have
been implemented in other programs
and take into account measures that
have been endorsed by NQF for
provider settings other than the LTCH
setting. We have previously adopted
measures with the term ‘‘Application
of’’ in the names of those measures. We
have received questions pertaining to
the term ‘‘application’’ and want to
clarify that when we refer to a measure
as an ‘‘application of’’ the measure, we
mean that the measure will be used in
the LTCH setting, rather than the setting
for which it was endorsed by the NQF.
For example, in the FY 2016 IPPS/LTCH
PPS final rule (80 FR 49736 through
49739) we adopted a measure entitled,
an Application of Percent of Residents
Experiencing One or More Falls With
Major Injury (Long Stay) (NQF #0674),
which is currently endorsed for the
nursing home setting but not for the
LTCH setting. For such measures, we
intend to seek NQF endorsement for the
LTCH setting, and if the NQF endorses
one or more of them, we will update the
title of the measure to remove the
reference to ‘‘application.’’
We received several comments
generally related to the proposed
measures, the IMPACT Act, NQF
endorsement, the NQF MAP review
process, and the use of technical expert
panels (TEPs), which are summarized
and discussed below.
349 https://www.cms.gov/Medicare/QualityInitiatives-Patient-Assessment-Instruments/
QualityInitiativesGenInfo/CMS-QualityStrategy.html.
350 https://www.ahrq.gov/workingforquality/
reports/2011-annual-report.html.
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Comment: Several commenters
expressed support for the goals and
objectives of the IMPACT Act. One
commenter supported the continued
additions and modifications to the
LTCH QRP as mandated by the IMPACT
Act, stating that regulatory changes from
the LTCH QRP have not only required
LTCHs to focus more on care processes
and data collection, but have also
promoted a shift in provider focus
toward improved care quality, increased
transparency, and enhanced provider
accountability. Another commenter
stated that, even though it supports
CMS’ effort under the IMPACT Act,
additional time may be necessary to
fully implement all changes as outlined
in the final rule.
Response: We appreciate the
commenters’ support for the continued
additions and modifications to the
LTCH QRP, particularly the support for
modifications required by the IMPACT
Act. We strive to put patients first,
ensuring that they can make decisions
about their own healthcare along with
their clinicians. We want to ensure
innovative approaches to improve
quality, accessibility, and affordability
while paying particular attention to
improving clinicians’ and beneficiaries’
experience when interacting with CMS
programs. To that end, we believe that
a focus on data collection and quality
measurement leads to improved care
processes, facilitation of care
coordination, and, ultimately, improved
patient outcomes. However, we are also
sensitive to LTCHs’ needs for sufficient
time to implement the requirements
pertaining to the LTCH QRP, and we
aim to be responsive to these needs to
the extent feasible and appropriate.
Comment: Several commenters
expressed concern that quality measures
proposed for the LTCH QRP lack NQF
endorsement for the LTCH setting. One
commenter noted that NQF
endorsement for the LTCH setting
reflects that the NQF has determined the
measure to be appropriately modified
for the LTCH setting, which is unique
from other PAC settings due to the
complexity of LTCH patient needs. A
few commenters recommended that
CMS obtain NQF endorsement for the
LTCH setting through NQF review using
the Consensus Development Process, a
formal peer-review process providing
input on performance measures, before
proposing quality measures for the
LTCH QRP. Commenters further
recommended that CMS refrain from
implementing measures in the LTCH
QRP until the measures receive NQF
endorsement for the LTCH setting.
Response: We acknowledge the
commenters’ recommendation that
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proposed measures receive NQF
endorsement in the LTCH setting prior
to implementation. We would like to
note that we consider and propose
measures that have been endorsed by
the NQF whenever possible. However,
when this is not feasible because there
is not an NQF endorsed measure that
addresses quality gaps identified in the
program, we believe it is appropriate to
specify a measure for the LTCH QRP
that is not NQF-endorsed as long as due
consideration is given to measures that
have been endorsed or adopted by a
consensus organization, as is the case
for the proposed measures, and we have
considered but have not been able to
identify other feasible measures that are
endorsed or adopted by a consensus
organization. We plan to submit
measures within our program for
endorsement as soon as feasible.
Comment: Several commenters
expressed concern that quality measures
proposed for the LTCH QRP may not be
fully supported by the MAP.
Commenters recommended that CMS
obtain full support by the MAP before
proposing quality measures for the
LTCH QRP.
Response: We acknowledge that the
NQF-convened MAP serves a critical
function in evaluating measures under
consideration and providing
recommendations for measure
implementation prior to rulemaking
though MAP support is not a
requirement for a measure to be
proposed or finalized. However, as the
MAP’s role is to maintain transparency
for the public and encourage public
engagement throughout the measure
development process, we value the
MAP’s input and take into consideration
all input received.
We would like to clarify that the MAP
recommended ‘‘conditional support for
rulemaking’’ and ‘‘encouraged
continued development’’ for the
proposed measures for the LTCH QRP.
According to the MAP, the term
‘‘conditional support for rulemaking’’ is
applied when a measure is fully
developed and tested and meets MAP
assessment criteria; however should
meet a condition specified by MAP
before it can be supported for
implementation. Measures that are
conditionally supported are not
expected to be resubmitted to MAP. The
term ‘‘encourage continued
development’’ is applied when a
measure addresses a critical program
objective or promotes alignment. In
contrast, the MAP uses the phrase ‘‘do
not support’’ when it does not support
the measure at all.
For the proposed measure, Changes in
Skin Integrity Post-Acute Care: Pressure
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Ulcer/Injury, the MAP Post-Acute Care/
Long-Term Care (PAC/LTC) Workgroup
met on December 14 and 15, 2016, and
provided CMS a recommendation of
‘‘support for rulemaking’’ for use of the
measure in the LTCH QRP. The MAP
Coordinating Committee met on January
24 and 25, 2017, and provided a
recommendation of ‘‘conditional
support for rulemaking’’ for use of the
proposed measure in the LTCH QRP.
The MAP’s conditions of support
include as a part of measure
implementation, that CMS provide
guidance on the correct collection and
calculation of the measure result. CMS
intends to comply with all conditions
recommended by the MAP and will
engage in intensive training and
guidance efforts to ensure appropriate
calculation of the measure.
For the LTCH QRP ventilator weaning
measures, Compliance with
Spontaneous Breathing Trial (SBT) by
Day 2 of the LTCH Stay and Ventilator
Liberation Rate, the MAP met on
December 12, 2014 and again on
December 14 and 15, 2015. For the
Compliance with SBT by Day 2 of the
LTCH Stay measure, the MAP
encouraged continued development,
acknowledging that there is evidence for
interventions that improve ventilator
care, that variation in quality of care
exists among LTCHs, and that ventilator
care is an important safety priority for
LTCHs. Pursuant to MAP review and
recommendations, we have continued to
refine this proposed measure and these
activities are described more fully
below. For the Ventilator Liberation
Rate measure, the MAP encouraged
continued development, stating that this
measure has high value potential for the
LTCH QRP because successful weaning
is important for improving quality of life
and decreasing morbidity, mortality,
and resource use among patients. We
have continued to refine these measures
and these activities are described more
fully below. CMS has consistently used
the MAP process to improve measures
prior to rulemaking and implementation
and to ensure continued enhancement
of the LTCH QRP. We believe that the
measures have been fully and robustly
developed, and believe they are
appropriate for implementation and
should not be delayed.
Comment: Several commenters
expressed concern that quality measures
proposed for the LTCH QRP may not be
fully supported by a TEP. Commenters
recommended that CMS obtain full
support by a TEP before proposing
measures for the LTCH QRP. In
addition, commenters requested that the
TEPs that evaluate measures under
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consideration for the LTCH QRP include
members who work in the LTCH setting.
Response: TEP members are a
valuable part of the measure
development process, and we would
like to note that we take all TEP input
into consideration as we develop and
refine all quality measure work. When
our measurement development
contractors convene TEPs, they ensure
we have a group of individuals that
represents a wide range of clinical,
consumer, and academic expertise in
order to balance discipline and
experience. Further, individuals are
selected for TEPs because they are
relevant subject matter experts who
have knowledge of measure
development and clinical expertise. For
the LTCH QRP, selected TEP members
typically include experts who work in
the LTCH setting. We would like to note
that the overarching purpose of a TEP is
to obtain technical input on CMS work
that is under development so that
stakeholders can add input early in the
development process.
Comment: A few commenters
expressed concern regarding the intent
of the IMPACT Act to facilitate care
coordination and interoperability,
stating there is currently a lack of
comparability across PAC settings. One
commenter expressed concern that data
for assessment-based quality measures
are collected on all patients in the LTCH
setting, but collected only on Medicare
Part A and Medicare Advantage
patients/residents in the IRF and SNF
settings, inhibiting cross-setting quality
comparison. Another commenter noted
that LTCHs are highly specialized acute
care facilities that differ from other PAC
settings in several key areas, including
patient acuity levels, average length of
patient stay, and regulatory
requirements, making cross-setting
comparison difficult. The commenter
requested that CMS exercise care in the
development of methods for and
interpretation of findings related to
differences across PAC settings. Another
commenter noted some measures
proposed for the LTCH QRP were not
proposed in other PAC settings. The
commenter suggested CMS implement
all proposed LTCH QRP measures in
every PAC setting and implement future
PAC QRP measures in every PAC
setting.
Response: Our intent is to develop
standardized measures that can be
collected across the LTCH, IRF, SNF,
and HHA settings. However, we also
recognize that each of these PAC
settings is different in terms of patient
mix, including complexity of care
needed, therapies required, and length
of stay. For this reason, we believe that
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in addition to adopting cross-setting
measures that apply to all four settings,
it is appropriate to adopt measures
specific to each individual PAC setting
that address a quality issue unique to
that setting.
Comment: Several commenters
expressed concern regarding the
increasing burden of reporting data
under the current LTCH QRP. One
commenter noted that reporting the
proposed new data elements and related
sub-elements will require additional
facility clinical staff time, which may
take time away from patient care. One
commenter expressed concern that the
value of data collection under the LTCH
QRP is unsubstantiated. Another
commenter stated that the reported data
goes unused. One commenter
encouraged CMS to reconsider the
necessity of the new data elements and
requested additional clarification
regarding these elements and reporting
requirements.
Response: We appreciate commenters’
concerns regarding burden due to the
LTCH QRP data collection
requirements. We also appreciate the
importance of avoiding undue burden
on providers and will continue to
evaluate and avoid any unnecessary
burden associated with the
implementation of the LTCH QRP. We
will also continue to work with
stakeholders to explore ways to decrease
burden as our shared goal is to focus on
improving patient care. In response to
these concerns regarding burden, and as
we discuss further below, we have
decided not to finalize a number of the
proposed standardized patient
assessment data elements.
Comment: A commenter thanked
CMS for the opportunity to comment on
measures proposed for the LTCH QRP
but expressed concern that complete
measure specifications were not
available for all proposed measures. The
commenter requested that CMS provide
an additional opportunity for public
comment when complete measure
specifications are available for all
proposed measures. Another commenter
expressed concern that complete
specifications and appropriate
crosswalks were not provided for all
proposed measures, noting that these
materials assist staff to appropriately
implement measures and utilize data to
improve patient care. The commenter
requested that CMS make crosswalks
available prior to measure
implementation, within the final rule or
in a separate publication.
Response: We posted complete
measure specifications for each
proposed measure at the same time that
we issued the proposed rule, and those
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specifications can be viewed at: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
LTCH-Quality-Reporting-MeasuresInformation.html. With the final rule, in
accordance with our usual posting
process, we will post all final measure
specifications and associated measure
documentation at: https://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/LTCH-QualityReporting/LTCH-Quality-ReportingMeasures-Information.html.
We interpret the commenter’s concern
about crosswalks to be related to
crosswalks from ICD–10 codes to LTCH
CARE Data Set items. We refer readers
to section IX.C.11.d. of the preamble of
this final rule where we respond to
similar issues.
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b. Accounting for Social Risk Factors in
the LTCH QRP
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20086 through
20087), we discussed accounting for
social risk factors in the LTCH QRP. We
stated that we consider related factors
that may affect measures in the LTCH
QRP. We understand that social risk
factors such as income, education, race
and ethnicity, employment, disability,
community resources, and social
support (certain factors of which are
also sometimes referred to as
socioeconomic status (SES) factors or
socio-demographic status (SDS) factors)
play a major role in health. One of our
core objectives is to improve beneficiary
outcomes including reducing health
disparities, and we want to ensure that
all beneficiaries, including those with
social risk factors, receive high quality
care. In addition, we seek to ensure that
the quality of care furnished by
providers and suppliers is assessed as
fairly as possible under our programs
while ensuring that beneficiaries have
adequate access to excellent care.
We have been reviewing reports
prepared by the Office of the Assistant
Secretary for Planning and Evaluation
(ASPE) 351 and the National Academies
of Sciences, Engineering, and Medicine
on the issue of measuring and
accounting for social risk factors in
CMS’ quality measurement and
payment programs, and considering
options on how to address the issue in
these programs. On December 21, 2016,
ASPE submitted a Report to Congress on
a study it was required to conduct under
section 2(d) of the IMPACT Act. The
351 https://aspe.hhs.gov/pdf-report/reportcongress-social-risk-factors-and-performanceunder-medicares-value-based-purchasingprograms.
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study analyzed the effects of certain
social risk factors of Medicare
beneficiaries on quality measures and
measures of resource use used in one or
more of nine Medicare value-based
purchasing programs.352 The report also
included considerations for strategies to
account for social risk factors in these
programs. In a January 10, 2017 report
released by The National Academies of
Sciences, Engineering, and Medicine,
that body provided various potential
methods for measuring and accounting
for social risk factors, including
stratified public reporting.353
In addition, the NQF undertook a 2year trial period in which new
measures, measures undergoing
maintenance review, and measures
endorsed with the condition that they
enter the trial period were assessed to
determine whether risk adjustment for
selected social risk factors was
appropriate for these measures. A
measure from the LTCH QRP was
addressed in this trial (All-Cause
Unplanned Readmission Measure for
30-Days Post-Discharge from LTCHs
(NQF #2512)). This trial entailed
temporarily allowing inclusion of social
risk factors in the risk-adjustment
approach for these measures. The trial
has concluded, and NQF will issue
recommendations on the future
inclusion of social risk factors in risk
adjustment for quality measures.
As we continue to consider the
analyses and recommendations from
these reports and await the
recommendations of the NQF trial on
risk adjustment for quality measures, we
are continuing to work with
stakeholders in this process. As we have
previously communicated, we are
concerned about holding providers to
different standards for the outcomes of
their patients with social risk factors
because we do not want to mask
potential disparities or minimize
incentives to improve the outcomes for
disadvantaged populations. Keeping
this concern in mind, while we sought
input on this topic previously, we
continue to seek public comment on
whether we should account for social
risk factors in measures in the LTCH
QRP, and if so, what method or
combination of methods would be most
appropriate for accounting for social
risk factors. Examples of methods
include: Confidential reporting to
352 https://aspe.hhs.gov/pdf-report/reportcongress-social-risk-factors-and-performanceunder-medicares-value-based-purchasingprograms.
353 National Academies of Sciences, Engineering,
and Medicine. 2017. Accounting for social risk
factors in Medicare payment. Washington, DC: The
National Academies Press.
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providers of measure rates stratified by
social risk factors; public reporting of
stratified measure rates; and potential
risk adjustment of a particular measure
as appropriate based on data and
evidence.
In addition, in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 20086
through 20087), we sought public
comment on which social risk factors
might be most appropriate for reporting
stratified measure scores and/or
potential risk adjustment of a particular
measure. Examples of social risk factors
include, but are not limited to, dual
eligibility/low-income subsidy, race and
ethnicity, and geographic area of
residence. We also sought comments on
which of these factors, including current
data sources where this information
would be available, could be used alone
or in combination, and whether other
data should be collected to better
capture the effects of social risk. We will
take commenters’ input into
consideration as we continue to assess
the appropriateness and feasibility of
accounting for social risk factors in the
LTCH QRP. We note that any such
changes would be proposed through
future notice and comment rulemaking.
We look forward to working with
stakeholders as we consider the issue of
accounting for social risk factors and
reducing health disparities in CMS
programs. Of note, implementing any of
the above methods would be taken into
consideration in the context of how this
and other CMS programs operate (for
example, data submission methods,
availability of data, statistical
considerations relating to reliability of
data calculations, among others), so we
also sought comment on operational
considerations. CMS is committed to
ensuring that its beneficiaries have
access to and receive excellent care, and
that the quality of care furnished by
providers and suppliers is assessed
fairly in CMS programs.
Comment: We received several
comments in response to our request for
public comment on whether we should
account for social risk factors in the
LTCH QRP. Some commenters
expressed appreciation for the agency’s
efforts and ongoing consideration of this
issue. Commenters were generally
supportive of accounting for social risk
factors for LTCH QRP quality measures.
Many commenters expressed concerns
that not adjusting for social risk factors
may lead to the appearance of low
quality of care for LTCHs that treat more
underserved patients. Some commenters
noted that lack of adjustment for social
risk factors may impact beneficiaries’
access to care. A few commenters
encouraged CMS to consider the results
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of NQF’s SES trial period and closely
monitor recommendations from the
NQF Disparities Standing Committee.
A few commenters expressed
concerns with accounting for social risk
factors. One commenter noted that
adjusting for social risk factors may
mask potential disparities and create
disincentives to improve outcomes for
vulnerable populations. Similarly,
another commenter cautioned that the
misapplication of social risk factors in
the calculation of measures may create
unintended consequences for
disadvantaged groups.
Regarding the methodology for risk
adjustment, some commenters made
specific recommendations regarding the
type of risk adjustment to be used.
Commenters suggested approaches for
CMS to consider, such as reporting of
performance stratified by certain social
risk factors. A few commenters drew
attention to how adjustment should be
conducted on a measure-specific basis,
as different social risk factors affect
different outcomes. One commenter
recommended that quality measures
reflecting processes within the control
of a provider, such as pressure ulcer
incidence, not be stratified by SES
factors. Other commenters
recommended adjusting for social risk
factors, specifically for resource use
measures assessing potentially
preventable readmissions, discharge to
community, and Medicare spending per
beneficiary. Several commenters
recommended conducting additional
testing and evaluating this on a measure
by measure basis.
In addition to support for CMS’
suggested categories of race/ethnicity,
dual eligibility status, and geographical
location, specific, commenters
suggested social risk factors for
consideration, including patient-level
factors like caregiver availability,
disability, income, education, presence
of pre-morbid assistance, and health
care literacy. Commenters also
suggested community resources and
other factors such as access to adequate
housing, medications, food,
transportation, and availability of
primary care. Some commenters also
recommended specific data sources,
such as administrative data for dual
eligibility or US census data to derive
SES or SDS data. A few commenters
supported data collection of SES or SDS
elements by LTCHs or patient-reported
information. One commenter suggested
formal assessment of caregiver capacity
to facilitate discharge planning. Another
commenter suggested the use of
confidential patient-reported data to
determine social risk.
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There were a few comments
discussing confidential and public
reporting of data adjusted for social risk
factors. Some commenters supported
either statistical risk-adjustment or
stratifying performance for public
reporting. One commenter suggested
that confidential feedback reports could
include unadjusted performance.
Response: As we have previously
stated, we are concerned about holding
providers to different standards for the
outcomes of their patients with social
risk factors, because we do not want to
mask potential disparities. We believe
that the path forward should incentivize
improvements in health outcomes for
disadvantaged populations while
ensuring that beneficiaries have
adequate access to excellent care. We
will consider all suggestions as we
continue to assess each measure and the
overall program. We intend to explore
options including but not limited to
measure stratification by social risk
factors in a consistent manner across
programs, informed by considerations of
stratification methods described in
section IX.A.13. of the preamble of this
final rule. We thank commenters for this
important feedback and will continue to
consider options to account for social
risk factors that would allow us to view
disparities and potentially incentivize
improvement in care for patients and
beneficiaries. We are considering
providing feedback to providers on
outcomes for individuals with social
risk factors in confidential reports.
3. Collection of Standardized Patient
Assessment Data Under the LTCH QRP
a. Definition of Standardized Patient
Assessment Data
Section 1886(m)(5)(F)(ii) of the Act
requires that, for fiscal year 2019
(beginning October 1, 2018) and each
subsequent year, LTCHs report
standardized patient assessment data
required under section 1899B(b)(1) of
the Act. For purposes of meeting this
requirement, section 1886(m)(5)(F)(iii)
of the Act requires an LTCH to submit
the standardized patient assessment
data required under section 1899B(b)(1)
of the Act using the standard instrument
in a time, form, and manner specified by
the Secretary.
Section 1899B(b)(1)(B) of the Act
describes standardized patient
assessment data as data required for at
least the quality measures described in
section 1899B(c)(1) of the Act and that
is with respect to the following
categories:
• Functional status, such as mobility
and self-care at admission to a PAC
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provider and before discharge from a
PAC provider;
• Cognitive function, such as ability
to express ideas and to understand and
mental status, such as depression and
dementia;
• Special services, treatments and
interventions such as the need for
ventilator use, dialysis, chemotherapy,
central line placement and total
parenteral nutrition;
• Medical conditions and
comorbidities such as diabetes,
congestive heart failure and pressure
ulcers;
• Impairments, such as incontinence
and an impaired ability to hear, see or
swallow; and
• Other categories deemed necessary
and appropriate.
As required under section
1899B(b)(1)(A) of the Act, the
standardized patient assessment data
must be reported at least with respect to
LTCH admissions and discharges, but
the Secretary may require the data to be
reported more frequently. In the FY
2018 IPPS/LTCH PPS proposed rule (82
FR 20087 through 20088), we proposed
to define the standardized patient
assessment data that LTCHs must report
to comply with section 1886(m)(5)(F)(ii)
of the Act, as well as the requirements
for the reporting of these data. The
collection of standardized patient
assessment data is critical to our efforts
to drive improvement in health care
quality across the four PAC settings to
which the IMPACT Act applies. We
intend to use these data for a number of
purposes, including facilitating their
exchange and longitudinal use among
health care providers to enable high
quality care and outcomes through care
coordination, as well as for quality
measure calculation and identifying
comorbidities that might increase the
medical complexity of a particular
admission.
LTCHs are currently required to
report patient assessment data through
the Long-Term Care Hospital Continuity
Assessment Record and Evaluation Data
Set (LTCH CARE Data Set or LCDS) by
responding to an identical set of
assessment questions using an identical
set of response options (we refer to each
solitary question/response option as a
data element and we refer to a group of
questions/responses as data elements),
both of which incorporate an identical
set of definitions and standards. The
primary purpose of the identical
questions and response options is to
ensure that we collect a set of
standardized data elements across
LTCHs which can then be used for a
number of purposes, including LTCH
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payment and measure calculation for
the LTCH QRP.
SNFs, IRFs, and HHAs are also
required to report patient assessment
data through their applicable PAC
assessment instruments, and they do so
by responding to identical assessment
questions developed for their respective
settings using an identical set of
response options (which incorporate an
identical set of definitions and
standards). Like the LCDS, the questions
and response options for each of these
other PAC assessment instruments are
standardized across the PAC provider
type to which the PAC assessment
instrument applies. However, the
assessment questions and response
options in the four PAC assessment
instruments are not currently
standardized with each other. As a
result, questions and response options
that appear on the LCDS cannot be
readily compared with questions and
response options that appear, for
example, on the Inpatient Rehabilitation
Facility-Patient Assessment Instrument
(IRF–PAI), the PAC assessment
instrument used by IRFs. This is true
even when the questions and response
options are similar. This lack of
standardization across the four PAC
providers has limited our ability to
compare one PAC provider type with
another for purposes such as care
coordination and quality improvement.
To achieve a level of standardization
across SNFs, LTCHs, IRFs, and HHAs
that enables us to make comparisons
between them, we proposed to define
‘‘standardized patient assessment data’’
as patient assessment questions and
response options that are identical in all
four PAC assessment instruments, and
to which identical standards and
definitions apply.
Standardizing the questions and
response options across the four PAC
assessment instruments will also enable
the data to be interoperable, allowing it
to be shared electronically, or otherwise,
between PAC provider types. It will
enable the data to be comparable for
various purposes, including the
development of cross-setting quality
measures, which may enhance provider
and patient choice when selecting a
post-acute care setting that will deliver
the best outcome possible, and to inform
payment models that take into account
patient characteristics rather than
setting, as described in the IMPACT Act.
We invited public comment on this
proposed definition.
Comment: A commenter expressed
support for the proposed definition of
standardized patient assessment data.
Response: We thank the commenter
for its support.
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After consideration of the public
comments we received, we are
finalizing, as proposed, the definition of
standardized patient assessment data for
the LTCH QRP.
b. General Considerations Used for the
Selection of Standardized Patient
Assessment Data
As part of our effort to identify
appropriate standardized patient
assessment data for purposes of
collecting under the LTCH QRP, we
sought input from the general public,
stakeholder community, and subject
matter experts on items that would
enable person-centered, high quality
health care, as well as access to
longitudinal information to facilitate
coordinated care and improved
beneficiary outcomes.
To identify optimal data elements for
standardization, our data element
contractor organized teams of
researchers for each category, and each
team worked with a group of advisors
made up of clinicians and academic
researchers with expertise in PAC.
Information-gathering activities were
used to identify data elements, as well
as key themes related to the categories
described in section 1899B(b)(1)(B) of
the Act. In January and February 2016,
our data element contractor also
conducted provider focus groups for
each of the four PAC provider types,
and a focus group for consumers that
included current or former PAC patients
and residents, caregivers, ombudsmen,
and patient advocacy group
representatives. The Development and
Maintenance of Post-Acute Care CrossSetting Standardized Patient
Assessment Data Focus Group Summary
Report is available at: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/Post-Acute-Care-QualityInitiatives/IMPACT-Act-of-2014/
IMPACT-Act-Downloads-andVideos.html.
Our data element contractor also
assembled a 16-member TEP that met on
April 7 and 8, 2016, and January 5 and
6, 2017, in Baltimore, Maryland, to
provide expert input on data elements
that are currently in each PAC
assessment instrument, as well as data
elements that could be standardized.
The Development and Maintenance of
Post-Acute Care Cross-Setting
Standardized Patient Assessment Data
TEP Summary Reports are available at:
https://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/Post-Acute-Care-QualityInitiatives/IMPACT-Act-of-2014/
IMPACT-Act-Downloads-andVideos.html.
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As part of the environmental scan,
data elements currently in the four
existing PAC assessment instruments
were examined to see if any could be
considered for proposal as standardized
patient assessment data. Specifically,
this evaluation included consideration
of data elements in OASIS–C2 (effective
January 2017); IRF–PAI, v1.4 (effective
October 2016); LCDS, v3.00 (effective
April 2016); and MDS 3.0, v1.14
(effective October 2016). Data elements
in the standardized assessment
instrument that we tested in the PostAcute Care Payment Reform
Demonstration (PAC PRD)—the
Continuity Assessment Record and
Evaluation (CARE)—were also
considered. A literature search was also
conducted to determine whether
additional data elements to propose as
standardized patient assessment data
could be identified.
We also held four Special Open Door
Forums (SODFs) on October 27, 2015;
May 12, 2016; September 15, 2016; and
December 8, 2016, to present data
elements we were considering and
solicit input. At each SODF, some
stakeholders provided immediate input,
and all were invited to submit
additional comments via the CMS
IMPACT Mailbox at:
PACQualityInitiative@cms.hhs.gov.
We also convened a meeting with
federal agency subject matter experts
(SMEs) on May 13, 2016. In addition, a
public comment period was open from
August 12 to September 12, 2016, to
solicit comments on detailed candidate
data element descriptions, data
collection methods, and coding
methods. The IMPACT Act Public
Comment Summary Report containing
the public comments (summarized and
verbatim) and our responses is available
at: https://www.cms.gov/Medicare/
Quality-Initiatives-Patient-AssessmentInstruments/Post-Acute-Care-QualityInitiatives/IMPACT-Act-of-2014/
IMPACT-Act-Downloads-andVideos.html.
We specifically sought to identify
standardized patient assessment data
that we could feasibly incorporate into
the LTCH, IRF, SNF, and HHA
assessment instruments and that have
the following attributes: (1) Being
supported by current science; (2) testing
well in terms of their reliability and
validity, consistent with findings from
the PAC PRD; (3) the potential to be
shared (for example, through
interoperable means) among PAC and
other provider types to facilitate
efficient care coordination and
improved beneficiary outcomes; (4) the
potential to inform the development of
quality, resource use and other
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measures, as well as future payment
methodologies that could more directly
take into account individual beneficiary
health characteristics; and (5) the ability
to be used by practitioners to inform
their clinical decision and care planning
activities. We also applied the same
considerations that we apply with
quality measures, including the CMS
Quality Strategy which is framed using
the three broad aims of the National
Quality Strategy.
4. Policy for Retaining LTCH QRP
Measures and Application of That
Policy to Standardized Patient
Assessment Data
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53614 through 53615), we
adopted a policy that would allow any
quality measure adopted for use in the
LTCH QRP to remain in effect until the
measure is removed, suspended, or
replaced. For further information on
how measures are considered for
removal, suspension, or replacement,
we refer readers to the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53614
through 53615). In the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 20089),
we proposed to apply this policy to the
standardized patient assessment data
that we adopt for the LTCH QRP.
We invited public comment on our
proposal.
Comment: Some commenters
expressed support for applying the CMS
policy for retaining LTCH QRP
measures to the standardized patient
assessment data. Another commenter
disagreed with applying the existing
policy to standardized patient
assessment data, and encouraged CMS
to remove items with unsubstantiated
value as soon as possible. The
commenter also stated that CMS should
alleviate the data collection burden on
providers as soon as it is practicable.
Response: Standardized patient
assessment data elements are used to
collect data for quality measures.
Therefore, standardized patient
assessment elements that support such
data collection follow the policy for
quality measures that, once adopted, are
retained until CMS determines that the
quality measure should be removed.
This determination is based on specific
criteria for removal, suspension, or
replacement. For any such removal, the
public will be given a chance to
comment through the notice-andcomment rulemaking process.
We understand the concerns raised by
commenters to alleviate the data
collection burden on providers resulting
from the finalization of our standardized
patient assessment data proposals. We
strive to balance implementing the
reporting requirements of standardized
patient assessment data and responding
to burden concerns.
After consideration of the public
comments we received, we are
finalizing our proposal, as proposed, to
apply the policy for retaining LTCH
QRP measures to the standardized
patient assessment data that we adopt
for the LTCH QRP.
5. Policy for Adopting Changes to LTCH
QRP Measures and Application of That
Policy for Adopting Changes to
Standardized Patient Assessment Data
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53615 through 53616), we
adopted a subregulatory process to
incorporate updates to LTCH quality
38431
measure specifications that do not
substantively change the nature of the
measure. Under that policy, substantive
changes to quality measures are
proposed and finalized through
rulemaking. For further information on
what constitutes a substantive versus a
nonsubstantive change and the
subregulatory process we use to make
nonsubstantive changes to measures, we
refer readers to the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53615 through
53616). In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20089), we
proposed to apply this policy to the
standardized patient assessment data
that we adopt for the LTCH QRP.
We invited public comment on our
proposal.
Comment: Several commenters
supported CMS’ subregulatory process
for adopting nonsubstantive changes to
LTCH QRP measures. One commenter
expressed support for applying this
approach to the standardized patient
assessment data proposed for the LTCH
QRP.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal, as proposed, to
apply our policy for adopting changes to
LTCH QRP measures to the
standardized patient assessment data
that we adopt for the LTCH QRP.
6. Quality Measures Currently Adopted
for the LTCH QRP
The LTCH QRP currently has 17
adopted measures as outlined in the
table below:
QUALITY MEASURES CURRENTLY ADOPTED FOR THE LTCH QRP
Short name
Measure name & data source
LTCH CARE Data Set
Pressure Ulcers ....................................
Patient Influenza Vaccine .....................
Application of Falls ...............................
Functional Assessment ........................
Application of Functional Assessment
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Change in Mobility ................................
DRR ......................................................
Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (Short Stay) (NQF
#0678).
Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza
Vaccine (Short Stay) (NQF #0680).
Application of Percent of Residents Experiencing One or More Falls with Major Injury (Long Stay) (NQF
#0674).*
Percent of Long-Term Care Hospital (LTCH) Patients with an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function (NQF #2631).
Application of Percent of Long-Term Care Hospital (LTCH) Patients with an Admission and Discharge
Functional Assessment and a Care Plan That Addresses Function (NQF #2631).
Functional Outcome Measure: Change in Mobility Among Long-Term Care Hospital (LTCH) Patients
Requiring Ventilator Support (NQF #2632).
Drug Regimen Review Conducted With Follow-Up for Identified Issues—Post Acute Care (PAC) LongTerm Care Hospital (LTCH) Quality Reporting Program (QRP).*
NHSN
CAUTI ...................................................
CLABSI .................................................
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National Healthcare Safety Network (NHSN) Catheter-Associated Urinary Tract Infection Outcome
Measure (NQF #0138).
National Healthcare Safety Network (NHSN) Central Line-Associated Bloodstream Infection Outcome
Measure (NQF #0139).
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QUALITY MEASURES CURRENTLY ADOPTED FOR THE LTCH QRP—Continued
Short name
Measure name & data source
MRSA ...................................................
National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Methicillin-resistant
Staphylococcus aureus (MRSA) Bacteremia Outcome Measure (NQF #1716).
National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Clostridium difficile
Infection (CDI) Outcome Measure (NQF #1717).
Influenza Vaccination Coverage among Healthcare Personnel (NQF #0431).
National Healthcare Safety Network (NHSN) Ventilator-Associated Event (VAE) Outcome Measure.*
CDI .......................................................
HCP Influenza Vaccine ........................
VAE ......................................................
Claims-based
All-Cause Readmissions ......................
MSPB ...................................................
DTC ......................................................
PPR ......................................................
All-Cause Unplanned Readmission Measure for 30-Days Post-Discharge from Long-Term Care Hospitals (LTCHs) (NQF #2512).
Medicare Spending Per Beneficiary (MSPB)—Post Acute Care (PAC) Long-Term Care Hospital (LTCH)
Quality Reporting Program (QRP).*
Discharge to Community—Post Acute Care (PAC) Long-Term Care Hospital (LTCH) Quality Reporting
Program (QRP).*
Potentially Preventable 30-Day Post-Discharge Readmission Measure for Long-Term Care Hospital
(LTCH) Quality Reporting Program (QRP).*
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* Not currently NQF-endorsed for the LTCH setting.
We received comments about quality
measures currently adopted for the
LTCH QRP. The comments are
summarized and discussed below.
Comment: A few commenters
expressed views regarding Medicare
Spending per Beneficiary—PAC LTCH
QRP, a measure previously finalized in
the FY 2017 IPPS/LTCH PPS final rule
(81 FR 57199 through 57207).
Commenters addressed the riskadjustment approach, episode length,
accounting for social risk factors, and
potential for unintended consequences
related to implementation of the
measure. Some commenters encouraged
CMS to utilize claims and patient
assessment data to incorporate
functional status into the riskadjustment. One commenter
recommended expanding the associated
services period from 30 days to 180 days
post-PAC discharge in order to enhance
the measure’s capacity to identify
improvements in medically complex
populations. Another commenter
expressed concern that PAC providers’
performance on this measure would
focus on costs per patient, without fully
accounting for patient outcomes, and
that efficiency should not be based
solely on the MSPB–PAC measures.
This commenter also noted that this
measure may result in limiting access to
certain patients.
Response: Since no changes were
proposed to the previously finalized
measure, Medicare Spending per
Beneficiary—PAC LTCH QRP, the
comments received are outside the
scope of the current rule. We addressed
these issues in the FY 2017 IPPS/LTCH
PPS final rule (81 FR 57199 through
57207), and we refer the reader to that
detailed discussion. We continue to
believe that the measure specifications,
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including the risk-adjustment and
episode length, are appropriate for this
measure. With regard to comments
related to accounting for social risk
factors, we refer readers to section
IX.C.2.b. of the preamble of this final
rule.
Comment: A few commenters
expressed views related to Discharge to
Community—PAC LTCH QRP, a
measure previously finalized in the FY
2017 IPPS/LTCH PPS final rule (81 FR
57207 through 57215). Commenters
suggested excluding patients who died
in the observation window following
return to a community setting,
distinguishing between a patient’s
return to home in the community versus
home in a custodial nursing facility,
assessing reliability and validity of the
claims discharge status code used to
calculate the measure, and accounting
for social risk factors.
Response: Since no changes were
proposed to the previously finalized
Discharge to Community—PAC LTCH
QRP measure, the comments received
are outside the scope of the current rule.
We addressed these issues in the FY
2017 IPPS/LTCH PPS final rule (81 FR
57207 through 57215), and we refer
readers to that rule for a detailed
discussion of these issues. We also note
that in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20098), we sought
comment on the exclusion of baseline
nursing facility residents as a potential
future modification of the Discharge to
Community—PAC LTCH QRP measure.
We refer readers to section IX.C.9.a. of
the preamble of this final rule for a
discussion of this issue. With regard to
comments related to social risk factors,
we refer readers to section IX.C.2.b. of
the preamble of this final rule.
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Comment: A few commenters
expressed views regarding the
Potentially Preventable 30-Day PostDischarge Readmission Measure for
LTCH QRP, a measure previously
finalized in the FY 2017 IPPS/LTCH
PPS final rule (81 FR 57215 through
57219). Commenters expressed support
for this measure, but encouraged further
measure testing. They also suggested
some modifications to the measure,
such as excluding readmissions for
conditions unrelated to the initial
reason for LTCH admission and risk
adjusting for certain patient
characteristics, such as ‘‘hospital
dependent’’ patients. Commenters also
expressed views related to accounting
for social risk factors.
Response: Since no changes were
proposed to the previously finalized
measure, Potentially Preventable 30-Day
Post-Discharge Readmission Measure for
LTCH QRP, comments received are
outside the scope of the current rule. We
addressed these issues in the FY 2017
IPPS/LTCH PPS final rule (81 FR 57215
through 57219), and we refer the reader
to that detailed discussion. We continue
to believe that the measure
specifications are appropriate for this
measure. We also refer readers to
section IX.C.2.b. of the preamble of this
final rule for responses to comments
received related to social risk factors for
this measure.
Comment: We received a comment
regarding the Percent of Residents or
Patients Who Were Assessed and
Appropriately Given the Seasonal
Influenza Vaccine (Short Stay) (NQF
#0680) and Influenza Vaccination
Coverage Among Healthcare Personnel
(NQF #0431) measures. The commenter
supported the continued inclusion of
the previously adopted measure,
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Influenza Vaccination Coverage Among
Healthcare Personnel (NQF #0431), in
the LTCH QRP. The commenter also
supported CMS’ proposal to extend the
data collection period for the Percent of
Residents or Patients Who Were
Assessed and Appropriately Given the
Seasonal Influenza Vaccine (Short Stay)
(NQF #0680) measure to allow for
accurate calculation of the measure
outcome.
Response: Since no changes were
proposed to the previously finalized
measures, Percent of Residents or
Patients Who Were Assessed and
Appropriately Given the Seasonal
Influenza Vaccine (Short Stay) (NQF
#0680) and Influenza Vaccination
Coverage among Healthcare Personnel
(NQF #0431), the comments received
are outside the scope of the current rule.
We addressed these issues in the FY
2017 IPPS/LTCH PPS final rule (81 FR
57227 through 57229) for the Percent of
Residents or Patients Who Were
Assessed and Appropriately Given the
Seasonal Influenza Vaccine (Short Stay)
(NQF #0680) measure and in the FY
2013 IPPS/LTCH PPS final rule (77 FR
53630 through 53631) for the Influenza
Vaccination Coverage among Healthcare
Personnel (NQF #0431) measure. We
refer readers to those rules for a detailed
discussion. We continue to believe the
inclusion of these influenza measures
are important for the LTCH setting.
Comment: A commenter requested
additional information regarding the
Percent of Long-Term Care Hospital
Patients with an Admission and
Discharge Functional Assessment and A
Care Plan That Addresses Function
(NQF #2631) and the Application of
Percent of Long-Term Care Hospital
Patients with an Admission and
Discharge Functional Assessment and A
Care Plan That Addresses Function
(NQF #2631), measures previously
finalized in the FY 2015 IPPS/LTCH
PPS final rule and FY 2016 IPPS/LTCH
PPS final rule, respectively. The
commenter requested that CMS provide
detailed examples for coding a patient’s
discharge functional goals, and
suggested removing the gateway
mobility item for both measures that
have been previously finalized.
Response: Since no changes were
proposed to the previously finalized
measures, Percent of Long-Term Care
Hospital Patients with an Admission
and Discharge Functional Assessment
and A Care Plan That Addresses
Function (NQF #2631) and Application
of Percent of Long-Term Care Hospital
Patients with an Admission and
Discharge Functional Assessment and A
Care Plan That Addresses Function
(NQF #2631), the comments received
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are outside the scope of the current rule.
We addressed these issues in the FY
2015 IPPS/LTCH PPS final rule (79 FR
50291 through 50298) and the FY 2016
IPPS/LTCH PPS final rule (80 FR 49739
through 49747), respectively. We refer
readers to those rules for a detailed
discussion.
We also provide examples of coding
goals in Section GG of the LTCH QRP
Manual, which is available at: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
LTCH-CARE-Data-Set-and-LTCH-QRPManual.html.
7. LTCH QRP Quality Measures
Beginning With the FY 2020 LTCH QRP
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20090 through
20097), beginning with the FY 2020
LTCH QRP, in addition to the quality
measures we are retaining under our
policy described in section IX.C.4. of the
preamble of this final rule, we proposed
to remove the current pressure ulcer
measure entitled Percent of Residents or
Patients with Pressure Ulcers That Are
New or Worsened (Short Stay) (NQF
#0678) and replace it with a modified
version of the measure entitled Changes
in Skin Integrity Post-Acute Care:
Pressure Ulcer/Injury and adopt two
new measures (one process and one
outcome) related to ventilator weaning.
We also proposed to characterize the
data elements described below as
standardized patient assessment data
under section 1899B(b)(1)(B) of the Act
that must be reported by LTCHs under
the LTCH QRP through the LTCH CARE
Data Set.
The proposed measures are as
follows:
• Changes in Skin Integrity Post-Acute
Care: Pressure Ulcer/Injury
• Compliance with Spontaneous
Breathing Trial (SBT) by Day 2 of the
LTCH Stay
• Ventilator Liberation Rate
The measures are described in more
detail below.
a. Finalized Policy To Replace the
Current Pressure Ulcer Quality Measure,
Percent of Residents or Patients With
Pressure Ulcers That Are New or
Worsened (Short Stay) (NQF #0678),
With a Modified Pressure Ulcer
Measure, Changes in Skin Integrity PostAcute Care: Pressure Ulcer/Injury
(1) Measure Background
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20090 through
20092), we proposed to remove the
current pressure ulcer measure, Percent
of Residents or Patients with Pressure
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38433
Ulcers That Are New or Worsened
(Short Stay) (NQF #0678), from the
LTCH QRP measure set and to replace
it with a modified version of that
measure, Changes in Skin Integrity PostAcute Care: Pressure Ulcer/Injury,
beginning with the FY 2020 LTCH QRP.
The change in the measure name is to
reduce confusion about the new
modified measure. The modified
version differs from the current version
of the measure because it includes new
or worsened unstageable pressure
ulcers, including deep tissue injuries
(DTIs), in the measure numerator. The
proposed modified version of the
measure also contains updated
specifications intended to eliminate
redundancies in the assessment items
needed for its calculation and to reduce
the potential for underestimating the
frequency of pressure ulcers. The
modified version of the measure would
satisfy the IMPACT Act domain of skin
integrity and changes in skin integrity.
(2) Measure Importance
As described in the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51754
through 51756), pressure ulcers are
high-cost adverse events and an
important measure of quality. For
information on the history and rationale
for the relevance, importance, and
applicability of having a pressure ulcer
measure in the LTCH QRP, we refer
readers to the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51748 through 51750)
and the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50861 through 50863).
We proposed to adopt a modified
version of the current pressure ulcer
measure because unstageable pressure
ulcers, including DTIs, are similar to
Stage 2, Stage 3, and Stage 4 pressure
ulcers in that they represent poor
outcomes, are a serious medical
condition that can result in death and
disability, are debilitating and painful,
and are often an avoidable outcome of
medical care.354 355 356 357 358 359 Studies
354 Casey, G. (2013). ‘‘Pressure ulcers reflect
quality of nursing care.’’ Nurs N Z 19(10): 20–24.
355 Gorzoni, M.L. and S.L. Pires (2011). ‘‘Deaths
in nursing homes.’’ Rev Assoc Med Bras 57(3): 327–
331.
356 Thomas, J.M., et al. (2013). ‘‘Systematic
review: Health-related characteristics of elderly
hospitalized adults and nursing home residents
associated with short-term mortality.’’ J Am Geriatr
Soc 61(6): 902–911.
357 White-Chu, E.F., et al. (2011). ‘‘Pressure ulcers
in long-term care.’’ Clin Geriatr Med 27(2): 241–258.
358 Bates-Jensen BM. Quality indicators for
prevention and management of pressure ulcers in
vulnerable elders. Ann Int Med. 2001;135 (8 Part 2),
744–51.
359 Bennet, G., Dealy, C., Posnett, J. (2004). The
cost of pressure ulcers in the UK, Age and Aging,
33(3):230–235.
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show that most pressure ulcers can be
avoided and can also be healed in acute,
post-acute, and long-term care settings
with appropriate medical care.360
Furthermore, some studies indicate that
DTIs, if managed using appropriate care,
can be resolved without deteriorating
into a worsened pressure ulcer.361 362
While there are few studies that
provide information regarding the
incidence of unstageable pressure ulcers
in PAC settings, an analysis conducted
by a contractor suggests the incidence of
unstageable pressure ulcers varies
according to the type of unstageable
pressure ulcer and setting.363 This
analysis examined the national
incidence of new unstageable pressure
ulcers in LTCHs at discharge compared
with admission using LTCH discharges
from January through December 2015.
The contractor found a national
incidence of 1.15 percent of new
unstageable pressure ulcers due to
slough and/or eschar, 0.05 percent of
new unstageable pressure ulcers due to
non-removable dressing/device, and
1.01 percent of new DTIs. In addition,
an international study spanning the
time period 2006 to 2009 provides some
evidence to suggest that the proportion
of pressure ulcers identified as DTI has
increased over time.364 The study found
DTIs increased by three fold, to nine
percent of all observed ulcers in 2009,
and that DTIs were more prevalent than
either Stage 3 or 4 ulcers. During the
same time period, the proportion of
Stage 1 and 2 ulcers decreased, and the
proportion of Stage 3 and 4 ulcers
remained constant.
The inclusion of unstageable pressure
ulcers, including DTIs, in the numerator
360 Black, Joyce M., et al. ‘‘Pressure ulcers:
Avoidable or unavoidable? Results of the national
pressure ulcer advisory panel consensus
conference.’’ Ostomy-Wound Management 57.2
(2011): 24.
361 Sullivan, R. (2013). A Two-year Retrospective
Review of Suspected Deep Tissue Injury Evolution
in Adult Acute Care Patients. Ostomy Wound
Management 59(9). https://www.o-wm.com/article/
two-year-retrospective-review-suspected-deeptissue-injury-evolution-adult-acute-care-patien.
362 Posthauer, M.E., Zulkowski, K. (2005). Special
to OWM: The NPUAP Dual Mission Conference:
Reaching Consensus on Staging and Deep Tissue
Injury. Ostomy Wound Management 51(4) https://
www.o-wm.com/content/the-npuap-dual-missionconference-reaching-consensus-staging-and-deeptissue-injury.
363 Final Specifications for LTCH QRP Quality
Measures and Standardized Patient Assessment
Data Elements, available at: https://www.cms.gov/
Medicare/Quality-Initiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/LTCHQuality-Reporting-Measures-Information.html.
364 VanGilder, C., MacFarlane, G.D., Harrison, P.,
Lachenbruch, C., Meyer, S. (2010). The
Demographics of Suspected Deep Tissue Injury in
the United States: An Analysis of the International
Pressure Ulcer Prevalence Survey 2006–2009.
Advances in Skin & Wound Care. 23(6): 254–261.
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of this measure is expected to increase
measure scores and variability in
measure scores, thereby improving the
ability to discriminate among poor- and
high-performing LTCHs. In the currently
implemented pressure ulcer measure,
Percent of Residents or Patients with
Pressure Ulcers That Are New or
Worsened (Short Stay) (NQF #0678),
analysis using data from Quarter 1
through Quarter 4 2015 data reveals that
the LTCH mean score is 1.95 percent;
the 25th and 75th percentiles are 0.53
percent and 2.49 percent, respectively;
and 12.11 percent of facilities have
perfect scores. In the proposed measure,
Changes in Skin Integrity Post-Acute
Care: Pressure Ulcer/Injury, during the
same time frame, the LTCH mean score
is 3.73 percent; the 25th and 75th
percentiles are 1.53 percent and 4.89
percent, respectively; and 5.46 percent
of facilities have perfect scores.
(3) Stakeholder Feedback
Our measure development contractor
sought input from subject matter
experts, including Technical Expert
Panels (TEPs), over the course of several
years on various skin integrity topics
and specifically those associated with
the inclusion of unstageable pressure
ulcers, including DTIs. Most recently,
on July 18, 2016, a TEP convened by our
measure development contractor
provided input on the technical
specifications of this quality measure,
including the feasibility of
implementing the proposed measure’s
updates across PAC settings. The TEP
supported the updates to the measure
across PAC settings, including the
inclusion in the numerator of
unstageable pressure ulcers due to
slough and/or eschar that are new or
worsened, new unstageable pressure
ulcers due to a non-removable dressing
or device, and new DTIs. The TEP also
supported the use of different data
elements for measure calculation. The
TEP recommended supplying additional
guidance to providers regarding each
type of unstageable pressure ulcer. This
support was in agreement with earlier
TEP meetings, held on June 13 and
November 15, 2013, which had
recommended that CMS update the
specifications for the pressure ulcer
measure to include unstageable pressure
ulcers in the numerator.365 366
365 Schwartz, M., Nguyen, K.H., Swinson Evans,
T.M., Ignaczak, M.K., Thaker, S., and Bernard, S.L.:
Development of a Cross-Setting Quality Measure for
Pressure Ulcers: OY2 Information Gathering, Final
Report. Centers for Medicare & Medicaid Services,
November 2013. Available at: https://www.cms.gov/
Medicare/Quality-Initiatives-Patient-AssessmentInstruments/Post-Acute-Care-Quality-Initiatives/
Downloads/Development-of-a-Cross-Setting-
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Exploratory data analysis conducted by
our measure development contractor
suggests that the addition of unstageable
pressure ulcers, including DTIs, will
increase the observed incidence and
variation in the rate of new or worsened
pressure ulcers at the facility level,
which may improve the ability of the
proposed quality measure to
discriminate between poor- and highperforming facilities.
We solicited stakeholder feedback on
this proposed measure by means of a
public comment period held from
October 17 through November 17, 2016.
In general, we received considerable
support for the proposed measure. A
few commenters supported all of the
changes to the current pressure ulcer
measure that resulted in the proposed
measure, with one commenter noting
the significance of the work to align the
pressure ulcer quality measure
specifications across the PAC settings.
Many commenters supported the
inclusion of unstageable pressure ulcers
due to slough/eschar, due to nonremovable dressing/device, and DTIs in
the quality measure. Other commenters
did not support the inclusion of DTIs in
the quality measure because they stated
that there is no universally accepted
definition for this type of skin injury.
Some commenters provided feedback
on the data elements used to calculate
the proposed quality measure. We
believe that these data elements will
promote facilitation of cross-setting
quality comparison as mandated by the
IMPACT Act, alignment between quality
measures and payment, reduction in
redundancies in assessment items, and
prevention of inappropriate
underestimation of pressure ulcers. The
currently implemented pressure ulcer
measure is calculated using
retrospective data elements that assess
the number of new or worsened
pressure ulcers at each stage, while the
proposed measure is calculated using
the number of unhealed pressure ulcers
at each stage after subtracting the
number that were present upon
admission. Some commenters did not
support the data elements that would be
used to calculate the proposed measure,
Quality-Measure-for-Pressure-Ulcers-InformationGathering-Final-Report.pdf.
366 Schwartz, M., Ignaczak, M.K., Swinson Evans,
T.M., Thaker, S., and Smith, L.: The Development
of a Cross-Setting Pressure Ulcer Quality Measure:
Summary Report on November 15, 2013, Technical
Expert Panel Follow-Up Webinar. Centers for
Medicare & Medicaid Services, January 2014.
Available at: https://www.cms.gov/Medicare/
Quality-Initiatives-Patient-Assessment-Instruments/
Post-Acute-Care-Quality-Initiatives/Downloads/
Development-of-a-Cross-Setting-Pressure-UlcerQuality-Measure-Summary-Report-on-November15-2013-Technical-Expert-Pa.pdf.
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and requested further testing of these
data elements. Other commenters
supported the use of these data elements
stating that these data elements
simplified the measure calculation
process.
The public comment summary report
for the proposed measure is available on
the CMS Web site at: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/Post-Acute-Care-QualityInitiatives/IMPACT-Act-of-2014/
IMPACT-Act-Downloads-andVideos.html. This summary includes
further detail about our responses to
various concerns and ideas stakeholders
raised.
The NQF-convened Measures
Application Partnership (MAP) PostAcute Care/Long-Term Care (PAC/LTC)
Workgroup met on December 14 and 15,
2016, and provided input to CMS about
this measure. The Workgroup provided
a recommendation of ‘‘support for
rulemaking’’ for use of the proposed
measure in the LTCH QRP. The MAP
Coordinating Committee met on January
24 and 25, 2017, and provided a
recommendation of ‘‘conditional
support for rulemaking’’ for use of the
proposed measure in the LTCH QRP.
The MAP’s conditions of support
include that, as a part of measure
implementation, CMS provide guidance
on the correct collection and calculation
of the measure result, as well as
guidance on public reporting Web sites
explaining the impact of the
specification changes on the measure
result. The MAP’s conditions also
specify that CMS continue analyzing the
proposed measure in order to
investigate unexpected results reported
in public comment. We intend to fulfill
these conditions by offering additional
training opportunities and educational
materials in advance of public reporting,
and by continuing to monitor and
analyze the proposed measure. More
information about the MAP’s
recommendations for this measure is
available at: https://www.qualityforum.
org/WorkArea/linkit.aspx?
LinkIdentifier=id&ItemID=84452.
We reviewed the NQF’s consensus
endorsed measures and were unable to
identify any NQF-endorsed pressure
ulcer quality measures for PAC settings
that are inclusive of unstageable
pressure ulcers. There are related
measures, but after careful review, we
determined these measures are not
applicable for use in LTCHs based on
the populations addressed or other
aspects of the specifications. We are
unaware of any other such quality
measures that have been endorsed or
adopted by another consensus
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organization for the LTCH setting.
Therefore, based on the evidence
discussed above, we proposed to adopt
the quality measure entitled, Changes in
Skin Integrity Post-Acute Care: Pressure
Ulcer/Injury, for the LTCH QRP
beginning with the FY 2020 LTCH QRP.
We plan to submit the proposed
measure to the NQF for endorsement
consideration as soon as feasible.
(4) Data Collection
The data for this quality measure
would be collected using the LTCH
CARE Data Set, which is currently
submitted by LTCHs through the QIES
ASAP System. The proposed
standardized patient assessment data
applicable to this measure that must be
reported by LTCHs for admissions as
well as discharges occurring on or after
April 1, 2018 is described in section
IX.C.11. of the preamble of this final
rule. While the inclusion of unstageable
wounds in the proposed measure results
in a measure calculation methodology
that is different from the methodology
used to calculate the current pressure
ulcer measure, the data elements needed
to calculate the proposed measure are
already included on the LTCH CARE
Data Set. In addition, our proposal to
eliminate duplicative data elements that
were used in calculation of the current
pressure ulcer measure will result in an
overall reduced reporting burden for
LTCHs with respect to the proposed
measure. To view the updated LTCH
CARE Data Set, with the proposed
changes, we refer readers to: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
LTCH-CARE-Data-Set-and-LTCH-QRPManual.html. For more information on
LTCH CARE Data Set submission using
the QIES ASAP System, we refer readers
to: https://www.cms.gov/Medicare/
Quality-Initiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
LTCH-Technical-Information.html.
For technical information about this
measure, including information about
the measure calculation and the
standardized patient assessment data
elements used to calculate this measure,
we refer readers to the document titled,
Final Specifications for LTCH QRP
Quality Measures and Standardized
Patient Assessment Data Elements,
available at: https://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/LTCH-QualityReporting/LTCH-Quality-ReportingMeasures-Information.html.
We proposed that LTCHs would begin
reporting the proposed pressure ulcer
measure, Changes in Skin Integrity PostAcute Care: Pressure Ulcer/Injury,
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which will replace the current pressure
ulcer measure, with data collection
beginning April 1, 2018.
We invited public comment on our
proposal to replace the current pressure
ulcer measure, Percent of Residents or
Patients with Pressure Ulcers That Are
New or Worsened (Short Stay) (NQF
#0678), with a modified version of that
measure, entitled Changes in Skin
Integrity Post-Acute Care: Pressure
Ulcer/Injury, for the LTCH QRP
beginning with the FY 2020 LTCH QRP.
Comment: Many commenters
supported the proposed replacement of
the current pressure ulcer measure, the
Percent of Residents or Patients with
Pressure Ulcers That Are New or
Worsened (Short Stay) (NQF #0678),
with a modified version of that measure,
entitled Changes in Skin Integrity PostAcute Care: Pressure Ulcer/Injury.
Commenters appreciated that the
implementation of this modified
measure will reduce regulatory burden
for providers while continuing to
maintain a high standard for measuring
the quality of care. Commenters also
encouraged the expansion of this
measure into other settings.
Response: We appreciate the
commenters’ support, and also agree
that this measure may be suitable to
adapt for other settings.
Comment: Several commenters
requested that additional testing
analyses be conducted prior to the
implementation of this measure. These
commenters indicated that the purpose
of this additional testing should be to
verify that the specifications of this
measure reflect actual differences in the
care practices and the quality of care
provided by LTCHs, rather than
differences in compliance. Specifically,
some commenters expressed concerns
that the variation in measure scores
between facilities could reflect
differences in the interpretation of
definitions for unstageable pressure
ulcers or DTIs, rather than actual
differences in quality or care practices.
These commenters noted that a measure
should not be changed to create
performance variation, but rather to be
consistent with current science or to
provide clarity and consistent data
collection. Commenters requested that
additional guidance be provided to
promote consistency in the way the new
measure is interpreted among providers.
Response: We have performed testing
to compare the performance of the
proposed measure with the existing
pressure ulcer/injury measure. Current
findings indicate that the measure is
both valid and reliable in the SNF,
LTCH, and IRF settings. One of the
differences between the current and
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proposed pressure ulcer measures is
that the proposed measure is calculated
using the M0300 data element.
Reliability and validity of the data
elements used to calculate this quality
measure have been tested in several
ways.
Rigorous testing on both reliability
and validity of the data elements in the
MDS 3.0 provides evidence for the data
elements used in the SNF, LTCH, and
IRF settings.367 The MDS 3.0 pilot test
showed good reliability, and the results
are applicable to the IRF–PAI as well as
the LTCH CARE Data Set because the
data elements tested are the same as
those used in the IRF–PAI and LTCH
CARE Data Set. Across pressure ulcer
data elements, average gold-standard to
gold-standard kappa statistic was 0.905.
The average gold-standard to facilitynurse kappa statistic was 0.937. These
kappa scores indicate ‘‘almost perfect’’
agreement using the Landis and Koch
standard for strength of agreement.368
Analyses conducted by the measure
development contractor indicate that
there is a high level of alignment
between the M0300 data element and
the M0800 data element, suggesting that
the data elements assess an equivalent
concept. Using the M0300 data elements
improves accuracy by establishing a
standardized calculation method.
A second main difference between the
current and proposed pressure ulcer
measures is that the proposed measure
includes unstageable pressure ulcers,
including DTIs, in the numerator of the
quality measure, resulting in increased
scores in all settings compared with the
previously implemented pressure ulcer
measure. An analysis conducted by the
measure development contractor, using
data from October through December
2016, showed mean scores increasing by
2.03 percentage points in LTCH. This is
due to the fact that the proposed
measure includes unstageable pressure
ulcers, including DTIs, while the
current measure does not, as well as the
fact some pressure ulcers captured as
new or worsened in the M0300 data
element were not reported in the M0800
data element.
To assess the construct validity of this
measure, or the degree to which the
measure construct measures what it
claims or purports to be measuring, our
367 Saliba, D., & Buchanan, J. (2008, April).
Development and validation of a revised nursing
home assessment tool: MDS 3.0. Contract No. 500–
00–0027/Task Order #2. Santa Monica, CA: Rand
Corporation. Retrieved from: https://
www.cms.hhs.gov/NursingHomeQualityInits/
Downloads/MDS30FinalReport.pdf.
368 Landis, R., & Koch, G. (1977, March). The
measurement of observer agreement for categorical
data. Biometrics 33(1), 159– 174.
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measure contractor sought input from
TEPs over the course of several years.
Most recently, on July 18, 2016, a TEP
supported the inclusion in the
numerator of unstageable pressure
ulcers due to slough and/or eschar that
are new or worsened, new unstageable
pressure ulcers/injuries due to a nonremovable dressing or device, and new
DTIs. The measure testing activities
were presented to TEP members for
their input on the reliability, validity,
and feasibility of this measure change.
The TEP members supported the
measure construct.
The proposed measure also increased
the variability of measures scores
between providers, as noted by some
commenters. In the currently
implemented pressure ulcer measure,
analysis using 2015 data from Quarter 1
through Quarter 4 reveals that the LTCH
mean score is 1.95 percent; the 25th and
75th percentiles are 0.53 percent and
2.49 percent, respectively; and 12.11
percent of facilities have perfect scores.
In the proposed measure, during the
same timeframe, the LTCH mean score
is 3.73 percent; the 25th and 75th
percentiles are 1.53 percent and 4.89
percent, respectively; and 5.46 percent
of facilities have perfect scores. We
would like to clarify that the goal of the
proposed measure is not to create
performance variation where none
exists, but rather to better measure
existing performance variation. This
increased variability of scores between
facilities will improve the ability of the
measure to distinguish between highand low-performing facilities. As
described above, the proposed measure
has been shown to be reliable and valid
through testing of the measure and data
elements, and input from stakeholders.
We will continue to perform
reliability and validity testing in
compliance with NQF guidelines and
the Blueprint for the CMS Measures
Management System to ensure that that
the measure demonstrates scientific
acceptability (including reliability and
validity) and meets the goals of the QRP.
Finally, as with all measure
development and implementation, we
will provide training and guidance prior
to implementation of the measure to
promote consistency in the
interpretation of the measure.
Comment: A few commenters stated
that the M0300 data element assesses
the total number of unhealed pressure
ulcers at the time of admission and of
those, the total number of unhealed
pressure ulcers at the time of discharge,
for each stage. One commenter
expressed concern that the proposed
measure may disfavor LTCHs that admit
patients with pressure ulcers because
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those pressure ulcers might not heal by
the time the patients are discharged
from the LTCH.
Response: We do not believe that this
measure will disfavor LTCHs that admit
patients who already have pressure
ulcers. We wish to clarify that the
proposed measure, Changes in Skin
Integrity Post-Acute Care: Pressure
Ulcer/Injury, is calculated using a
subtraction method. The M0300 data
element collects the number of
unhealed pressure ulcers present at the
time of the assessment (that is,
discharge) for each stage, and the
number of those pressure ulcers that
were present upon admission. The
pressure ulcers that were present upon
admission are subtracted from the
number of pressure ulcers at the same
stage that are present at discharge and,
as a result, are not included in the
measure.
Comment: Commenters requested
further training and guidance in
completing the M0300 data element that
will be used to calculate the proposed
quality measure. Some commenters
requested comprehensive guidance on
completing the ‘‘present on admission’’
data element. Some commenters
questioned how specific scenarios
involving unstageable pressure ulcers
should be coded. These commenters
had questions about how to code a
pressure ulcer that is unstageable at
admission, and becomes numerically
stageable during the patient’s stay,
remaining at that stage at discharge. One
commenter supported the proposed
measure calculation approach, which
will not count pressure ulcers that were
present at the time of admission at the
same stage, but stated that this would
add complexity in coding and would
require further training. One commenter
stated that the use of these data
elements would require LTCHs to
calculate the number of new or
worsened pressure ulcers by subtracting
those present on admission. Some
commenters stated that the modified
measure may be difficult for providers
to capture because they are being asked
to report on a different data element.
Response: The measure will be
calculated using data reported on the
M0300 data element collected at
discharge, which only requires LTCHs
to report the number of pressure ulcers
for each stage (including stages 2, 3 and
4, unstageable due to slough and/or
eschar, unstageable due to nonremovable dressing/device, and DTIs)
and of those, the number that were
present on admission. The M0300 data
element currently exists on the LTCH
CARE Data Set, and the current LTCH
QRP Manual, as well as prior versions
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of the Manual, include guidance about
how to complete the M0300 data
element in the scenarios described by
the commenters, including unstageable
pressure ulcers that become numerically
stageable. The LTCH QRP Manual can
be found at: https://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/LTCH-QualityReporting/LTCH-CARE-Data-Set-andLTCH-QRP-Manual.html.
We will provide further training,
education, and guidance prior to
implementation of the proposed
measure. The LTCH QRP Manual will
be updated with additional examples to
further address the coding of
unstageable pressure ulcers, and to
provide further clarification on the
coding of pressure ulcers/injuries that
are ‘‘present on admission.’’
Comment: Several comments
expressed general support for the
inclusion of all unstageable pressure
ulcers in the proposed measure. One
commenter stated that the measure will
provide a more accurate picture of
pressure ulcers and the quality of their
prevention and treatment in PAC
settings. This commenter stated that
unstageable pressure ulcers may be
prevented, accurately diagnosed, and
effectively treated when they occur, that
this measure will result in a more
accurate picture of quality in post-acute
care, and that the 2016 NPUAP staging
definitions will help to improve
diagnostic accuracy.
Some commenters did not support the
inclusion of unstageable pressure ulcers
in the quality measure as proposed.
Some commenters stated that there is a
lack of clear definitions for some types
of unstageable pressure ulcers, and that
those definitions may be too subjective
to collect reliable data on unstageable
pressure ulcers. One commenter
requested that CMS clarify the criteria
that would enable a LTCH to report that
an unstageable pressure ulcer present on
admission has improved by the time of
discharge. One commenter stated that it
was unclear whether mucosal pressure
injuries are included in the measure,
and what the definition of ‘‘worsened’’
is in the context of unstageable pressure
ulcers. The commenter stated that it
may not be possible to prevent
unstageable pressure ulcers/injuries due
to non-removable devices and dressings,
or DTIs, and they questioned how this
measure would inform improvement or
inform the public. Commenters
requested that CMS conduct additional
testing to examine the inclusion of
unstageable pressure ulcers.
Response: We appreciate the support
we have received regarding the
inclusion of unstageable pressure ulcers,
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including DTIs, in the proposed quality
measure. We believe that the inclusion
of unstageable pressure ulcers in the
measure will result in a fuller picture of
quality to patients and families, and
lead to further quality improvement
efforts that will advance patient safety
by reducing the rate of facility acquired
pressure ulcers at any stage.
To provide greater clarity about the
definitions of different types of
unstageable pressure ulcers and how to
code them on the LTCH CARE Data Set,
we are currently engaged in multiple
educational efforts. These include
training events, updates to the manuals
and training materials, and responses to
Help Desk questions to promote
understanding and proper coding of
these data elements. We will continue to
engage in these training activities prior
to implementation of the proposed
measure.
With regard to provider concerns
regarding the inclusion of mucosal
pressure ulcers, we wish to clarify that
mucosal pressure ulcers are not
included in this measure. Further
instruction about these types of pressure
ulcers is provided in the LTCH QRP
Manual, which can be found at: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
LTCH-CARE-Data-Set-and-LTCH-QRPManual.html. We would like to clarify
that the data elements used to collect
information about unstageable pressure
ulcers do not reflect whether a pressure
ulcer is improved at discharge
compared to admission. Rather, the data
element collects the number of pressure
ulcers present at each stage (at
discharge), and the number of those
there were present at the same stage at
admission.
Comment: One commenter
specifically supported the inclusion of
DTIs. This commenter stated that the
currently implemented pressure ulcer
measure is biased because it does not
include DTIs, and that the inclusion of
DTIs in the measure has value and
directly impacts the patient. The
commenter stated that prompt
assessment for a DTI at early onset is
optimal to initial treatment protocols,
and that a well-trained clinician is able
to discern DTIs during an assessment.
Another commenter stated that these
types of injuries may be prevented,
accurately diagnosed and effectively
treated when they occur, and that the
2016 NPUAP staging definitions may
help to improve diagnostic accuracy.
Other commenters did not support the
inclusion of DTIs in the measure. Some
commenters stated that there is not a
universally accepted definition of DTIs,
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38437
and one stated that DTIs are commonly
misdiagnosed, which could lead to
surveillance bias. One commenter stated
that the category of DTI is not
sufficiently mature enough to include in
the measure, and that it may not be
possible to prevent DTIs.
Response: We appreciate the
comments regarding the specific
inclusion of DTIs in the proposed
quality measure. DTIs, often an
avoidable outcome of medical care, are
debilitating and painful, and can result
in death and/or disability, similar to
Stage 2, Stage 3 and Stage 4 pressure
ulcers. While some DTIs may worsen,
studies indicate that many DTIs, if
managed using appropriate care, can be
resolved without deteriorating into a
worsened pressure ulcer. Therefore, we
believe that the inclusion of DTIs in the
proposed quality measure is essential to
be able to accurately reflect the number
of these types of pressure injuries and
to provide the appropriate patient care.
Further, we believe that it is important
to do a thorough assessment on every
patient in each PAC setting, including a
thorough skin assessment documenting
the presence of any pressure ulcers or
injuries of any kind, including DTIs. We
agree that it is important to conduct
thorough and consistent assessments to
avoid the possibility of surveillance
bias.
When considering the addition of
DTIs to the measure numerator, we
convened cross-setting TEPs in June and
November 2013, and obtained input
from clinicians, experts, and other
stakeholders. An additional crosssetting TEP convened by our measure
development contractor in July 2016
also supported the recommendation to
include unstageable pressure ulcers,
including DTIs, in the numerator of the
quality measure. Given DTIs’ potential
impact on mortality, morbidity, and
quality of life, it may be detrimental to
the quality of care to exclude DTIs from
a pressure ulcer quality measure.
Comment: A few commenters
recommended that CMS attain NQF
endorsement of the Changes in Skin
Integrity Post-Acute Care: Pressure
Ulcer/Injury measure prior to
implementation.
Response: While this measure is not
currently NQF-endorsed, we recognize
that the NQF endorsement process is an
important part of measure development
and plan to submit this measure for
NQF endorsement consideration as soon
as feasible.
Comment: Some commenters
supported adopting the NPUAP
terminology regarding the use of the
term ‘‘pressure injury.’’ These
commenters believed that use of NPUAP
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language will help facilitate the use of
consistent definitions across PAC
settings. One commenter expressed
support for the term ‘‘injury’’ to describe
‘‘deep tissue injury,’’ but not other types
of pressure ulcers. This commenter
requested further clarification on the
term ‘‘pressure ulcer/injury’’ used in the
proposed rule for this measure.
Other commenters opposed the use of
the new NPUAP terminology.
Commenters stated that the term
‘‘injury’’ is not universally supported by
wound care organizations, does not
differentiate closed versus open
wounds, is clinically inaccurate, and
does not align with ICD–10 codes in use
for pressure ulcers. These commenters
indicated that, while the term ‘‘ulcer’’ is
related to underlying medical
conditions, the term ‘‘wound’’ is related
to the results of operations and
accidents, which may imply
intentionality.
Response: We are aware of the array
of terms used to describe alterations in
skin integrity due to pressure. Some of
these terms include: Pressure ulcer,
pressure injury, pressure sore, decubitus
ulcer, and bed sore. However, for
purposes of the proposed measure, a
skin condition should be coded on the
LTCH CARE Data Set as a pressure ulcer
if the primary cause of the skin
condition is related to pressure. For
example, if the medical record reflects
the presence of a Stage 2 pressure
injury, it should be coded on the
assessment as a Stage 2 pressure ulcer.
A TEP held by our measure
development contractor on July 15, 2016
was very supportive of adopting the
NPUAP terminology of ‘‘pressure
injury.’’ Some members of the TEP
stated that the term ‘‘injury’’ may be a
more inclusive term than ‘‘ulcer,’’ and
that the term ‘‘pressure injury’’ may be
more easily and positively understood
by patients, residents, and family
members than ‘‘pressure ulcer.’’ The
TEP recommended training for
providers and consumers regarding any
change in terminology. We concur with
the TEP’s recommendations. The
purpose and intent of the measure is to
provide increased surveillance of an
important patient safety and quality of
care issue, and language revisions are
intended to ensure that patient wounds
are captured in a comprehensive and
systematic manner.
Regarding concerns about changes to
ICD codes, we would like to clarify that
the Changes in Skin Integrity Post-Acute
Care: Pressure Ulcer/Injury measure is
calculated using data elements from the
LTCH CARE Data Set, and does not use
ICD codes.
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Comment: Several commenters
expressed concern regarding the
proposal to adopt a modified pressure
ulcer measure. One commenter
supported CMS’ efforts to implement
this measure as it may reduce the
burden of collecting assessment data.
Other commenters believed that the
implementation of the modified
pressure ulcer measure will create
additional administrative and financial
burdens for LTCHs. One commenter
urged CMS to postpone the
implementation of this measure, stating
that this would allow LTCHs additional
time to improve their performance on
the existing pressure ulcer quality
measure.
Response: We do not believe that the
reporting of the proposed measure will
impose a new burden on LTCHs because
the measure is calculated using data
elements that are currently included in
the LTCH CARE Data Set. Further, our
proposal to remove duplicative data
elements that we are finalizing in this
final rule will result in an overall
reduced reporting burden for providers
for the proposed measure.
Comment: Several commenters
recommended using both the M0300
and M0800 data elements to calculate
the pressure ulcer measure, and
recommended that CMS maintain the
M0800 data elements on the LTCH
CARE Data Set. These commenters
stated that M0800 data elements are
used by PAC providers to verify the
number of patients with pressure ulcers
that are new or worsened since
admission, and believed that the use of
M0300 data elements might require PAC
staff to review both admission and
discharge assessments when verifying
the accuracy of measure calculation.
One commenter found the M0800 data
elements to be clear and concise.
Response: We proposed to collect the
proposed measure using the M0300 data
element, and to remove the M0800 from
the LTCH CARE Data Set, because we
have found that use of the M0800 data
element could result in the
underreporting of pressure ulcers. Using
the M0300 data element improves the
reporting accuracy by establishing a
standardized calculation. Further, the
use of the M0300 data element
facilitates standardization of the
measure across settings.
During a TEP meeting held on July 18,
2016, to discuss this measure, multiple
TEP members preferred the wording of
the M0300 data element, compared with
the M0800 data element. TEP members
stated that this data element may be
clearer and reduce opportunities for
error. We agree with these views, and
we plan to provide additional training
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opportunities to improve understanding
of the data elements.
Comment: A few commenters noted
that LTCH performance scores on the
proposed measure are likely to differ
from performance scores on the
currently implemented pressure ulcer
measure, Percent of Residents or
Patients with Pressure Ulcers That Are
New or Worsened (Short Stay) (NQF
#0678). They recommended
development of educational materials
for the public to explain the perceived
shifts in performance.
Response: We appreciate commenters’
concerns about differences in
performance scores between the two
measures and the possibility of
misinterpretation. While the proposed
measure will not be directly comparable
to the existing measure, it is expected to
provide an improved measure of quality
moving forward since it will more
accurately capture the number of new
and worsened pressure ulcers and
include unstageable pressure ulcers.
Further information and training will be
provided to providers as well as
consumers regarding how to interpret
scores on the proposed measure, to
avoid any possible confusion between
the proposed measure and the existing
measure.
Comment: One commenter suggested
that we include additional risk factors
in the proposed measure, including age,
mechanical ventilation status of the
patient, and incontinence associated
dermatitis. The commenter also
recommended that we revise the
terminology to be more specific (that is,
‘‘diabetes mellitus’’ instead of
‘‘diabetes’’ and ‘‘impaired independent
mobility’’ instead of ‘‘mobility’’).
Response: We would like to note that
this proposed quality measure will be
risk adjusted for functional mobility
admission performance, bowel
continence, diabetes mellitus or
peripheral vascular disease/peripheral
arterial disease, and low body mass
index in each of the four settings. In
response to the commenters request for
the use of more specific terminology of
risk adjusters, we note that all terms are
described in greater detail in the
Specifications for LTCH QRP Quality
Measures and Standardized Data
Elements, available at: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
LTCH-Quality-Reporting-MeasuresInformation.html. As with our measure
modification and evaluation processes,
we will continue to analyze this
measure, specifically assessing the
addition of variables to the risk
adjustment model, and testing the
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inclusion of other risk factors as
additional risk adjustors. This
continued refinement of the risk
adjustment models will ensure that the
measure remains valid and reliable to
inform quality improvement within and
across each PAC setting, and to fulfill
the public reporting goals of quality
reporting programs.
Comment: One commenter requested
clarification on measure specification
differences between LTCHs and other
PAC settings. One commenter stated
that there is an IMPACT Act mandate to
implement ‘‘interoperable measures’’
across PAC settings.
Response: The Changes in Skin
Integrity Post-Acute Care: Pressure
Ulcer/Injury measure is harmonized
across all PAC settings and uses
standardized patient assessment data as
required by the IMPACT Act. Further,
we would like to clarify that the M0300
data element used to calculate this
measure is standardized across all PAC
settings, enabling interoperability. This
standardization and interoperability of
data elements allows for the exchange of
information among PAC providers and
other providers to whom this data is
applicable. We refer readers to the
measure specifications, which describe
the specifications for the measure in
PAC settings, Final Specifications for
LTCH QRP Quality Measures and
Standardized Patient Assessment Data
Elements, available at: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
LTCH-Quality-Reporting-MeasuresInformation.html.
After consideration of the public
comments we received, we are
finalizing our proposal to remove the
current pressure ulcer measure, Percent
of Residents or Patients with Pressure
Ulcers That Are New or Worsened
(Short Stay) (NQF #0678), from the
LTCH QRP measure set and replace it
with a modified version of that measure,
entitled Changes in Skin Integrity PostAcute Care: Pressure Ulcer/Injury, for
the LTCH QRP with an implementation
date of July 1, 2018.
b. Mechanical Ventilation Process
Quality Measure: Compliance With
Spontaneous Breathing Trial (SBT) by
Day 2 of the LTCH Stay
Invasive mechanical ventilation care
was identified through technical expert
panels convened by our measure
development contractor and public
comment periods as a gap in the LTCH
QRP measure set and aligns with the
National Quality Strategy priority and
the CMS Quality Strategy goal of
‘‘promoting the most effective
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prevention and treatment practices’’ by
reducing the risk of complications from
unnecessarily prolonged mechanical
ventilation. In the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 20092
through 20095), we proposed to adopt
the quality measure, Compliance with
Spontaneous Breathing Trial (SBT) by
Day 2 of the LTCH Stay, beginning with
the FY 2020 LTCH QRP. The data
applicable to this measure that must be
reported by LTCHs for admissions as
well as discharges occurring on or after
April 1, 2018 is described in section
IX.C.11. of the preamble of this final
rule.
The Compliance with SBT by Day 2
of the LTCH Stay measure is a process
quality measure. For patients on
invasive mechanical ventilation support
upon admission to the LTCH, except
those who meet measure exclusion
criteria, this measure assesses facilitylevel compliance with SBT, including
Tracheostomy Collar Trial (TCT) or
Continuous Positive Airway Pressure
(CPAP) breathing trial, by Day 2 of the
LTCH stay, where Day 1 is the day of
admission to the LTCH and Day 2 is the
subsequent calendar day. This measure
is calculated and reported for the
following two components: (1) The
percentage of patients admitted on
invasive mechanical ventilation who
were assessed for readiness for SBT by
Day 2 of the LTCH Stay, and (2) the
percentage of patients deemed
medically ready for SBT who received
SBT by Day 2 of the LTCH stay. Higher
percentages indicate better compliance.
Patients are included in this quality
measure if they are on invasive
mechanical ventilation support upon
admission to the LTCH, unless they
meet measure exclusion criteria.
Patients on invasive mechanical
ventilation support present a critical
focus for assessment of high quality care
because they comprise a substantial
proportion of LTCH patient admissions.
Mechanically ventilated patients are
increasingly common in both acute care
hospital intensive care units (ICUs),
where up to 40 percent of patients
require some duration of mechanical
ventilation,369 and LTCHs, where
patients are frequently transferred for
weaning following treatment in
ICUs.370 371 372 Patients who require
369 Dasta, J.F., et al. (2005). ‘‘Daily cost of an
intensive care unit day: the contribution of
mechanical ventilation.’’ Crit Care Med 33(6): 1266–
1271.
370 Dasta, J.F., et al. (2005). ‘‘Daily cost of an
intensive care unit day: the contribution of
mechanical ventilation.’’ Crit Care Med 33(6): 1266–
1271.
371 Kahn, J.M., et al. (2010). ‘‘Long-term acute care
hospital utilization after critical illness.’’ JAMA
303(22): 2253–2259.
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invasive mechanical ventilation of
longer than 14 or 21 days are
undergoing prolonged mechanical
ventilation (PMV). In 2012, about 22,000
or 15.8 percent of all LTCH discharges
received PMV services during the LTCH
stay.373
This ventilator weaning-related
process quality measure is important for
encouraging implementation of
evidence-based weaning guidelines as
early during the LTCH patient stay as is
beneficial to the patient. Although often
necessary for life support, invasive
mechanical ventilation is not without
risk of harm to patients, and these risks
increase as duration of ventilation
continues.374 375 376 In both ICUs and
LTCHs, unsuccessful weaning and
delayed weaning increase patient
exposure to a number of ventilatorassociated negative health outcomes,
including ventilator-associated
pneumonia,377 378 379 380 ventilatorassociated lung injury,381 382 383
ventilator induced diaphragm
372 Szubski, C.R., et al. (2014). ‘‘Predicting
discharge to a long-term acute care hospital after
admission to an intensive care unit.’’ Am J Crit Care
23(4): e46–53.
373 MedPAC (2016). Chapter 10. Long-term Care
Hospital Services. In: Report to the Congress:
Medicare Payment Policy. Washington, DC,
Medicare Payment Advisory Commission.
374 Esteban, A., et al. (2002). ‘‘Characteristics and
outcomes in adult patients receiving mechanical
ventilation: a 28-day international study.’’ JAMA
287(3): 345–355.
375 Cox, C.E., et al. (2007). ‘‘Differences in oneyear health outcomes and resource utilization by
definition of prolonged mechanical ventilation: a
prospective cohort study.’’ Crit Care 11(1): R9.
376 Penuelas, O., et al. (2011). ‘‘Characteristics and
outcomes of ventilated patients according to time to
liberation from mechanical ventilation.’’ Am J
Respir Crit Care Med 184(4): 430–437.
377 Cook, D.J., et al. (1998). ‘‘Incidence of and risk
factors for ventilator-associated pneumonia in
critically ill patients.’’ Ann Intern Med 129(6): 433–
440.
378 Papazian, L., et al. (1996). ‘‘Effect of ventilatorassociated pneumonia on mortality and morbidity.’’
Am J Respir Crit Care Med 154(1): 91–97.
379 Vincent, J.L., et al. (1995). ‘‘The prevalence of
nosocomial infection in intensive care units in
Europe. Results of the European Prevalence of
Infection in Intensive Care (EPIC) Study. EPIC
International Advisory Committee.’’ JAMA 274(8):
639–644.
380 Safdar, N., et al. (2005). ‘‘Clinical and
economic consequences of ventilator-associated
pneumonia: a systematic review.’’ Crit Care Med
33(10): 2184–2193.
381 Meade, M.O. and D.J. Cook (1995). ‘‘The
aetiology, consequences and prevention of
barotrauma: a critical review of the literature.’’ Clin
Intensive Care 6(4): 166–173.
382 Meade, M.O., et al. (1997). ‘‘How to use
articles about harm: the relationship between high
tidal volumes, ventilating pressures, and ventilatorinduced lung injury.’’ Crit Care Med 25(11): 1915–
1922.
383 Slutsky, A.S. and L.N. Tremblay (1998).
‘‘Multiple system organ failure. Is mechanical
ventilation a contributing factor?’’ Am J Respir Crit
Care Med 157(6 Pt 1): 1721–1725.
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dysfunction,384 psychological
distress 385 386 387 and post-traumatic
stress disorder,388 disability 389 and
decreased functional status,390 391 and
chronic critical illness syndrome.392
Furthermore, these ventilator-associated
negative health outcomes particularly
affect the LTCH population since a
significant number of its patients are on
PMV. The majority of mechanically
ventilated patients who are transferred
to an LTCH have received mechanical
ventilation for at least 21 days.393 PMV
increases the risk of patient morbidity
and short-term and long-term mortality.
According to a recent systematic review,
the pooled mortality of patients with
PMV (defined here as invasive
mechanical ventilation for ≥14 days)
undergoing weaning attempts in LTCHs
was 31 percent (18 studies); however,
the pooled mortality at one year
significantly increased to 73 percent (8
studies).394
In addition to increased morbidity
and mortality, mechanical ventilation is
also associated with higher costs. While
the literature on costs of mechanical
ventilation are limited for the LTCH
setting, studies in the acute care
384 Levine, S., et al. (2008). ‘‘Rapid disuse atrophy
of diaphragm fibers in mechanically ventilated
humans.’’ N Engl J Med 358(13): 1327–1335.
385 Rose, L., et al. (2014). ‘‘Psychological
wellbeing, health related quality of life and
memories of intensive care and a specialised
weaning centre reported by survivors of prolonged
mechanical ventilation.’’ Intensive Crit Care Nurs
30(3): 145–151.
386 Schou, L. and I. Egerod (2008). ‘‘A qualitative
study into the lived experience of post-CABG
patients during mechanical ventilator weaning.’’
Intensive Crit Care Nurs 24(3): 171–179.
387 Rotondi, A.J., et al. (2002). ‘‘Patients’
recollections of stressful experiences while
receiving prolonged mechanical ventilation in an
intensive care unit.’’ Crit Care Med 30(4): 746–752.
388 Jubran, A., et al. (2010). ‘‘Post-traumatic stress
disorder after weaning from prolonged mechanical
ventilation.’’ Intensive Care Med 36(12): 2030–2037.
389 Barnato, A.E., et al. (2011). ‘‘Disability among
elderly survivors of mechanical ventilation.’’ Am J
Respir Crit Care Med 183(8): 1037–1042.
390 Scheinhorn, D.J., et al. (2007). ‘‘Post-ICU
mechanical ventilation at 23 long-term care
hospitals: a multicenter outcomes study.’’ Chest
131(1): 85–93.
391 Cox, C.E., et al. (2007). ‘‘Differences in oneyear health outcomes and resource utilization by
definition of prolonged mechanical ventilation: a
prospective cohort study.’’ Crit Care 11(1): R9.
392 Cox, C.E., et al. (2007). ‘‘Differences in oneyear health outcomes and resource utilization by
definition of prolonged mechanical ventilation: a
prospective cohort study.’’ Crit Care 11(1): R9.
393 MacIntyre, N.R., Epstein, S.K., Carson, S.,
Scheinhorn, D., Christopher, K., Muldoon, S., &
National Association for Medical Direction of
Respiratory, C. (2005). Management of patients
requiring prolonged mechanical ventilation: report
of a NAMDRC consensus conference. Chest, 128(6),
3937–3954.
394 Damuth, E., et al. (2015). ‘‘Long-term survival
of critically ill patients treated with prolonged
mechanical ventilation: a systematic review and
meta-analysis.’’ Lancet Respir Med. 2015 May 20.
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hospital ICU setting indicate that
patients who require mechanical
ventilation can have up to 50 percent
higher costs than patients who do not
receive mechanical ventilation.395 ICU
patients who develop VAP incur at least
$40,000 more in hospital costs than
ventilated patients without VAP, and
costs increase with increasing duration
of mechanical ventilation.396 397 398
Although there is evidence regarding
the benefit of daily assessments of
patient readiness for weaning from
invasive mechanical ventilation,399 as
well as for the importance of adherence
to weaning protocols,400 we are not
aware of any studies in LTCHs that
evaluate timing of assessment for
readiness to wean with respect to the
admission date. However, an
international task force, convened in
2005, developed guideline
recommendations to address the entire
weaning process. Despite the limited
evidence, this task force recommended
that weaning be considered as soon as
possible,401 because failure to assess the
patient for readiness to wean may lead
to undue prolonged mechanical
ventilation,402 thus exposing patients
unnecessarily to adverse ventilatorassociated morbidity and mortality.403
Based on studies and observations of
implementation of regular assessment
for SBTs and weaning protocols in ICUs,
adherence to the recommended weaning
395 Dasta, J.F., et al. (2005). ‘‘Daily cost of an
intensive care unit day: the contribution of
mechanical ventilation.’’ Crit Care Med 33(6): 1266–
1271.
396 Kollef, M.H., et al. (2012). ‘‘Economic impact
of ventilator-associated pneumonia in a large
matched cohort.’’ Infect Control Hosp Epidemiol
33(3): 250–256.
397 Restrepo, M.I., et al. (2010). ‘‘Economic burden
of ventilator-associated pneumonia based on total
resource utilization.’’ Infect Control Hosp
Epidemiol 31(5): 509–515.
398 Sedwick, M.B., et al. (2012). ‘‘Using evidencebased practice to prevent ventilator-associated
pneumonia.’’ Crit Care Nurse 32(4): 41–51.
399 Robertson, T.E., et al. (2008). ‘‘Improved
extubation rates and earlier liberation from
mechanical ventilation with implementation of a
daily spontaneous-breathing trial protocol.’’ J Am
Coll Surg 206(3): 489–495.
400 Blackwood, B., et al. (2014). ‘‘Protocolized
versus non-protocolized weaning for reducing the
duration of mechanical ventilation in critically ill
adult patients.’’ Cochrane Database Syst Rev 11:
Cd006904.
401 Boles, J.M., et al. (2007). ‘‘Weaning from
mechanical ventilation.’’ Eur Respir J 29(5): 1033–
1056.
402 MacIntyre, N.R., Epstein, S.K., Carson, S.,
Scheinhorn, D., Christopher, K., Muldoon, S., &
National Association for Medical Direction of
Respiratory, C. (2005). Management of patients
requiring prolonged mechanical ventilation: report
of a NAMDRC consensus conference. Chest, 128(6),
3937–3954.
403 Hess, D.R., & MacIntyre, N.R. (2011).
Ventilator discontinuation: why are we still
weaning? Am J Respir Crit Care Med, 184(4), 392–
394.
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processes, including prompt assessment
of weaning readiness and initiation of
SBTs, appears quite variable, likely due
to differences in clinicians’ intuitive
thresholds for determination of patients’
readiness to wean.404 405 Clinician
delays in recognizing that weaning may
be possible and beginning assessment of
weaning readiness are two common
causes of weaning delays.406 In one
study, 50 percent of the patients
considered to be incapable of sustaining
spontaneous ventilation by clinicians
later were able to tolerate a weaning
trial. The authors concluded that tests
used to validate clinician intuition on a
patient’s readiness for weaning are often
inaccurate and that clinicians should
follow explicit protocols to consistently
test patients on their readiness to
wean.407 Because prompt identification
of patients’ readiness for SBTs has been
shown to reduce weaning duration
without harm to patients,408 such delays
indicate less than optimal
performance 409 and opportunities for
improvement.
Indirect evidence for the need for
prompt recognition of patients’
readiness to wean in LTCHs comes from
a recent study of patients newly
admitted to LTCHs on invasive
mechanical ventilation, which reported
that 32 percent of invasively
mechanically ventilated patients
admitted to an LTCH passed a 5-day
TCT following admission.410 That
nearly one third of newly admitted
LTCH patients were able to be
completely weaned within five days
underscores the need to assess patients’
ability to breathe without assistance
soon after admission to an LTCH, and
also indicates that this quality measure
404 MacIntyre, N.R. (2013). ‘‘The ventilator
discontinuation process: an expanding evidence
base.’’ Respir Care 58(6): 1074–1086.
405 Kollef, M.H., et al. (1997). ‘‘A randomized,
controlled trial of protocol-directed versus
physician-directed weaning from mechanical
ventilation.’’ Crit Care Med 25(4): 567–574.
406 Boles, J.M., et al. (2007). ‘‘Weaning from
mechanical ventilation.’’ Eur Respir J 29(5): 1033–
1056.
407 Cook, D., et al. (2000). Criteria for Weaning
from Mechanical Ventilation. Evidence Reports/
Technology Assessments, Agency for Healthcare
Research and Quality.
408 Ely, E.W., et al. (1996). ‘‘Effect on the duration
of mechanical ventilation of identifying patients
capable of breathing spontaneously.’’ N Engl J Med
335(25): 1864–1869.
409 Blackwood, B., et al. (2014). ‘‘Protocolized
versus non-protocolized weaning for reducing the
duration of mechanical ventilation in critically ill
adult patients.’’ Cochrane Database Syst Rev 11:
Cd006904.
410 Jubran, A., et al. (2013). ‘‘Effect of pressure
support vs unassisted breathing through a
tracheostomy collar on weaning duration in
patients requiring prolonged mechanical
ventilation: a randomized trial.’’ JAMA 309(7): 671–
677.
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has potential to positively impact the
health and quality of care received by a
considerable proportion of the LTCH
patient population.
Because invasive mechanical
ventilation should be discontinued as
soon as patients are capable of breathing
independently,411 412 unnecessarily
prolonged mechanical ventilation can
be an indicator of poor care quality or
of persistent illness.413 This quality
measure is designed to encourage
adherence to evidence-based and
consensus-based guidelines through
implementation of timely assessment of
patient readiness to wean and trials of
unassisted breathing. To increase
timeliness of weaning and reduce
patient risk of complications, it is
important to assess a patient’s need for
continued mechanical ventilation at the
time of admission. Measuring and
comparing assessment of readiness to
wean and compliance with SBT by Day
2 is expected to help differentiate
among facilities with varying
performance in this important domain.
The anticipated improvement in quality
is an improvement in timeliness of
weaning and ventilator liberation for
patients admitted to LTCHs on invasive
mechanical ventilation. In addition,
facilities can use results of this measure
to improve timely compliance with
evidence-based weaning guidelines and
develop ventilator weaning quality
improvement programs.
A TEP assembled by our measure
development contractor convened nine
meetings (two in-person meetings and
seven webinars) between April 2014
and August 2016 in order to refine the
quality measure’s technical
specifications, including the measure
target population, inclusion and
exclusion criteria, and key definitions
(for example, ‘‘non-weaning’’). The TEP
also offered feedback on the individual
LTCH CARE Data Set ventilator weaning
items and supported the feasibility of
implementing this measure in the LTCH
setting. The measure developer
recruited two former patients
successfully weaned from mechanical
ventilation as well as the primary
caregiver of one of the patients to solicit
their views on the measures. The 2014–
2016 Development of Long-Term Care
411 Blackwood, B., et al. (2011). ‘‘Use of weaning
protocols for reducing duration of mechanical
ventilation in critically ill adult patients: Cochrane
systematic review and meta-analysis.’’ BMJ 342:
c7237.
412 Epstein, S.K. (2009). ‘‘Weaning from
ventilatory support.’’ Current opinion in critical
care, 15(1), 36–43. doi: 10.1097/
MCC.0b013e3283220e07.
413 MacIntyre, N.R. (2013). ‘‘The ventilator
discontinuation process: an expanding evidence
base.’’ Respir Care 58(6): 1074–1086.
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Hospital (LTCH) Ventilator Weaning
Quality Measures Technical Expert
Panel Summary Report is available on
the CMS Web site at: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
LTCH-Quality-Reporting-MeasuresInformation.html.
We also solicited stakeholder
feedback on the development of this
measure through a public comment
period held from May 19, 2016, through
June 9, 2016. Several stakeholders and
organizations supported this measure
for implementation, including hospitals
and professional organizations. The
public comment summary report for the
proposed measure is available on the
CMS Web site at: https://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/LTCH-QualityReporting/LTCH-Quality-ReportingMeasures-Information.html.
Our measure development contractor
conducted a pilot test on the data
elements used to calculate this quality
measure. The pilot test was conducted
in 10 LTCHs among approximately 150
LTCH patients and used a mixed
methods research design to collect data.
Quantitative data on the ventilator
weaning items was collected from May
27, 2016 through September 10, 2016,
and qualitative data on these items was
collected from June 6, 2016 through
October 4, 2016. The LTCHs who
participated in the pilot test were
selected to represent variation across
several key facility-level characteristics:
geographic location, size, and profit
status.
The qualitative data from the pilot test
of the ventilator weaning process
measure supported the importance of
the measure. Results from qualitative
and quantitative analysis further
support the feasibility of data collection
for this quality measure. Data collection
for this quality measure was not seen as
burdensome by pilot sites. The pilot test
summary report for this measure is
available at: https://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/LTCH-QualityReporting/LTCH-Quality-ReportingMeasures-Information.html.
The NQF-convened MAP PAC/LTC
Workgroup met on December 12, 2014
and again on December 14 and 15, 2015.
During these meetings, the MAP
encouraged continued development of
this proposed measure, acknowledging
that there is evidence for interventions
that improve ventilator care,414 that
414 ‘‘Spreadsheet of MAP 2015 Final
Recommendations (XLSX).’’ Measure Applications
Partnership Post Acute Care/Long-Term Care
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38441
variation in quality of care exists among
LTCHs,415 and that ventilator care is an
important safety priority for LTCHs.416
Since the MAP’s review and
recommendation of continued
development in 2015, we have
continued to refine this proposed
measure in accordance with the MAP’s
recommendations. Results of continued
development activities, including
stakeholder feedback from the 2016
public comment period and 2016 pilot
test findings, were presented to the
MAP during the MAP feedback loop
meeting in October 2016. The proposed
measure is consistent with the
information submitted to the MAP, and
the original MAP submission and our
continued refinements support its
scientific acceptability for use in quality
reporting programs. As discussed with
the MAP, we fully anticipate that
additional analyses will continue once
data collection for the measure begins.
More information about the MAP’s
recommendations for this proposed
measure is available at: https://
www.qualityforum.org/Publications/
2016/02/MAP_2016_Considerations_
for_Implementing_Measures_in_
Federal_Programs_-_PAC-LTC.aspx.
We reviewed the NQF’s consensus
endorsed measures and were unable to
identify any NQF-endorsed ventilator
weaning quality measures focused on
assessment of readiness to wean for
patients admitted on invasive
mechanical ventilation in the LTCH
setting. We are unaware of any other
quality measures for weaning from
invasive mechanical ventilation that
have been endorsed or adopted by
another consensus organization for the
LTCH setting. Therefore, based on the
evidence discussed above, we proposed
to adopt the quality measure entitled,
Compliance with SBT by Day 2 of the
LTCH Stay, for the LTCH QRP
beginning with the FY 2020 LTCH QRP.
We plan to submit the quality measure
to the NQF for consideration for
endorsement.
We proposed that data for this
ventilator weaning quality measure be
collected through the LTCH CARE Data
Workgroup. Available at: https://
www.qualityforum.org/WorkArea/
linkit.aspx?LinkIdentifier=id&ItemID=78711.
415 ‘‘Spreadsheet of MAP 2016 Final
Recommendations (XLSX).’’ Measure Applications
Partnership Post Acute Care/Long-Term Care
Workgroup. Available at: https://
www.qualityforum.org/WorkArea/
linkit.aspx?LinkIdentifier=id&ItemID=81593.
416 MAP 2015 Considerations for Implementing
Measures in Federal Programs: Draft for Public
Comment. Measure Applications Partnership Post
Acute Care/Long-Term Care Workgroup. Available
at: https://www.qualityforum.org/
ProjectMaterials.aspx?projectID=75370.
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Set, with submission through the QIES
ASAP System. For more information on
LTCH QRP reporting using the QIES
ASAP System, we refer readers to our
Web site at: https://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/LTCH-QualityReporting/LTCH-TechnicalInformation.html. We stated that we
intended to revise the LTCH CARE Data
Set to include new items that assess
processes for weaning from invasive
mechanical ventilation, should this
proposed measure be adopted.
This measure is calculated and
reported for two components. The
proposed measure denominator for
Component 1, Percentage of Patients
Assessed for Readiness for SBT by Day
2 of LTCH Stay, is the total number of
patients admitted during the reporting
period who were on invasive
mechanical ventilation upon admission
to an LTCH and expected or anticipated
by the provider to undergo weaning
attempts at admission. The proposed
measure numerator for Component 1 is
the number of patients admitted on
invasive mechanical ventilation during
the reporting period who were assessed
for readiness for SBT (including TCT or
CPAP breathing trial) by Day 2 of the
LTCH stay.
The proposed measure denominator
for Component 2, Percentage of Patients
Ready for SBT Who Received SBT by
Day 2 of LTCH Stay, is the subset of
patients in the denominator of the
Component 1, who were assessed and
deemed medically ready for SBT by Day
2 of the LTCH stay. The proposed
measure numerator for Component 2,
Percentage of Patients Ready for SBT
Who Received SBT by Day 2 of LTCH
Stay, is the number of patients admitted
on invasive mechanical ventilation
during the reporting period who were
ready for SBT and who received an SBT
(including TCT or CPAP breathing trial)
by Day 2 of the LTCH stay.
For technical information about this
proposed measure, including
information about the measure
calculation and proposed measure
denominator exclusions, we refer
readers to the document titled, Final
Specifications for LTCH QRP Quality
Measures and Standardized Patient
Assessment Data Elements, available at:
https://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
LTCH-Quality-Reporting-MeasuresInformation.html.
We invited public comments on our
proposal to adopt the quality measure,
Compliance with SBT by Day 2 of the
LTCH Stay, beginning with the FY 2020
LTCH QRP.
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Comment: Some commenters
expressed support for the adoption of
Compliance with SBT by Day 2 of the
LTCH Stay for the LTCH QRP.
Commenters noted that reducing risks of
complications associated with
prolonged mechanical ventilation, such
as VAEs, and improving ventilator
weaning rates are important areas for
quality measurement in LTCHs. Another
commenter expressed support that this
measure will provide data necessary to
reduce the risk of complications from
unnecessarily prolonged mechanical
ventilation and reduce variations in
practice that do not benefit patients.
Response: We appreciate the
commenters’ support of the Compliance
with SBT by Day 2 of the LTCH Stay
measure and support for this topic for
the LTCH QRP. We agree that the
objective of this measure aligns with
guidelines on reducing time spent on
mechanical ventilation to decrease risk
of complications and to improve
ventilator weaning rates.
Comment: Some commenters
recommended that CMS further test the
Compliance with SBT by Day 2 of the
LTCH Stay measure prior to finalization
and implementation for the LTCH QRP.
Response: Determination of measure
readiness for implementation and data
collection was informed by feedback
and results from the pilot test and TEP
discussions. Pilot sites were able to test
the items related to the measure and
provided feedback via a series of checkins that further informed measure
development. The TEPs further
supported measure development by
providing critical insight and feedback
from clinicians, researchers, and
experienced LTCH administrators. In
addition, patient advocates provided
insight into ventilated patient
experiences in the LTCH and the utility
of the ventilator weaning measures.
Additional testing will be conducted as
data collection ensues, and we will
continue to test these measures on a
quarterly basis if feasible and conduct
maintenance and evaluation of the
measure for reliability and validity.
Comment: One commenter
appreciated that the measure has
significantly evolved from conception
and recommended that we submit the
measure to NQF for consideration of
endorsement.
Response: We appreciate the
commenter for their comment about the
extensive work that went into the
measure development process. With
regard to NQF endorsement, as noted in
the proposed rule, we intend to submit
the measure to NQF for consideration of
endorsement. We further note that we
consider and propose appropriate
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measures that have been endorsed by
the NQF whenever possible. However,
section 1886(m)(5)(D)(ii) of the Act
allows the Secretary to specify a
measure for the LTCH QRP that that is
not NQF endorsed as long as due
consideration is given to measures that
have been endorsed or adopted by a
consensus organization. In the case of
the proposed measure, we have not been
able to identify other measures that are
endorsed or adopted by a consensus
organization. While we appreciate the
importance of consensus endorsement
and intend to seek such endorsement,
we believe the need to address the
measure gap in invasive mechanical
ventilation care in the LTCH QRP
outweighs the general rule of adopting
an NQF endorsed measure at this time.
Comment: With respect to the
addition of the two ventilator weaning
measures for FY 2020, one commenter
expressed concern that the expanded
patient assessment data reporting
requirements would impose a
significant burden on providers.
Response: We appreciate the
commenter’s concern about the burden
associated with the measure proposals;
however, we believe that these measures
are important to assess measure gaps for
LTCH patients. We intend to provide
guidance and training for providers to
address their concerns regarding the
expanded patient assessment data
reporting requirements.
Comment: A commenter expressed
concern that the small size of the pilot
test used to inform the development of
this measure may not be adequate to
conclude that the measure is reliable
and accurate.
Response: The focus of the pilot test
was to inform measure development as
well as to evaluate the feasibility of
patient-level data collection and
submission. To obtain a balanced
sample of participants, pilot sites were
chosen based on criteria including
LTCH size, geographic region, and
ownership type. Based on the size and
projected number of ventilated patients,
the number of sites recruited was
deemed to provide a sufficient number
of patients for analysis of the feasibility
of data collection and validity of the
mechanical ventilation quality
measures. Pilot sites received in-depth
trainings and provided feedback via a
series of check-ins that further informed
measure development during the course
of the pilot study. We concluded that
the pilot test was adequate to proceed
with proposal of the measure for
adoption under the LTCH QRP. We will
continue to test these measures on a
quarterly basis and conduct
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maintenance and evaluation of the
measure for reliability and validity.
Comment: Some commenters were
concerned with the 2-day time frame to
assess an admitted patient for readiness
to perform SBT because it would be
burdensome to providers especially for
patients admitted during evenings or
weekends. Some commenters
recommended extending the time frame
to complete the assessment to 5 days as
used in a recent study led by Jubran et
al., 2013.417
Response: We wish to clarify that the
5-day time frame used by a recent study
led by Jubran et al., 2013 to assess LTCH
patients on invasive mechanical
ventilation is not an established
protocol. A task force in 2005 on the
subject of weaning from mechanical
ventilation, which included
international scientific experts and
advisors, recommended that liberation
be considered as soon as possible for
patients to reduce risk of complications
and mortality.418 Accordingly, TEP
members agreed that the 5-day time
frame was too long compared to best
practices and that assessment for
ventilator liberation should be prior to
5 days. After extensive discussion, TEP
members recommended the 2-day time
frame to set a high standard to
encourage high quality of care and
increase the chance that patients are
determined to be capable of liberation
from mechanical ventilation earlier.
Comment: One commenter was
concerned that the proposed measure
conflicts with the site neutral payment
policy.
Response: We appreciate the
opportunity to clarify that the proposed
measure is intended to ensure that
patients on invasive mechanical
ventilation support upon LTCH
admission are assessed for readiness for
SBT as recommended. In addition, if a
patient on invasive mechanical
ventilation is found ready for SBT, then
a provider should perform an SBT. This
measure does not conflict with the site
neutral payment policy because
providers are not assessed on the time
to liberation (completion of an SBT and
liberation from mechanical ventilation),
but assessed on initiating the process
(completing an assessment of the
patient) to determine whether the
417 Jubran, A., et al. (2013). ‘‘Effect of pressure
support vs unassisted breathing through a
tracheostomy collar on weaning duration in
patients requiring prolonged mechanical
ventilation: a randomized trial.’’ JAMA 309(7): 671–
677.
418 Boles, J.M., et al. (2007). ‘‘Weaning from
mechanical ventilation.’’ Eur Respir J 29(5): 1033–
1056.
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patient is medically ready to be
liberated from mechanical ventilation.
Comment: One commenter expressed
concern about whether the proposed
measure is a safe and feasible practice
for patients. Another commenter noted
that the short time frame may have
unintended negative consequences for
patient care and forces clinical
judgment on weaning status.
Response: We appreciate the
commenters’ concerns pertaining to
patient safety, and would like to
emphasize that patient safety is a top
priority in all measurement
development efforts. We encourage
providers to use best patient care
practices when assessing patients for
readiness for liberation. In addition, we
note that while the measure assesses
providers on completing an assessment
of the patient to determine whether the
patient is medically ready to be
liberated from mechanical ventilation, it
does not ‘‘force’’ providers to make any
particular assessment, and we
encourage providers to classify patients
as ‘‘weaning’’ or ‘‘non-weaning’’ as
clinically appropriate. Of note,
evidence-based guidelines recommend
that liberation be considered as soon as
possible for patients to reduce risk of
complications and mortality. If a
clinician deemed a patient medically
unready to perform SBT, then the
decision should be documented and
providers should code this item
appropriately.
Comment: One commenter was
concerned that the multi-component
structure of the measure may be
confusing to providers and that
definitions embedded in the calculation
of the two components (specifically,
‘‘documentation,’’ ‘‘weaning,’’ and
‘‘non-weaning’’) are too subjective.
Response: We would like to clarify
that ‘‘documentation’’ that the patient
was not deemed medically ready for
SBT can be any medical record that a
provider uses to document patient
information. In regard to weaning status,
we encourage providers to classify
patients as ‘‘weaning’’ or ‘‘nonweaning’’ as clinically appropriate. We
wish to further clarify that patients with
specific conditions such as amyotrophic
lateral sclerosis that may negate any
expectation or anticipation of weaning
attempts on admission may be
considered ‘‘non-weaning’’ by the
provider. We intend to provide training
and guidance prior to the
implementation of the quality measure
to ensure that providers are prepared to
properly collect the data and fully
understand the measure specifications.
After consideration of the public
comments we received, we are
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38443
finalizing our proposal to adopt the
measure, Compliance with SBT by Day
2 of the LTCH Stay, beginning with the
FY 2020 LTCH QRP with an
implementation date of July 1, 2018, as
discussed in section IX.C.11. of the
preamble of this final rule.
c. Mechanical Ventilation Outcome
Quality Measure: Ventilator Liberation
Rate
Invasive mechanical ventilation care
was identified as an important gap in
the LTCH QRP measure set,419 and
aligns with the National Quality
Strategy priority and the CMS Quality
Strategy goal of ‘‘promoting the most
effective prevention and treatment
practices’’ by reducing the risk of
complications from unnecessarily
prolonged mechanical ventilation. In
the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 20095 through 20097), we
proposed to adopt the quality measure,
Ventilator Liberation Rate, for the LTCH
QRP beginning with the FY 2020 LTCH
QRP. The data applicable to this
measure that must be reported by
LTCHs for admissions as well as
discharges occurring on or after April 1,
2018 is described in section IX.C.11. of
the preamble of this final rule.
The Ventilator Liberation Rate
measure is an outcome quality measure.
This quality measure is a facility-level
measure that reports the percentage of
LTCH patients admitted on invasive
mechanical ventilation, for whom
weaning attempts were expected or
anticipated, and are fully weaned by the
end of their LTCH stay. Patients who are
considered fully weaned at discharge
are those who did not require any
invasive mechanical ventilation support
for at least 2 consecutive calendar days
immediately prior to discharge. While
the first ventilator weaning measure we
proposed captures the weaning process,
this measure captures the key outcome
of successful liberation from invasive
mechanical ventilation.
We refer readers to section IX.C.7.b. of
the preamble of this final rule for
information regarding the literature
review in support of proposing the
mechanical ventilation process quality
measure, Compliance with SBT by Day
2 of the LTCH Stay.
Discontinuation of invasive
mechanical ventilation, known as
weaning or liberation, is feasible for
many ventilated patients, and is
associated with improved health
outcomes. In LTCHs, higher weaning
rates have been associated with lower
419 Technical Expert Panel Report: Quality
Measures for Long-Term Care Hospitals. Thaker, S.,
Gage, B., Bernard, S., and Nguyen, K. March 2011.
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post-discharge mortality, even among
the elderly,420 421 422 423 424 and fewer
days of mechanical ventilation may lead
to decreased risk of ventilator-associated
complications/events, enhanced
rehabilitation opportunities, and a
shorter length of stay.425 Based on the
evidence, increasing weaning rates is
expected to reduce the risk of harm
associated with invasive mechanical
ventilation, thus contributing to more
favorable clinical outcomes for
patients 426 427 and decreased costs.
Numerous studies from 1991 through
2015 have reported a range of ventilator
liberation rates among LTCHs. A review
of nine single-center studies conducted
between 1991 and 2001 reported that,
among more than 3,000 patients with
PMV >21 days, facility-level liberation
rates ranged from 34 percent to 60
percent, with an overall weaning rate of
52 percent.428 A recent systematic
review identified nine studies (4,769
patients) reporting the proportion of
patients successfully liberated from
ventilation in LTCHs, and found a
pooled weaning rate of 47 percent (95
percent CI 42–51); rates reported by
individual studies conducted in the
United States varied from 13 percent to
420 Blackwood, B., et al. (2014). ‘‘Protocolized
versus non-protocolized weaning for reducing the
duration of mechanical ventilation in critically ill
adult patients.’’ Cochrane Database Syst Rev 11:
Cd006904.
421 Frengley, J., et al. (2014). ‘‘Prolonged
mechanical ventilation in 540 seriously ill older
adults: effects of increasing age on clinical
outcomes and survival.’’ J Am Geriatr Soc 62(1): 1–
9.
422 Rose, L. and I.M. Fraser (2012). ‘‘Patient
characteristics and outcomes of a provincial
prolonged-ventilation weaning centre: a
retrospective cohort study.’’ Can Respir J 19(3):
216–220.
423 Scheinhorn, D.J., et al. (2007). ‘‘Post-ICU
mechanical ventilation at 23 long-term care
hospitals: a multicenter outcomes study.’’ Chest
131(1): 85–93.
424 Stearn-Hassenpflug, M., et al. (2013). ‘‘PostICU Mechanical Ventilation: Trends in Mortality
and 12-month Post-discharge Survival.’’ Critical
Care Medicine 41(12): A166.
425 Hassenpflug, M.S., et al. (2015). Post-ICU
Mechanical Ventilation: Outcomes of the Revised
Therapist-Implemented Patient-Specific Weaning
Protocol. [abstract] B44. Invasive And Non-Invasive
Mechanical Ventilation, American Thoracic
Society: A3166–A3166.
426 Blackwood, B., et al. (2014). ‘‘Protocolized
versus non-protocolized weaning for reducing the
duration of mechanical ventilation in critically ill
adult patients.’’ Cochrane Database Syst Rev 11:
Cd006904.
427 Jubran, A., et al. (2013). ‘‘Effect of pressure
support vs unassisted breathing through a
tracheostomy collar on weaning duration in
patients requiring prolonged mechanical
ventilation: a randomized trial.’’ JAMA, 309(7):
671–677.
428 Scheinhorn, D.J., et al. (2001). ‘‘Post-ICU
weaning from mechanical ventilation: the role of
long-term facilities.’’ Chest 120(6 Suppl): 482S–
484S.
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56 percent.429 Lower liberation rates
may indicate less-than-optimal
performance.
Ventilator liberation rate is an
actionable health care outcome.
Multiple interventions have been shown
to increase ventilator liberation rates,
including selection and implementation
of weaning protocols, ventilator modes,
and type of pressure support strategies.
Multiple studies in LTCHs 430 431 432 and
ICUs 433 434 provide evidence to support
the relationship between weaning
processes and the successful weaning of
mechanically ventilated LTCH patients.
The effectiveness of these interventions
suggests that improvement in liberation
rates among LTCH patients is possible
through modifying provider-led
processes and interventions.
Expectations of successful ventilator
liberation are high for many LTCH
patients.435 436 437 Unnecessarily
prolonged mechanical ventilation
increases the risk of negative patient
outcomes and can be an indicator of
poor quality care or of persistent
illness.438 Based on the evidence,
429 Damuth, E., et al. (2015). ‘‘Long-term survival
of critically ill patients treated with prolonged
mechanical ventilation: a systematic review and
meta-analysis.’’ Lancet Respir Med.
430 Jubran, A., et al. (2013). ‘‘Effect of pressure
support vs unassisted breathing through a
tracheostomy collar on weaning duration in
patients requiring prolonged mechanical
ventilation: a randomized trial.’’ JAMA 309(7): 671–
677.
431 Vitacca, M., et al. (2001). ‘‘Comparison of two
methods for weaning patients with chronic
obstructive pulmonary disease requiring
mechanical ventilation for more than 15 days.’’ Am
J Respir Crit Care Med 164(2): 225–230.
432 Hassenpflug, M.S., et al. (2015). Post-ICU
Mechanical Ventilation: Outcomes of the Revised
Therapist-Implemented Patient-Specific (TIPS?)
Weaning Protocol. B44. Invasive And Non-Invasive
Mechanical Ventilation, American Thoracic
Society: A3166–A3166.
433 Ely, E.W., et al. (1996). ‘‘Effect on the duration
of mechanical ventilation of identifying patients
capable of breathing spontaneously.’’ N Engl J Med
335(25): 1864–1869.
434 Burns, K.E., et al. (2014). ‘‘Noninvasive
ventilation as a weaning strategy for mechanical
ventilation in adults with respiratory failure: a
Cochrane systematic review.’’ CMAJ 186(3): E112–
122.
435 Rose, L. and I.M. Fraser (2012). ‘‘Patient
characteristics and outcomes of a provincial
prolonged-ventilation weaning centre: a
retrospective cohort study.’’ Can Respir J 19(3):
216–220.
436 Hassenpflug, M.S., et al. (2011). Post-ICU
Mechanical Ventilation: Extended Care Facility
Residents Transferred From Intensive Care To LongTerm Acute Care. American Thoracic Society 2011
International Conference. Denver, Colorado.
437 Hassenpflug, M.S., et al. (2015). Post-ICU
Mechanical Ventilation: Outcomes of the Revised
Therapist-Implemented Patient-Specific (TIPS?)
Weaning Protocol. B44. Invasive And Non-Invasive
Mechanical Ventilation, American Thoracic
Society: A3166–A3166.
438 MacIntyre, N.R. (2013). ‘‘The ventilator
discontinuation process: an expanding evidence
base.’’ Respir Care 58(6): 1074–1086.
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improving weaning processes and
increasing weaning rates are expected to
mitigate the risk of harm associated with
invasive mechanical ventilation, thus
contributing to more favorable clinical
outcomes for patients 439 440 and
decreased costs.441 This quality
measure, Ventilator Liberation Rate, will
assess the proportion of patients
discharged alive from an LTCH who are
fully weaned, thereby promoting
weaning efforts and encouraging quality
management of LTCH patients on
invasive mechanical ventilation. Kahn
et al. (2013) noted that inclusion of a
liberation outcome measure is key to
providing a truly patient-centered
measure related to invasive mechanical
ventilation weaning among LTCH
patients.442
A TEP assembled by our measure
development contractor convened nine
meetings (two in-person meetings and
seven webinars) between April 2014
and August 2016. TEP members
provided input to guide the
development of the quality measures,
including feedback on the individual
LTCH CARE Data Set ventilator weaning
items, the target population, inclusion
and exclusion criteria, and patient
demographic and clinical factors that
could affect ventilator weaning
outcomes (risk adjustors). TEP members
also supported the feasibility of
implementing this measure in the LTCH
setting. The measure developer
recruited two former patients
successfully weaned from mechanical
ventilation as well as the primary
caregiver of one of the patients to solicit
their views on the measures. The 2014–
2016 Development of Long-Term Care
Hospital (LTCH) Ventilator Weaning
Quality Measures Technical Expert
Panel Summary Report is available on
the CMS Web site at: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
LTCH-Quality-Reporting-MeasuresInformation.html.
439 Blackwood, B., et al. (2014). ‘‘Protocolized
versus non-protocolized weaning for reducing the
duration of mechanical ventilation in critically ill
adult patients.’’ Cochrane Database Syst Rev 11:
Cd006904.
440 Jubran, A., et al. (2013). ‘‘Effect of pressure
support vs unassisted breathing through a
tracheostomy collar on weaning duration in
patients requiring prolonged mechanical
ventilation: a randomized trial.’’ JAMA 309(7): 671–
677.
441 Dasta, J.F., et al. (2005). ‘‘Daily cost of an
intensive care unit day: the contribution of
mechanical ventilation.’’ Crit Care Med 33(6): 1266–
1271.
442 Kahn, J.M., & Carson, S.S. (2013). Generating
evidence on best practice in long-term acute care
hospitals. JAMA, 309(7), 719–720.
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We also solicited stakeholder
feedback on the development of this
measure through a public comment
period held from May 19, 2016, through
June 9, 2016. Several stakeholders and
organizations supported this measure
for implementation, including hospitals
and professional organizations. The
public comment summary report for the
proposed measure is available on the
CMS Web site at: https://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/LTCH-QualityReporting/LTCH-Quality-ReportingMeasures-Information.html.
Our measure development contractor
conducted a pilot test on the proposed
data elements used to calculate this
quality measure. The pilot test was
conducted in ten LTCHs which
included approximately 150 LTCH
patients and used a mixed methods
research design to collect data.
Quantitative data on the ventilator
weaning items was collected from May
27, 2016 through September 10, 2016,
and qualitative data on these items was
collected from June 6, 2016 through
October 4, 2016. The LTCHs who
participated in the pilot test were
selected to represent variation across
several key facility-level characteristics:
Geographic location, size, and profit
status.
The qualitative data from the pilot test
of the ventilator liberation quality
measure supported the importance of
the measure; results from qualitative
and quantitative analysis also supported
the feasibility of data collection. Data
collection for this quality measure was
not seen as burdensome by pilot sites.
The pilot test summary report for this
measure is available at: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
LTCH-Quality-Reporting-MeasuresInformation.html.
The NQF-convened MAP PAC/LTC
Workgroup met on December 12, 2014,
and on December 14 and 15, 2015.
During these meetings, the MAP
provided input on the importance and
specifications of this measure. The MAP
encouraged continued development of
the measure, stating that this measure
has high value potential for the LTCH
QRP443 because successful weaning is
important for improving quality of life
443 ‘‘Spreadsheet of MAP 2016 Final
Recommendations (XLSX).’’ Measure Applications
Partnership Post Acute Care/Long-Term Care
Workgroup. Available at: https://
www.qualityforum.org/WorkArea/
linkit.aspx?LinkIdentifier=id&ItemID=81593.
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and decreasing morbidity, mortality,
and resource use among patients.444 445
Since the MAP’s review and
recommendation of continued
development in 2015, we have
continued to refine this proposed
measure in accordance with the MAP’s
recommendations. Results of continued
development activities, including
stakeholder feedback from the 2016
public comment period and 2016 pilot
test findings, were presented to the
MAP during the MAP feedback loop
meeting in October 2016. The proposed
measure is consistent with the
information submitted to the MAP, and
the original MAP submission and our
continued refinements support its
scientific acceptability for use in quality
reporting programs. As discussed with
the MAP, we fully anticipate that
additional analyses will continue once
data collection for the measure begins.
More information about the MAP’s
recommendations for this measure is
available at: https://
www.qualityforum.org/Publications/
2016/02/MAP_2016_Considerations_for
_Implementing_Measures_in_Federal_
Programs_-_PAC-LTC.aspx.
We reviewed the NQF’s consensus
endorsed measures and were unable to
identify any NQF-endorsed ventilator
weaning quality measures focused on
the liberation status at discharge for
patients admitted on invasive
mechanical ventilation in the LTCH
setting. We are unaware of any other
quality measures for liberation from
invasive mechanical ventilation that
have been endorsed or adopted by
another consensus organization for the
LTCH setting. Therefore, based on the
evidence discussed above, we proposed
to adopt the quality measure entitled,
Ventilator Liberation Rate, for the LTCH
QRP beginning with the FY 2020 LTCH
QRP. We plan to submit the quality
measure to the NQF for consideration
for endorsement.
We proposed that data for this quality
measure be collected through the LTCH
CARE Data Set, with the submission
through the QIES ASAP System. For
more information on LTCH QRP
reporting using the QIES ASAP system,
we refer readers to our Web site at:
https://www.cms.gov/Medicare/Quality444 MAP 2015 Considerations for Implementing
Measures in Federal Programs: Draft for Public
Comment. Measure Applications Partnership Post
Acute Care/Long-Term Care Workgroup. Available
at: https://www.qualityforum.org/
ProjectMaterials.aspx?projectID=75370.
445 ‘‘Spreadsheet of MAP 2016 Final
Recommendations (XLSX).’’ Measure Applications
Partnership Post Acute Care/Long-Term Care
Workgroup. Available at: https://
www.qualityforum.org/WorkArea/
linkit.aspx?LinkIdentifier=id&ItemID=81593.
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Initiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
LTCH-Technical-Information.html. We
stated that we intended to revise the
LTCH CARE Data Set to include new
items that assess invasive mechanical
ventilation liberation at discharge,
should this proposed measure be
adopted.
This measure reports facility-level
Ventilator Liberation Rate for patients
admitted to an LTCH on invasive
mechanical ventilation, and for whom
weaning attempts were expected or
anticipated as reported on the
Admission Assessment. The Ventilator
Liberation Rate is defined as the
percentage of patients on invasive
mechanical ventilation upon admission
who are alive and fully liberated at
discharge. The proposed measure
denominator is the number of patients
requiring invasive mechanical
ventilation support upon admission to
an LTCH, except those who meet
exclusion criteria. The proposed
measure numerator is the number of
patients who are discharged alive and
fully liberated. This measure is riskadjusted for variables such as age,
neurological injury or disease, dialysis,
and other comorbidities and treatments.
If a patient has more than one LTCH
stay during the reporting period, then
each LTCH stay will be included in the
measure calculation and reporting. For
technical information about this
measure, including information about
the measure calculation, risk
adjustment, and proposed measure
denominator exclusions, we refer
readers to the document titled, Final
Specifications for LTCH QRP Quality
Measures and Standardized Patient
Assessment Data Elements, available at:
https://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
LTCH-Quality-Reporting-MeasuresInformation.html.
We invited public comments on our
proposal to adopt the quality measure,
Ventilation Liberation Rate, beginning
with the FY 2020 LTCH QRP.
Comment: Some commenters
expressed support for the adoption of
Ventilator Liberation Rate into the
LTCH QRP.
Response: We appreciate commenters’
support for the adoption of Ventilator
Liberation Rate.
Comment: Some commenters
recommended that CMS further test the
Ventilator Liberation Rate measure prior
to finalization and implementation for
the LTCH QRP.
Response: Determination of measure
readiness for implementation and data
collection was informed by feedback
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and results from the pilot test and TEP
discussions. Pilot sites were able to test
the items related to the measure and
provided feedback via a series of checkins that further informed measure
development. The TEPs further
supported measure development by
providing critical insight and feedback
from clinicians, researchers, and
experienced LTCH administrators. In
addition, patient advocates provided
insight into ventilated patient
experiences in the LTCH and the utility
of the ventilator weaning measures.
Additional testing will be conducted as
data collection ensues and we will
continue to test these measures on a
quarterly basis if feasible and conduct
maintenance and evaluation of the
measure for reliability and validity.
Comment: One commenter
appreciated that the measure has
significantly evolved from conception.
This commenter recommended that we
submit the measure to NQF for
consideration of endorsement.
Response: We appreciate the
commenter for their comment about the
extensive work that went into the
measure development process. With
regard to NQF endorsement, as noted in
the proposed rule, we intend to submit
the measure to NQF for consideration of
endorsement. We further note that we
consider and propose appropriate
measures that have been endorsed by
the NQF whenever possible. However,
section 1886(m)(5)(D)(ii) of the Act
allows the Secretary to specify a
measure for the LTCH QRP that that is
not NQF endorsed as long as due
consideration is given to measures that
have been endorsed or adopted by a
consensus organization. In the case of
the proposed measure, we have not been
able to identify other measures that are
endorsed or adopted by a consensus
organization. While we appreciate the
importance of consensus endorsement
and intend to seek such endorsement,
we believe the need to address the
measure gap in invasive mechanical
ventilation care in the LTCH QRP
outweighs the general rule of adopting
an NQF endorsed measure at this time.
Comment: With respect to the
addition of the two ventilator weaning
measures beginning with the FY 2020
LTCH QRP, one commenter expressed
concern that the expanded patient
assessment data reporting requirements
would impose a significant burden on
providers.
Response: We appreciate the
commenter’s concern about the burden
associated with the measure proposals;
however, we believe that these measures
are important to assess measure gaps for
LTCH patients. We intend to provide
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guidance and training for providers to
address their concerns regarding the
expanded patient assessment data
reporting requirements.
Comment: A commenter expressed
concern that the small size of the pilot
test used to inform the development of
this measure may not be adequate to
conclude that the measure is reliable
and accurate.
Response: The focus of the pilot test
was to inform measure development as
well as to evaluate the feasibility of
patient-level data collection and
submission. To obtain a balanced
sample of participants, pilot sites were
chosen based on criteria including
LTCH size, geographic region, and
ownership type. Based on the size and
projected number of ventilated patients,
the number of sites recruited was
deemed to provide a sufficient number
of patients for analysis of the feasibility
of data collection and validity of the
mechanical ventilation quality
measures. Pilot sites received in-depth
trainings and provided feedback via a
series of check-ins that further informed
measure development during the course
of the pilot study. We concluded that
the pilot test was adequate to proceed
with proposal of the measure for
adoption under the LTCH QRP. We will
continue to test these measures on a
quarterly basis and conduct
maintenance and evaluation of the
measure for reliability and validity.
Comment: With respect to data coding
restrictions for item O0200, Ventilator
Liberation Rate, one commenter
requested clarification on the
appropriate coding for the item for
patients admitted on mechanical
ventilation who were not expected to
wean but are liberated at discharge and
for patients ventilated during the LTCH
stay who were liberated at discharge.
Response: We would like to clarify
that all patients who were liberated
from mechanical ventilation should be
coded as indicated regardless of
admission status of the patient to ensure
accurate data. The measure calculations
for item O0200, Ventilator Liberation
Rate, exclude the two sets of patients
described by the commenter from the
denominator. Therefore, data coding
restrictions are not needed for item
O0200, Ventilator Liberation Rate.
Comment: A few commenters
supported that the measure was riskadjusted and noted the importance of
adequate risk adjustment to ensure that
providers who care for more complex
patients do not fare worse because of
insufficient risk adjustment. Some
commenters questioned whether the
current risk-adjustment model for the
measure was adequate. Specifically, one
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commenter suggested that cases with
progressive neuromuscular disease and
severe neuromuscular injury, disease or
dysfunction be excluded from the
measure numerator and denominator,
and another commenter recommended
to combine and risk-adjust these cases
together, as the conditions are captured
under one category in the LTCH CARE
Data Set. Another commenter
recommended that ventilated patients
undergoing dialysis also be considered
as a measure exclusion and that special
adjustments be made for larger
ventilator weaning programs where
most ventilated patients are accepted,
unlike LTCHs that only admit patients
identified for weaning.
Response: We appreciate the
importance of adequate risk adjustment
for this measure and appreciate the
commenters’ recommendations. The
TEP identified several risk factors that
affect ventilator liberation outcome, and
these factors were included in the riskadjustment model for initial measure
testing. In addition, pilot sites have
provided CMS feedback on these riskadjustment variables. We will continue
to test and refine the risk-adjustment
model by further evaluating conditions
such as progressive neuromuscular
disease, severe neuromuscular injury,
disease or dysfunction, and dialysis to
ensure sufficient risk adjustment. We
note that the LTCH CARE Data Set
V4.00 contains two separate items that
indicate either ‘‘Other Progressive
Neuromuscular Disease’’ and ‘‘Other
Severe Neurological Injury, Disease, or
Dysfunction.’’ We would like to clarify
that patients who were deemed nonweaning on admission are excluded
from the denominator for Ventilator
Liberation Rate. As a result of this
exclusion, performance on the measure
would not be impacted by the
proportion of patients admitted that are
undergoing mechanical ventilation and
identified as weaning.
After consideration of the public
comments we received, we are
finalizing our proposal to adopt the
measure, Ventilator Liberation Rate,
beginning with the FY 2020 LTCH QRP
with an implementation date of July 1,
2018, as discussed in section IX.C.11. of
the preamble of this final rule.
8. Removal of the All-Cause Unplanned
Readmission Measure for 30 Days PostDischarge From LTCHs From the LTCH
QRP
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20097 through
20098), we proposed to remove the AllCause Unplanned Readmission Measure
for 30 Days Post-Discharge from LTCHs
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(NQF #2512) beginning with the FY
2019 LTCH QRP.
In the FY 2016 IPPS/LTCH PPS final
rule (80 FR 49730 through 49731), we
adopted the All-Cause Unplanned
Readmission Measure for 30 Days PostDischarge from LTCHs (NQF #2512) for
the LTCH QRP. This measure assesses
all-cause unplanned hospital
readmissions from LTCHs. In the FY
2017 IPPS/LTCH PPS final rule (81 FR
57215 through 57219), we adopted the
Potentially Preventable 30-Day PostDischarge Readmission Measure for
LTCH QRP to fulfill IMPACT Act
requirements. In response to the FY
2017 IPPS/LTCH PPS proposed rule, we
received public comments expressing
concern over the multiplicity of
readmission measures and the overlap
between the All-Cause Readmission and
Potentially Preventable Readmission
(PPR) 30-Day Post-Discharge measures
(see 81 FR 57217 through 57218).
Commenters also stated that more than
one readmission measure would create
confusion and require additional effort
by providers to track and improve
performance.
We retained the All-Cause
Readmission measure because it would
allow us to monitor trends in both allcause and PPR rates. In particular, we
could compare facility performance on
the All-Cause Readmission and PPR 30Day Post-Discharge measures. However,
upon further consideration of the public
comments, we believe that removing the
All-Cause Readmission measure and
retaining the PPR 30-Day Post-Discharge
measure in the LTCH QRP would
prevent duplication, because potentially
preventable readmissions are a subset of
all-cause readmissions. Although there
is no data collection burden associated
with these claims-based measures, we
recognize that having two hospital
readmission measures in the LTCH QRP
may create confusion. We agree with
commenters that there is overlap
between the All-Cause Readmission
measure and the PPR 30-Day PostDischarge measure, which identifies a
subset of all-cause readmissions, and
believe the PPR measure will be more
actionable for quality improvement.
Accordingly, we proposed to remove
the All-Cause Unplanned Readmission
measure beginning with the FY 2019
LTCH QRP. We proposed that public
reporting of this measure would end by
October 2018 when public reporting of
the PPR 30-Day Post-Discharge measure
begins by October 2018. We refer
readers to section IX.C.17. of the
preamble of this final rule for more
information regarding our proposal to
publicly report the PPR 30-Day PostDischarge measure. We refer readers to
the PPR 30-Day Post-Discharge measure
specifications available at: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
Downloads/Measure-Specifications-forFY17–LTCH–QRP-Final-Rule.pdf.
We invited public comment on our
proposal to remove the All-Cause
Unplanned Readmission Measure for 30
Days Post-Discharge from LTCHs (NQF
#2512) from the LTCH QRP, beginning
with the FY 2019 LTCH QRP.
Comment: Commenters supported the
proposed removal of the All-Cause
Unplanned Readmission Measure for 30
Days Post-Discharge from LTCHs from
the LTCH QRP. The commenters stated
that the lack of patient level data makes
it difficult to track and improve
performance on this measure. Several
commenters supported the removal of
this measure because they consider it
confusing and duplicative of the PPR
30-Day Post-Discharge Measure for
LTCH QRP. Some commenters urged
CMS to evaluate PAC readmission
measures adopted for quality reporting
to ensure that they create consistent
incentives across the system. One
commenter requested additional detail
on the components of the all-cause
readmission measure that are not
represented in the PPR measure, as well
as details on the components of the PPR
measure.
Response: We appreciate the support
for the proposed removal of the All-
38447
Cause Unplanned Readmission Measure
for 30 Days Post-Discharge from LTCHs
from the LTCH QRP. We note the
commenters’ concerns regarding the
availability of patient level data for
tracking and improving performance,
and we are exploring the feasibility of
making additional data available to
LTCHs. We thank the commenters for
their concern over consistent incentives
and will continue to monitor PAC
readmission measures to ensure they
align incentives across the system.
We appreciate the request for
additional detail on the components of
the all-cause and PPR measures. We
wish to clarify that the PPR measure
captures readmissions for conditions
considered potentially preventable and
unplanned, whereas the all-cause
measure captured the broader set of all
unplanned readmissions. For additional
details on the components of the PPR
measure, we refer readers to the
measure specifications and Appendix 2
for the list of conditions used to define
PPRs, available at: https://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/LTCH-QualityReporting/Downloads/MeasureSpecifications-for-FY17–LTCH–QRPFinal-Rule.pdf.
After consideration of the public
comments we received, we are
finalizing our proposal to remove the
All-Cause Unplanned Readmission
Measure for 30 Days Post-Discharge
from LTCHs (NQF #2512) from the
LTCH QRP, beginning with the FY 2019
LTCH QRP.
9. LTCH QRP Quality Measures Under
Consideration for Future Years
a. LTCH QRP Quality Measures Under
Consideration for Future Years
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20098), we invited
public comment on the importance,
relevance, appropriateness, and
applicability of each of the quality
measures listed in the table below for
future years in the LTCH QRP.
LTCH QRP QUALITY MEASURES UNDER CONSIDERATION FOR FUTURE YEARS
NQS Priority: Patient- and Caregiver-Centered Care
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Measures ........................................
• Experience of Care.
• Application of Percent of Residents Who Self-Report Moderate to Severe Pain (Short Stay) (NQF
#0676).
• Advance Care Plan.
NQS Priority: Patient Safety
Measure ..........................................
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• Patients Who Received an Antipsychotic Medication.
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LTCH QRP QUALITY MEASURES UNDER CONSIDERATION FOR FUTURE YEARS—Continued
NQS Priority: Communication and Care Coordination
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Measure ..........................................
• Modification of the Discharge to Community-PAC LTCH QRP measure.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20098), we also
solicited public comments on the use of
survey-based experience of care
measures for the LTCH QRP. We are
currently developing an experience of
care survey for LTCHs and survey-based
measures will be developed from this
survey. These survey-based measures
may be considered for inclusion in the
LTCH QRP through future notice-andcomment rulemaking. This survey was
developed using a rigorous survey
development methodology that
included a public request for measures
titled Request for Information To Aid in
the Design and Development of a Survey
Regarding Patient and Family Member
Experiences With Care Received in
Long-Term Care Hospitals (80 FR 72722
through 72725); focus groups and
interviews with patients, family
members, and caregivers; input from a
TEP of LTCHs, researchers, and patient
advocates; and cognitive interviewing.
The survey has also been field tested.
The survey explores experience of care
across five main areas: (1) Beginning
stay at the hospital; (2) interactions with
staff; (3) experience during the hospital
stay; (4) preparing for leaving hospital;
and (5) overall hospital rating. We are
specifically interested in comments
regarding survey implementation and
logistics, use of the survey-based
measures in the LTCH QRP, and general
feedback.
Also, we are considering a measure
focused on pain that relies on the
collection of patient-reported pain data,
and another measure that documents
whether a patient has an Advance Care
Plan. Finally, we are considering a
measure related to patient safety,
specifically, Patients Who Received an
Antipsychotic Medication.
We invited public comment on the
possible inclusion of such measures in
future years of the LTCH QRP.
Comment: Several commenters
provided feedback on the use of an
experience of care survey in the LTCH
setting.
Response: We thank the commenters
who submitted comments about the
experience of care survey. We will take
those comments into consideration as
we finish developing the measure and
related survey-based measures.
Comment: A number of commenters
supported the inclusion of an Advance
Care Plan measure in the LTCH QRP.
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Several commenters expressed concern
regarding the ability of the LTCH
population to engage in advance care
planning given their severity of illness.
One commenter emphasized the
importance of ensuring access to
advance care plans from the short-term
acute care hospital. One commenter
recommended inclusion of a more
detailed measure that specifies the
contents of an advanced care plan.
Several commenters supported adoption
of the NQF-endorsed measure, Advance
Care Plan (NQF #0326). One commenter
supported a revision of the current
NQF-endorsed measure into two
separate measures to capture the
distinction between advance care plans
and surrogate decision makers. One
commenter also discussed the need to
define what is considered an advance
care plan, and the ability of the measure
to account for the patient’s willingness
to engage in such planning. The
commenter also emphasized the
important role a patient’s goals, values,
and preferences play in the care
planning process.
Response: We appreciate the
commenters’ thoughtful comments and
agree with the importance of advanced
care plans as they relate to the critically,
chronically ill and vulnerable patient
population in LTCHs. As with all
measures, we work to fulfill the aims of
the NQS. Improving care through the
provision of patient-centered care is one
of the NQS’s aims that we seek to fulfill.
We acknowledge the importance of
including patient preferences in
advance care planning. We will take
these comments into consideration as
we develop future measures pertaining
to advance care plans for the LTCH
QRP.
Comment: A commenter stated that,
regarding the Application of Percent of
Residents Who Self-Report Moderate to
Severe Pain (Short Stay) (NQF #0676)
measure for future consideration in the
LTCH QRP, the pain experience alone
should not be a quality measure and
suggested that CMS revisit how pain is
captured and monitored, as the presence
of pain, its frequency, and severity do
not provide enough information to help
an individual’s overall quality of life.
The commenter expressed support for
use of a pain measure that does not
encourage unnecessary opioid
prescribing, and recommended
modification of the existing measure to
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one that relates pain to important daily
functional tasks. The commenter
suggested that such a measure would
better capture the functional abilities of
patients, as pain levels do not frequently
change. Another commenter expressed
caution in expanding the existing
measure to the LTCH setting due to
concerns with reliability, based on their
experience, noting variable and
inconsistent findings related to how the
MDS is used to capture the data for this
measure.
Response: We appreciate the
comments pertaining to the Application
of Percent of Residents Who Self-Report
Moderate to Severe Pain (Short Stay)
(NQF #0676) measure under
consideration for future implementation
in the LTCH QRP. We note that
appropriately assessing pain as an
outcome is important, acknowledge the
importance of avoiding unintended
consequences that may arise from such
assessments, and will take into
consideration the commenters’
recommendations.
Comment: A commenter supported
appropriate use of antipsychotic
medications. Specifically, the
commenter noted that measures
implemented for this purpose should
account for informed consent,
preference, and potential improvements
in the quality of life in order to
accurately measure appropriate use of
such medications. Another commenter
suggested further development of the
measure, as there is no existing baseline
measurement to provide it with
meaning as a measure of quality of care.
A commenter noted the distinction
between appropriate and inappropriate
use of antipsychotic medications, and
the lack of sensitivity of the proposed
measure. Another commenter expressed
opposition against adoption of the
measure until CMS provides additional
information regarding measure
utilization, rationale, and specification.
Response: We appreciate the
comments received pertaining to the
development of this potential quality
measure construct. We note the support
for the inclusion of an antipsychotic
measure in the LTCH QRP, but
recognize the potential limitations to the
inclusion of this type of measure, as
stated by the commenters. As we
continue to explore the development of
this future measure construct, we will
take the commenters’ recommendations
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into consideration in our measure
development and testing efforts, as well
as in our ongoing efforts to identify and
propose appropriate measures for the
LTCH QRP in the future.
Comment: A commenter supported
the use of a cross-setting malnutrition
measure. Another commenter also
encouraged the use of malnutrition
measures in post-acute care settings,
and recommended the use of a
nationally recognized ‘‘blueprint’’ that
was developed to prevent and reduce
malnutrition among older adults.
Response: We agree with the
commenters’ rationale for consideration
of adopting malnutrition quality
measures, including a malnutrition care
composite measure, to prevent and
reduce malnutrition among older adults
across the care continuum as they are
important components of care for LTCH
patients. We will take the suggestions
into consideration as we develop future
measures for the LTCH QRP.
Comment: A commenter suggested the
use of pain related questions in an
HCAHPS survey in the LTCH setting
instead of implementing the
Application of Percent of Residents
Who Self-Report Moderate to Severe
Pain (Short Stay) (NQF #0676) measure.
Response: We thank the commenter
for the suggestion. We will continue to
take these and future stakeholder inputs
under advisement to inform our ongoing
quality measure development.
Comment: One commenter
emphasized the importance of
establishing quality measures for
individuals with advanced illness
which address symptom management,
social and spiritual support, care
coordination, and identification of goals
and preferences and whether those goals
are met, given unique care needs and
the aging of the population as CMS
considers future measure topics for
consideration in the LTCH QRP.
Response: We appreciate the
commenter’s suggestions regarding
future measures, and will take them into
consideration.
b. IMPACT Act Measure—Possible
Future Update To Measure
Specifications
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57207 through 57215), we
finalized the Discharge to CommunityPAC LTCH QRP measure, which
assesses successful discharge to the
community from an LTCH setting, with
successful discharge to the community
including no unplanned
rehospitalizations and no death in the
31 days following discharge from the
LTCH. We received public comments
(see 81 FR 57211) recommending
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exclusion of baseline nursing facility
residents from the measure, as these
residents did not live in the community
prior to their LTCH stay. At that time,
we highlighted that, using Medicare FFS
claims alone, we were unable to
accurately identify baseline nursing
facility residents. We stated that
potential future modifications of the
measure could include assessment of
the feasibility and impact of excluding
baseline nursing facility residents from
the measure through the addition of
patient assessment-based data. In
response to these public comments, we
are considering a future modification of
the Discharge to Community-PAC LTCH
QRP measure, which would exclude
baseline nursing facility residents from
the measure.
We invited public comment on the
possibility of excluding baseline nursing
facility residents from the Discharge to
Community-PAC LTCH QRP measure in
future years of the LTCH QRP.
Comment: Several commenters
expressed support for excluding
baseline nursing facility residents from
the discharge to community measure as
a potential future measure modification.
Commenters stated that this exclusion
would result in the measure more
accurately portraying quality of care
provided by LTCHs, while controlling
for factors outside of LTCH control.
Response: We thank commenters for
their support for exclusion of baseline
nursing facility residents as a potential
future measure modification. We will
consider their views and determine
whether to propose to exclude baseline
nursing facility residents from the
Discharge to Community-PAC LTCH
QRP measure in future years of the
LTCH QRP.
c. IMPACT Act Implementation Update
As a result of the input and
suggestions provided by technical
experts at the TEPs held by our measure
developer, and through public
comment, we are engaging in additional
development work, including
performing additional testing, with
respect to two measures that would
satisfy the domain of accurately
communicating the existence of and
providing for the transfer of health
information and care preferences when
the individual transitions, in section
1899B(c)(1)(E) of the Act. The measures
under development are: Transfer of
Information at Post-Acute Care
Admission, Start or Resumption of Care
from other Providers/Settings; and
Transfer of Information at Post-Acute
Care Discharge, and End of Care to
other Providers/Settings. We intend to
specify these measures under section
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38449
1899B(c)(1)(E) of the Act no later than
October 1, 2018, and we intend to
propose to adopt them for the FY 2021
LTCH QRP, with data collection
beginning on or about April 1, 2019.
Comment: Commenters suggested that
CMS be cautious in its development of
the Transfer of Health Information
measure set and only proceed to
propose and adopt measures that
receive NQF endorsement. One
commenter cited concerns about the
measure development, citing the 2016
MAP PAC/LTC meeting. One
commenter noted that the unique goals,
preferences, and needs of the patient
should be considered in transferring
patient information, and that care
transitions can be a confusing time for
the patient and family/caregiver. The
commenter recommended that the
measures require PAC facilities to
communicate their capabilities and
limitations to ensure that they can
provide the level of care that meets a
patient’s clinically assessed needs, as
determined by the relevant decisionmakers.
Response: We appreciate the
comments and feedback on the Transfer
of Health Information measures that are
currently under development. As we
continue to develop these measures, we
will take into account the feedback
pertaining to modes of information
transfer, prescreening requirements for
LTCHs, and patient goals and
preferences. We intend to re-submit
these measures for review to the MAP
PAC/LTC Workgroup. Further, we plan
to submit the measures to the NQF for
consideration for endorsement when we
believe that they are ready for NQF
review.
10. Standardized Patient Assessment
Data Reporting for the LTCH QRP
a. Standardized Patient Assessment Data
Reporting for the FY 2019 LTCH QRP
Section 1886(m)(5)(F)(ii) of the Act
requires that for fiscal year 2019 and
each subsequent year, LTCHs report
standardized patient assessment data
required under section 1899B(b)(1) of
the Act. As we describe in more detail
above, we are finalizing that the current
pressure ulcer measure, Percent of
Residents or Patients with Pressure
Ulcers That Are New or Worsened
(Short Stay) (NQF #0678), will be
removed and replaced with the
proposed pressure ulcer measure,
Changes in Skin Integrity Post-Acute
Care: Pressure Ulcer/Injury, beginning
with the FY 2020 LTCH QRP. The
current pressure ulcer measure will
remain in the LTCH QRP until that time.
Accordingly, in the FY 2018 IPPS/LTCH
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PPS proposed rule (82 FR 20099), with
respect to the requirement that LTCHs
report standardized patient assessment
data for the FY 2019 LTCH QRP, we
proposed that the data elements used to
calculate the current pressure ulcer
measure, Percent of Residents or
Patients with Pressure Ulcers That Are
New or Worsened (Short Stay) (NQF
#0678), meet the definition of
standardized patient assessment data
with respect to medical conditions and
co-morbidities under section
1899B(b)(1)(B)(iv) of the Act, and that
the successful reporting of that data
under section 1886(m)(5)(F)(i) of the Act
with respect to admissions as well as
discharges occurring during last three
quarters of CY 2017 would also satisfy
the requirement to report standardized
patient assessment data for the FY 2019
LTCH QRP.
The collection of assessment data
pertaining to skin integrity, specifically
pressure related wounds, is important
for multiple reasons. Clinical decision
support, care planning, and quality
improvement all depend on reliable
assessment data collection. Pressure
related wounds represent poor
outcomes, are a serious medical
condition that can result in death and
disability, are debilitating, painful and
are often an avoidable outcome of
medical care.446 447 448 449 450 451 Pressure
related wounds are considered
healthcare acquired conditions.
As we note above, the data elements
needed to calculate the current pressure
ulcer measure are already included on
the LTCH CARE Data Set and reported
by LTCHs, and exhibit validity and
reliability for use across PAC providers.
Item reliability for these data elements
was also tested for the nursing home
setting during implementation of MDS
3.0. Testing results are from the RAND
Development and Validation of MDS 3.0
project.452 The RAND pilot test of the
446 Casey, G. (2013). ‘‘Pressure ulcers reflect
quality of nursing care.’’ Nurs N Z 19(10): 20–24.
447 Gorzoni, M.L. and S.L. Pires (2011). ‘‘Deaths
in nursing homes.’’ Rev Assoc Med Bras 57(3): 327–
331.
448 Thomas, J.M., et al. (2013). ‘‘Systematic
review: health-related characteristics of elderly
hospitalized adults and nursing home residents
associated with short-term mortality.’’ J Am Geriatr
Soc 61(6): 902–911.
449 White-Chu, E.F., et al. (2011). ‘‘Pressure ulcers
in long-term care.’’ Clin Geriatr Med 27(2): 241–258.
450 Bates-Jensen B.M. Quality indicators for
prevention and management of pressure ulcers in
vulnerable elders. Ann Int Med. 2001;135 (8 Part 2),
744–51.
451 Bennet, G., Dealy, C., Posnett, J. (2004). The
cost of pressure ulcers in the UK, Age and Aging,
33(3):230–235.
452 Saliba, D., & Buchanan, J. (2008, April).
Development and validation of a revised nursing
home assessment tool: MDS 3.0. Contract No. 500–
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MDS 3.0 data elements showed good
reliability and is also applicable to both
the IRF–PAI and the LTCH CARE Data
Set because the data elements tested are
the same. Across the pressure ulcer data
elements, the average gold-standard
nurse to gold-standard nurse kappa
statistic was 0.905. The average goldstandard nurse to facility-nurse kappa
statistic was 0.937. Data elements used
to risk adjust this quality measure were
also tested under this same pilot test,
and the gold-standard to gold-standard
kappa statistic, or percent agreement
(where kappa statistic not available),
ranged from 0.91 to 0.99 for these data
elements. These kappa scores indicate
‘‘almost perfect’’ agreement using the
Landis and Koch standard for strength
of agreement.453
The data elements used to calculate
the current pressure ulcer measure
received public comment on several
occasions, including when that measure
was proposed in the FY 2012 IRF PPS
(76 FR 47876) and IPPS/LTCH PPS
proposed rules (76 FR 51754). Further,
they were discussed in the past by TEPs
held by our measure development
contractor on June 13 and November 15,
2013, and recently by a TEP on July 18,
2016. TEP members supported the
measure and its cross-setting use in
PAC. The report, Technical Expert
Panel Summary Report: Refinement of
the Percent of Patients or Residents with
Pressure Ulcers that are New or
Worsened (Short Stay) (NQF #0678)
Quality Measure for Skilled Nursing
Facilities (SNFs), Inpatient
Rehabilitation Facilities (IRFs), LongTerm Care Hospitals (LTCHs), and
Home Health Agencies (HHAs), is
available at: https://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/Post-AcuteCare-Quality-Initiatives/Downloads/
July-2016-Pressure-Ulcer-TEP-Report_
revised.pdf.
We invited public comment on this
proposal.
Comment: Several comments
supported reporting the data elements
already implemented in the LTCH QRP
to fulfill the requirement to report
standardized patient assessment data for
the FY 2019 LTCH QRP.
Response: We appreciate the
commenters’ support of the proposal
and agree that these data elements
currently reported by LTCHs meet the
definition of standardized patient
00–0027/Task Order #2. Santa Monica, CA: Rand
Corporation. Retrieved from: https://
www.cms.hhs.gov/NursingHomeQualityInits/
Downloads/MDS30FinalReport.pdf.
453 Landis, R., & Koch, G. (1977, March). The
measurement of observer agreement for categorical
data. Biometrics 33(1), 159–174.
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assessment data and satisfy the
requirement to report standardized
patient assessment data.
Comment: One commenter expressed
concern regarding the proposed
reporting schedule for new standardized
patient assessment data elements given
the volume of data that will need to be
reported by LTCHs. The commenter
emphasized the reporting requirements
for the current pressure ulcer measure,
which fulfills the standardized patient
assessment data element requirements
beginning with the FY 2019 LTCH QRP.
Response: We acknowledge the
concerns raised by the commenter.
Upon further consideration of the
appropriate timeline for LTCHs to report
this data for the FY 2019 LTCH QRP, we
are finalizing that LTCHs would be
required to report the current pressure
ulcer measure for the last quarter of CY
2017 to meet the requirements for
reporting standardized patient
assessment data. We do not believe that
the continued reporting of the current
pressure ulcer measure is too
burdensome on the LTCH industry since
LTCHs will not need to change their
reporting practices with respect to
reporting the standardized pressure
ulcer data, nor will they be reporting
additional data as of October 1, 2017.
The submission of the current pressure
ulcer measure data will act to meet the
requirement of submitting standardized
patient assessment data beginning
October 1, 2017. Further, in response to
similar comments expressing concern
with increased burden, CMS has
decided to move the release date of the
LTCH CARE Data Set Version 4.00 from
April 1, 2018 to July 1, 2018 which
gives LTCHs an additional 3 months to
prepare. We refer readers to section
IX.C.11.d which describes the effect of
the delayed release date of the LTCH
CARE Data Set Version 4.00 on the
currently adopted LTCH QRP measures.
After consideration of the public
comments received, we are finalizing
our proposal, as proposed, that the data
elements currently reported by LTCHs
to calculate the current measure,
Percent of Residents or Patients with
Pressure Ulcers That Are New or
Worsened (Short Stay) (NQF #0678),
meet the definition of standardized
patient assessment data with respect to
medical conditions and co-morbidities
under section 1899B(b)(1)(B)(iv) of the
Act, and that the successful reporting of
that data under section 1886(m)(5)(F)(i)
of the Act would also satisfy the
requirement to report standardized
patient assessment data under section
1886(m)(5)(F)(ii) of the Act beginning
October 1, 2017 for the FY 2019 LTCH
QRP. We are also finalizing the change
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in the release date of the LTCH CARE
Data Set Version 4.00 from April 1, 2018
to July 1, 2018. We refer readers to
section IX.C.11.c. of the preamble of this
final rule for discussion on this issue.
b. Standardized Patient Assessment
Data Reporting Beginning With the FY
2020 LTCH QRP
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20099 through
20116) we described our proposals for
the reporting of standardized patient
assessment data by LTCHs beginning
with the FY 2020 LTCH QRP. LTCHs
would be required to report these data
with respect to LTCH admissions and
discharges that occur between April 1,
2018 and December 31, 2018, with the
exception of three data elements (Brief
Interview of Mental Status (BIMS),
Hearing, and Vision), which would be
required with respect to LTCH
admissions only that occur between
April 1, 2018 and December 31, 2018.
Following the initial reporting year for
the FY 2020 LTCH QRP, subsequent
years for the LTCH QRP would be based
on a full calendar year of such data
reporting.
In selecting the data elements
proposed in the FY 2018 IPPS/LTCH
PPS proposed rule, we carefully
weighed the balance of burden in
assessment-based data collection and
aimed to minimize additional burden
through the utilization of existing data
in the assessment instruments. We also
took into consideration the following
factors with respect to each data
element: Overall clinical relevance;
ability to support clinical decisions,
care planning and interoperable
exchange to facilitate care coordination
during transitions in care; and the
ability to capture medical complexity
and risk factors that can inform both
payment and quality. In addition, the
data elements had to have strong
scientific reliability and validity; be
meaningful enough to inform
longitudinal analysis by providers; had
to have received general consensus
agreement for its usability; and had to
have the ability to collect such data
once but support multiple uses. Further,
to inform the final set of data elements
for proposal, we took into account
technical and clinical subject matter
expert review, public comment, and
consensus input in which such
principles were applied. We also took
into account the consensus work and
empirical findings from the PAC PRD.
Comment: Many commenters
expressed significant concerns with
respect to our standardized patient
assessment data proposals. Several
commenters stated that the new
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standardized patient assessment data
reporting requirements will impose
significant burden on providers, given
the volume of new standardized patient
assessment data elements that were
proposed to be added to the LCDS. A
few commenters noted that the addition
of the proposed standardized patient
assessment data elements would require
hiring more staff, retraining staff on
revised questions or coding guidance,
and reconfiguring internal databases
and EHRs. Other commenters expressed
concerns about the gradual but
significant past and future expansion of
the LCDS through the addition of
standardized patient assessment data
elements and quality measures, noting
the challenge of coping with ongoing
additions and changes.
Several commenters expressed
concern related to the implementation
timeline in the proposed rule, which
would require LTCHs to begin collecting
the proposed standardized patient
assessment data elements in the
timeframe stated in the proposed rule.
One commenter stated that there would
not be sufficient time to be ready by
April 1, 2018. Another commenter
noted that CMS had not yet provided
sufficient specifications or educational
materials to support implementation of
the new patient assessments in the
proposed timeline.
Several commenters urged CMS to
delay the reporting of new standardized
patient assessment data elements by at
least one year, and to carefully assess
whether all of the proposed
standardized patient assessment data
elements are necessary under the
IMPACT Act. Commenters suggested
ways to delay the proposals for
standardized patient assessment data
elements in the categories of Cognitive
Function and Mental Status; Special
Services, Treatments, and Interventions;
and Impairments, including allowing
voluntary or limited reporting for a
period of time before making
comprehensive reporting mandatory,
and delaying the beginning of
mandatory data collection for a period
of time. Some commenters
recommended that during the delay,
CMS re-evaluate whether it can require
the reporting of standardized patient
assessment data in a less burdensome
manner.
Response: We understand the
concerns raised by commenters that the
finalization of our standardized patient
assessment data proposals would
require LTCHs to spend a significant
amount of resources preparing to report
the data, including updating relevant
protocols and systems and training
appropriate staff. We also recognize that
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we can meet our obligation to require
the reporting of standardized patient
assessment data with respect to the
categories described in section
1899B(b)(1)(B) of the Act while
simultaneously being responsive to
these concerns. Therefore, after
consideration of the public comments
we received on these issues, we have
decided that at this time, we will not
finalize the standardized patient
assessment data elements we proposed
for three of the five categories under
section 1899B(b)(1)(B) of the Act:
Cognitive Function and Mental Status;
Special Services, Treatments, and
Interventions; and Impairments.
Although we believe that the proposed
standardized patient assessment data
elements would promote transparency
around quality of care and price as we
continue to explore reforms to the PAC
payment system, the data elements that
we proposed for each of these categories
would have imposed a new reporting
burden on LTCHs. We agree that it
would be useful to evaluate further how
to best identify the standardized patient
assessment data that would satisfy each
of these categories; would be most
appropriate for our intended purposes
including payment and measure
standardization; and can be reported by
LTCHs in the least burdensome manner.
As part of this effort, we intend to
conduct a national field test that allows
for stakeholder feedback and to consider
how to maximize the time LTCHs have
to prepare for the reporting of
standardized patient assessment data in
these categories. We intend to make new
proposals with respect to the categories
described in sections 1899B(b)(1)(B)(ii),
(iii) and (v) of the Act no later than in
the FY 2020 IPPS/LTCH PPS proposed
rule.
In this final rule, we are finalizing the
standardized patient assessment data
elements that we proposed to adopt for
the IMPACT Act categories of
Functional Status and Medical
Conditions and Co-Morbidities. Unlike
the standardized patient assessment
data that we are not finalizing, the
standardized patient assessment data
that we proposed for these categories are
already required to calculate the Percent
of Residents or Patients with Pressure
Ulcers That Are New or Worsened (NQF
#0678) quality measure, Changes in
Skin Integrity Post-Acute Care: Pressure
Ulcer/Injury quality measure (which we
are finalizing in this final rule), and the
Application of Percent of Long-Term
Care Hospital Patients with an
Admission and Discharge Functional
Assessment and a Care Plan That
Addresses Function (NQF #2631)
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quality measure (which we finalized in
the FY 2016 IPPS/LTCH PPS final rule).
As a result, we do not believe that
finalizing these proposals creates a new
reporting burden for LTCHs or
otherwise necessitates a delay.
Comment: Several commenters
expressed support for the adoption of
standardized patient assessment data
elements. One commenter expressed
support for standardizing the definitions
as well as the implementation of the
data collection effort. The commenter
also supported CMS’ goal of
standardizing the questions and
responses across all PAC settings to help
‘‘enable the data to be interoperable,
allowing it to be shared electronically,
or otherwise between PAC provider
types.’’ One commenter stated that
streamlining requirements across
Medicare’s quality reporting programs
will reduce the administrative burden of
quality reporting for these facilities as
well as the physicians and other
clinicians who contribute to that
reporting. Another commenter noted
full support of the IMPACT Act’s goals
and objectives and appreciated CMS’
efforts to regularly communicate with
stakeholders through various national
provider calls, convening of
stakeholders, and meetings with
individual organizations. Another
commenter recognized the value of a
unified patient assessment system for
PAC as part of a potential unified
payment system for PAC, but
encouraged CMS to look carefully at
opportunities to streamline the
assessment and avoid duplication.
Response: We appreciate the support
of these proposals, but note that for the
reasons explained above, we have
decided at this time to not finalize the
proposals for three of the five categories
under section 1899B(b)(1)(B) of the Act:
Cognitive Function and Mental Status;
Special Services, Treatments, and
Interventions; and Impairments.
Comment: Several commenters
addressed the variation in the look-back
period associated with the standardized
patient assessment data elements. In
general, commenters were concerned
about the variation in look-back periods
across items and how differences in
look-back periods would affect the
validity of the item responses and
assessor burden. One commenter stated
that the many and varied look-back
periods associated with the proposed
standardized patient assessment data
elements would cause confusion for the
assessors and patients.
Response: We appreciate the
commenters’ review of the proposed
standardized patient assessment data
elements and concerns about
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implementation. We acknowledge that
the look-back periods would vary for
different standardized patient
assessment data elements within a
setting, but we wish to clarify that the
look-back periods for each standardized
patient assessment data element would
be the same across PAC settings. In our
ongoing work to identify candidate data
elements for standardization, we will
continue to carefully consider the
impact of different look-back periods for
different standardized patient
assessment data elements on the
validity of the data and assessor burden.
We believe that it is important to collect
the same information across settings,
including over the same look-back
period, and we will work to identify the
best options for achieving this aspect of
standardized assessment in the future.
Comment: Several commenters stated
that there is insufficient evidence
demonstrating the reliability and
validity of the proposed standardized
patient assessment data elements. Some
commenters stated that the expanded
standardized patient assessment data
reporting requirements have not yet
been adequately tested to ensure they
collect accurate and useful data in this
setting. A few commenters stated that
only five of the proposed 23
standardized patient assessment data
elements are currently reported in the
CARE Data Set and the other 18 are
currently used in other post-acute
setting patient assessment instruments,
mainly the Minimum Data Set (MDS)
3.0 used in skilled nursing facilities
(SNFs). Other commenters stated that
CMS’ conclusion that the collection of
these standardized patient assessment
data elements in the LTCH setting
would be feasible and the standardized
patient assessment data elements would
result in valid and reliable data was
based on the current use of these data
elements in the MDS and the testing of
these data elements in the PAC PRD.
A few commenters stated that several
of the proposed standardized patient
assessment data elements that had not
been adequately tested were deemed
close enough to an item that had been
tested in the PAC PRD or in other PAC
settings and thus appropriate for
implementation.
Response: Our standardized patient
assessment data elements were selected
based on a rigorous multi-stage process
that was described in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 20088
through 20089). In addition, we believe
that the PAC PRD testing of many of
these data elements provides good
evidence from a large, national sample
of patients and residents in PAC settings
to support the use of these standardized
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patient assessment data elements in and
across PAC settings. However, as noted
above, we have decided at this time to
not finalize the proposals for three of
the five categories under section
1899B(b)(1)(B) of the Act: Cognitive
Function and Mental Status; Special
Services, Treatments, and Interventions;
and Impairments. Prior to making new
proposals for these categories, we intend
to conduct extensive testing to ensure
that the standardized patient assessment
data elements we select are reliable,
valid and appropriate for their intended
use.
A full discussion of the standardized
patient assessment data elements that
we proposed to adopt for the categories
described in sections 1899B(b)(1)(B)(ii),
(iii) and (v) of the Act can be found in
the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 20100 through 20116). In
light of our decision to not finalize our
proposals with respect to these
categories, we are not going to address
in this final rule the specific technical
comments that we received on these
proposed data elements. However, we
appreciate the many technical
comments we did receive specific to
each of these data elements, and we will
take them into consideration as we
develop new proposals for these
categories. Below we discuss the
comments we received specific to the
standardized patient assessment data we
proposed to adopt, and are finalizing in
this final rule, for the categories of
Functional Status and Medical
Conditions and Co-Morbidities.
(1) Functional Status Data
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20100), we
proposed that the data elements
currently reported by LTCHs to
calculate the measure, Application of
Percent of Long-Term Care Hospital
Patients with an Admission and
Discharge Functional Assessment and a
Care Plan That Addresses Function
(NQF #2631), would also meet the
definition of standardized patient
assessment data with respect to
functional status under section
1899B(b)(1)(B)(i) of the Act, and that the
successful reporting of that data under
section 1886(m)(5)(F)(i) of the Act
would also satisfy the requirement to
report standardized patient assessment
data under section 1886(m)(5)(F)(ii) of
the Act.
These patient assessment data for
functional status are from the CARE
Item Set. The development of the CARE
Item Set and a description and rationale
for each item is described in a report
entitled ‘‘The Development and Testing
of the Continuity Assessment Record
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and Evaluation (CARE) Item Set: Final
Report on the Development of the CARE
Item Set: Volume 1 of 3.’’ 454 Reliability
and validity testing were conducted as
part of CMS’ Post-Acute Care Payment
Reform Demonstration, and we
concluded that the functional status
items have acceptable reliability and
validity. A description of the testing
methodology and results are available in
several reports, including the report
entitled ‘‘The Development and Testing
of the Continuity Assessment Record
And Evaluation (CARE) Item Set: Final
Report On Reliability Testing: Volume 2
of 3’’ 455 and the report entitled ‘‘The
Development and Testing of The
Continuity Assessment Record And
Evaluation (CARE) Item Set: Final
Report on Care Item Set and Current
Assessment Comparisons: Volume 3 of
3.’’ 456 The reports are available on CMS’
Post-Acute Care Quality Initiatives Web
page at: https://www.cms.gov/Medicare/
Quality-Initiatives-Patient-AssessmentInstruments/Post-Acute-Care-QualityInitiatives/CARE-Item-Set-and-BCARE.html.
For more information about this
quality measure and the data elements
used to calculate it, we refer readers to
the FY 2016 IPPS/LTCH PPS final rule
(80 FR 49739 through 49747).
We invited public comment on this
proposal.
Comment: One commenter requested
that the following self-care and
cognitive items to be added to the
Percent of Long-Term Care Hospital
(LTCH) Patients With an Admission and
Discharge Functional Assessment and a
Care Plan That Addresses Function
(NQF #2631) measure in order to meet
the definition of standardized patient
assessment data with respect to
functional status: upper body dressing,
lower body dressing, and putting on/
taking off footwear.
Response: We will take these
suggestions into consideration. We
believe we should seek additional
stakeholder input before considering
proposing adding these data elements to
the LTCH CARE Data Set, because we
are mindful of burden associated with
adding any new data elements. We refer
readers to the FY 2016 IPPS/LTCH PPS
final rule (80 FR 49739 through 49747)
for a detailed discussion of the
Application of Percent of Long-Term
Care Hospital Patients with an
Admission and Discharge Functional
454 Barbara Gage et al., ‘‘The Development and
Testing of the Continuity Assessment Record and
Evaluation (CARE) Item Set: Final Report on the
Development of the CARE Item Set’’ (RTI
International, 2012).
455 Ibid.
456 Ibid.
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Assessment and a Care Plan That
Addresses Function (NQF #2631)
measure.
After consideration of the public
comments we received, we are
finalizing as proposed that the data
elements currently reported by LTCHs
to calculate the measure, Application of
Percent of Long-Term Care Hospital
Patients with an Admission and
Discharge Functional Assessment and a
Care Plan That Addresses Function
(NQF #2631), also meet the definition of
standardized patient assessment data
with respect to functional status under
section 1899B(b)(1)(B)(i) of the Act, and
that the successful reporting of that data
under section 1886(m)(5)(F)(i) of the Act
will also satisfy the requirement to
report standardized patient assessment
data under section 1886(m)(5)(F)(ii) of
the Act.
(2) Medical Condition and Comorbidity
Data
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20113 through
20114), we proposed that the data
elements needed to calculate the current
measure, Percent of Residents or
Patients with Pressure Ulcers That Are
New or Worsened (Short Stay) (NQF
#0678), and the proposed measure,
Changes in Skin Integrity Post-Acute
Care: Pressure Ulcer/Injury, meet the
definition of standardized patient
assessment data with respect to medical
conditions and co-morbidities under
section 1899B(b)(1)(B)(iv) of the Act,
and that the successful reporting of that
data under section 1886(m)(5)(F)(i) of
the Act would also satisfy the
requirement to report standardized
patient assessment data under section
1886(m)(5)(F)(ii) of the Act.
‘‘Medical conditions and
comorbidities’’ and the conditions
addressed in the standardized data
elements used in the calculation and
risk adjustment of these measures, that
is, the presence of pressure ulcers,
diabetes, incontinence, peripheral
vascular disease or peripheral arterial
disease, mobility, as well as low body
mass index, are all health-related
conditions that indicate medical
complexity that can be indicative of
underlying disease severity and other
comorbidities.
Specifically, the data elements used
in the measure are important for care
planning and provide information
pertaining to medical complexity.
Pressure ulcers are serious wounds
representing poor healthcare outcomes,
and can result in sepsis and death.
Assessing skin condition, care planning
for pressure ulcer prevention and
healing, and informing providers about
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38453
their presence in patient transitions of
care is a customary and best practice.
Venous and arterial disease and diabetes
are associated with low blood flow
which may increase the risk of tissue
damage. These diseases are indicators of
factors that may place individuals at
risk for pressure ulcer development and
are therefore important for care
planning. Low BMI, which may be an
indicator of underlying disease severity,
may be associated with loss of fat and
muscle, resulting in potential risk for
pressure ulcers. Bowel incontinence,
and the possible maceration to the skin
associated, can lead to higher risk for
pressure ulcers. In addition, the bacteria
associated with bowel incontinence can
complicate current wounds and cause
local infection. Mobility is an indicator
of impairment or reduction in mobility
and movement which is a major risk
factor for the development of pressure
ulcers. Taken separately and together,
these data elements are important for
care planning, transitions in services
and identifying medical complexities.
In sections IX.C.7.a. and IX.C.10.a. of
the preamble of this final rule, we
discuss our rationale for proposing that
the data elements used in the measures
meet the definition of standardized
patient assessment data. In summary,
we believe that the collection of such
assessment data is important for
multiple reasons, including clinical
decision support, care planning, and
quality improvement, and that the data
elements assessing pressure ulcers and
the data elements used to risk adjust
showed good reliability. We solicited
stakeholder feedback on the quality
measure, and the data elements from
which it is derived, by means of a
public comment period and TEPs, as
described in section IX.C.7.a. of the
preamble of this final rule.
We invited public comment on this
proposal.
Comment: Some commenters
supported the reporting of data elements
already implemented in the LTCH QRP
to satisfy the requirement to report
standardized patient assessment data.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing as proposed that the data
elements currently reported by LTCHs
to calculate the current measure,
Percent of Residents or Patients with
Pressure Ulcers That Are New or
Worsened (Short Stay) (NQF #0678),
and the proposed measure, Changes in
Skin Integrity Post-Acute Care: Pressure
Ulcer/Injury, meet the definition of
standardized patient assessment data
with respect to medical conditions and
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co-morbidities under section
1899B(b)(1)(B)(iv) of the Act, and that
the successful reporting of that data
under section 1886(m)(5)(F)(i) of the Act
would also satisfy the requirement to
report standardized patient assessment
data under section 1886(m)(5)(F)(ii) of
the Act.
For comments related to the pressure
ulcer quality measure, we refer readers
to section IX.C.7.a of the preamble of
this final rule.
11. Form, Manner, and Timing of Data
Submission Under the LTCH QRP
a. Start Date for Standardized Patient
Assessment Data Reporting by New
LTCHs
In the FY 2016 IPPS/LTCH PPS final
rule (80 FR 49749 through 49752), we
adopted timing for new LTCHs to begin
reporting quality data under the LTCH
QRP beginning with the FY 2017 LTCH
QRP. In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20116), we
proposed that new LTCHs will be
required to begin reporting standardized
patient assessment data on the same
schedule.
We invited public comment on this
proposal. We did not receive any public
comments on this proposal; therefore,
we are finalizing as proposed the start
date for standardized patient assessment
data reporting by new LTCHs.
b. Mechanism for Reporting
Standardized Patient Assessment Data
Beginning With the FY 2019 LTCH QRP
Under our current policy, LTCHs
report data by completing applicable
sections of the LCDS, and submitting
the LCDS to CMS through the QIES
ASAP system. For more information on
LTCH QRP reporting through the QIES
ASAP system, refer to the ‘‘Related
Links’’ section at the bottom of: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-Assessment-
Instruments/LTCH-Quality-Reporting/
LTCH-Technical-Information.html.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20116), we stated
that the proposed standardized patient
assessment data elements are already
included on, or would be added to, the
LCDS. Details regarding the LCDS with
respect to the proposed standardized
patient assessment data are available at:
https://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
LTCH-Quality-Reporting-MeasuresInformation.html.
We invited public comments on this
proposal. We did not receive any
comments on this proposal; therefore,
we are finalizing as proposed the
mechanism for reporting standardized
patient assessment data beginning with
the FY 2019 LTCH QRP.
c. Schedule for Reporting Standardized
Patient Assessment Data Beginning
With the FY 2019 LTCH QRP
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20116 through
20117), we proposed that the
standardized patient assessment data
necessary to calculate the quality
measure ‘‘Percent of Residents or
Patients with Pressure Ulcers That Are
New or Worsened (Short Stay) (NQF
#0678)’’ would be used for the FY 2019
LTCH QRP. We also proposed that for
purposes of the FY 2019 LTCH QRP
program year such data would only
include the last three quarters of
calendar year 2017 (April 1, 2017
through December 31, 2017). In section
IX.C.7.a of the preamble of the proposed
rule, we discussed our proposal to adopt
the measure, ‘‘Changes in Skin Integrity
Post-Acute Care: Pressure Ulcer/Injury’’
to replace the current measure, ‘‘Percent
of Residents or Patients with Pressure
Ulcers That Are New or Worsened
(Short Stay) (NQF #0678)’’ with data
collection beginning on April 1, 2018.
We also stated that should the proposed
measure be finalized, the FY 2020 LTCH
QRP will be determined using the data
from the first quarter of CY 2018 using
the current measure, ‘‘Percent of
Residents or Patients with Pressure
Ulcers That Are New or Worsened
(Short Stay) (NQF #0678)’’ and last three
quarters of CY 2018 using the data from
the proposed measure, ‘‘Changes in Skin
Integrity Post-Acute Care: Pressure
Ulcer/Injury.’’
In section IX.C.10.b of the preamble of
the proposed rule, we discussed the
additional standardized patient
assessment data proposed beginning
with the FY 2020 LTCH QRP. Unless
otherwise indicated, under our current
policy, except for the first program year
for which a measure is adopted, LTCHs
must report data on measures with
respect to LTCH admissions and
discharges that occur during the 12
month calendar year period that applies
to the program year. For the first
program year for which a measure is
adopted, LTCHs are usually required to
report data for LTCH admissions and
discharges that occur during the last
three quarters of the calendar year that
applies to that program year, as the
version of the LTCH CARE Data Set that
will contain the new items for LTCHs to
report a new measure, is routinely
released on April 1st of any given year.
For example, for the FY 2018 LTCH
QRP, data on measures adopted for
earlier program years must be reported
with respect to all CY 2016 LTCH
admissions and discharges. However,
data on new measures adopted for the
first time for the FY 2018 LTCH QRP
must only be reported with respect to
LTCH admissions and discharges that
occur during the last three calendar
quarters of 2016.
The tables below illustrate the data
collection timeframes and data
submission deadlines related to the
April 1st standard release of the LTCH
CARE Data Set:
SUMMARY ILLUSTRATION OF INITIAL REPORTING CYCLE FOR MEASURES AND STANDARDIZED PATIENT ASSESSMENT DATA
REPORTING USING CY QUARTERS 2, 3, AND 4 DATA *
Data submission quarterly deadlines for the FY [year] LTCH QRP * ∧
Data collection/submission quarterly reporting period *
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Q2: April 1–June 30 .................................................................................
Q3: July 1–September 30 ........................................................................
Q4: October 1–December 30 ...................................................................
Q2 Deadline: November 15.
Q3 Deadline: February 15.
Q4 Deadline: May 15.
* Applies to data reporting using the LTCH CARE Data Set and data reporting using the National Healthcare Safety Network.
∧ The term ‘‘FY [year] LTCH QRP’’ means the fiscal year for which the LTCH QRP requirements applicable to that fiscal year must be met in
order for an LTCH to receive the full annual update when calculating the payment rates applicable to it for that fiscal year.
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38455
SUMMARY ILLUSTRATION OF CALENDAR YEAR QUARTERLY REPORTING CYCLE FOR MEASURES AND STANDARDIZED
PATIENT ASSESSMENT DATA REPORTING *
Data submission quarterly deadlines for the FY [year] LTCH QRP * ∧
Data collection/submission quarterly reporting period *
Q1:
Q2:
Q3:
Q4:
January 1–March 31 ..........................................................................
April 1–June 30 .................................................................................
July 1–September 30 ........................................................................
October 1–December 31 ...................................................................
Q1
Q2
Q3
Q4
Deadline:
Deadline:
Deadline:
Deadline:
August 15.
November 15.
February 15.
May 15.
*Applies to data reporting using the LTCH CARE Data Set and data reporting using the National Healthcare Safety Network.
∧ The term ‘‘FY [year] LTCH QRP’’ means the fiscal year for which the LTCH QRP requirements applicable to that fiscal year must be met in
order for an LTCH to receive the full annual update when calculating the payment rates applicable to it for that fiscal year.
We invited public comment on our
proposal for standardized patient
assessment data reporting beginning
with the FY 2019 LTCH QRP and to
extend our current policy governing the
schedule for reporting quality measure
data to the reporting of standardized
patient assessment data beginning with
the FY 2020 LTCH QRP.
The FY 2019 LTCH QRP will be
determined using standardized patient
assessment data collected from October
1, 2017 through December 31, 2017
using the current measure, Percent of
Residents or Patients with Pressure
Ulcers That Are New or Worsened
(Short Stay) (NQF #0678), as described
in section IX.C.10.a. of the preamble of
this final rule.
As described in section IX.C.10.b of
the preamble of this final rule,
commenters expressed concern related
to the implementation timeline in the
proposed rule and stated that there
would not be sufficient time to be ready
by April 1, 2018. In response to those
comments, we are moving the
implementation of the LTCH CARE Data
Set Version 4.00 from April 1, 2018 to
July 1, 2018.
As a result of the delayed
implementation of the LTCH CARE Data
Set Version 4.00, the FY 2020 LTCH
QRP will be determined using the
standardized patient assessment data
from the first two quarters of CY 2018
using the current measure, Percent of
Residents or Patients with Pressure
Ulcers That Are New or Worsened
(Short Stay) (NQF #0678), and last two
quarters of CY 2018 using the
standardized patient assessment data
from the finalized measures, Changes in
Skin Integrity Post-Acute Care: Pressure
Ulcer/Injury and Application of Percent
of Long-Term Care Hospital (LTCH)
Patients With an Admission and
Discharge Functional Assessment and a
Care Plan That Addresses Function
(NQF #2631), as described in IX.C.10.b.
of the preamble of this final rule.
For the FY 2020 LTCH QRP, and with
this final rule, LTCHs will be required
to report measures and standardized
patient assessment data for LTCH
admissions and discharges during the
last two quarters of CY 2018 as the
version of the LTCH CARE Data Set that
will contain the new items for LTCHs to
report new measures and standardized
patient assessment data will be released
July 1, 2018. This exception to our
standard policy is relevant only to
LTCH CARE Data Set data to be reported
to CMS for new measures and
standardized patient assessment data
that is finalized in this FY 2018 IPPS/
LTCH PPS final rule, and for which
LTCHs will begin reporting data on July
1, 2018, with the release of the LTCH
CARE Data Set Version 4.00, as all
subsequent releases of LTCH CARE Data
Set versions will revert back to their
standard release date of April 1 of any
given year.
The FY 2021 LTCH QRP will be
determined using standardized patient
assessment data from CY 2019 from the
finalized measures, Changes in Skin
Integrity Post-Acute Care: Pressure
Ulcer/Injury and Application of Percent
of Long-Term Care Hospital (LTCH)
Patients With an Admission and
Discharge Functional Assessment and a
Care Plan That Addresses Function
(NQF #2631).
The tables below illustrate the data
collection timeframes and submission
deadlines for measures and
standardized patient assessment data
finalized for the FY 2020 and FY 2021
LTCH QRP.
SUMMARY ILLUSTRATION OF INITIAL REPORTING CYCLE FOR NEWLY ADOPTED MEASURES AND STANDARDIZED PATIENT
ASSESSMENT DATA REPORTING FOR CY 2018 QUARTERS 3 AND 4 DATA *
Finalized data collection/submission quarterly reporting period *
Q3: CY 2018—7/1/2018–9/30/2018 .........................................................
Q4: CY 2018—10/1/2018–12/31/2018 .....................................................
Finalized data submission quarterly deadlines beginning with the FY
2020 LTCH QRP * ∧
CY 2018 Q3 Deadline: February 15, 2019.
CY 2018 Q4 Deadline: May 15, 2019.
* Applies to data reporting using the LTCH CARE Data Set and data reporting using the National Healthcare Safety Network.
∧ The term ‘‘FY 2020 LTCH QRP’’ means the fiscal year for which the LTCH QRP requirements applicable to that fiscal year must be met in
order for an LTCH to receive the full annual update when calculating the payment rates applicable to it for that fiscal year.
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SUMMARY ILLUSTRATION OF CALENDAR YEAR QUARTERLY REPORTING CYCLE FOR MEASURES AND STANDARDIZED
PATIENT ASSESSMENT DATA REPORTING *
Finalized data collection/submission quarterly reporting period *
Q1:
Q2:
Q3:
Q4:
CY
CY
CY
CY
2019—1/1/2019–3/31/2019 .........................................................
2019—4/1/2019–6/30/2019 .........................................................
2019—7/1/2019–9/30/2019 .........................................................
2019—10/1/2019–12/31/2019 .....................................................
Finalized data submission quarterly deadlines beginning with the FY
2021 LTCH QRP * ∧
CY
CY
CY
CY
2019
2019
2019
2019
Q1
Q2
Q3
Q4
Deadline:
Deadline:
Deadline:
Deadline:
August 15, 2019.
November 15, 2019.
February 15, 2020.
May 15, 2020.
* Applies to data reporting using the LTCH CARE Data Set and data reporting using the National Healthcare Safety Network.
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∧ The term ‘‘FY 2021 LTCH QRP’’ means the fiscal year for which the LTCH QRP requirements applicable to that fiscal year must be met in
order for an LTCH to receive the full annual update when calculating the payment rates applicable to it for that fiscal year.
We are finalizing our proposal for
reporting standardized patient
assessment data beginning with the FY
2019 LTCH QRP. We are also finalizing
the exception to the standard policy
related to the timing of reporting
standardized patient assessment data for
the FY 2020 LTCH QRP and subsequent
releases of the LTCH CARE Data Set will
revert back to their standard release date
of April 1 of any given year.
sradovich on DSK3GMQ082PROD with RULES2
d. Schedule for Reporting the Newly
Finalized Quality Measures Beginning
With the FY 2020 LTCH QRP
As discussed in section IX.C.7. of the
preamble of this final rule, we adopted
three quality measures beginning with
the FY 2020 LTCH QRP: Changes in
Skin Integrity Post-Acute Care: Pressure
Ulcer/Injury; Compliance with SBT by
Day 2 of the LTCH Stay; and Ventilator
Liberation Rate. In the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 20117),
we proposed that LTCHs would report
data on these measures using the LTCH
CARE Data Set that is submitted through
the QIES ASAP system and LTCHs
would be required to report these data
beginning with LTCH admissions and
discharges that occur between April 1,
2018 and December 31, 2018. More
information on LTCH reporting using
the QIES ASAP system is located at:
https://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
LTCH-Technical-Information.html.
Under our current policy, LTCHs
would only be required to submit data
on the proposed measures for the last
three quarters of CY 2018 for purposes
of the FY 2020 LTCH QRP. Starting in
CY 2019, LTCHs would be required to
submit data for the entire calendar year
beginning with the FY 2021 LTCH QRP.
We invited public comment on this
proposal.
Comment: A commenter requested
that CMS reduce the unnecessary
burden of the LTCH CARE Data Set,
including revising the response timing
requirements of the LTCH CARE Data
Set, and suggested extending the
response time beyond three days. The
commenter also stated that CMS should
provide clear assessment guidelines and
guidance for reporting data.
Response: We appreciate the
comment, and we are working on ways
to minimize the overall burden
associated with the LTCH CARE Data
Set, while keeping in mind our goal to
collect valid, reliable and appropriate
data for the LTCH QRP.
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The three-day assessment period is in
place to standardize responses from all
LTCHs in order to ensure that the data
are comparable across LTCHs. In
addition, when choosing the
appropriate length of time in which to
require that the assessment take place,
we weighed the need for providers to
have sufficient time to accurately assess
the patient’s clinical status at the time
of admission. Due to the high acuity of
LTCH patients, we believe extending the
3-day assessment period would not
allow a true picture of the patient’s
clinical status at the time of admission.
Moreover, LTCHs have approximately
135 days following the end of each
calendar year quarter, during which to
submit, review, and correct their quality
data for that CY quarter, with exception
of the Influenza Vaccination Coverage
Among Healthcare Personnel (NQF
#0431) measure, in which data is
submitted annually and not quarterly.
These timeframes are aligned with those
of other quality reporting programs and
allow an appropriate amount of time for
LTCHs to review and correct quality
data prior to the public display of that
data.
We provide comprehensive training to
assist LTCHs with completing the LCDS,
including through training manuals,
webinars, open door forums, help desk
support, and a Web site that hosts
training information (https://
www.youtube.com/user/CMSHHSgov).
We also provide guidance on
completing and submitting the LTCH
CARE Data Set in Chapter 2 of the LTCH
QRP Manual, which is available at:
https://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
LTCH-CARE-Data-Set-and-LTCH-QRPManual.html.
Comment: Some commenters
requested crosswalks from ICD–10
codes to LTCH CARE Data Set items.
One commenter requested that these
crosswalks be kept up-to-date
contemporaneously with ICD–10
changes.
Response: A list of ICD–10 codes for
the 2018 LTCH CARE Data Set items
will be available no sooner than July
2018. We also intend to provide and
update this information in LTCH
manuals, training events, and on Web
site postings.
As described in section IX.C.10.c. of
the preamble of this final rule, we are
finalizing the schedule for reporting the
newly finalized measures beginning July
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1, 2018 for the FY 2020 LTCH QRP in
response to public comments.
As a result of the delayed
implementation of the LTCH CARE Data
Set Version 4.00, as described in section
IX.C.10.c of the preamble of this final
rule, in addition to the currently
adopted measures in the LTCH QRP,
LTCHs will be required to submit data
on the finalized measures, Change in
Skin Integrity Post-Acute Care: Pressure
Ulcer/Injury, Compliance with SBT by
Day 2 of the LTCH Stay, and Ventilator
Liberation Rate, beginning with the last
two quarters of CY 2018 for the FY 2020
LTCH QRP. LTCHs will also submit data
on the previously finalized measure,
Drug Regimen Review Conducted with
Follow-Up for Identified Issues-PAC
LTCH QRP, beginning with the last two
quarters of CY 2018 for the FY 2020
LTCH QRP. Starting in CY 2019, LTCHs
will be required to submit data for the
entire calendar year beginning with the
FY 2021 LTCH QRP. The finalized
LTCH CARE Data Set Version 4.00 is
available for review at: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
LTCH-CARE-Data-Set-and-LTCH-QRPManual.html.
In summary, we are finalizing our
proposal for reporting the standardized
patient assessment data necessary to
calculate quality measures beginning
with the FY 2019 LTCH QRP. We are
also finalizing our proposal to extend
our current policy governing the
schedule for reporting quality measure
data to the reporting of standardized
patient assessment data, including the
schedule for reporting newly finalized
measures beginning July 1, 2018 for the
FY 2020 LTCH QRP.
e. Removal of Interrupted Stay Items
From the LTCH CARE Data Set
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20117), we
proposed to remove the program
interruption items from the LTCH CARE
Data Set. Specifically, we proposed to
remove the following items: (1) A2500,
Program Interruption(s); (2) A2510,
Number of Program Interruptions
During This Stay in This Facility; and
(3) A2525, Program Interruption Dates,
because we do not currently utilize this
information nor do we have plans to
utilize this information for the LTCH
QRP. For a detailed discussion of
burden related to LTCH CARE Data Set,
we refer readers to section XIV.B.9. of
the preamble of this final rule.
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We invited public comment on this
proposal.
Comment: Several commenters
supported the removal of the
interrupted stay items from the LTCH
CARE Data Set, and commended CMS’
efforts to reduce burden with the
removal of these items.
Response: We thank the commenters
for their support of our efforts to reduce
burden.
After consideration of the public
comments we received, we are
finalizing our proposal to remove the
program interruption items (A2500,
A2510, and A2525) from the LTCH
CARE Data Set Version 4.00, effective
July 1, 2018.
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12. Application of the LTCH QRP
Participation Requirements to the
Submission of Standardized Patient
Assessment Data
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20117), we
proposed to revise the regulatory text at
§ 412.560(a) to state that an LTCH must
begin submitting quality data, including
standardized patient assessment data,
under the LTCH QRP by no later than
the first day of the calendar quarter
subsequent to 30 days after the date on
its CMS Certification Number (CCN)
notification letter.
We invited public comments on this
proposal. We did not receive any public
comments on this proposal. Therefore,
we are finalizing our proposal as
proposed to revise the regulatory text at
§ 412.560(a) to state that an LTCH must
begin submitting quality data, including
standardized patient assessment data,
under the LTCH QRP by no later than
the first day of the calendar quarter
subsequent to 30 days after the date on
its CMS Certification Number (CCN)
notification letter.
13. Application of the LTCH QRP Data
Submission Requirements to the
Submission of Standardized Patient
Assessment Data
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20117), we
proposed to revise the regulatory text at
§ 412.560(b)(1) to require LTCHs to
report both data on measures and
standardized patient assessment data
under the LTCH QRP in a form and
manner, and at a time, specified by
CMS.
We invited public comments on this
proposal. We did not receive any public
comments on this proposal. Therefore,
we are finalizing our proposal as
proposed to revise the regulatory text at
§ 412.560(b)(1) to require LTCHs to
report both data on measures and
standardized patient assessment data
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under the LTCH QRP in a form and
manner, and at a time, specified by
CMS.
14. Application of the LTCH QRP
Exception and Extension Requirements
to the Submission of Standardized
Patient Assessment Data
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20117 through
20118), we proposed to revise the
regulatory text at § 412.560(c) to extend
the Exception and Extension
requirement policies to the submission
of standardized patient assessment data
beginning with the FY 2019 LTCH QRP.
We invited public comments on this
proposal. We did not receive any public
comments on this proposal. Therefore,
we are finalizing our proposal as
proposed to revise the regulatory text at
§ 412.560(c) to extend these policies to
the submission of standardized patient
assessment data beginning with the FY
2019 LTCH QRP.
15. Application of the LTCH QRP
Reconsideration Policy to the
Submission of Standardized Patient
Assessment Data
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20118), we
proposed to revise the regulatory text at
§ 412.560(d) to extend the
reconsideration policies to the
submission of standardized patient
assessment data beginning with the FY
2019 LTCH QRP.
We invited public comments on this
proposal. We did not receive any
comments on this proposal. Therefore,
we are finalizing our proposal to revise
the regulatory text at § 412.560(d) to
extend these policies to the submission
of standardized patient assessment data
beginning with the FY 2019 LTCH QRP.
16. Application of the LTCH QRP Data
Completion Thresholds to the
Submission of Standardized Patient
Assessment Data Beginning With the FY
2019 LTCH QRP
In the FY 2015 IPPS/LTCH PPS final
rule (79 FR 50311 through 50314), we
finalized LTCH QRP thresholds for
completeness of LTCH data
submissions. To ensure that LTCHs are
meeting an acceptable standard for
completeness of submitted data, we
finalized the policy that, beginning with
the FY 2016 LTCH QRP, LTCHs must
meet or exceed two separate data
completeness thresholds: One threshold
set at 80 percent for completion of
measures data collected using the LTCH
CARE Data Set submitted through the
QIES ASAP system, and a second
threshold set at 100 percent for
measures data collected and submitted
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using the CDC NHSN. The term
‘‘measures’’ refers to quality measures,
resource use, and other measures.
Under our finalized policy, some
assessment data will not invoke a
response and, in those circumstances,
are not ‘‘missing’’ nor is the data
incomplete. For example, in the case of
a patient who does not have any of the
medical conditions in a ‘‘check all that
apply’’ listing, the absence of a response
of a health condition indicates that the
condition is not present, and it would
be incorrect to consider the absence of
such data as missing in a threshold
determination. In the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 20118),
we proposed to extend our current
LTCH QRP data completion
requirements to the reporting of
standardized patient assessment data.
We invited public comment on this
proposal.
We also proposed to codify these
LTCH QRP data completion thresholds
at a new § 412.560(f) for measures data
collected using the LTCH CARE Data
Set, beginning with the FY 2016 LTCH
QRP, and standardized patient
assessment data elements collected
using the LTCH CARE Data Set,
beginning with the FY 2019 LTCH QRP.
Under this section, we proposed to
codify that LTCHs must meet or exceed
two separate data completeness
thresholds: 80 Percent for completion of
measures data and standardized patient
assessment data collected using the
LTCH CARE Data Set submitted through
the QIES; and 100 percent for measures
data collected and submitted using the
CDC NHSN. These thresholds would
apply to all measures and data elements
adopted into LTCH QRP. A LTCH must
meet or exceed both thresholds to avoid
receiving a 2 percentage point reduction
to its annual payment update for a given
fiscal year, beginning with the FY 2016
LTCH QRP for measures data and
beginning with the FY 2019 LTCH QRP
for standardized patient assessment data
elements.
We invited public comment on our
proposal to extend our current LTCH
QRP data completion requirements to
the reporting of standardized patient
assessment data. We also invited public
comment on our proposal to codify the
LTCH QRP data completion thresholds
at § 412.560(f) for measures and
standardized patient assessment data
elements collected using the LTCH
CARE Data Set.
Comment: A commenter raised
concerns regarding the addition of
standardized patient assessment data
that would be applied to the data
completion threshold policy. The
commenter suggested waiting a year to
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impose the data completion threshold
policy to the standardized patient
assessment data so that providers have
the opportunity to receive confidential
feedback on their data from CMS.
Response: We appreciate the
commenter’s suggestions pertaining to
the application of the data completion
threshold policy to the standardized
patient assessment data elements.
Providers generally have 135 days
following the end of each CY quarter to
review and submit corrections to their
data. Therefore, we believe that
providers have the sufficient tools and
time to manage the addition of the
standardized patient assessment data to
the data completion threshold policy.
After consideration of the public
comments we received, we are
finalizing our proposal as proposed to
extend our current LTCH QRP data
completion requirements to the
reporting of standardized patient
assessment data. We are also finalizing
our proposal as proposed to codify the
LTCH QRP data completion thresholds
at § 412.560(f) for measures and
standardized patient assessment data
elements collected using the LTCH
CARE Data Set.
17. Policies Regarding Public Display of
Measure Data for the LTCH QRP
Section 1886(m)(5)(E) of the Act
requires the Secretary to establish
procedures for making the LTCH QRP
data available to the public after
ensuring that an LTCH has the
opportunity to review its data prior to
public display. Measure data is
currently displayed on the Long-Term
Care Hospital Compare Web site, which
is an interactive web tool that assists
individuals by providing information on
LTCH quality of care including those
who need to select an LTCH. For more
information on LTCH Compare, we refer
readers to: https://www.medicare.gov/
longtermcarehospitalcompare/. In
addition, for a more detailed discussion
about the provider’s confidential review
process prior to public display of
quality measures we refer readers to the
FY 2017 IPPS/LTCH PPS final rule (81
FR 57231 through 57236).
We also finalized the process we use
to publish a list of LTCHs that
successfully meet the reporting
requirements for the applicable LTCH
QRP year on the LTCH QRP Web site in
the FY 2017 IPPS/LTCH PPS final rule
(81 FR 57231). The list of compliant
LTCHs is available at: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
LTCH-Quality-Reporting-DataSubmission-Deadlines.html.
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In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57231 through 57236), we
finalized the public display of measure
data on the LTCH Compare Web site in
CY 2017 for the following 4 quality
measures pending the availability of
data: (1) NHSN Facility-wide Inpatient
Hospital-onset MRSA Bacteremia
Outcome Measure (NQF #1716); (2)
NHSN Facility-wide Inpatient Hospitalonset CDI Outcome Measure (NQF
#1717); (3) Influenza Vaccination
Coverage Among Healthcare Personnel
(NQF #0431); and (4) Percent of
Residents or Patients Who Were
Assessed and Appropriately Given the
Seasonal Influenza Vaccine (NQF
#0680).
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57232), we stated that
‘‘pending the availability of data,’’ the
public display of NHSN Facility-wide
Inpatient Hospital-onset MRSA
Bacteremia Outcome Measure (NQF
#1716) and NHSN Facility-wide
Inpatient Hospital-onset CDI Outcome
Measure (NQF #1717) would initially be
based on data collected from January 1,
2015 through December 31, 2015 and
would be displayed based on 4 rolling
quarters. We would like to clarify that
the initial public display of data for
these two quality measures (MRSA and
CDI) will be based on data collected
from January 1, 2016 through December
31, 2016 (CY 2016), as the CY 2015 data
is not available for display using the
Standardized Infection Ratio (SIR)
metric. Rather, this data (CY 2015) was
used by the CDC to calculate the
‘‘predicted’’ number of infections (the
number of infections that would be
expected to occur based on previously
reported data) for each LTCH, so that
subsequent data could be used to
calculate the SIR for each of these
quality measures.
The SIR is a summary statistic that
compares the ‘‘predicted’’ number of
infections to the ‘‘observed’’ or actual
number of infections for a given LTCH.
This process or ‘‘rebaselining’’ of data
occurs periodically when the CDC
determines that referent period of data
or ‘‘baseline’’ is no longer meaningful
due to changes in the quality measure
protocols or changes in provider
populations. When the CDC uses a
specific year’s data to inform newly
calculated ‘‘predicted’’ number of
infections, CMS is unable to use that
specific year of data to calculate the SIR,
and for this reason, we are unable to
display the MRSA and CDI performance
data using the CY 2015 LTCH NHSN
data, and will use the CY 2016 data to
inform the SIR calculations when we
publicly display the SIRs for these
measures in fall 2017.
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The Influenza Vaccination Coverage
Among Healthcare Personnel (NQF
#0431) and Percent of Residents or
Patients Who Were Assessed and
Appropriately Given the Seasonal
Influenza Vaccine (NQF #0680) will be
based on the influenza vaccination
season from October 1, 2015 through
March 31, 2016 and will be updated
annually. We refer readers to the FY
2017 IPPS/LTCH PPS final rule (81 FR
57231 through 57233) for details on the
calculations and display of these quality
measures.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20118 through
20120), pending the availability of data,
we proposed to publicly report data in
CY 2018 for the following 3 assessmentbased measures: (1) Percent of LTCH
Patients With an Admission and
Discharge Functional Assessment and a
Care Plan That Addresses Function
(NQF #2631); (2) Application of Percent
of LTCH Patients With an Admission
and Discharge Functional Assessment
and a Care Plan That Addresses
Function (NQF #2631); and (3)
Application of Percent of Residents
Experiencing One or More Falls with
Major Injury (NQF #0674). In addition,
pending the availability of data, we
proposed to publicly report data in CY
2020 for the assessment-based measure
Functional Outcome Measure: Change
in Mobility Among Patients Requiring
Ventilator Support (NQF #2632). Data
collection for these 4 new assessmentbased measures began on April 1, 2016.
We proposed to display data for the
assessment-based measures based on
four rolling quarters of data and would
initially use discharges from January 1,
2017 through December 31, 2017, with
the exception of Functional Outcome
Measure: Change in Mobility Among
Patients Requiring Ventilator Support
(NQF #2632) which would be based on
eight rolling quarters of data and would
initially use discharges from January 1,
2017 through December 31, 2018.
In addition, we proposed to publicly
report 3 claims-based measures: (1)
Medicare Spending Per Beneficiary-PAC
LTCH QRP; (2) Discharge to
Community-PAC LTCH QRP; and (3)
Potentially Preventable 30-Day PostDischarge Readmission Measure for
LTCH QRP.
These measures were adopted for the
LTCH QRP in the FY 2017 IPPS/LTCH
PPS final rule to be based on data from
2 consecutive calendar years. As
previously adopted in the FY 2017
IPPS/LTCH PPS final rule (81 FR 57233
through 57236), confidential feedback
reports for these 3 claims-based
measures will be based on calendar
years 2015 and 2016 and data collected
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for discharges beginning January 1, 2015
through December 31, 2016. However,
our current proposal revises the dates
for public reporting, and we proposed to
transition from calendar year to fiscal
year to make these measure data
publicly available by October 2018.
Thus, we proposed public reporting
beginning in CY 2018 for these claimsbased measures based on fiscal years
2016 and 2017 and data collected from
discharges beginning October 1, 2015
through September 30, 2017.
We proposed to remove the following
claims-based measure ‘‘All-Cause
Unplanned Readmission Measure for 30
Days Post Discharge from LTCHs’’ from
the LTCH QRP and public reporting by
October 2018. We refer readers to
section IX.C.8. of the preamble of this
final rule for additional information
regarding the proposed removal of this
measure from quality reporting and
public display. We also proposed to
remove the following assessment-based
measure ‘‘Percent of Residents or
Patients with Pressure Ulcers That Are
New or Worsened (Short Stay) (NQF
#0678)’’ and to replace it with a
modified version of the measure entitled
‘‘Changes in Skin Integrity Post-Acute
Care: Pressure Ulcer/Injury’’ from the
LTCH QRP and public reporting by
October 2020. We refer readers to
section IX.C.7.a. of the preamble of this
final rule for additional information
regarding the proposed replacement of
this measure from quality reporting and
public display.
For the assessment-based measures:
Percent of LTCH Patients With an
Admission and Discharge Functional
Assessment and a Care Plan That
Addresses Function (NQF #2631);
Application of Percent of LTCH Patients
With an Admission and Discharge
Functional Assessment and a Care Plan
That Addresses Function (NQF #2631);
and Application of Percent of Residents
Experiencing One or More Falls with
Major Injury (NQF #0674), to ensure the
statistical reliability of the measures, we
proposed to assign LTCHs with fewer
than 20 eligible cases during a
performance period to a separate
category: ‘‘The number of cases/patient
stays is too small to report.’’ If an LTCH
had fewer than 20 eligible cases, the
38459
LTCH’s performance would not be
publicly reported for the measure for
that performance period.
For the claims-based measures:
Discharge to Community-PAC LTCH
QRP and Potentially Preventable 30-Day
Post-Discharge Readmission Measure for
LTCH QRP, to ensure the statistical
reliability of the measures, we proposed
to assign LTCHs with fewer than 25
eligible cases during a performance
period to a separate category: ‘‘The
number of cases/patient stays is too
small to report.’’ If an LTCH had fewer
than 25 eligible cases, the LTCH’s
performance would not be publicly
reported for the measure for that
performance period. For Medicare
Spending Per Beneficiary-PAC LTCH
QRP, to ensure the statistical reliability
of the measure, we proposed to assign
LTCHs with fewer than 20 eligible cases
during a performance period to a
separate category: ‘‘The number of
cases/patient stays is too small to
report.’’ If an LTCH had fewer than 20
eligible cases, the LTCH’s performance
would not be publicly reported for the
measure for that performance period.
PREVIOUSLY FINALIZED AND PROPOSED MEASURES FOR CY 2018 PUBLIC DISPLAY AND CONFIDENTIAL FEEDBACK
REPORTS
Previously Finalized Measures:
Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (Short Stay) (NQF #0678).
National Healthcare Safety Network (NHSN) Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure (NQF #0138).
National Healthcare Safety Network (NHSN) Central Line-Associated Bloodstream Infection (CLABSI) Measure (NQF #0139).
NHSN Facility-wide Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus (MRSA) Bacteremia Outcome Measure (NQF
#1716).
NHSN Facility-wide Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome Measure (NQF #1717).
Influenza Vaccination Coverage Among Healthcare Personnel (NQF #0431).
Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (NQF #0680).
Proposed Measures:
Percent of Long-Term Care Hospital (LTCH) Patients With an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function (NQF #2631).
Application of Percent of Long-Term Care Hospital (LTCH) Patients With an Admission and Discharge Functional Assessment and a Care
Plan That Addresses Function (NQF #2631).
Application of Percent of Residents Experiencing One or More Falls with Major Injury (NQF #0674).
Medicare Spending Per Beneficiary-PAC LTCH QRP.
Discharge to Community-PAC LTCH QRP.
Potentially Preventable 30-Day Post-Discharge Readmission Measure for LTCH QRP.
PROPOSED ADDITIONAL MEASURE FOR replacement of ‘‘Percent of Residents or
CY 2020 PUBLIC DISPLAY AND CON- Patients with Pressure Ulcers That Are
New or Worsened (Short Stay) (NQF
FIDENTIAL FEEDBACK REPORTS
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Functional Outcome Measure: Change in
Mobility Among Long-Term Care Hospital
(LTCH) Patients Requiring Ventilator Support (NQF #2632).
We invited public comment on the
proposal for the public display of the
four assessment-based measures and
three claims-based measures, the
removal of the All-Cause Unplanned
Readmission Measure for 30 Days Post
Discharge from LTCHs from the LTCH
QRP and public display, and the
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#0678)’’ with a modified version of the
measure entitled ‘‘Changes in Skin
Integrity Post-Acute Care: Pressure
Ulcer/Injury’’ as described above.
Comment: A commenter supported
CMS’ efforts to display regional
comparison rates. The commenter also
requested state comparison data in
addition to regional comparison data for
the LTCH quality measures.
Response: We appreciate the
commenter’s support. We also note that
we addressed this issue in the FY 2017
IPPS/LTCH PPS final rule (81 FR
57233), and we refer the reader to that
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final rule for a detailed response
regarding the display of regional and
state comparison rates.
Comment: A commenter supported
CASPER monthly updates to the data
and the provision of detailed
instructions on how to obtain their
confidential feedback reports.
Response: We acknowledge the
commenter’s support for the current
process of providing monthly updates to
the confidential feedback reports. We
will continue to provide detailed
instructions on how to obtain CASPER
reports on the LTCH QRP Web site and
will continue to offer trainings to help
providers understand how to utilize the
reports available to them.
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Comment: A commenter suggested
that CMS provide consultative
opportunities to assist LTCHs in their
measure improvements.
Response: We note that providers can
use their confidential feedback and
other CASPER reports to address their
internal processes to improve quality
outcomes. Further, there are established
help desks for our public reporting and
quality reporting programs that
providers can submit questions about
the measures and performance results
that CMS reviews and responds to.
Additional information about the help
desks can be found on the LTCH QRP
Web site: https://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/LTCH-QualityReporting/LTCH-Quality-ReportingHelp.html. Finally, we also provide
training opportunities and updated
guidance which can be accessed by
means of the LTCH QRP Web pages.
Comment: A few commenters
expressed concern that similar or
overlapping quality measures would be
publicly reported at the same time on
the LTCH Compare Web site (for
example, both pressure ulcer measures,
both readmission measures).
Response: We plan to remove the
Percent of Residents or Patients with
Pressure Ulcers That Are New or
Worsened (Short Stay) (NQF #0678) and
All-Cause Unplanned Readmission
Measure for 30 Days Post-Discharge
from Long-Term Care Hospitals from the
LTCH Compare Web site prior to when
we begin to publicly display the
Changes in Skin Integrity Post-Acute
Care: Pressure Ulcer/Injury and
Potentially Preventable 30-Day PostDischarge Readmission Measure for
Long-Term Care Hospital Quality
Reporting Program, respectively.
Comment: A few commenters
recommended enhancements to the
LTCH Compare Web site to further
explain quality measure data and results
in a way that is interpretable to patients,
their families, and providers. One of
these commenters also suggested
convening a multi-stakeholder panel to
review and provide guidance on the
various Compare Web sites including
LTCH Compare.
Response: We appreciate the
commenters’ suggestions and will take
these suggestions into consideration as
we continue to enhance the LTCH
Compare Web site, including making
quality measure information
interpretable for LTCH patients,
families, and providers. Of note, when
developing the LTCH Compare Web
site, consumer testing of the Web site
did occur during the development
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stages with members of the public
including Medicare beneficiaries.
Comment: A commenter expressed
concerns about the ability of providers
to review and correct the accuracy of
measure data generated by the CDC
NHSN and claims-based models prior to
their display on the LTCH Compare
Web site as mandated by the IMPACT
Act. The commenter further stated that
results for two of the four required
measures, CLABSI and CAUTI, were not
posted on the Compare Web site due to
calculation issues while the unplanned
readmission rate cannot be reviewed for
accuracy by providers because they are
not provided the raw source data or the
model.
Response: We recognize the
commenter’s concerns regarding the
CDC NHSN CAUTI and CLABSI and
claims-based All-Cause Unplanned
Readmission Measure for 30 Days Post
Discharge from Long-Term Care
Hospitals. Providers are required to
submit accurate HAI data to CDC and
are given the opportunity to review and
correct any data submitted. Providers
have approximately 4.5 months after the
reporting quarter to correct their
assessment-based and NHSN data used
to calculate the measures as detailed in
FY 2017 IPPS/LTCH PPS final rule (81
FR 57234 through 57236). Also, as
stated in the FY 2017 IPPS/LTCH PPS
final rule (81 FR 57234), CMS can
suppress data on LTCH Compare if it is
determined that the measure
performance on the Provider Preview
reports contains a calculation error. We
intend to display data on the CDC
NHSN CAUTI and CLABSI measures for
the most recent quarter when the data
is corrected. We will continue to work
with the CDC to ensure the accuracy of
measure results. CDC measure
specifications can be found on the CDC
NHSN Web site (https://www.cdc.gov/
nhsn/).
Regarding the claims-based All-Cause
Unplanned Readmission Measure for 30
Days Post Discharge from Long-Term
Care Hospitals measure, CMS
appreciates commenter’s concern
regarding the accuracy of the measure
because they are not provided the raw
source data or the model. CMS is
exploring the feasibility of making
additional patient level data available to
providers as well as posting updated
information on the risk model results
used for measure calculation. We intend
to continue to display results for The
All-Cause Unplanned Readmission
Measure for 30 Days Post Discharge
from Long-Term Care Hospitals (NQF
#2512) until the removal of the measure
from public display by October 2018.
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Comment: A commenter expressed
concerns regarding the ability of CDC
NHSN HAI and claims-based All-Cause
Unplanned Readmission Measure for 30
Days Post Discharge from Long-Term
Care Hospitals measures to accurately
reflect changing patient populations.
Response: We appreciate the
commenter’s concerns about the CDC
NHSN HAI CAUTI and CLABSI
measures and the claims-based AllCause Unplanned Readmission Measure
for 30 Days Post-Discharge from LongTerm Care Hospitals. We will continue
to update and refine measure
specifications based on ongoing analysis
of the data and patient populations.
National averages are not stagnant but
are calculated on an ongoing basis to
reflect results based on the data from the
time period reported.
After consideration of the public
comments we received, we are
finalizing our proposal as proposed to
begin publicly reporting in CY 2018 the
following assessment-based measures
pending the availability of the data:
‘‘Percent of Long-Term Care Hospital
(LTCH) Patients With an Admission and
Discharge Functional Assessment and a
Care Plan That Addresses Function’’
(NQF #2631), ‘‘Application of Percent of
Long-Term Care Hospital (LTCH)
Patients With an Admission and
Discharge Functional Assessment and a
Care Plan That Addresses Function’’
(NQF #2631), ‘‘Application of Percent of
Residents Experiencing One or More
Falls with Major Injury’’ (NQF #0674),
as well as the following claims-based
measures: ‘‘Medicare Spending Per
Beneficiary-PAC LTCH QRP,’’
‘‘Discharge to Community-PAC LTCH
QRP,’’ and ‘‘Potentially Preventable 30Day Post-Discharge Readmission
Measure for LTCH QRP.’’ In addition,
we will publicly report data in CY 2020
the assessment-based measure:
‘‘Functional Outcome Measure: Change
in Mobility Among Long-Term Care
Hospital (LTCH) Patients Requiring
Ventilator Support’’ (NQF #2632)
pending availability of data.
We are finalizing our proposal to
remove the claims-based measure ‘‘AllCause Unplanned Readmission Measure
for 30 Days Post-Discharge from LongTerm Care Hospitals’’ from the LTCH
QRP and public reporting by October
2018. We are also finalizing our
proposals to remove the following
assessment-based measure ‘‘Percent of
Residents or Patients with Pressure
Ulcers That Are New or Worsened
(Short Stay) (NQF #0678)’’ and to
replace it with a modified version of the
measure entitled ‘‘Changes in Skin
Integrity Post-Acute Care: Pressure
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Ulcer/Injury’’ from the LTCH QRP and
public reporting by October 2020.
18. Mechanism for Providing Feedback
Reports to LTCHs
Section 1899B(f) of the Act requires
the Secretary to provide confidential
feedback reports to PAC providers on
their performance on the measures
specified under sections 1899B(c)(1)
and (d)(1) of the Act, beginning one year
after the specified application date that
applies to such measures and PAC
providers. In the FY 2017 IPPS/LTCH
PPS final rule (81 FR 57233 through
57236), we finalized processes to
provide LTCHs the opportunity to
review their data and information using
confidential feedback reports that will
enable LTCHs to review their
performance on the measures required
under the LTCH QRP. Information on
how to obtain these and other reports
available to the LTCH can be found at:
https://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
LTCH-Quality-Public-Reporting.html.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20120), we did not
propose any changes to this policy.
D. Inpatient Psychiatric Facility Quality
Reporting (IPFQR) Program
1. Background
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a. Statutory Authority
Section 1886(s)(4) of the Act, as added
and amended by sections 3401(f) and
10322(a) of the Patient Protection and
Affordable Care Act, requires the
Secretary to implement a quality
reporting program for inpatient
psychiatric hospitals and psychiatric
units. Section 1886(s)(4)(A)(i) of the Act
requires that, for fiscal year (FY)
2014 457 and each subsequent fiscal
year, the Secretary must reduce any
annual update to a standard Federal rate
457 The statute uses the term ‘‘rate year’’ (RY).
However, beginning with the annual update of the
inpatient psychiatric facility prospective payment
system (IPF PPS) that took effect on July 1, 2011
(RY 2012), we aligned the IPF PPS update with the
annual update of the ICD codes, effective on
October 1 of each year. This change allowed for
annual payment updates and the ICD coding update
to occur on the same schedule and appear in the
same Federal Register document, promoting
administrative efficiency. To reflect the change to
the annual payment rate update cycle, we revised
the regulations at 42 CFR 412.402 to specify that,
beginning October 1, 2012, the RY update period
would be the 12-month period from October 1
through September 30, which we refer to as a
‘‘fiscal year’’ (FY) (76 FR 26435). Therefore, with
respect to the IPFQR Program, the terms ‘‘rate year,’’
as used in the statute, and ‘‘fiscal year’’ as used in
the regulation, both refer to the period from October
1 through September 30. For more information
regarding this terminology change, we refer readers
to section III of the RY 2012 IPF PPS final rule (76
FR 26434 through 26435).
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for discharges occurring during the
fiscal year by 2.0 percentage points for
any inpatient psychiatric hospital or
psychiatric unit that does not comply
with quality data submission
requirements with respect to an
applicable fiscal year.
As provided in section
1886(s)(4)(A)(ii) of the Act, the
application of the reduction for failure
to report under section 1886(s)(4)(A)(i)
of the Act may result in an annual
update of less than 0.0 percent for a
fiscal year, and may result in payment
rates under section 1886(s)(1) of the Act
being less than the payment rates for the
preceding year. In addition, section
1886(s)(4)(B) of the Act requires that the
application of the reduction to a
standard Federal rate update be
noncumulative across fiscal years. Thus,
any reduction applied under section
1886(s)(4)(A) of the Act will apply only
with respect to the fiscal year rate
involved and the Secretary may not take
into account the reduction in computing
the payment amount under the system
described in section 1886(s)(1) of the
Act for subsequent years.
Section 1886(s)(4)(C) of the Act
requires that, for FY 2014 (October 1,
2013 through September 30, 2014) and
each subsequent year, each psychiatric
hospital and psychiatric unit must
submit to the Secretary data on quality
measures as specified by the Secretary.
The data must be submitted in a form
and manner and at a time specified by
the Secretary. Under section
1886(s)(4)(D)(i) of the Act, unless the
exception of subclause (ii) applies,
measures selected for the quality
reporting program must have been
endorsed by the entity with a contract
under section 1890(a) of the Act. The
National Quality Forum (NQF) currently
holds this contract.
Section 1886(s)(4)(D)(ii) of the Act
provides an exception to the
requirement for NQF endorsement of
measures: In the case of a specified area
or medical topic determined appropriate
by the Secretary for which a feasible and
practical measure has not been endorsed
by the entity with a contract under
section 1890(a) of the Act, the Secretary
may specify a measure that is not so
endorsed as long as due consideration is
given to measures that have been
endorsed or adopted by a consensus
organization identified by the Secretary.
Section 1886(s)(4)(E) of the Act
requires the Secretary to establish
procedures for making public the data
submitted by inpatient psychiatric
hospitals and psychiatric units under
the IPFQR Program. These procedures
must ensure that a facility has the
opportunity to review its data prior to
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the data being made public. The
Secretary must report quality measures
that relate to services furnished by the
psychiatric hospitals and units on the
CMS Web site.
b. Covered Entities
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53645), we established that
the IPFQR Program’s quality reporting
requirements cover those psychiatric
hospitals and psychiatric units paid
under Medicare’s Inpatient Psychiatric
Facility Prospective Payment System
(IPF PPS) (42 CFR 412.404(b)).
Generally, psychiatric hospitals and
psychiatric units within acute care and
critical access hospitals that treat
Medicare patients are paid under the
IPF PPS. Consistent with prior rules, we
continue to use the term ‘‘inpatient
psychiatric facility’’ (IPF) to refer to
both inpatient psychiatric hospitals and
psychiatric units. This usage follows the
terminology in our IPF PPS regulations
at 42 CFR 412.402. For more
information on covered entities, we
refer readers to the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53645).
c. Considerations in Selecting Quality
Measures
We strive to put patients first,
ensuring they are empowered to make
decisions about their own healthcare
along with their clinicians using
information from data-driven insights
that are increasingly aligned with
meaningful quality measures. We
support technology that reduces burden
and allows clinicians to focus on
providing high-quality healthcare for
their patients. We also support
innovative approaches to improve
quality, accessibility, and affordability
of care while paying particular attention
to improving clinicians’ and
beneficiaries’ experience when
interacting with our programs. In
combination with other efforts across
the Department of Health and Human
Services, we believe the IPFQR program
helps to incentivize facilities to improve
healthcare quality and value while
giving patients and providers the tools
and information needed to make the
best decisions for them. Consistent with
these goals, our objective in selecting
quality measures is to balance the need
for information on the full spectrum of
care delivery and the need to minimize
the burden of data collection and
reporting. We have primarily focused on
measures that evaluate critical processes
of care that have significant impact on
patient outcomes and support CMS and
HHS priorities for improved quality and
efficiency of care provided by IPFs.
When possible, we also seek to
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incorporate measures that directly
evaluate patient outcomes. We refer
readers to section VIII.F.4.a of the FY
2013 IPPS/LTCH PPS final rule (77 FR
53645 through 53646) for a detailed
discussion of the considerations taken
into account in selecting quality
measures.
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(1) Measure Selection Process
Before being proposed for inclusion in
the IPFQR Program, measures are placed
on a list of measures under
consideration, which is published
annually by December 1 on behalf of
CMS by the NQF. In compliance with
section 1890A(a)(2) of the Act, measures
proposed for the IPFQR Program were
included in a publicly available
document: ‘‘List of Measures under
Consideration for December 1, 2016’’
available at: https://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/Quality
Measures/Downloads/Measures-underConsideration-List-for-2016.pdf. The
Measure Applications Partnership
(MAP), a multi-stakeholder group
convened by the NQF, reviews the
measures under consideration for the
IPFQR Program, among other Federal
programs, and provides input on those
measures to the Secretary. The MAP’s
2017 recommendations for quality
measures under consideration are
captured in the following documents:
‘‘Process and Approach for MAP PreRulemaking Deliberations, 2016–2017,’’
available at: https://www.qualityforum.
org/WorkArea/linkit.aspx?Link
Identifier=id&ItemID=84455 and ‘‘2016–
2017 Spreadsheet of Final
Recommendations to HHS and CMS’’
available at: https://www.quality
forum.org/WorkArea/linkit.aspx?Link
Identifier=id&ItemID=84452. We
considered the input and
recommendations provided by the MAP
in selecting all measures for the IPFQR
Program, including those discussed
below.
(2) Accounting for Social Risk Factors in
the IPFQR Program
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20121), we
discussed accounting for social risk
factors in the IPFQR Program. We
understand that social risk factors such
as income, education, race and
ethnicity, employment, disability,
community resources, and social
support (certain factors of which are
also sometimes referred to as
socioeconomic status (SES) factors or
socio-demographic status (SDS) factors)
play a major role in health. One of our
core objectives is to improve beneficiary
outcomes including reducing health
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disparities, and we want to ensure that
all beneficiaries, including those with
social risk factors, receive high quality
care. In addition, we seek to ensure that
the quality of care furnished by
providers and suppliers is assessed as
fairly as possible under our programs
while ensuring that beneficiaries have
adequate access to excellent care.
We have been reviewing reports
prepared by the Office of the Assistant
Secretary for Planning and Evaluation
(ASPE) 458 and the National Academies
of Sciences, Engineering, and Medicine
on the issue of measuring and
accounting for social risk factors in
CMS’ value-based purchasing and
quality reporting programs, and
considering options on how to address
the issue in these programs. On
December 21, 2016, ASPE submitted a
Report to Congress on a study it was
required to conduct under section 2(d)
of the Improving Medicare Post-Acute
Care Transformation (IMPACT) Act of
2014. The study analyzed the effects of
certain social risk factors in Medicare
beneficiaries on quality measures and
measures of resource use used in one or
more of nine Medicare value-based
purchasing programs.459 The report also
included considerations for strategies to
account for social risk factors in these
programs. In a January 10, 2017 report
released by the National Academies of
Sciences, Engineering, and Medicine,
that body provided various potential
methods for measuring and accounting
for social risk factors, including
stratified public reporting.460
As noted in the FY 2017 IPPS/LTCH
PPS final rule, the NQF undertook a 2year trial period in which new
measures, measures undergoing
maintenance review, and measures
endorsed with the condition that they
enter the trial period could be assessed
to determine whether risk adjustment
for selected social risk factors is
appropriate for these measures. This
trial entailed temporarily allowing
inclusion of social risk factors in the
458 Office of the Assistant Secretary for Planning
and Evaluation. 2016. Report to Congress: Social
Risk Factors and Performance Under Medicare’s
Value-Based Purchasing Programs. Available at:
https://aspe.hhs.gov/pdf-report/report-congresssocial-risk-factors-and-performance-undermedicares-value-based-purchasing-programs.
459 Office of the Assistant Secretary for Planning
and Evaluation. 2016. Report to Congress: Social
Risk Factors and Performance Under Medicare’s
Value-Based Purchasing Programs. 21 Dec. 2016.
Available at: https://aspe.hhs.gov/pdf-report/reportcongress-social-risk-factors-and-performanceunder-medicares-value-based-purchasingprograms.
460 National Academies of Sciences, Engineering,
and Medicine. 2017. Accounting for social risk
factors in Medicare payment. Washington, DC: The
National Academies Press.
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risk-adjustment approach for these
measures. The trial period ended in
April 2017 and a draft report is available
at: https://www.qualityforum.org/SES_
Trial_Period.aspx.
As we continue to consider the
analyses and recommendations from
these reports and await the results of the
NQF trial on risk adjustment for quality
measures, we are continuing to work
with stakeholders in this process. As we
have previously communicated, we are
concerned about holding providers to
different standards for the outcomes of
their patients with social risk factors
because we do not want to mask
potential disparities or minimize
incentives to improve the outcomes for
disadvantaged populations. Keeping
this concern in mind, while we sought
input on this topic previously, we
continue to seek public comment on
whether we should account for social
risk factors in the IPFQR Program, and
if so, what method or combination of
methods would be most appropriate for
accounting for social risk factors.
Examples of methods include:
Confidential reporting to providers of
measure rates stratified by social risk
factors; public reporting of stratified
measure rates; and potential risk
adjustment of a particular measure as
appropriate based on data and evidence.
In addition, in the proposed rule, we
sought public comment on which social
risk factors might be most appropriate
for reporting stratified measure scores
and/or potential risk adjustment of a
particular measure. Examples of social
risk factors include, but are not limited
to, dual eligibility/low-income subsidy,
race and ethnicity, and geographic area
of residence. We also sought comments
on which of these factors, including
current data sources where this
information would be available, could
be used alone or in combination, and
whether other data should be collected
to better capture the effects of social
risk. We will take commenters’ input
into consideration as we continue to
assess the appropriateness and
feasibility of accounting for social risk
factors in the IPFQR Program. We note
that any such changes would be
proposed through future notice-andcomment rulemaking.
We look forward to working with
stakeholders as we consider the issue of
accounting for social risk factors and
reducing health disparities in CMS
programs. Of note, implementing any of
the above methods would be taken into
consideration in the context of how this
and other CMS programs operate (for
example, data submission methods,
availability of data, statistical
considerations relating to reliability of
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data calculations, among others), so we
also welcomed comment on operational
considerations. CMS is committed to
ensuring that its beneficiaries have
access to and receive excellent care, and
that the quality of care furnished by
providers and suppliers is assessed
fairly in CMS programs.
Comment: Many commenters
expressed support for the concept of
accounting for social risk factors in the
IPFQR Program; however, these
commenters expressed concern that
chart-abstracted process measures, with
data submitted in aggregate, are
inappropriate for risk adjustment or
stratified reporting. These commenters
observed that to properly risk-adjust or
stratify data for the IPFQR Program, the
program would benefit from collection
of patient-level outcome measures data.
One commenter cautioned that
collecting information to stratify
measures could increase burden on IPFs
and reduce the amount of data publicly
reported due to small sample sizes.
Several commenters encouraged CMS to
ensure that providers can confidentially
view reports of measures data stratified
by social risk factors.
One commenter expressed
appreciation that CMS is dedicating
time and attention to this issue, but
requested that CMS improve
transparency of the process by
developing a work plan and timeline.
One commenter encouraged CMS to
collaborate with Medicare Advantage
and Medicaid health plans in
understanding the impact of social risk
factors.
Many commenters expressed concern
that incentives for reducing disparities
could lead to a reduction in quality for
patients who are not at risk, and
recommended that CMS consider this or
other unintended consequences in any
program design.
Several commenters urged CMS to
ensure that data are publicized in a way
that is meaningful to consumers, with
some commenters specifically
recommending that CMS convene
consumer focus groups to provide input
on the data presentation.
Response: We will consider all
suggestions as we continue to assess the
feasibility of accounting for social risk
factors and will actively perform
additional research and monitor for
trends to prevent unintended
consequences. We intend to explore
options including but not limited to
measure stratification by social risk
factors in a consistent manner across
our quality reporting and value-based
purchasing programs when appropriate.
Future proposals would be made after
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further research and continued
stakeholder engagement.
We are committed to ensuring that
CMS beneficiaries have access to and
receive excellent care and the quality of
care furnished by providers and
suppliers is assessed fairly in CMS
quality reporting and value-based
purchasing programs. We thank the
commenters, and we will consider their
views as we develop further policy
regarding social risk factors in the
IPFQR Program.
(3) IPFQR Program Measures Adopted
in Previous Payment Determinations
The current IPFQR Program includes
18 mandatory measures. For more
information on these measures, we refer
readers to the following final rules:
• The FY 2013 IPPS/LTCH PPS final
rule (77 FR 53646 through 53652);
• The FY 2014 IPPS/LTCH PPS final
rule (78 FR 50889 through 50895);
• The FY 2015 IPF PPS final rule (79
FR 45963 through 45974);
• The FY 2016 IPF PPS final rule (80
FR 46694 through 46714); and
• The FY 2017 IPPS/LTCH PPS final
rule (81 FR 57236 through 57249).
2. Factors for Removal or Retention of
IPFQR Program Measures
a. Background
The Hospital IQR Program adopted
formal policies regarding measure
retention and removal in the FY 2011
IPPS/LTCH PPS final rule (75 FR
50185). We believe that it is important
to be consistent between programs to
the extent possible. Therefore, to align
with the policies adopted in this and
other quality reporting programs, in the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 20122), we proposed to adopt
similar policies within the IPFQR
Program. In the past, we have retained
measures from each previous year’s
IPFQR Program measure set for
subsequent years’ measure sets, except
when we specifically proposed to
remove or replace a measure. For
example, we removed HBIPS–6 and
HBIPS–7 and replaced these measures
with Transition Record with Specified
Elements Received by Discharged
Patients (NQF #0647) and Timely
Transmission of Transition Record
(NQF #0648) respectively in the FY
2016 IPF PPS final rule (80 FR 46701
through 46709). In the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 20122),
we proposed factors to consider in
removing or retaining measures effective
upon finalization of the proposed rule,
anticipated to be effective October 1,
2017 and for subsequent years.
We will continue to use the noticeand-comment rulemaking process to
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propose measures for removal or
replacement.
b. Considerations in Removing or
Retaining Measures
With respect to measure removal, we
believe it is important to be transparent
in identifying factors that we would take
into consideration on a case-by-case
basis as guidelines to evaluate a
measure for potential removal from the
IPFQR Program. We believe that these
factors should be aligned between our
programs whenever possible. Therefore,
we refer readers to the Hospital IQR
Program (80 FR 49641 through 49642)
factors we consider in removing or
retaining measures. We intend to align
our policies in the IPFQR Program with
those in the Hospital IQR Program.
Thus, in the proposed rule, we
proposed: (1) Measure removal factors;
(2) criteria for determining when a
measure is ‘‘topped-out;’’ and (3)
measure retention factors. These
proposals are discussed in more detail
below.
We proposed the following measure
removal factors for the IPFQR Program:
• Measure performance among IPFs is
so high and unvarying that meaningful
distinctions and improvements in
performance can no longer be made
(‘‘topped-out’’ measures);
• Measure does not align with current
clinical guidelines or practice;
• Measure can be replaced by a more
broadly applicable measure (across
settings or populations) or a measure
that is more proximal in time to desired
patient outcomes for the particular
topic;
• Measure performance or
improvement does not result in better
patient outcomes;
• Measure can be replaced by a
measure that is more strongly associated
with desired patient outcomes for the
particular topic;
• Measure collection or public
reporting leads to negative unintended
consequences other than patient harm;
and
• Measure is not feasible to
implement as specified.
For the purposes of considering
measures for removal from the program,
we also proposed to align our criteria for
determining that a measure is ‘‘toppedout’’ with the Hospital IQR Program’s
criteria (80 FR 49642), which states that
a measure is ‘‘topped-out’’ if there is
statistically indistinguishable
performance at the 75th and 90th
percentiles and the truncated coefficient
of variation is less than or equal to 0.10.
Furthermore, we recognize that there
may be times when measures may meet
some of the outlined factors for removal,
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but continue to bring value to the
program. Therefore, we also proposed
the following factors for consideration
in determining whether to retain a
measure in the IPFQR Program, which
also are based on factors established in
the Hospital IQR Program (80 FR 49641
through 49642):
• Measure aligns with other CMS and
HHS policy goals, such as those
delineated in the National Quality
Strategy or CMS Quality Strategy;
• Measure aligns with other CMS
programs, including other quality
reporting programs; and
• Measure supports efforts to move
IPFs towards reporting electronic
measures.
We reiterate that these removal and
retention factors are considerations that
we take into account in balancing the
benefits and drawbacks of whether or
not to remove measures on a case-bycase basis.
We invited public comment on our
proposals to adopt: (1) Measure removal
factors; (2) criteria for determining when
a measure is ‘‘topped out;’’ and (3)
measure retention factors as discussed
above. These factors and criteria will
become effective upon finalization of
this rule, anticipated to be effective
October 1, 2017 and for subsequent
years; measures identified as
appropriate for removal would be
proposed through notice-and-comment
rulemaking subsequent to that date.
Comment: Many commenters
supported CMS’ proposal to adopt
measure removal factors. Many of these
commenters also expressed a desire to
see measure performance data and for
CMS to define and report on the
outcomes that CMS believes are
impacted by each process measure. One
commenter supported the criteria for
determining that a measure is ‘‘topped
out.’’
Response: We thank the commenters
for their support of our proposed
measure removal factors. We publish
data collected through the IPFQR
Program on a publicly available CMS
Web site (specifically, Hospital
Compare—https://www.medicare.gov/
hospitalcompare/psych-measures.html)
to allow the public to make informed
healthcare decisions; these data can also
be used to assess national performance
levels on specific measures. We also
note that when we propose measures for
the IPFQR Program, we provide
explanations of how we believe these
measures impact patient outcomes, we
report these data to the extent possible
(through our reporting on Hospital
Compare), and we continue to be
committed to adopting applicable
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outcomes measures into the IPFQR
Program.
Comment: One commenter requested
that CMS add ‘‘implementation puts
patients at greater risk of harm’’ and
‘‘measure has not been specified or
tested in the IPF setting’’ to this list of
removal factors.
Response: While we agree with the
commenter that the potential for
increased patient harm requires
removing a measure from the IPFQR
Program, this was not included on the
list because the list is for routine
measure maintenance, and an increase
in patient harm would most likely
require immediate action. To clarify, if
evidence suggests that a measure results
in an increase in patient harm, we
would take immediate action, as
opposed to waiting for the notice and
comment rulemaking cycle.
We disagree with the commenter’s
assertion that measures must have been
specified or tested in the IPF setting for
adoption in the IPFQR Program. We
believe that measures should address
the overall care provided to patients
while they are inpatients and that to
accomplish this, for example, some
measures which have been tested in
general acute care facilities are
appropriate for the IPF setting.
Comment: Many commenters did not
support CMS’ proposed measure
retention factors. These commenters
believed that only measures specific to
psychiatric care should be retained in
the IPFQR Program. One commenter
expressed that the measure retention
factors do not appear to outweigh the
benefit of removing measures that meet
at least one removal factor.
Response: We disagree with the
commenters’ assertion that only
measures specific to psychiatric care
should be included in the IPFQR
Program. We believe IPFs should
consider the overall health of the patient
throughout the length of his/her episode
of care, in addition to the patient’s
psychiatric condition. We also disagree
with the assertion that the measure
retention factors do not outweigh the
measure removal factors. We believe
that selecting measures for this or any
of the CMS quality reporting program
requires multiple considerations, which
is why we have aligned these measure
removal and retention factors with those
in use in other programs which must
also balance multiple considerations.
We refer readers to the Hospital IQR
Program (80 FR 49641 through 49642),
the PCHQR Program (81 FR 57182
through 57183), the Hospital OQR
Program (79 FR 66942), and the ASCQR
Program (79 FR 66968 through 66969) as
examples of programs with similar
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needs to balance multiple
considerations.
Comment: Several commenters
expressed concern that if CMS adopts
measures that ‘‘support efforts to move
IPFs towards reporting electronic
measures,’’ it may require IPFs to make
extensive infrastructure investments to
participate in the IPFQR Program. Some
commenters stated that measures should
not be retained to support efforts to
move IPFs toward reporting electronic
measures.
Response: We understand the
commenters’ concern regarding the
adoption of infrastructure to support
electronic measure reporting. We do
believe that EHRs have a role in quality
reporting programs, including the
IPFQR Program and, as discussed in the
FY 2013 IPPS/LTCH PPS final rule (77
FR 53660) and the 2014 IPPS/LTCH PPS
final rule (78 FR 50903) we are
interested in increasing the use of EHRs
for data collection in the future.
However, we note that the only measure
currently in the IPFQR Program that
addresses the adoption of Electronic
Health Records is the attestation
measure ‘‘Use of an Electronic Health
Record,’’ which does not require any
infrastructure investment. We originally
adopted this measure to assess the state
of adoption of EHRs among IPFs
because the use of EHRs for the
collection, use, and transmission of
medical information has been
demonstrated to impact the quality of
care. However, data collected from this
measure also provides insight into the
operational barriers to adopting future
electronic clinical quality measures
(eCQMs) as well as the potential burden
posed by individual eCQMs. We would
propose any future measures that
address adoption of EHRs through the
notice and comment rulemaking process
which allows us to seek public
comment on these measures.
Comment: Several commenters
requested that CMS evaluate the current
measures using the proposed removal
and retention factors. One commenter
further encouraged CMS to evaluate the
measures individually and as a set.
Response: We will evaluate the
effectiveness of the measures currently
in the IPFQR Program, individually and
as a set, using these factors for this
evaluation upon finalization of this rule.
Comment: One commenter
recommended that CMS also identify a
set of principles to use in selecting
measures for inclusion in the IPFQR
Program. The commenter recommended
the following principles for selecting
measures: (1) Measures improve the
effectiveness and efficiency of patient
care; (2) measures focus on indicators
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that provide the most useful clinical and
operational data possible; (3) measures
focus on indicators that support
actionable steps that fall within the
scope of responsibility and
accountability of the organization being
measured; (4) measures provide value in
the data generated that is in proportion
to the intensity of the data-collection
effort; and (5) measures have the
potential for being used to measurably
improve the processes, outcomes,
efficiency, and patient experiences of
the care being delivered.
Response: We have previously
described our considerations in the
development and selection of measures,
which include addressing the six
priorities of the National Quality
Strategy (NQS) while minimizing
burden, publicly reporting on measures
that are close to the patient centered
outcome of interest, focusing on gaps of
quality, reflecting important areas of
service, weighing the importance of the
measure versus the burden of collection,
seeking measures which are endorsed
by multistakeholder organizations, and
supporting the HHS Strategic Plan. For
a detailed discussion, we refer readers
to section VIII.F.4.a. of the FY 2013
IPPS/LTCH PPS final rule (77 FR 53645
through 53646). However, we will take
into consideration commenter’s
suggestions for the future.
Comment: One commenter expressed
concern that the definition of ‘‘topped
out’’ is not standardized across private
and public payers. This commenter also
expressed concern that removing
‘‘topped out’’ measures may worsen
performance on the processes that these
measures evaluate.
Response: We seek to align definitions
and criteria with other programs
wherever possible. However, as the
commenter noted there are multiple
definitions of ‘‘topped out’’ across
private and public payers. We wish to
align definitions and criteria with other
programs to the extent possible,
however because of the nonstandardization of the definition, it is
not possible to align with all payers. We
proposed ‘‘topped out’’ criteria that
align with those in use in other CMS
quality reporting programs to ensure our
ability to continue to be in alignment
with these programs. Such quality
reporting programs include the Hospital
IQR Program (80 FR 49641 through
49642), the PCHQR Program (81 FR
57182 through 57183), the Hospital
OQR Program (79 FR 66942), and the
ASCQR Program (79 FR 66968 through
66969).
We agree with the commenter that
there may be times that retaining a
‘‘topped out’’ measure is beneficial, as
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the measure continues to encourage
high levels of performance and we
intend to evaluate each measure on a
case-by-case basis in accordance with
our removal and retention policy to
address this concern.
After consideration of the public
comments we received, we are adopting
the measure removal factors, ‘‘toppedout’’ criteria, and measure retention
factors as proposed.
3. Proposal for New Quality Measure for
the FY 2020 Payment Determination
and Subsequent Years—Medication
Continuation Following Inpatient
Psychiatric Discharge (NQF #3205)
a. Background
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20122 through
20126), we proposed one new measure,
Medication Continuation Following
Inpatient Psychiatric Discharge (NQF
#3205), for the FY 2020 payment
determination and subsequent years.
The measure uses Medicare fee-forservice (FFS) claims to identify whether
patients admitted to IPFs with diagnoses
of major depressive disorder (MDD),
schizophrenia, or bipolar disorder had
filled at least one evidence-based
medication within 2 days prior to
discharge through 30 days postdischarge. We believe that medication
continuation is important for patients
discharged from the inpatient
psychiatric setting with MDD,
schizophrenia, or bipolar disorder
because of significant negative outcomes
associated with non-adherence to
medication regimens. For example,
patients with MDD who do not remain
on prescribed medications are more
likely to have negative health outcomes
such as relapse and readmission,
decreased quality of life, and increased
healthcare costs.461 462 Patients with
schizophrenia who do not adhere to
their medication regimen are more
likely to be hospitalized, use emergency
psychiatric services, be arrested, be
victims of crimes, and consume alcohol
or drugs compared to those who adhere
to their medication regimen.463 Patients
with bipolar disorder who do not adhere
to their medications have increased
461 Geddes JR, Carney SM, Davies C, et al. Relapse
prevention with antidepressant drug treatment in
depressive disorders: a systematic review. Lancet.
2003;361(9358):653–661.
462 Glue P, Donovan MR, Kolluri S, Emir B. Metaanalysis of relapse prevention antidepressant trials
in depressive disorders. The Australian and New
Zealand journal of psychiatry. 2010;44(8):697–705.
463 Gilmer TP, Dolder CR, Lacro JP, et al.
Adherence to treatment with antipsychotic
medication and health care costs among Medicaid
beneficiaries with schizophrenia. The American
journal of psychiatry. 2004;161(4):692–699.
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suicide risk.464 For these reasons,
guidelines from the American
Psychiatric Association (APA) and the
Department of Veterans Affairs/
Department of Defense (VA/DoD),
which are based on extensive literature,
recommend pharmacotherapy as the
primary form of treatment for patients
with these conditions.465 466 467 468 469
Interventions that can be applied in
the inpatient setting that increase
medication compliance and prevent the
negative outcomes associated with
nonadherence have been identified.
These interventions include patient
education, enhanced therapeutic
relationships, shared decision-making,
and text-message reminders, with
multidimensional approaches resulting
in the best outcomes.470 471 472 473 474 475
Furthermore, patients and caregivers
interviewed during the development of
this measure indicated the importance
of the facility’s role in communicating
464 Gonzalez-Pinto A, Mosquera F, Alonso M, et
al. Suicidal risk in bipolar I disorder patients and
adherence to long-term lithium treatment. Bipolar
disorders. 2006;8(5 Pt 2):618–624.
465 American Psychiatric Association. (2002).
Practice guideline for the treatment of patients with
bipolar disorder, second edition. Retrieved from:
https://psychiatryonline.org/pb/assets/raw/sitewide/
practice_guidelines/guidelines/bipolar.pdf.
466 American Psychiatric Association. (2010).
Practice guideline for the treatment of patients with
major depressive disorder, 3rd ed. Retrieved from:
https://psychiatryonline.org/pb/assets/raw/sitewide/
practice_guidelines/guidelines/mdd.pdf.
467 American Psychiatric Association. (2010).
Practice guideline for the treatment of patients with
schizophrenia: 2nd ed. Retrieved from: https://
psychiatryonline.org/pb/assets/raw/sitewide/
practice_guidelines/guidelines/schizophrenia.pdf.
468 U.S. Department of Veterans Affairs, & U.S.
Department of Defense. (2016). Management of
major depressive disorder (MDD). Retrieved from:
https://www.healthquality.va.gov/guidelines/MH/
mdd/VADoDMDDCPGFINAL82916.pdf.
469 U.S. Department of Veterans Affairs & U.S.
Department of Defense. (2010) VA/DOD clinical
practice guideline for management of bipolar
disorder in adults. Retrieved from: https://
www.healthquality.va.gov/guidelines/MH/bd/bd_
305_full.pdf.
470 Douaihy AB, Kelly TM, Sullivan C.
Medications for substance use disorders. Social
work in public health. 2013;28(3–4):264–278.
471 Haddad PM, Brain C, Scott J. Nonadherence
with antipsychotic medication in schizophrenia:
challenges and management strategies. Patient
related outcome measures. 2014;5:43–62.
472 Hung CI. Factors predicting adherence to
antidepressant treatment. Current opinion in
psychiatry. 2014;27(5):344–349.
473 Lanouette NM, Folsom DP, Sciolla A, Jeste DV.
Psychotropic medication nonadherence among
United States Latinos: a comprehensive literature
review. Psychiatric services (Washington, DC).
2009;60(2):157–174.
474 Mitchell AJ. Understanding Medication
Discontinuation in Depression. BMedSci
Psychiatric Times. 2007;24(4).
475 Sylvia LG, Hay A, Ostacher MJ, et al.
Association between therapeutic alliance, care
satisfaction, and pharmacological adherence in
bipolar disorder. Journal of clinical
psychopharmacology. 2013;33(3):343–350.
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information about medications to the
patient, pharmacy, and outpatient
providers.476
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b. Appropriateness for the IPFQR
Program
In compliance with section
1890A(a)(2) of the Act, this measure was
included in a publicly available
document: ‘‘List of Measures under
Consideration for December 1, 2016’’
available at: https://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/
QualityMeasures/Downloads/Measuresunder-Consideration-List-for-2016.pdf.
The MAP Hospital Workgroup
concluded that the measure addressed a
critical quality objective, was evidencebased, and would contribute to efficient
use of resources.477 One Workgroup
member commented that it was
appropriate to hold IPFs accountable for
patients filling a prescription for an
evidence-based medication postdischarge, further remarking that the
measure was moving in the right
direction.478
The MAP Hospital Workgroup
classified the measure as ‘‘Refine and
Resubmit Prior to Rulemaking.’’ 479 The
measure received this classification
because the MAP recommended that
measure testing be completed to
demonstrate reliability and validity at
the facility level in the hospital setting
and that the measure be submitted to
NQF for review and endorsement.480
The MAP also requested additional
details on the measure, such as: (1) The
definition of medication dispensation;
(2) how the facility would know
whether the medication was dispensed;
and (3) how the measure would be
impacted if Medicare Part D coverage is
optional. The MAP also recommended
that this measure be submitted to NQF
for review and endorsement. The final
methodology report includes the results
of reliability and validity testing, and
additional measure updates that
occurred between the MAP review and
NQF submission in December 2016.481
476 Health Services Advisory Group. Final
Methodology Report: Medication Continuation
Following Inpatient Discharge. Tampa, FL; 2016.
477 MAP Hospital Workgroup, Preliminary
Analysis Worksheet. December 2017.
478 National Quality Forum, Measure
Applications Partnership. Meeting Transcript, Day
1 of 2—In-Person Meeting. 2016.
479 https://www.qualityforum.org/WorkArea/
linkit.aspx?LinkIdentifier=id&ItemID=84452.
480 National Quality Forum, Measure Application
Partnership. MAP 2017 Considerations for
Implementing Measures in Federal Programs:
Hospitals. 2017.
481 Health Services Advisory Group. Final
Methodology Report: Medication Continuation
Following Inpatient Discharge. Tampa, FL; 2016.
https://www.cms.gov/medicare/Quality-Initiatives-
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This methodology report also provides
the additional details requested by MAP
at the December meeting.
Reliability and validity testing
completed in 2016 using the final
measure specifications demonstrates
that the measure, as specified, provides
reliable and valid facility-level scores of
medication continuation.482
Reliability was established using a
method of mean denominator and
volume categories. Using that approach,
a minimum denominator size of 75
discharges was established to attain an
overall reliability score of at least 0.7;
this reliability score is within acceptable
norms and indicates sufficient signal
strength to discriminate performance
between facilities.483 This means that it
is possible to distinguish good
performance from poor performance
based on measure scores among
facilities with at least 75 cases in the
denominator.
Validity was established by evaluating
the correlations of medication
continuation scores with the
conceptually related IPFQR Program
measures. The medication continuation
scores were moderately correlated with
the scores for 7- and 30-day follow-up
after hospitalization for mental illness
scores as expected (rho = 0.35 and 0.45,
where rho is the Spearman’s rank
correlation coefficient). In other words,
the positive correlation between scores
of these two types of measures is
expected because high follow-up rates
with mental health providers and high
follow-up rates of medication
continuation both indicate a highquality transition from the inpatient to
the outpatient setting. The medication
continuation scores were negatively
correlated with readmission scores as
expected (rho = ¥0.27). This negative
correlation is expected because patients
that do not continue their medications
are more likely to relapse and be
readmitted.484 485 486 All correlations are
Patient-Assessment-Instruments/
HospitalQualityInits/Measure-Methodology.html.
To access the report, click on the zip file titled
‘‘Inpatient Psychiatric Facility Medication
Continuation Measure.’’
482 Health Services Advisory Group. Final
Methodology Report: Medication Continuation
Following Inpatient Discharge. Tampa, FL; 2016.
483 Adams J. The reliability of provider profiling:
a tutorial. Santa Monica, CA: RAND; 2009.
484 Glue P, Donovan MR, Kolluri S, Emir B. Metaanalysis of relapse prevention antidepressant trials
in depressive disorders. The Australian and New
Zealand journal of psychiatry. 2010;44(8):697–705.
485 Geddes JR, Carney SM, Davies C, et al. Relapse
prevention with antidepressant drug treatment in
depressive disorders: a systematic review. Lancet.
2003;361(9358):653–661.
486 Gilmer TP, Dolder CR, Lacro JP, et al.
Adherence to treatment with antipsychotic
medication and health care costs among Medicaid
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statistically significant at p-value
<0.0001. After reviewing these results
and the proposed measure
specifications, all of the 10 TEP
members who were present for the face
validity vote agreed that the measure
score had face validity.
This measure was submitted to NQF
for endorsement on December 16, 2016,
and the measure received endorsement
from the NQF Consensus Standards
Approval Committee (CSAC) following
the June 21 CSAC meeting, pending a 30
day appeals process that closes on
August 2, 2017.487 The new version of
the specifications referenced on the
NQF Web site is consistent with the
version reviewed and approved by the
CSAC. Under section 1886(s)(4)(D)(i) of
the Act, measures selected for the
IPFQR Program must have been
endorsed by the entity with a contract
under section 1890(a) of the Act. The
NQF currently holds this contract.
However, section 1886(s)(4)(D)(ii) of the
Act provides that, in the case of a
specified area or medical topic
determined appropriate by the Secretary
for which a feasible and practical
measure has not been endorsed by the
entity with a contract under section
1890(a) of the Act, the Secretary may
specify a measure that is not so
endorsed as long as due consideration is
given to measures that have been
endorsed or adopted by a consensus
organization identified by the Secretary.
We have reviewed NQF-endorsed
measures related to medication
continuation in this patient population
and did not identify any equivalent
measures. We believe this measure is
consensus-based because of the
extensive measure development
process, including the solicitation of
expert and patient opinion and public
comments (discussed in more detail
below).
In addition, this measure addresses
several aspects of the CMS Quality
Strategy goals and objectives. The
measure supports the CMS Quality
Strategy Goal to ‘‘promote effective
prevention and treatment of chronic
disease,’’ which includes an objective to
improve behavioral health access and
quality of care by using evidence-based
practices.488 The measure also supports
the CMS Quality Strategy Goal to
beneficiaries with schizophrenia. The American
journal of psychiatry. 2004;161(4):692–699.
487 https://www.qualityforum.org/QPS/3205.
488 Centers for Medicare & Medicaid Services.
CMS Quality Strategy 2016. Baltimore, MD: U.S.
Department of Health and Human Services; 2015.
https://www.cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/
QualityInitiativesGenInfo/Downloads/CMS-QualityStrategy.pdf.
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‘‘promote effective communication and
coordination of care.’’ 489 Specifically,
the measure addresses three objectives
within the goal of ‘‘promoting effective
communication and coordination of
care:’’ (1) ‘‘to reduce admissions and
readmissions’’ 490 as patients with these
conditions who do not adhere to their
medication regimens are at an increased
risk of relapse and readmission; 491 492 493
(2) ‘‘to embed best practices to enable
successful transitions between all
settings of care,’’ 494 because ensuring
medication continuation following
discharge is a critical component of
transitioning from the IPF to the home
or home health care; and (3) ‘‘to enable
effective healthcare system
navigation,’’ 495 as we believe that this
measure will encourage IPFs to provide
information to patients regarding the
importance of medication continuation
and guidance on how to fill
prescriptions following discharge.
The measure would complement the
portfolio of facility-level measures in
the IPFQR Program that assess the
transition from the inpatient to
outpatient setting: Follow-Up After
Hospitalization for Mental Illness;
Thirty-day All Cause Unplanned
Readmission Following Psychiatric
Hospitalization in an Inpatient
Psychiatric Facility; Transition Record
with Specified Elements Received by
Discharged Patients; and Timely
Transmission of Transition Record.
489 Centers for Medicare & Medicaid Services.
CMS Quality Strategy 2016. Baltimore, MD: U.S.
Department of Health and Human Services; 2015.
https://www.cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/QualityInitiatives
GenInfo/Downloads/CMS-Quality-Strategy.pdf.
490 Centers for Medicare & Medicaid Services.
CMS Quality Strategy 2016. Baltimore, MD: U.S.
Department of Health and Human Services; 2015.
https://www.cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/QualityInitiatives
GenInfo/Downloads/CMS-Quality-Strategy.pdf.
491 Glue P, Donovan MR, Kolluri S, Emir B. Metaanalysis of relapse prevention antidepressant trials
in depressive disorders. The Australian and New
Zealand journal of psychiatry. 2010;44(8):697–705.
492 Geddes JR, Carney SM, Davies C, et al. Relapse
prevention with antidepressant drug treatment in
depressive disorders: a systematic review. Lancet.
2003;361(9358):653–661.
493 Gilmer TP, Dolder CR, Lacro JP, et al.
Adherence to treatment with antipsychotic
medication and health care costs among Medicaid
beneficiaries with schizophrenia. The American
journal of psychiatry. 2004;161(4):692–699.
494 Centers for Medicare & Medicaid Services.
CMS Quality Strategy 2016. Baltimore, MD: U.S.
Department of Health and Human Services; 2015.
https://www.cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/QualityInitiatives
GenInfo/Downloads/CMS-Quality-Strategy.pdf.
495 Centers for Medicare & Medicaid Services.
CMS Quality Strategy 2016. Baltimore, MD: U.S.
Department of Health and Human Services; 2015.
https://www.cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/QualityInitiatives
GenInfo/Downloads/CMS-Quality-Strategy.pdf.
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More detailed information about the
development of this measure as well as
final measure specifications can be
downloaded from the CMS Web site at:
https://www.cms.gov/medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html. To access
the report, click on the zip file titled
‘‘Inpatient Psychiatric Facility
Medication Continuation Measure.’’
c. Measure Calculation
The measure is calculated by dividing
the number of admissions that meet the
numerator criteria (described below) by
the number of admissions that meet the
denominator criteria (also described
below).
(1) Numerator
The numerator for the measure
includes discharges for patients with a
principal diagnosis of MDD,
schizophrenia, or bipolar disorder in the
denominator who were dispensed at
least one evidence-based outpatient
medication within 2 days prior to
discharge through 30 days postdischarge. The evidence-based
medications that define the numerator
are based on the practice guidelines for
each condition from the APA and VA/
DoD.496 497 498 499 500 Furthermore, we
sought to align the medications with
evidence-based medications from
existing quality measures including the
Antidepressant Medication Management
measure from the Healthcare
Effectiveness Data and Information Set
(HEDIS) 2015 for MDD, the Adherence
to Antipsychotic Medications for
Individuals with Schizophrenia
measure (NQF #1879) for schizophrenia,
and the Adherence to Mood Stabilizers
for Individuals with Bipolar I Disorder
measure (NQF #1880) for bipolar
496 American Psychiatric Association. (2010).
Practice guideline for the treatment of patients with
major depressive disorder, 3rd ed. Retrieved from:
https://psychiatryonline.org/pb/assets/raw/sitewide/
practice_guidelines/guidelines/mdd.pdf.
497 American Psychiatric Association. (2002).
Practice guideline for the treatment of patients with
bipolar disorder, second edition. Retrieved from:
https://psychiatryonline.org/pb/assets/raw/sitewide/
practice_guidelines/guidelines/bipolar.pdf.
498 American Psychiatric Association. (2010).
Practice guideline for the treatment of patients with
schizophrenia: 2nd ed. Retrieved from: https://
psychiatryonline.org/pb/assets/raw/sitewide/
practice_guidelines/guidelines/schizophrenia.pdf.
499 U.S. Department of Veterans Affairs & U.S.
Department of Defense. (2016). Management of
major depressive disorder (MDD). Retrieved from:
https://www.healthquality.va.gov/guidelines/MH/
mdd/VADoDMDDCPGFINAL82916.pdf.
500 U.S. Department of Veterans Affairs & U.S.
Department of Defense. (2010) VA/DOD clinical
practice guideline for management of bipolar
disorder in adults. Retrieved from: https://
www.healthquality.va.gov/guidelines/MH/bd/bd_
305_full.pdf.
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disorder. Staff pharmacists reviewed
these lists of medications for
completeness and appropriateness in
the IPF setting. The finalized lists of
evidence-based medications are
available in the measure methodology
report at: https://www.cms.gov/
medicare/Quality-Initiatives-PatientAssessment-Instruments/Hospital
QualityInits/MeasureMethodology.html. To access the report,
click on the zip file titled ‘‘Inpatient
Psychiatric Facility Medication
Continuation Measure.’’
We considered the appropriate
number of days prior to discharge and
post-discharge to include in the followup period for the numerator. Clinical
experts noted that discharge planning
may start as early as 2 days prior to
discharge and that some facilities may
help patients fill their outpatient
prescriptions prior to discharge.
Therefore, the numerator includes
outpatient medications filled up to 2
days prior to discharge (Day ¥2 through
Day ¥1). The follow-up period extends
30 days post-discharge (Day 0 through
Day 30) to align with other care
coordination measures, such as the 30
day follow-up period in Follow-Up
After Hospitalization for Mental Illness
(FUH) (NQF #0576) which we finalized
for the IPFQR Program in the FY 2014
IPPS/LTCH PPS final rule (78 FR 50893
through 50895). To further support a 30day follow-up period, we confirmed that
over 93 percent of the evidence-based
prescriptions filled prior to the
admission were for a 30-day supply,
which indicates that most patients
would need to fill a medication within
30 days of discharge to avoid gaps in
treatment even if they had some
medications at home.
(2) Denominator
The denominator for the measure
includes Medicare FFS beneficiaries
aged 18 years and older who were
discharged from an IPF to home or
home health care 501 with a principal
diagnosis of MDD, schizophrenia, or
bipolar disorder. The denominator
excludes discharges for patients who:
• Received Electroconvulsive
Therapy (ECT) during the inpatient stay
or follow-up period because some
patients who receive ECT during the
inpatient stay or follow-up period may
501 The measure specifications, as submitted to
the MAP, did not include home health care. For
details of this addition, please see the measure
methodology report: https://www.cms.gov/
medicare/Quality-Initiatives-Patient-AssessmentInstruments/HospitalQualityInits/MeasureMethodology.html. To access the report, click on
the zip file titled ‘‘Inpatient Psychiatric Facility
Medication Continuation Measure.’’
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have failed pharmacotherapy and would
not fill an evidence-based prescription
post-discharge;
• Received Transcranial Magnetic
Stimulation (TMS) during the inpatient
stay or follow-up period because some
patients who receive TMS during the
inpatient stay or follow-up period may
have failed pharmacotherapy and would
not fill an evidence-based prescription
post-discharge;
• Were pregnant during the inpatient
stay because some of the evidence-based
medications for the treatment of MDD,
schizophrenia, and bipolar disorder are
contraindicated during pregnancy;
• Had a secondary diagnosis of
delirium because some of the evidencebased medications for the treatment of
MDD, schizophrenia, and bipolar
disorder are contraindicated for patients
with delirium; or
• Had a principal diagnosis of
schizophrenia and secondary diagnosis
of dementia because many FDAapproved medications for the treatment
of schizophrenia have a Boxed Warning
due to an increased risk of mortality in
elderly patients with dementia-related
psychosis treated with antipsychotic
drugs.502
All patients in the measure
denominator are enrolled in Medicare
Parts A, B, and D during the
measurement and follow-up periods.
Therefore, these patients have
prescription drug coverage for evidencebased medications in the measure.
While patients are responsible for some
out-of-pocket medication costs after Part
D has been applied, low income patients
qualify for additional support through
both Medicare and Medicaid to help
mitigate the cost of prescriptions and
ensure that patients do not face
financial barriers to filling necessary
medications.
We refer readers to the measure
specifications for more details about
measure inclusions and exclusions at:
https://www.cms.gov/medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html. To access
the report, click on the zip file titled
‘‘Inpatient Psychiatric Facility
Medication Continuation Measure.’’
d. Data Sources
The measure will be implemented
using Medicare FFS Parts A, B, and D
claims and enrollment data to calculate
the measure results. Valid prescription
drug claims from Medicare Parts B and
D provide the data necessary to
calculate this measure. Therefore, no
data collection will be required from
IPFs. The measure will be reported as a
combined facility-level rate across all
three conditions. The measurement
period is 2 years to maximize the
number of facilities with a minimum of
75 discharges, which is necessary for
calculation of reliable facility-level
scores.503 We will inform stakeholders
of the claims data collection period
through a subregulatory process, such as
on a CMS Web site and/or on our
applicable listservs.
e. Public Comment
During the measure development
process, we solicited public comments
on the measure via the CMS Quality
Measures Public Comment Page.504 We
provided the draft measure information
form 505 and draft measure justification
form 506 to the public for review. We
accepted public comments from August
25, 2016 through September 15, 2016.
Numerous commenters expressed
support for the Medication Continuation
Following Inpatient Psychiatric
Discharge (NQF #3205) measure (with
only 6 of 53 commenters expressing
reluctance to support the measure) and
commented on the importance of
measuring medication continuation as
this is an important component of care
transitions and reduces the risk of
readmissions. We received public
comments about denominator
specifications, numerator specifications,
data collection, attribution of the
measure to the IPF, and the relevance of
the proposed measure. After review and
evaluation of all the public comments
received, we expanded the follow-up
period from day of discharge (Day 0)
through 30 days post discharge to
include outpatient prescriptions filled
up to 2 days prior to discharge as
described above. For specific
information regarding the comments we
received, we refer readers to the public
comment summary at: https://
www.cms.gov/medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html. To access
the report, click on the zip file titled
‘‘Inpatient Psychiatric Facility
Medication Continuation Measure.’’
We believe this measure evaluates a
process with a demonstrated quality gap
and has the potential to benefit patients.
For these reasons and the reasons stated
above, we proposed the Medication
Continuation Following Inpatient
Psychiatric Discharge (NQF #3205)
measure described in this section for the
FY 2020 payment determination and
subsequent years.
In summary, we proposed one
measure for the FY 2020 payment
determination and subsequent years, as
shown in the table below.
NEWLY PROPOSED IPFQR PROGRAM MEASURE FOR THE FY 2020 PAYMENT DETERMINATION AND SUBSEQUENT YEARS
National quality strategy priority
NQF #
Communication/Care Coordination .....
Measure ID
3205
N/A
Measure
Medication Continuation Following Inpatient Psychiatric Discharge.
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We welcomed public comment on our
proposal to adopt the Medication
Continuation Following Inpatient
Psychiatric Discharge (NQF #3205)
measure.
Comment: Several commenters
supported adoption of the Medication
Continuation Following Inpatient
Psychiatric Discharge (NQF #3205)
measure. Other commenters expressed
appreciation for CMS developing
claims-based measures to limit the
burden on IPFs.
Response: We thank these
commenters for their input and
appreciate this support.
502 U.S. Food and Drug Administration. Public
Health Advisory: Deaths with Antipsychotics in
Elderly Patients with Behavioral Disturbances.
2005. Accessed at: https://www.fda.gov/Drugs/
DrugSafety/PostmarketDrugSafety
InformationforPatientsandProviders/
ucm053171.htm.
503 Health Services Advisory Group. Final
Methodology Report: Medication Continuation
Following Inpatient Discharge. Tampa, FL; 2016.
504 CMS Quality Measure Public Comment Page:
https://www.cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/MMS/
CallforPublicComment.html#44 In the
‘‘Downloads’’ section of this page, please select
‘‘Recently Archived Call for Public Comments
Files.’’ The information regarding the Medication
Continuation following Inpatient Psychiatric
Discharge information is available in the ‘‘InpatientPsychiatric-Facility-IPF-Outcome-and-ProcessMeasure-Development-and-Maintenance’’ zip file.
505 Ibid.
506 Ibid.
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Comment: Many commenters
expressed concerns that the Medication
Continuation Following Inpatient
Psychiatric Discharge (NQF #3205)
measure will pose undue burden on
facilities, which are still updating
processes to account for previously
adopted measures. Several commenters
expressed the concern that IPFs have
limited control of medication
continuation once their patients are
discharged. These commenters observed
that patients may experience social or
geographical barriers to filling
medication prescriptions that are
beyond the control of IPFs.
Response: We recognize that there are
factors external to the IPF that influence
filling prescriptions post-discharge in
the psychiatric population. While it may
not be possible to achieve complete
post-discharge compliance with
pharmacotherapy, there is evidence that
improvements to the quality of care for
patients in the IPF setting, including the
discharge processes, can help to
increase medication continuation rates.
We discussed this evidence in the FY
2018 IPPS/LTCH PPS proposed rule (82
FR 20123). However, depending on a
facility’s current state of performance
and the implicit requirements of this
measure, process changes (such as
updates to clinical procedures or
adoption of new workflows) to achieve
higher performance may be significant
and sometimes require a considerable
period after initial implementation to
realize measurable improvement. This
may particularly be true for a measure
such as the Medication Continuation
Following Inpatient Psychiatric
Discharge (NQF #3205) measure, which
assesses the degree to which facilities
address a critical element of successful
care transition following discharge, a
component of quality care that some
facilities have not traditionally attended
to. We agree with commenters that
updating processes to achieve high
performance, which likely requires
multiple and innovative efforts related
to patient communication, and
coordination and communication with
outpatient providers, creates burden on
IPFs. While we believe this is an
important measure because of the
clinical benefits of appropriate
pharmacotherapy post discharge and the
current performance gap on the
measure, we would like to be sensitive
to facilities, especially small, rural
facilities, that may not have sufficient
resources to meet the burden this
measure could bring.
To accommodate the need for
facilities to develop and implement
innovative efforts for this measure, we
are not adopting it at this time.
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However, we will consider re-proposing
this measure in future rulemaking.
Comment: Many commenters
expressed concerns that the NQF has
not completed the endorsement review
of the measure.
Response: This measure was
submitted to NQF for endorsement on
December 16, 2016, and the measure
received endorsement from the NQF
Consensus Standards Approval
Committee (CSAC) following the June
21 CSAC meeting, pending a 30 day
appeals process that closes on August 2,
2017.
Comment: Many commenters
expressed concerns that limitation of
the measure to patients enrolled in
Medicare Parts A, B, and D may result
in an impacted population that is both
too small to be meaningful for public
reporting and one that does not
experience the same access to
medications barriers as other inpatient
psychiatric patients.
Response: We thank the commenters
for expressing their concerns, but we
disagree with the commenters that
limiting the measure to patients with
Medicare Parts A, B, and D for use in
the IFPQR program limits the utility of
the measure. While we agree that the
patients included in the measure may
not experience the same barriers to
access to medications that some other
patients encounter because low income
Medicare patients qualify for additional
support to help pay for medications, we
note that the evidence based
interventions to improve medication
adherence would apply to all patients.
Further, considering that the Medicare
population may have lower barriers to
access, we would expect to see higher
medication continuation rates and less
variation in performance across
facilities. As described in the measure
technical report,507 the claims data from
1,694 IPFs demonstrated ample
opportunity for improvement. The mean
medication continuation rate was 79
percent across all facilities, with
variation of 22 percent between the 10th
and 90th percentile.
Comment: Many commenters
expressed concerns that IPFs may not
receive feedback with sufficient time to
improve processes prior to public
reporting of the data since they will not
be able to independently calculate
measure results (as they do not have
access to Part D claims).
Response: We thank the commenters
for providing these comments, and we
507 Health Services Advisory Group. Final
Methodology Report: Medication Continuation
Following Inpatient Discharge. Tampa, FL; 2016.
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38469
will consider their views if we decide to
propose this measure in the future.
Comment: Some commenters believed
that the link between measure
performance and patient outcomes has
not been adequately demonstrated.
Commenters further expressed the belief
that the measure may not generate
information that is meaningful to
consumers in making healthcare
choices.
Response: We thank the commenters
for their comments, but disagree with
them. We believe that information on
medication continuation is important
for patients discharged from the
inpatient psychiatric setting with MDD,
schizophrenia, or bipolar disorder
because of significant negative outcomes
associated with patients not adhering to
recommended medication. We note that
the MAP Hospital Workgroup
concluded that the measure addressed a
critical quality objective, was evidencebased, and would contribute to efficient
use of resources. Further, performance
on this measure in testing showed that
improved performance on this measure
was associated with reduced unplanned
readmissions, indicating that
performance on this measure is linked
with patient outcomes.
Comment: Many commenters
expressed the concern that filling a
prescription does not always indicate
compliance to treatment. They
suggested that patient compliance, not
claims for prescriptions, should be the
target of quality measurement.
Response: We acknowledge that
increasing patient compliance is the
ultimate goal of quality improvement
informed by the measure but disagree
with the comment that a medication
continuation measure assessed from
prescription claims does not indicate
gaps in compliance. The filling of a
prescription is a critical step in
improving compliance. We observed
ample opportunity for improvement
based on a mean medication
continuation rate of 79 percent across
1,694 IPFs, with variation of 22 percent
between the 10th and 90th percentile.
Therefore, we know that at a minimum,
approximately 20 percent of patients are
not compliant because they are not in
possession of their outpatient
psychiatric medications following
discharge. Measuring actual compliance
would be burdensome for both facilities
and patients and therefore is not feasible
to measure.
Comment: Some commenters
expressed the belief that technical
questions regarding denominator
inclusion and exclusion criteria and
measure calculation methods have not
been sufficiently answered. Commenters
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were specifically concerned regarding
how prescriptions filled for patients
without Part D would be identified, how
free samples provided at or before
discharge would be identified, and
whether facilities without inpatient
pharmacies would be at a disadvantage
for this measure.
Response: Patients who do not have
Medicare Part D coverage are excluded
from the denominator of this measure.
We anticipate that few patients in the
population for this measure would be
eligible for samples because low income
Medicare patients qualify for additional
support to help pay for medication
copays. Finally, this measure does not
include medications filled at inpatient
pharmacies in the measure numerator.
This measure gives facilities the
flexibility to determine which
interventions are most appropriate for
their patient populations, including
filling prescriptions for patients prior to
discharge through outpatient
pharmacies. However, the measure does
not encourage any particular
intervention over another because
interventions to improve medication
continuation should be tailored to meet
each patient’s needs and circumstances.
After consideration of the public
comments we received, we are not
finalizing adoption of the Medication
Continuation Following Inpatient
Psychiatric Discharge (NQF #3205)
measure for the reasons discussed
above. If we decide to propose this
measure in the future, we will consider
information and recommendations
provided by commenters at that time.
4. Summary of Previously Finalized
Measures for the FY 2020 Payment
Determination and Subsequent Years
The number of measures for the FY
2020 payment determination and
subsequent years totals 18 as set forth in
the table below.
PREVIOUSLY FINALIZED MEASURES FOR THE FY 2020 PAYMENT DETERMINATION AND SUBSEQUENT YEARS
NQF #
Measure ID
Measure
640 ...................
641 ...................
560 ...................
HBIPS–2 ..................................................
HBIPS–3 ..................................................
HBIPS–5 ..................................................
576 ...................
1661 .................
1663 .................
FUH ..........................................................
SUB–1 ......................................................
SUB–2 and SUB–2a ................................
1664 .................
SUB–3 and SUB–3a ................................
1651 .................
1654 .................
TOB–1 ......................................................
TOB–2 and TOB–2a ................................
1656 .................
TOB–3 and TOB–3a ................................
1659 .................
647 ...................
IMM–2 ......................................................
N/A ...........................................................
648 ...................
N/A ...........................................................
N/A ...................
431 ...................
N/A ...................
N/A ...................
2860 * ...............
N/A
N/A
N/A
N/A
N/A
Hours of Physical Restraint Use.
Hours of Seclusion Use.
Patients Discharged on Multiple Antipsychotic Medications with Appropriate Justification.
Follow-up After Hospitalization for Mental Illness.
Alcohol Use Screening.
Alcohol Use Brief Intervention Provided or Offered and SUB–2a Alcohol Use Brief
Intervention.
Alcohol and Other Drug Use Disorder Treatment Provided or Offered at Discharge
and SUB–3a Alcohol and Other Drug Use Disorder Treatment at Discharge.
Tobacco Use Screening.
Tobacco Use Treatment Provided or Offered and TOB–2a Tobacco Use Treatment.
Tobacco Use Treatment Provided or Offered at Discharge and Tob–3a Tobacco
Use Treatment at Discharge.
Influenza Immunization.
Transition Record with Specified Elements Received by Discharged Patients (Discharges from an Inpatient Facility to Home/Self Care or Any Other Site of Care).
Timely Transmission of Transition Record (Discharges from an Inpatient Facility to
Home/Self Care or Any Other Site of Care).
Screening for Metabolic Disorders.
Influenza Vaccination Coverage Among Healthcare Personnel.
Assessment of Patient Experience of Care.
Use of an Electronic Health Record.
Thirty-Day All-Cause Unplanned Readmission Following Psychiatric Hospitalization in an Inpatient Psychiatric Facility.
...........................................................
...........................................................
...........................................................
...........................................................
...........................................................
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* Since this measure was finalized in the FY 2017 IPPS/LTCH PPS final rule (57239 through 57246), NQF endorsement has been received.
5. Possible IPFQR Program Measures
and Topics for Future Consideration
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20126 through
20127), we discussed possible IPFQR
Program measures and topics for future
consideration. As we have previously
indicated (79 FR 45974 through 45975),
we seek to develop a comprehensive set
of quality measures to be available for
widespread use for informed decisionmaking and quality improvement in the
IPF setting. Therefore, through future
rulemaking, we intend to propose new
measures for development or adoption
that will help further our goals of
achieving better healthcare and
improved health for individuals who
obtain inpatient psychiatric services
through the widespread dissemination
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and use of quality information. As noted
on the ‘‘List of Measures under
Consideration for December 1, 2016’’ 508
published by the NQF on behalf of CMS,
we are considering a measure of
Medication Reconciliation on
Admission and a measure of
Identification of Opioid Use Disorder
among Patients Admitted to Inpatient
Psychiatric Facilities. We welcomed
comments on these measure concepts
for future inclusion in the IPFQR
Program. In addition, we have identified
several areas which we believe are
important to stakeholders, but which are
not currently sufficiently covered by
508 https://www.cms.gov/Medicare/QualityInitiatives-Patient-Assessment-Instruments/
QualityMeasures/Downloads/Measures-underConsideration-List-for-2016.pdf.
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IPFQR Program measures. These areas
are:
• Family and caregiver engagement;
• Patient experience of care;
• Opioid use and treatment;
• Access to care; and
• Inpatient assaults and violence.
We welcomed public comments on
possible new measures in these or other
areas.
Comment: Many commenters
expressed support for measures in the
areas of: (1) Family and caregiver
engagement; (2) patient experience of
care; (3) access to care; and (4) inpatient
assaults and violence. These
commenters further encouraged CMS to
consider clinical outcomes measures.
Finally, the commenters urged CMS to
engage with stakeholders during
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measure development and
implementation.
Response: We thank these
commenters for their support of these
measure topic areas and will continue to
engage with stakeholders in measure
development and implementation.
Comment: Many commenters urged
CMS to develop and implement a
patient experience of care survey and
measure specific to the inpatient
psychiatric setting. One commenter
further recommended that this survey
include questions regarding the
patient’s understanding of diagnoses,
treatment plans, and follow-up care.
Response: We believe that patient
experience of care is an important
measure gap in the IPFQR Program and
are actively evaluating ways to address
this topic. We will take commenters’
suggestions into consideration as we
develop future program policy.
Comment: Several commenters urged
CMS to develop and implement
measures that address suicide. Some of
these commenters specifically
recommended a measure to address
hospital processes to help patients
manage suicidal ideation in the hospital
and post discharge.
Response: We will consider this input
as we develop and select measures for
the IPFQR Program.
Comment: Many commenters
recommended that CMS develop and
implement claims-based measures that
evaluate clinical outcomes.
Response: We believe that clinical
outcomes measures are an important
part of quality reporting, and that
claims-based measures are effective for
reducing reporting burden on facilities.
We will take commenters’ suggestions
into consideration as we develop and
select measures for the IPFQR Program.
Comment: One commenter
recommended that CMS adopt measures
related to opioid treatment to determine
if there are access issues associated with
this treatment.
Response: We believe that the current
opioid epidemic is a significant public
health issue, and we are striving to
address it in the IPFQR Program to the
extent possible, including adoption of
the SUB–3 & 3a Measure (Alcohol and
Other Drug Use Disorder Treatment
Provided or Offered at Discharge and
SUB–3a Alcohol and Other Drug Use
Disorder Treatment at Discharge) in the
FY 2017 IPPS/LTCH PPS final rule (81
FR 57239 through 57241) and inclusion
of Identification of Opioid Use Disorder
among Patients Admitted to Inpatient
Psychiatric Facilities on the List of
Measures Under Consideration for
December 1, 2016. We will continue to
consider ways to address this issue as
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we develop and select measures for the
IPFQR Program.
Comment: Many commenters
recommended that CMS identify a
method for data validation as part of the
measure development and adoption
process.
Response: We will consider this input
as we develop and select measures for
the IPFQR Program. We are currently
seeking to identify a means to
implement data validation in the IPFQR
Program.
We thank the commenters and we
will consider their views as we develop
further measures for use in the IPFQR
Program.
6. Public Display and Review
Requirements
We refer readers to the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53653
through 53654), in which we finalized
that we would publicly display the
submitted data on the CMS Web site
beginning in the first quarter of the
calendar year following the respective
payment determination year. We also
finalized that IPFs would have the
opportunity to preview their data
between September 20 and October 19
of the respective payment determination
year. In the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50897 through 50898),
we finalized policies on public display
and review of data stating that we
would publicly display the data in April
of the calendar year following the start
of the payment determination year and
that the preview period would be 30
days approximately twelve weeks prior
to the public display of the data. In the
FY 2017 IPPS/LTCH PPS final rule (81
FR 57248 through 57249), we finalized
changes to how we specify the
timeframes for the IPFQR Program,
including that we would: (1) No longer
specify the exact dates of the preview
period or data publication in
rulemaking; (2) make the data for the
IPFQR Program available as soon as
possible; (3) announce the exact
timeframes through subregulatory
guidance; and (4) continue our policy
that the time period for review will be
approximately 30 days. In the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
20127), we did not propose any changes
to the public display and review
policies.
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7. Form, Manner, and Timing of Quality
Data Submission for the FY 2019
Payment Determination and Subsequent
Years
a. Procedural Requirements for FY 2019
Payment Determination and Subsequent
Years
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53654 through 77 FR 53655),
we finalized procedural requirements
for the IPFQR Program, including the
requirements that facilities must do the
following to participate in the IPFQR
Program:
• Register with QualityNet before the
IPF begins reporting;
• Identify a QualityNet Administrator
who follows the registration process
listed on the QualityNet Web site;
• Complete a Notice of Participation
(NOP) within a specified time period;
and,
• Submit aggregate numerator and
denominator data for all age groups, for
all measures.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50901), we clarified that the
policy we adopted for the FY 2016
payment determination also applies to
the FY 2017 payment determination and
subsequent years, unless we change it
through future rulemaking. In the FY
2018 IPPS/LTCH PPS proposed rule (82
FR 20127), we proposed to make
changes related to the Notice of
Participation (NOP) and withdrawals for
the FY 2019 payment determination and
subsequent years.
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53654 through 53655), we
finalized our policies that IPFs
participating in the IPFQR Program
must comply with several procedural
requirements. In that rule, one of the
policies we finalized was that the time
frame for completing an online NOP
form is between January 1 and August
15 before each respective payment
determination year (for example, for the
FY 2017 payment determination year,
IPFs would be required to submit an
NOP between January 1, 2016 and
August 15, 2016). Similarly, in the FY
2013 IPPS/LTCH PPS final rule (77 FR
53654), we also finalized that
withdrawals from the IPFQR Program
will be accepted no later than August 15
before the beginning of each respective
payment determination year.
As described in section IX.D.7.b. of
the preamble of this final rule, there
have been times that we have updated
the data submission period through
subregulatory means; this has led to a
data submission period that is not
aligned with the submission period for
the NOP or program withdrawal. To
ensure these dates align, in the
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proposed rule, we proposed to change
the submission timeframes for both
NOPs and withdrawals from between
January 1 and August 15 before each
respective payment determination year
to prior to the end of the data
submission period before each
respective payment determination year.
This means that we proposed to accept
NOPs and withdrawals any time prior to
the end of the data submission period
before the payment determination year.
For example, for the FY 2019 payment
determination year, the end of the data
submission period would be a date on
or after June 15, 2018 (which we would
announce via subregulatory means).
This date will coincide with the
deadline to submit an NOP or withdraw
from the program. In addition, we
proposed to provide precise dates that
define the end of the data submission
period/NOP/withdrawal submission
deadline through subregulatory means,
such as on a CMS Web site and/or on
our applicable listservs, beginning with
the FY 2019 payment determination.
We invited public comment on our
proposals to: (1) Change the submission
timeframes for both NOPs and
withdrawals to the end of the data
submission period before each
respective payment determination year;
and (2) provide precise dates that define
the end of the data submission period/
NOP/withdrawal submission deadline
through subregulatory means for the FY
2019 payment determination and
subsequent years.
Comment: Several commenters
supported CMS’ proposal to align the
submission period for NOPs and
withdrawals with the end of the data
submission period, which will be
provided through subregulatory means.
Response: We thank the commenters
for this support.
After consideration of the public
comments we received, we are
finalizing our proposals to: (1) Change
the submission timeframes for both
NOPs and withdrawals to the end of the
data submission period before each
respective payment determination year;
and (2) provide precise dates that define
the end of the data submission period/
NOP/withdrawal submission deadline
through subregulatory means for the FY
2019 payment determination and
subsequent years as proposed.
b. Data Submission Requirements for
the FY 2019 Payment Determination
and Subsequent Years
We refer readers to the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53655
through 53656) and the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50901) for
our previously finalized policies
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regarding quality data submission
requirements. In the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 20127
through 20128), we proposed to make
changes related to the data submission
period for the FY 2019 payment
determination and subsequent years.
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53655 through 53657) we
finalized our policies related to
reporting periods and submission
timelines for data required by the IPFQR
Program. IPFs are required to submit
their aggregated data on the measures on
an annual basis, beginning in FY 2014
(77 FR 53655). In that rule, we specified
that data must be submitted between
July 1 and August 15 of the calendar
year preceding a given payment
determination year (for example,
between July 1, 2015 and August 15,
2015 for the FY 2016 payment
determination (77 FR 53655 through
53657)). In the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50899), we clarified
that this policy applies to all future
years of data submission for the IPFQR
Program unless we change the policy
through future rulemaking.
Because there have been times that
the submission period has been updated
through the subregulatory process (for
example, due to systems issues
impacting data collection in the
specified timeframe), in order to avoid
contradictory guidance between dates
established in the Federal Register and
dates established through subregulatory
guidance, in the proposed rule, we
proposed to no longer specify the exact
dates of the submission period through
rulemaking. We proposed to provide
these exact dates through a
subregulatory process instead,
beginning with the FY 2019 payment
determination. We proposed to shift to
a 45-day submission period beginning at
least 30 calendar days following the end
of the data collection period. For
example, for the FY 2019 payment
determination, the latest reporting
period for a measure for which IPFs
must submit data through the
QualityNet Secure Portal ends on March
31, 2018 for the IMM–2 measure. In this
example, the submission period would
begin at least 30 days after March 31,
2018 (that is, no earlier than May 1,
2018). IPFs then would have 45 days
from May 1 to submit their data, which
would result in a June 15, 2018
submission deadline for this example.
Because the exact dates could vary from
year to year, for the FY 2019 payment
determination and subsequent years, we
also proposed to provide notification of
the exact dates of the 45-day submission
period through subregulatory means,
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such as on a CMS Web site and/or on
our applicable listservs.
We welcomed public comments on
our proposals to: (1) Change the
specification of the submission deadline
from exact dates (that is, July 1–August
15) to a 45-day submission period
beginning at least 30 days following the
end of the data collection period; and
(2) provide notification of the exact
dates of the 45-day submission period
through subregulatory means for the FY
2019 payment determination and
subsequent years.
Comment: Several commenters
supported CMS’ proposal to change the
specification of the submission deadline
and provide notification of the exact
dates through subregulatory means.
Response: We thank these
commenters for this support.
Comment: One commenter asked for
clarification whether this proposal
pertains only to data submitted via the
QualityNet Secure Portal, as opposed to
through the NHSN Web site.
Response: This proposal only applies
to data submitted via the QualityNet
Secure Portal.
Comment: Many commenters
expressed concerns that the data
submission period, as proposed, may
not allow adequate time to abstract and
audit the data prior to submission.
These commenters were also concerned
that IPFs may have insufficient warning
regarding the data submission
timeframe for appropriate resource
planning.
Response: We recognize that IPFs
must plan for appropriate resources for
data collection and submission. We will
strive to give as much notice as possible.
It is our intent to continue the July 1 to
August 15 data reporting period.
However, because there are instances
where adherence to these dates would
not be possible, we wish to provide
more flexibility and communicate the
dates of reporting periods (or
confirmation of the July 1 through
August 15 timeframe) through
subregulatory means. We expect that in
most, if not all, cases, changes in the
July 1 to August 15 reporting period will
be to delay and/or extend the reporting
period, rather than to move it forward.
After consideration of the public
comments we received, we are
finalizing our proposals as proposed to:
(1) change the specification of the
submission deadline from exact dates
(that is, July 1–August 15) to a 45-day
submission period beginning at least 30
days following the end of the data
collection period; and (2) provide
notification of the exact dates of the 45day submission period through
subregulatory means for the FY 2019
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payment determination and subsequent
years
c. Reporting Requirements for the FY
2019 Payment Determination and
Subsequent Years
We refer readers to the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53655
through 53657), the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50901 through
50902), and the FY 2016 IPF PPS final
rule (80 FR 46715 and 46716), for
information about data reporting
periods. In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20128) we did not
propose any changes to these policies.
d. Population and Sampling
We refer readers to the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53657
through 53658), the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50902), FY 2015
IPF PPS final rule (79 FR 45973), the FY
2016 IPF PPS final rule (80 FR 46717
through 46719), for information about
population, sampling, and minimum
case thresholds. In the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 20128),
we did not propose any changes to the
population and sampling methodology
or to the minimum case thresholds.
e. Data Accuracy and Completeness
Acknowledgement (DACA)
Requirements
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20128), we did not
propose any changes to the DACA
requirements and refer readers to the FY
2013 IPPS/LTCH PPS final rule (77 FR
53658) for more information on these
requirements.
8. Reconsideration and Appeals
Procedures
We refer readers to the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53658
through 53660), FY 2014 IPPS/LTCH
PPS final rule (78 FR 50953), and 42
CFR 412.434 for details on our
reconsideration and appeals procedures.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20128), we did not
propose any changes to these policies.
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9. Extraordinary Circumstances
Exceptions (ECE) Policy for the IPFQR
Program
a. Background
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53659 through 53660), we
finalized policies for facilities to request
waivers, now called ‘‘exceptions’’ (79
FR 45978), from quality reporting
requirements for the FY 2014 payment
determination and subsequent years. We
stated that in the event of extraordinary
circumstances not within the control of
IPFs, such as a natural disaster, IPFs
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may request a reporting extension or a
complete waiver of the requirement to
submit quality data for one or more
quarters for the FY 2014 payment
determination and subsequent years. In
that rule, we also finalized that facilities
would be required to submit a request
form with the following information:
• The IPF’s CMS Certification
Number (CCN);
• The IPF’s name;
• Contact information for the IPF’s
Chief Executive Officer (CEO) and any
other designated personnel, including
name, email address, telephone number,
and mailing address (the address must
be a physical address, not a post office
box);
• The IPF’s reason for requesting an
extension or waiver;
• Evidence of the impact of
extraordinary circumstances, including
but not limited to photographs,
newspaper and other media articles; and
• A date when the IPF will again be
able to submit IPFQR Program data, and
a justification for the proposed date.
In addition, we finalized that the form
must be signed by the IPF’s CEO and
submitted within 30 days of the date
that the extraordinary circumstance
occurred. We also finalized that
following the receipt of the request
form, we would: (1) Provide a written
acknowledgement, using the contact
information provided in the request, to
the CEO and any additional designated
IPF personnel, notifying them that the
IPF’s request has been received; and (2)
provide a formal response to the CEO
and any designated IPF personnel, using
the contact information provided in the
request, notifying the IPF of our
decision. Furthermore, in that rule, we
discussed that the above policy does not
preclude us from granting waivers or
extensions to IPFs that have not
requested them when we determine that
an extraordinary circumstance has
affected an entire region or locale. We
stated that if we make the determination
to grant such a waiver or extension, we
would communicate this decision
through routine communication
channels (77 FR 53659). In the FY 2014
IPPS/LTCH PPS final rule, we did not
make any changes to this policy (78 FR
50903).
In the FY 2015 IPF PPS final rule (79
FR 45978), we clarified that the term
‘‘exception’’ is synonymous with the
term ‘‘waiver’’ used in previous rules
and renamed our policy to
‘‘Extraordinary Circumstances
Exception’’ in order to align with
similar exceptions in other CMS quality
reporting programs. In that rule, we also
finalized that that we may grant a
waiver or extension to IPFs if we
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38473
determine that a systemic problem with
one of our data collection systems
directly affects the ability of the IPFs to
submit data. We stated that because we
do not anticipate that these types of
systemic errors will occur often, we do
not anticipate granting a waiver or
extension on this basis frequently (79
FR 45978). We noted that if we make the
determination to grant a waiver or
extension, we would communicate this
decision through routine
communication channels to IPFs,
vendors, and quality improvement
organizations (QIOs) by means of, for
example, memoranda, emails, and
notices on the QualityNet Web site (79
FR 45978).
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20128 through
20130), we proposed to modify aspects
of our current ECE policy to align with
those of other CMS quality reporting
programs. Many of our quality reporting
and value-based purchasing programs
share common processes for requesting
an exception from program reporting
due to an extraordinary circumstance
not within a provider’s control. We refer
readers to the Hospital IQR Program (76
FR 51651 through 51652, 78 FR 50836
through 50837, 79 FR 50277, 81 FR
57181 through 57182, and 42 CFR
412.140(c)(2)), Hospital OQR Program
(77 FR 68489, 78 FR 75119 through
75120, 79 FR 66966, and 80 FR 70524),
and ASCQR Program (77 FR 53642
through 53643 and 78 FR 75140 through
75141) as well as the HAC Reduction
Program (80 FR 49579 through 49581),
Hospital Readmissions Reduction
Program (80 FR 49542 through 49543),
and PCHQR Program (78 FR 50848) for
program specific information about
extraordinary circumstances exceptions
requests. In reviewing the policies for
these programs, however, we found five
areas in which these programs have
variance: (1) Contact Information and
Signature on ECE Form—there is
inconsistency regarding whether the
program requires contact information
and a signature on the ECE form from
the facility’s or hospital’s CEO versus
CEO or designated personnel; (2)
Submission deadline—there is
inconsistency in requiring the form be
submitted within 90 days following the
date that the extraordinary circumstance
occurred versus within 30 days
following the date the extraordinary
circumstance occurred; (3) CMS’
response following an ECE request—
there is inconsistency regarding
specification of a timeline for us to
provide our formal response notifying
the facility or hospital of our decision;
(4) CMS system issues—there is
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inconsistency regarding whether
programs make explicit the ability to
grant ECEs specific for systemic issues
with CMS data collection systems that
directly affect the ability of hospitals/
facilities to submit data; and (5) Policy
name—there is inconsistency in the
names used to refer to the policy, with
some programs using ‘‘extraordinary
circumstances extensions/exemptions’’
and some using ‘‘extraordinary
circumstances exceptions.’’
We believe aligning these five areas
across the programs will improve
administrative efficiencies for affected
facilities or hospitals. We note that, in
the FY 2018 IPPS/LTCH PPS proposed
rule, we also proposed to update ECE
policies in the Hospital Readmissions
Reduction Program (in section V.I.12. of
the preamble of the proposed rule); the
HAC Reduction Program (in section
V.K.8. of the preamble of the proposed
rule), Hospital IQR Program (in section
IX.A.15. of the preamble of the proposed
rule), and the PCHQR Program (in
section IX.B.10. of the preamble of the
proposed rule) in order to align policies.
We refer readers to these sections for
more details.
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b. ECE Policy Modifications
The IPFQR Program currently
includes policies to: (1) Make explicit
the ability to grant ECEs specific for
systemic issues with CMS data
collection systems that directly affect
the ability of hospitals/facilities to
submit data; and (2) refer to the ECE
policy as ‘‘extraordinary circumstances
exceptions.’’ Therefore did not make
proposals related to these two items.
However, to improve cross-program
alignment, in the proposed rule, we
proposed to update the IPFQR
Program’s ECE policy by: (1) Allowing
designated personnel to sign the ECE
request form that IPFs currently submit
with contact information for the CEO
and designated personnel and the
signature from the CEO; (2) extending
the deadline from 30 days following the
date that the extraordinary circumstance
occurred to 90 days following the date
the extraordinary circumstance
occurred; and (3) specifying that we will
strive to provide our formal response to
an ECE request notifying the IPF of our
decision within 90 days of receipt of the
IPF’s request. We proposed that these
policies would apply beginning with
extraordinary circumstances that occur
on or after the effective date of the 2018
IPPS/LTCH PPS final rule, anticipated
to be October 1, 2017. These proposals
are discussed in more detail below.
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(1) Signature of Either Designated
Personnel or CEO
As discussed above, in the FY 2013
IPPS/LTCH PPS final rule (77 FR 53659
through 53660) we finalized ECE
requests for the IPFQR Program must
submitted with contact information for
the CEO and any designated personnel,
and be signed by the IPF’s CEO.
However, we now believe that there
may be circumstances in which it is not
feasible for an IPF’s CEO to sign the ECE
request form, such as in cases where the
CEO has become disabled or is
deceased. Also, in the event that the
CEO of a facility affected by an
extraordinary circumstance, such as a
natural disaster, is unavailable to sign
the ECE request form, we believe that
the affected facility should be able to
submit ECE form despite the CEO’s
inability to sign. Therefore, we proposed
that ECE forms may be signed by either
the CEO or the designated personnel as
listed on the ECE form.
(2) ECE Request Submission Deadline
As discussed above, in the FY 2013
IPPS/LTCH PPS final rule (77 FR 53659
through 53660) we finalized that ECE
requests for the IPFQR Program must be
submitted within 30 days of the date
that the extraordinary circumstance
occurred. However, we believe that it
may be difficult for some IPFs to timely
evaluate the impact of a certain
extraordinary circumstance within 30
calendar days. Therefore, we proposed
to change the ECE request form
submission deadline from within 30
days of the date that the extraordinary
circumstance occurred to within 90
days of the date that the extraordinary
circumstance occurred.
We believe that extending the
deadline to 90 calendar days would
allow IPFs more time to determine
whether it is necessary and appropriate
to submit an ECE request and to provide
a more comprehensive account of the
extraordinary circumstance in their ECE
request form to CMS. As an example, if
an IPF suffers damage due to a
hurricane on October 1, 2017, it would
have until December 30, 2017, 90
calendar days after the hurricane, to
submit an ECE form via the QualityNet
Secure Portal, mail, email, or secure fax
as instructed on the ECE form.
(3) Clarification of CMS Response
Timeframe
As stated above, in the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53659
through 53660), we finalized that
following the receipt of the request
form, we would provide: (1) A written
acknowledgement, using the contact
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information provided in the request, to
the CEO and any additional designated
IPF personnel, notifying them that the
IPF’s ECE request has been received;
and (2) a formal response to the CEO
and any designated IPF personnel, using
the contact information provided in the
request, notifying the IPF of our
decision. We believe that it is important
for IPFs to receive timely feedback in a
predictable time frame regarding the
status of ECE requests. We strive to
complete our review of each ECE
request as quickly as possible. However,
the number of requests we receive and
the complexity of the information
provided affect the timeframe that we
need to make ECE determinations.
Therefore, in an effort to provide
facilities with a predictable timeframe,
we are clarifying that we will strive to
complete our review of ECE requests
within 90 days of receipt, depending on
the number of requests and the
complexity of the information provided
by facilities.
We welcomed public comments on
our proposals to: (1) Specify that ECE
forms can be signed by either the CEO
or the designated personnel as listed on
the ECE form; and (2) change the ECE
request form submission deadline to
within 90 days of the date that the
extraordinary circumstance occurred.
We also invited public comments on our
intent to clarify that we will strive to
complete our review of ECE requests
within 90 days of receipt.
Comment: Several commenters
supported CMS’ proposals to update the
ECE policies to align with other
programs.
Response: We thank these
commenters for their support.
After consideration of the public
comments we received, we are
finalizing our proposals as proposed to:
(1) Specify that ECE forms can be signed
by either the CEO or the designated
personnel as listed on the ECE form; and
(2) change the ECE request form
submission deadline to within 90 days
of the date that the extraordinary
circumstance occurred.
E. Clinical Quality Measurement for
Eligible Hospitals and Critical Access
Hospitals (CAHs) Participating in the
EHR Incentive Programs
1. Background
The HITECH Act (Title IV of Division
B of the ARRA, together with Title XIII
of Division A of the ARRA) authorizes
incentive payments under Medicare and
Medicaid for the adoption and
meaningful use of certified electronic
health record (EHR) technology
(CEHRT). Incentive payments under
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Medicare were available to eligible
hospitals and CAHs for certain payment
years (as authorized under sections
1886(n) and 1814(l) of the Act,
respectively) if they successfully
demonstrated meaningful use of
CEHRT, which includes reporting on
clinical quality measures (CQMs or
eCQMs) using CEHRT.
Sections 1886(b)(3)(B)(ix) and
1814(l)(4) of the Act also establish
downward payment adjustments under
Medicare, beginning with FY 2015, for
eligible hospitals and CAHs that do not
successfully demonstrate meaningful
use of CEHRT for certain associated
reporting periods. Section
1903(a)(3)(F)(i) of the Act establishes
100 percent Federal financial
participation (FFP) to States for
providing incentive payments to eligible
Medicaid providers (described in
section 1903(t)(2) of the Act) to adopt,
implement, upgrade and meaningfully
use CEHRT.
Under sections 1814(l)(3)(A),
1886(n)(3)(A), and 1903(t)(6)(C)(i)(II) of
the Act and the definition of
‘‘meaningful EHR user’’ under 42 CFR
495.4, eligible hospitals and CAHs must
report on CQMs selected by CMS using
CEHRT, as part of being a meaningful
EHR user under the Medicare and
Medicaid EHR Incentive Programs.
2. Modifications to the CQM Reporting
Requirements for the Medicare and
Medicaid EHR Incentive Programs for
CY 2017
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a. Background
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57255), we stated the CQM
reporting periods in CY 2017 for the
Medicare and Medicaid EHR Incentive
Programs as outlined below. For the
Medicare EHR Incentive Program, we
finalized the following submission
periods for eligible hospitals and CAHs
reporting CQMs by attestation and
eligible hospitals and CAHs
electronically reporting CQMs (81 FR
57255). In regard to the Medicaid EHR
Incentive Program, we provided States
with the flexibility to determine the
submission periods for reporting CQMs.
• Eligible Hospitals and CAHs
Reporting CQMs by Attestation:
++ For eligible hospitals and CAHs
demonstrating meaningful use for the
first time in 2017, the reporting period
is any continuous 90-day period within
CY 2017. The submission period for
attestation is the 2 months following the
close of the calendar year, ending
February 28, 2018.
++ For eligible hospitals and CAHs
that demonstrated meaningful use in
any year prior to 2017, the reporting
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period is the full CY 2017 (consisting of
four quarterly data reporting periods).
The submission period for attestation is
the 2 months following the close of the
calendar year, ending February 28,
2018.
• Eligible Hospitals and CAHs
Reporting CQMs Electronically: For
eligible hospitals and CAHs
demonstrating meaningful use for the
first time in 2017 or that have
demonstrated meaningful use in any
year prior to 2017, the reporting period
is the full CY 2017 (consisting of four
quarterly data reporting periods). The
submission period for reporting CQMs
electronically begins in late spring 2017
and continues through the 2 months
following the close of the calendar year,
ending February 28, 2018.
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57251 through 57255), we
finalized the following reporting criteria
regarding the number of CQMs eligible
hospitals and CAHs are required to
report for the reporting periods in CY
2017:
• For Attestation: If only participating
in the EHR Incentive Program, report on
all 16 available CQMs.
• For Electronic Reporting: If only
participating in the EHR Incentive
Program, or participating in both the
EHR Incentive Program and the Hospital
IQR Program (81 FR 57150 through
57159), report on 8 of the available
CQMs.
For further information on the
policies applicable for CQM reporting
for the EHR Incentive Program in 2017,
we refer readers to the discussion in the
FY 2017 IPPS/LTCH PPS final rule at 81
FR 57249 through 57257.
Since the publication of the FY 2017
IPPS/LTCH PPS final rule, we have
continued to receive frequent feedback
from hospitals and health IT vendors
about the ongoing challenges of
implementing CQM reporting
capabilities. A summary of the main
concerns identified by these data
submitters is as follows:
• The timing of the transition to a
new EHR system during 2017 (system
upgrades or new health IT vendor) may
influence hospitals’ ability to report in
a timely manner;
• The current timeframe for the
implementation of new EHR
requirements presents challenges due to
the varying 6 to 24-month cycles needed
for vendors to code new measures, test
and institute measure updates, train
hospital staff, and rollout other
upgraded features;
• Hospitals have had difficulty
identifying applicable measures that
reflect their patient population, given
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38475
the reduction in the number of available
CQMs (from 29 to 16) for CY 2017;
• Hospitals have had challenges with
data mapping and workflow because of
the need to collect CY 2017 data while
still reporting CY 2016 data; and
• Hospitals have identified challenges
in implementing annual updates and
new editions of certified health IT
because of significant impacts on
workflow, staffing, and connected
technology systems. (We note that this
information was inadvertently omitted
in the proposed rule at 82 FR 20130.)
In addition, there have been other
recent issues related to the CMS data
receiving system not being able to
process QRDA Category I files, and as a
result, the system is not generating
notifications confirming for providers
that their files have been received and
processed by the system. The
aforementioned issues and challenges
being experienced by hospitals and
health IT vendors are impacting the
capability of hospitals to meet the
requirements for CY 2017. As a result,
we proposed modifications to the CY
2017 final policies in the proposed rule,
which would reduce CQM reporting
requirements in order for hospitals and
health IT vendors to address these
issues.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20130 through
20131), we proposed two modifications
to our CY 2017 electronic CQM
reporting policies for the Medicare and
Medicaid EHR Incentive Programs. For
eligible hospitals and CAHs reporting
CQMs electronically in CY 2017, we
proposed to: (1) Decrease the number of
calendar quarters for which such
hospitals are required to submit data;
and (2) decrease the number of CQMs
for which such hospitals must submit
data (further discussion below). These
proposals are made in conjunction with
our proposals discussed in sections
IX.A.8. and IX.A.10.d. of the preamble
of this final rule to align requirements
for the Medicare and Medicaid EHR
Incentive Programs and the Hospital
IQR Program. In making these
proposals, we believe that eligible
hospitals and CAHs would have
additional time to upgrade their systems
and processes in preparation for the
transition to electronic reporting on
additional CQMs for additional quarters
in future years.
As we continue to make strides with
electronic reporting, we want to ensure
we provide eligible hospitals and CAHs
with a robust selection of CQMs. As
noted above, hospitals have expressed
concerns with identifying applicable
measures that reflect their patient
population; thus, we believe that the
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addition of new CQMs in the future will
offer more clinically relevant CQMs that
facilitate reporting and help drive
quality improvement. In section
IX.A.9.d. of the preamble of the
proposed rule, we discussed and sought
feedback on future potential CQMs for
the Hospital IQR Program and the
Medicare and Medicaid EHR Incentive
Programs for eligible hospitals and
CAHs.
b. Changes to Policies Regarding
Electronic Reporting of CQMs for CY
2017
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20131), in
response to concerns from stakeholders,
we proposed to modify the CQM
reporting period for eligible hospitals
and CAHs reporting CQMs
electronically for the Medicare and
Medicaid EHR Incentive Programs in CY
2017—for eligible hospitals and CAHs
demonstrating meaningful use for the
first time in 2017 or that have
demonstrated meaningful use in any
year prior to 2017, the reporting period
would be two self-selected quarters of
CQM data in CY 2017.
In addition, we proposed to modify
the reporting criteria regarding the
required number of CQMs for eligible
hospitals and CAHs that are reporting
electronically for the reporting periods
in CY 2017 under the Medicare and
Medicaid EHR Incentive Programs—if
only participating in the EHR Incentive
Program, or participating in both the
EHR Incentive Program and the Hospital
IQR Program, eligible hospitals and
CAHs would report on at least 6 (selfselected) of the available CQMs. For a
list of the available CQMs for reporting
periods in CY 2017, we refer readers to
the table in the FY 2017 IPPS/LTCH PPS
final rule at 81 FR 57255.
It should be noted that we did not
propose to modify any other aspects of
the policies for reporting CQMs
electronically for CY 2017, including
the submission periods, nor did we
propose any changes to our policies for
reporting CQMs by attestation.
Through our proposals for CY 2017,
we intend to continue to maintain
alignment between the Medicare and
Medicaid EHR Incentive Programs and
the Hospital IQR Program to reduce
confusion and reporting burden among
participants in the Medicare and
Medicaid EHR Incentive Programs that
also participate in the Hospital IQR
Program. As noted above, we are
retaining the submission period for
reporting CQMs electronically under the
Medicare EHR Incentive Program, in
which such submission period begins in
late spring 2017 and continues through
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the 2 months following the close of the
calendar year, ending February 28,
2018. In addition, we are continuing to
provide States with the flexibility to
determine the submission periods for
reporting CQMs under the Medicaid
EHR Incentive Program. For more
details on the aligned reporting
requirements for the Hospital IQR and
Medicare and Medicaid EHR Incentive
Programs, we refer readers to section
IX.A.10.d. of the preamble of this final
rule.
We believed that reducing the number
of CQMs required to be electronically
reported from 8 to 6 would ease the
burden on data submitters, allowing
them to shift resources to support
system upgrades, map data, and train
staff on CQMs. Similarly, we proposed
reducing the number of data reporting
periods to 2 quarters, rather than 4
quarters, and allowing eligible hospitals
and CAHs to select which two quarters
of CY 2017 to electronically report
would offer greater reporting flexibility
and allow eligible hospitals, CAHs, and
health IT vendors more time to plan for
reporting. We recognized that eligible
hospitals and CAHs were concerned
about their ability to meet the CY 2017
requirements established in the FY 2017
IPPS/LTCH PPS final rule and believed
that the proposed modified reporting
requirements for CY 2017 would
account for the challenges stakeholders
are experiencing while requiring the
electronic reporting on a portion of
CQMs, which is consistent with our goal
to transition to electronic reporting (81
FR 57254).
We invited public comment on our
proposals to modify the CY 2017 CQM
reporting requirements for the Medicare
and Medicaid EHR Incentive Programs
as described above.
Comment: A majority of commenters
supported CMS’ proposals to reduce the
number of CQMs required to be
electronically reported from 8 to 6
available CQMs and reduce the
reporting period from one full calendar
year of data to two, self-selected
quarters of data for CY 2017 electronic
reporting. The commenters encouraged
CMS to continue to take into account
the operational implications of the
electronic CQM submission
requirements for smaller hospitals that
have resource limitations. The
commenters noted that as currently
proposed, the requirements align with
the CY 2017 Joint Commission reporting
standards. A few commenters requested
CMS to finalize requirements as
proposed as soon as possible in order
for hospitals to prepare and educate
appropriate staff.
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Several commenters indicated that the
modified reporting period from one full
calendar year of data to two, selfselected quarters of data would provide
eligible hospitals and CAHs with
sufficient time to adequately transition
their EHR systems and allow them to
avoid a reporting period that overlaps
with the quarter in which they
transition EHR systems. One commenter
indicated that even if facilities were
already collecting data on 8 CQMs, the
reduction in the number of CQMs
required to electronically report and the
reporting period would give facilities
that have limited resources or
difficulties reporting for an entire
calendar year the opportunity to be
more successful.
Response: We thank the commenters
for their support regarding our proposal
to reduce the number of CQMs required
to be electronically reported from 8 to
6 available CQMs and reduce the
reporting period from one full calendar
year of data to two, self-selected
quarters of data for CY 2017 electronic
reporting. CMS remains committed to
engaging with stakeholders to address
their concerns, including hospitals of
varying sizes.
Comment: Several commenters
supported the proposed policies for CY
2017 that reduce the reporting period
from one full calendar year of data to
two, self-selected quarters of data and
the number of CQMs required to
electronically report from 8 to 6, but
recommended that CMS further reduce
the CY 2017 requirements by retaining
the CY 2016 established policies that
required the electronic reporting of 4
CQMs for one quarter of data. The
commenters indicated that maintaining
the CY 2016 CQM reporting
requirements for electronic submission
would provide certified health IT
vendors and CMS with additional time
to work on measure specification and
data validation, while giving hospitals
more time to focus on incorporating
system upgrades, data mapping, staff
training, planning for data processing
for CMS reporting and other issues.
In addition, some commenters
expressed concern that the incremental
increase in CQM electronic reporting
requirements would impact the ability
of eligible hospitals and CAHs to
effectively meet current CQM reporting
requirements and concurrently prepare
for increased CQM electronic reporting
requirements in the following program
year. As a result, additional burden
would be placed on hospitals by
limiting available time for testing prior
to production file submission. These
commenters indicated that recent
updates to measure specifications have
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required labor-intensive updates to
complete terminology mapping, which
has limited the ability of hospitals to
expand reporting on additional CQMs.
The commenters noted that
implementation of electronic CQM
reporting is a multi-year, incremental
process that requires significant capital
and operating expenditure, and a
significant investment of time and
energy by staff.
Response: We appreciate commenters’
feedback regarding the challenges
associated with the electronic reporting
of CQMs. As previously noted, in
response to hospital and health IT
vendor concerns, we proposed to
modify previously finalized policies by
reducing CQM reporting requirements.
Based upon continued feedback from
commenters, we are finalizing a
modification to our proposal which
reduces the CQM reporting
requirements for the CY 2017 reporting
period further than initially proposed.
For the CY 2017 reporting period, we
are requiring eligible hospitals and
CAHs to report one, self-selected
calendar quarter of data for 4 selfselected, available CQMs, instead of
reporting two, self-selected calendar
quarters of data for 6 available CQMs.
We believe that these modified
reporting requirements will provide
eligible hospitals, CAHs, and health IT
vendors with additional time to plan for
data processing, report quality data to
CMS, and focus on system upgrades,
data mapping, staff training, and other
issues, while also providing CMS with
more time to address data validation.
We will continue to monitor the
progress of hospitals implementing the
CQM reporting requirements and to
engage hospitals regarding their
experiences as we develop future CQM
policy.
In regard to the impact of the
incremental increase in CQM electronic
reporting requirements and recent
updates to measure specifications on the
ability of eligible hospitals and CAHs to
meet current CQM reporting
requirements and concurrently prepare
for increased CQM reporting
requirements in the following program
year, we believe that the modified
policies that we are finalizing will
address these commenters’ concerns.
Specifically, we decided to finalize for
CY 2017 the same CQM reporting
requirements established for CY 2016
(80 FR 49757 and 49758) (eligible
hospitals and CAHs will be required to
report one, self-selected quarter of data
(for CY 2016, either Q3 or Q4) for 4 selfselected, available CQMs), which we
believe will provide eligible hospitals
and CAHs additional experience
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reporting CQMs electronically,
incorporating annual measure
specification updates, and reviewing the
results of CQM data collection efforts
prior to an incremental increase in the
CQM reporting requirements.
For the CY 2017 reporting period,
eligible hospitals and CAHs will be able
to self-select 4 CQMs from the available
16 CQMs in the EHR Incentive Program
measure set and meet the reporting
requirements by submitting data via
QRDA I files, zero denominator
declaration, or case threshold
exemption. In addition, we are
continuing to allow manual aggregation
of data for those eligible hospitals and
CAHs experiencing issues with data
aggregation in the process of upgrading
EHR systems or changing health IT
vendors. In order to provide eligible
hospitals and CAHs with maximum
flexibility, they may self-select which
calendar quarter of data to report for the
CY 2017 reporting period.
We note that hospitals have reported
data electronically for several years to
both the Medicare EHR Incentive
Program and the Hospital IQR Program
(3 prior years of pilot reporting and 3
prior years of voluntary reporting) and
believe that the majority of hospitals
should be ready to successfully report
on at least 4 electronic CQMs beginning
with the CY 2017 reporting period.
However, we believe that the
modification to our proposal regarding
the CQM reporting requirements for CY
2017 that we are finalizing is responsive
to stakeholder feedback, including
feedback from small, rural, tribal, and
Indian Health Service hospitals that
have expressed the need for additional
time and flexibility to successfully
implement all of the CQM reporting
requirements. Lastly, CMS is aligning
the requirement for the reporting of one,
self-selected calendar quarter of data for
4 CQMs between the Hospital IQR
Program and the Medicare and
Medicaid EHR Incentive Programs in
order to streamline the electronic
submission of quality data for hospitals.
Although we are not finalizing our
proposal to require the electronic
reporting of 6 CQMs for two, selfselected calendar quarters of data in CY
2017, we encourage eligible hospitals
and CAHs to continue refining their
electronic reporting implementation
activities in order to successfully
achieve electronic data capture and
reporting. In addition, we encourage
early testing and the use of presubmission testing tools to reduce errors
and inaccurate data submissions in
electronic CQM reporting. As time
progresses, we expect that eligible
hospitals and CAHs will continue to
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38477
build and refine their EHR systems and
gain more familiarity with electronic
reporting of more CQM data, resulting
in more accurate data submissions with
fewer errors. It is critical that we
maintain a balance between the pace of
evolving electronic standards and the
timing cycle for the regulatory adoption
of standards when adopting policies for
the Medicare and Medicare EHR
Incentive Programs.
Comment: One commenter believed
that clinical staff may have difficulty
inputting patient information into the
appropriate structured fields during a
patient encounter due to competing
clinical demands.
Response: An EHR may allow
clinicians or administrative staff to
update patient information at a later
time if clinical staff cannot record
patient information at the time of the
encounter without compromising
patient care, or if additional information
needs to be added to the medical record.
We recommend that eligible hospitals
and CAHs and their health IT vendors
work together to implement EHR
functionalities that will successfully
support clinical activities,
documentation, and quality measure
reporting and that are consistent with
the policies and procedures of the
eligible hospital or CAH. We believe
that recording patient information in
structured fields for the purpose of
reporting CQMs electronically is more
accurate and less prone to errors than
using unstructured fields since it relies
less on interpretation, and ultimately
reduces burden on eligible hospitals and
CAHs.
Comment: A few commenters
expressed concern that hospitals may be
penalized more than once for failing to
successfully report CQMs electronically
in both the Hospital IQR and EHR
Incentive Programs and as a result, a
significant portion of their annual
payment update hinges on the maturity
of health IT vendor capabilities and the
ability of the CMS QualityNet Secure
Portal to manage and appropriately
support the volume of incoming data
submissions. Commenters noted that
hospitals continue to report barriers to
successfully submitting CQM data
electronically, including health IT
vendor failures during the submission of
production data (which were not
present during test submissions) and
limitations of the QualityNet Secure
Portal, such as: (1) An inability to accept
QRDA I files over a certain size; (2) an
inability to run reports verifying that
data have been submitted to CMS; and
(3) frequent periods when the system is
down due to it not being able to
accommodate more than a certain
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number of users at one time. The
commenters also expressed concern
regarding CQM measure specification.
Response: We disagree with
commenters that failing to successfully
report CQMs electronically in both the
Hospital IQR and EHR Incentive
Programs may result in duplicate
payment adjustments for hospitals.
Section 1886(n)(3)(B)(iii) of the Act
encourages the coordination of reporting
of information across CMS programs
and specifically directs the Secretary to
seek to avoid redundant or duplicative
reporting with reporting otherwise
required, including reporting under the
Hospital IQR Program, in selecting
measures and in establishing the form
and manner for reporting measures for
the EHR Incentive Program. Therefore,
we have established policies that have
enabled hospitals to satisfy the CQM
reporting requirements of both the
Medicare EHR Incentive Program and
the Hospital IQR Program without
duplicative reporting. In the event an
eligible hospital or CAH is unable to
meet the electronic CQM reporting
requirements, for CY 2017, it would be
able to report CQMs by attestation for
purposes of the EHR Incentive Program,
and if it satisfies all other program
requirements, it would avoid the EHR
Incentive Program downward payment
adjustment under sections
1886(b)(3)(B)(ix) and 1814(l)(4) of the
Act. Also, we encourage eligible
hospitals or CAHs that are unable to
meet the electronic CQM reporting
requirements under the EHR Incentive
Program to review the EHR Incentive
Program’s hardship exception policy.
Regarding the limitations of the
QualityNet Secure Portal and QRDA I
file submission difficulties that
commenters described, we acknowledge
that at certain times of high submission
volume, some data submitters reported
longer file processing times and an
inability to timely run feedback reports.
We are actively taking steps to improve
the data submission experience for the
CY 2017 reporting period, including
working to increase system throughput
and increase responsiveness should
further issues arise. In addition, we are
working to identify potential
efficiencies in our EHR Incentive
Program system source code which
could reduce the time it takes to receive
submission confirmation and run
reports.
We are finalizing a modified version
of our proposals regarding the
previously finalized CQM reporting
requirements for the CY 2017 reporting
period, such that eligible hospitals and
CAHs are required to electronically
report on 4 self-selected available CQMs
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(instead of 8 available CQMs) for one,
self-selected calendar quarter of data
(instead of a full calendar year
(consisting of four quarterly data
reporting periods)), whether reporting
only for the EHR Incentive Program or
reporting for both the Hospital IQR
Program and the EHR Incentive
Program.
Comment: One commenter did not
support CMS’ proposal to reduce the
number of CQMs required to be
electronically reported from 8 to 6 and
reduce the reporting period from one
full calendar year of data to two, selfselected quarters of CY 2017, and
recommended that the number of CQMs
and the reporting period reflect the
previously finalized CY 2017 CQM
reporting requirements for electronic
reporting. The commenter indicated that
capturing and exporting the data for a
QRDA Category I file is part of the ONC
EHR certification program and if a
hospital is not capturing data in such a
way that a QRDA I file can be generated,
then this implies that either the EHR is
violating its certification or the hospital
is not using its EHR appropriately.
Rather than modifying the CQM
reporting requirements, the commenter
suggested that the existing regulations
be enforced and penalties be applied to
health IT vendors with EHRs violating
their certification. In addition, the
commenter suggested that measure
specifications could be published in
advance to enable hospitals to view
them before the reporting period begins.
The commenter recognized the
challenges some hospitals face, but
indicated that these issues should be
addressed directly rather than by
changing the CQM reporting
requirements.
Response: We thank the commenter
for their support regarding our
previously finalized CY 2017 CQM
reporting requirements. We have found
that many hospitals are able to
successfully meet the CQM electronic
reporting requirements and would be
capable of successfully reporting
additional measures. However, we seek
to be responsive to the concerns and
challenges expressed by hospitals,
particularly smaller hospitals with
fewer resources. In the present case we
are seeking balance between hospitals’
requests for more time to improve their
CQM electronic reporting capabilities
and furthering our goal to expand
electronic data reporting. We appreciate
the commenter’s suggestion that
measure specifications could be
published further in advance to enable
hospitals to view them before the
reporting period begins and note that
measure specifications are typically
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published in the spring of the year prior
to the start of the applicable reporting
period.
Comment: A few commenters
recommended that CMS clarify the
definitions used for the terms
‘‘workflow’’ and ‘‘data submission,’’ in
the context of electronic measure
reporting. Specifically, the commenters
suggested that while ‘‘workflow’’ is
related to technical challenges, the term
is not appropriate in defining the
process of data extraction and QRDA I
submission.
Response: We thank the commenters
for their suggestions. Our references of
the terms ‘‘data submission’’ and
‘‘workflow’’ depend on the context in
which the terms are used, the parties
exchanging data, and the purpose for
which data is exchanged. In the context
of the electronic reporting of CQMs,
hospitals may experience challenges
modifying their internal workflow for
clinical care, corresponding
documentation and data capture, such
that clinical staff enter patient
information into the appropriate fields
of an EHR at the time of the patient
encounter. A clinician, medical
assistant, scribe, or other staff member
entering data into an EHR may find it
simpler to enter patient information in
the ‘‘free text’’ section of the EHR, even
though specific fields exist in the EHR
to record data so it maps appropriately
for CQM reporting purposes. In
suggesting that hospitals may need to
make changes to their internal
workflow, we expected that hospitals
would train the appropriate staff to
effectively capture patient data correctly
in the EHR and make such efforts a
priority. We further encourage hospitals
to innovate and design workflows that
fit their unique needs to make the best
use of both clinical and non-clinical
staff resources to maintain patient
health information in the EHR. In
addition, if clinical staff enter patient
information in the ‘‘free text’’ sections of
an EHR, clinical or administrative staff
could go back after a patient encounter
has completed and enter that
information into the appropriate fields.
This could be considered part of the
hospital’s ‘‘workflow’’ under the
definition provided by the commenter.
Data submission in the context of eCQM
reporting would refer to the sending and
subsequent receiving of clinical data
corresponding to eCQM specifications
through the QualityNet Secure Portal for
purposes of the Hospital IQR Program
and EHR Incentive Program eCQM
submissions.
Comment: One commenter urged
CMS to suspend all regulatory
requirements regarding the electronic
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reporting of CQMs, citing a lack of
improvement in patient care despite the
expenditure of significant time and
resources to meet the CQM reporting
requirements for the CY 2016 reporting
period.
Response: We disagree with the
commenter that the electronic reporting
of CQMs does not benefit patients. We
do not believe that suspending all
electronic reporting of CQMs would be
an appropriate approach. We recognize
the need to continue to improve the
electronic reporting of CQMs and
establish a more seamless process to
minimize burden on eligible hospitals
and CAHs in meeting CQM reporting
requirements. We understand that
eligible hospitals and CAHs have spent
resources to refine certified EHR
technology to meet the electronic CQM
reporting requirements. However, we
also believe that CQMs will promote
better quality of care as eligible
hospitals and CAHs and their health IT
vendors continue to refine EHR systems
and integrate them into the clinical
work flow. This will lead to improved
accuracy, reliability, and completeness
of the CQM data and promote higher
quality, improved health outcomes for
patients, and lower costs, while
ultimately decreasing reporting burden
on hospitals, and the associated
operational, administrative, and
financial burdens.
We will continue to monitor the
progress of eligible hospitals and CAHs
implementing CQM reporting
requirements and encourage eligible
hospitals and CAHs to continue sharing
their experiences in meeting reporting
requirements. In addition, we will
routinely evaluate the CQMs available
to report and consider new electronic
measures as they become available for
potential use in the Medicare and
Medicaid EHR Incentive Programs and
the Hospital IQR Program.
After consideration of the public
comments we received, we are
finalizing modifications to our
proposals regarding the previously
finalized CY 2017 CQM reporting
requirements for electronic reporting.
For the CY 2017 reporting period,
eligible hospitals and CAHs that choose
to report CQMs electronically are
required to report one, self-selected
calendar quarter of data for 4 selfselected CQMs of the available CQMs.
3. CQM Reporting for the Medicare and
Medicaid EHR Incentive Programs in
2018
a. Background
In the 2015 EHR Incentive Programs
Final Rule (80 FR 62892 through 62893),
beginning in CY 2017 and for
subsequent years, we established a CQM
reporting period of one full calendar
year (consisting of four quarterly data
reporting periods) for the reporting of
38479
CQMs by eligible hospitals and CAHs
participating in the Medicare and
Medicaid EHR Incentive Programs, with
an exception for providers
demonstrating meaningful use for the
first time under the Medicaid EHR
Incentive Program, for whom the CQM
reporting period is any continuous 90day period within the calendar year. In
the FY 2017 IPPS/LTCH PPS final rule
(81 FR 57250), we noted that one full
calendar year of data will result in more
complete and accurate data, and
hospitals will be able to submit one full
calendar year of data for both the
Medicare and Medicaid EHR Incentive
Programs and the Hospital IQR Program,
thereby reducing the reporting burden.
In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 57250 through 57255), we
removed 13 CQMs from the set of CQMs
available for eligible hospitals and
CAHs to report under the Medicare and
Medicaid EHR Incentive Programs,
beginning with the reporting periods in
CY 2017. All 16 of the remaining
measures listed in Table 10 of the EHR
Incentive Program Stage 2 final rule (77
FR 54083 through 54087) are available
for eligible hospitals and CAHs to report
for the Medicare and Medicaid EHR
Incentive Programs. The following table
lists the 16 CQMs available for eligible
hospitals and CAHs to report for the
Medicare and Medicaid EHR Incentive
Programs beginning in CY 2017 (81 FR
57255).
CQMS FOR ELIGIBLE HOSPITALS AND CAHS BEGINNING WITH CY 2017
Short name
Measure name
NQF #
Electronic Clinical Quality Measures (eCQMs)
AMI–8a .............................................
ED–3 ................................................
CAC–3 .............................................
ED–1 ................................................
ED–2 ................................................
EHDI–1a ..........................................
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PC–05 ..............................................
STK–02 ............................................
STK–03 ............................................
STK–05 ............................................
STK–06 ............................................
STK–08 ............................................
STK–10 ............................................
VTE–1 ..............................................
VTE–2 ..............................................
Primary PCI Received Within 90 Minutes of Hospital Arrival ...............................................
Median Time from ED Arrival to ED Departure for Discharged ED Patients .......................
Home Management Plan of Care Document Given to Patient/Caregiver ............................
Median Time from ED Arrival to ED Departure for Admitted ED Patients ...........................
Admit Decision Time to ED Departure Time for Admitted Patients .....................................
Hearing Screening Prior to Hospital Discharge ....................................................................
Elective Delivery (Collected in aggregate, submitted via web-based tool or electronic clinical quality measure).
Exclusive Breast Milk Feeding * ............................................................................................
Discharged on Antithrombotic Therapy ................................................................................
Anticoagulation Therapy for Atrial Fibrillation/Flutter ............................................................
Antithrombotic Therapy by the End of Hospital Day Two ....................................................
Discharged on Statin Medication ..........................................................................................
Stroke Education ...................................................................................................................
Assessed for Rehabilitation ..................................................................................................
Venous Thromboembolism Prophylaxis ...............................................................................
Intensive Care Unit Venous Thromboembolism Prophylaxis ...............................................
0163
0496
+
0495
0497
1354
0469
0480
0435
0436
0438
0439
+
0441
0371
0372
+ NQF endorsement has been removed.
* Measure name has been shortened. We refer readers to annually updated measure specifications on the CMS eCQI Resource Center Web
page for further information: https://www.healthit.gov/newsroom/ecqi-resource-center.
For CY 2018 and future calendar
years, we plan to continue to align the
CQM reporting requirements for the
Medicare and Medicaid EHR Incentive
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Programs and the Hospital IQR Program.
As we expect to expand the current
measures to align with the National
Quality Strategy, the CMS Quality
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Strategy 509 and incorporate updated
509 Available at: https://www.cms.gov/Medicare/
Quality-Initiatives-Patient-Assessment-Instruments/
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standards and terminology in current
CQMs, including updating the
electronic specifications for these
CQMs, and creating de novo CQMs, we
also plan to expand the set of CQMs
available for reporting under the EHR
Incentive Programs in future years. We
will continue to engage stakeholders to
provide input on future proposals for
CQMs as well as request comment on
future electronic specifications for new
and updated CQMs.
b. CQM Reporting Period for the
Medicare and Medicaid EHR Incentive
Programs in CY 2018
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(1) Background
Our goal is to continue to move
toward increased electronic reporting
while also addressing stakeholder
concerns. With the CY 2017 final
policies reducing electronic reporting
requirements and providing additional
time for eligible hospitals, CAHs, and
health IT vendors to make EHR
upgrades and system transitions in CY
2017, we believe that stakeholders will
be able to address some of the issues
and challenges they face prior to CY
2018, but recognize that certain
challenges and issues (for example, EHR
upgrade and system transition
challenges associated with the
development cycle of technology and
the timeframe to develop and execute
work flows and processes and train staff
based on EHR upgrades and system
transitions) may not be fully resolved
and as a result, may persist in CY 2018.
As established in the 2015 EHR
Incentive Programs Final Rule (80 FR
62894), reporting CQMs by attestation
will no longer be an option for eligible
hospitals and CAHs starting with the
reporting periods in CY 2018, except in
circumstances in which electronic
reporting is not feasible.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20132 and 20133),
for CY 2018, we proposed the following
CQM reporting period for the Medicare
and Medicaid EHR Incentive Programs
and the following submission period for
the Medicare EHR Incentive Program—
for eligible hospitals and CAHs
reporting CQMs electronically that
demonstrate meaningful use for the first
time in 2018 or that have demonstrated
meaningful use in any year prior to
2018, the reporting period would be the
first 3 quarters of CY 2018, and the
submission period would be the 2
months following the close of the
calendar year, ending February 28,
2019.
QualityInitiativesGenInfo/CMS-QualityStrategy.html.
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For eligible hospitals and CAHs that
report CQMs by attestation under the
Medicare EHR Incentive Program as a
result of electronic reporting not being
feasible, and for eligible hospitals and
CAHs that report CQMs by attestation
under their State’s Medicaid EHR
Incentive Program, we established a
CQM reporting period of the full CY
2018 (consisting of 4 quarterly data
reporting periods) (80 FR 62893). We
also established an exception to this
full-year reporting period for eligible
hospitals and CAHs demonstrating
meaningful use for the first time under
their State’s Medicaid EHR Incentive
Program; under this exception, the CQM
reporting period is any continuous 90day period within CY 2018 (80 FR
62893).
In the FY 2018 IPPS/LTCH PPS
proposed rule, we proposed the
submission period for eligible hospitals
and CAHs reporting CQMs by
attestation under the Medicare EHR
Incentive Program would be the 2
months following the close of the CY
2018 CQM reporting period, ending
February 28, 2019.
In regard to the Medicaid EHR
Incentive Program, we provide States
with the flexibility to determine the
method of reporting CQMs (attestation
or electronic reporting) and the
submission periods for reporting CQMs,
subject to prior approval by CMS.
(2) CQM Reporting Criteria for the
Medicare and Medicaid EHR Incentive
Programs in CY 2018
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20132 through
20133), we proposed the following
reporting criteria under the Medicare
and Medicaid EHR Incentive Program
for eligible hospitals and CAHs
reporting CQMs electronically for the
reporting period in CY 2018—for
eligible hospitals and CAHs
participating only in the EHR Incentive
Program, or participating in both the
EHR Incentive Program and the Hospital
IQR Program, report on at least six (selfselected) of the available CQMs from the
table in the FY 2017 IPPS/LTCH PPS
final rule at 81 FR 57255.
We proposed the following reporting
criteria for eligible hospitals and CAHs
that report CQMs by attestation under
the Medicare EHR Incentive Program
because electronic reporting is not
feasible, and for eligible hospitals and
CAHs that report CQMs by attestation
under their State’s Medicaid EHR
Incentive Program, for the reporting
period in CY 2018—report on all 16
available CQMs from the table in the FY
2017 IPPS/LTCH PPS final rule at 81 FR
57255.
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In developing these proposals, we
considered several alternatives.
Specifically, we considered aligning the
requirements for CY 2018 with the
proposed requirements for CY 2017
outlined in the proposed rule, such that
eligible hospitals and CAHs would
report on 6 (self-selected) available
CQMs for two self-selected quarters of
data in both CY 2017 and CY 2018. We
also considered the final policy in the
FY 2017 IPPS/LTCH PPS final rule for
the Hospital IQR Program (81 FR 57150
through 57159), which would require
hospitals to report one full calendar year
of data for at least 8 (self-selected)
CQMs out of the available CQMs for
both the CY 2017 reporting period/FY
2019 payment determination and the CY
2018 reporting period/FY 2020 payment
determination. However, we proposed
changes to this previously adopted
policy in the Hospital IQR Program and
refer readers to section IX.A.8. of the
preamble of this final rule for more
details. Ultimately, we believed that our
proposal balanced our goal to transition
to more robust electronic reporting of
quality measure data with concerns
from stakeholders regarding an
increased burden to meet CQM
reporting requirements. We believe the
electronic collection and reporting of
quality data using health IT will
ultimately simplify and streamline
reporting for various CMS quality
reporting programs, and hospitals will
experience decreased financial and
administrative burden as we continue to
align program reporting requirements
and adopt a more streamlined set of
clinical quality measures with
electronic specifications.
In addition, the proposal provided
eligible hospitals and CAHs the
opportunity to have several years of
experience reporting data electronically
for the Hospital IQR and Medicare and
Medicaid EHR Incentive Programs.
Therefore, we believed that eligible
hospitals and CAHs will be better
prepared to submit an additional quarter
of data for the CY 2018 reporting period
compared to the number of quarters we
proposed for the CY 2017 reporting
period. This proposal was made in
conjunction with our proposals
discussed in section IX.A.10.d. of the
preamble of the proposed rule to align
requirements for the Medicare and
Medicaid EHR Incentive Programs and
the Hospital IQR Program.
We invited public comment on our
proposals regarding the CY 2018
reporting requirements for eligible
hospitals and CAHs reporting CQMs
under the Medicare and Medicaid EHR
Incentive Programs.
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Comment: A majority of commenters
supported CMS’ proposal to require
eligible hospitals and CAHs to
electronically report 6 CQMs for the first
three calendar quarters of data for the
CY 2018 reporting period. A few
commenters requested CMS maintain
the requirement to electronically report
6 CQMs beyond the CY 2018 reporting
period while increasing the reporting
period to one full calendar year and
then gradually increasing the number of
required CQMs to electronically report
in future years. The commenters
believed such approach would allow
hospitals to adapt to the increased CQM
reporting requirements.
Response: We thank the commenters
for their support, and will consider their
comments in future policymaking.
Comment: Many commenters
supported requiring eligible hospitals
and CAHs to electronically report 6
CQMs, but requested that CMS retain
the proposed modified CY 2017 CQM
reporting period for electronic reporting,
which would require eligible hospitals
and CAHs to report two, self-selected
quarters of data for the CY 2018
reporting period instead of the first
three calendar quarters of data for the
CY 2018 reporting period. Some
commenters noted that smaller hospitals
with fewer resources require more time
to become proficient in all of the
parameters (mapping, new work flows,
staff education, etc.) associated with
electronic reporting.
A few commenters indicated that if
hospitals would be able to continue to
self-select two quarters of data for the
CY 2018 reporting period, it would
provide the necessary time for quality,
health IT, and clinical teams to improve
performance without significantly
impairing CMS’ ability to review and
analyze data generated through CQM
reporting.
Response: We appreciate the support
from commenters regarding our
proposal to require eligible hospitals
and CAHs to electronically report 6
available CQMs for the CY 2018
reporting period and their suggestion
that we retain the proposed CY 2017
reporting period (two, self-selected
quarters of data) for CY 2018.
In response to stakeholder concerns
regarding the burden associated with
meeting the CQM reporting
requirements (including updating EHR
systems, data mapping, refining work
flows, and staff education and training),
we recognize that eligible hospitals and
CAHs may require more time and
flexibility to meet the electronic
reporting requirements. Therefore, we
are finalizing modifications to our
proposals regarding the CQM reporting
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requirements for the CY 2018 reporting
period. Under the modified version of
our proposals which we are finalizing
for CY 2018, eligible hospitals and
CAHs will be required to electronically
report 4 self-selected CQMs of the
available 16 CQMs under the Medicare
and Medicaid EHR Incentive Programs.
In addition, under the modified version
of our proposals which we are
finalizing, for the CY 2018 reporting
period, eligible hospitals and CAHs are
required to report one, self-selected
calendar quarter of data for the 4 selfselected available CQMs.
By finalizing these modifications to
our proposal, the CQM reporting
requirements for electronic reporting for
the CY 2018 reporting period will be the
same as the CQM reporting
requirements finalized for the CY 2017
reporting period, as discussed above.
We believe that having the same
reporting requirements for three
reporting years will offer the
consistency requested by stakeholders
and allow hospitals and their health IT
vendors to improve CQM reporting
capabilities. We intend to establish
requirements for the CY 2019 reporting
period/FY 2021 payment determination
and future years in future rulemaking.
We will continue to monitor the
progress of eligible hospitals and CAHs
implementing CQM reporting
requirements and encourage hospitals to
continue sharing their experiences. In
addition, we encourage early testing and
the use of pre-submission testing tools
to reduce errors and inaccurate data
submissions in electronic CQM
reporting. As time progresses, we expect
that eligible hospitals and CAHs will
continue to build and refine their EHR
systems and gain more familiarity with
electronic reporting of more CQM data,
resulting in more accurate data
submissions with fewer errors.
Comment: Several commenters
supported CMS’ proposal to require
eligible hospitals and CAHs to
electronically report 6 CQMs for the CY
2018 reporting period, but requested
that CMS allow eligible hospitals and
CAHs to self-select the three quarters of
data for which they would report. The
commenters noted implementing
requirements that differ from one
calendar year to the next is time
consuming and cumbersome, which
includes changes and updates to CQM
logic definitions, vendor relations,
schemas for running reports, and XML
files. Some commenters indicated that
they would support reporting data from
the first quarter reporting period when
the year-end process is more established
and predictable.
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38481
Response: We thank the commenters
for their support of our proposal to
require eligible hospitals and CAHs to
electronically report 6 CQMs for the CY
2018 reporting period and suggestion to
allow eligible hospitals and CAHs to
self-select the three quarters of data for
which they would report.
However, with stakeholders
expressing concerns regarding eligible
hospitals and CAHs experiencing an
increased burden in meeting CQM
reporting requirements, we are
finalizing modifications to our
proposals regarding the CQM reporting
requirements for the CY 2018 reporting
period. For CY 2018, eligible hospitals
and CAHs are required to electronically
report one, self-selected calendar
quarter of data for 4 self-selected CQMs
of the available 16 CQM under the
Medicare and Medicaid EHR Incentive
Programs. The CQM reporting
requirements for CY 2017 and CY 2018
are the same.
Comment: Several commenters
supported the proposed policies for CY
2018 reporting period that would
require eligible hospitals and CAHs to
electronically report the first three
quarters of data for 6 self-selected
available CQMs, but recommended that
CMS further reduce the CY 2018
requirements by retaining the CY 2016
established policies that required the
electronic reporting of 4 CQMs for one
quarter of data.
In addition, some commenters
expressed concern that the incremental
increase in CQM electronic reporting
requirements would impact the ability
of eligible hospitals and CAHs to
effectively meet current CQM electronic
reporting requirements and
concurrently prepare for increased CQM
reporting requirements in the following
program year. As a result, additional
burden would be placed on hospitals by
limiting available time for testing prior
to production file submission. A few
commenters expressed concern about
the considerable burden required to
map the necessary data elements from
the EHR to the appropriate QRDA file
format and noted that some health IT
vendors are not properly equipped to
collect and transmit such data through
the CMS QualityNet Secure Portal. The
commenters stated that until these
issues are sufficiently addressed, CMS
should not increase the required CQM
reporting requirements for electronic
reporting.
Response: We appreciate commenters
expressing their concerns regarding the
challenges associated with the
electronic reporting of CQMs. As
previously noted, in response to
hospital and health IT vendor feedback,
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we are modifying our proposed CY 2018
reporting requirements by reducing
CQM reporting requirements. For the
CY 2018 reporting period, we are
requiring eligible hospitals and CAHs to
report one, self-selected calendar
quarter of data for 4 available CQMs. We
believe that the modified, reduced
reporting requirements will provide
eligible hospitals, CAHs, and health IT
vendors with additional time to plan for
data processing, report quality data to
CMS, and focus on system upgrades,
data mapping, staff training, and other
issues. We will continue to monitor the
progress of hospitals in implementing
CQM reporting requirements and engage
in discussions with hospitals and health
IT vendors regarding their experiences
as we consider the establishment of
CQM policies in future rulemaking.
In response to concerns from
commenters that the incremental
increase in CQM electronic reporting
requirements would impact the ability
of eligible hospitals and CAHs to both
effectively execute current CQM
electronic reporting requirements and
concurrently prepare for increased CQM
reporting requirements in the following
program year, we believe that the
modifications to our proposals requiring
eligible hospitals and CAHs to report
one, self-selected calendar quarter of
data for 4 available CQMs reduce
reporting requirements and provide
eligible hospitals and CAHs with
additional time to prepare to meet CQM
reporting requirements. We believe that
modestly increasing the requirements
for eligible hospitals and CAHs to report
CQMs electronically is consistent with
our goal to make progress toward more
robust electronic reporting of CQMs in
the EHR Incentive Program, but
recognize that some eligible hospitals
and CAHs may benefit from additional
time to become proficient in all of the
aspects associated with electronic
reporting and improving upon CQM
reporting capabilities prior to increasing
the number of quarters of data and
number of CQMs eligible hospitals and
CAHs are required to report
electronically. We believe the electronic
collection and reporting of quality data
using health IT will ultimately simplify
and streamline reporting for various
CMS quality reporting programs, and
hospitals will experience decreased
financial and administrative burden as
we continue to align program reporting
requirements and adopt a more
streamlined set of clinical quality
measures with electronic specifications.
For the CY 2018 reporting period,
eligible hospitals and CAHs will be able
to self-select 4 CQMs from the available
16 CQMs in the EHR Incentive Program
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measure set and meet the reporting
requirements by submitting data via
QRDA I files, zero denominator
declaration, or case threshold
exemption. In addition, we are
continuing to allow abstraction of data
into structured fields since some eligible
hospitals and CAHs are still in the
process of upgrading EHR systems and
changing health IT vendors. In an effort
to provide eligible hospitals and CAHs
with maximum flexibility, we are
finalizing a policy which permits them
to self-select the one calendar quarter of
data they report for the CY 2018
reporting period.
In considering what the reporting
period and number of CQMs to report
electronically should be, we decided to
implement for CY 2018 the same CQM
reporting requirements established for
CY 2016 (80 FR 49757 and 49758) and
finalized in this final rule for CY 2017
(eligible hospitals and CAHs will be
required to report one, self-selected
quarter of data (for CY 2016, either Q3
or Q4) for 4 available CQMs), which we
believe will provide eligible hospitals
and CAHs with additional time gaining
experience reporting CQMs
electronically and reviewing the results
of CY 2016 CQM data collection prior to
increasing the number of quarters of
data and number of CQMs eligible
hospitals and CAHs are required to
report electronically. We note that
hospitals have reported data
electronically for several years to both
the Medicare EHR Incentive Program
and the Hospital IQR Program (3 prior
years of pilot reporting and 3 prior years
of voluntary reporting) and believe that
the majority of hospitals should be
ready to successfully report on at least
4 electronic CQMs beginning with the
CY 2018 reporting period. However, we
believe that the finalized modification
to our proposal regarding the CQM
reporting requirements for CY 2018 is
responsive to stakeholder feedback,
including feedback from small, rural,
tribal, and Indian Health Service
hospitals that have expressed the need
for additional time and flexibility to
successfully implement all of the CQM
reporting requirements.
Comment: One commenter supported
CMS’ proposal that would require
eligible hospitals and CAHs to
electronically report 6 CQMs for the CY
2018 reporting period, but suggested
that CMS retain the requirement to
report one full calendar year of data.
Further, the commenter suggested
gradually increasing the number of
required CQMs in future years. The
commenter believed that such approach
would allow hospitals to adapt to the
increased CQM requirements.
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Response: We thank the commenter
for their support. For future years, we
will consider requiring hospitals to
report more quarters of data and to
gradually increase the electronic
reporting of quality measure data in the
Medicare and Medicaid EHR Incentive
Programs.
Comment: One commenter
recommended the submission deadline
be moved to the end of the first quarter
of 2019 instead of February 28, 2019,
which would allow for final ICD–10
coding and corrections potentially
needed after receiving final
documentation from physicians.
Response: We thank the commenter
for the recommendation to adjust the
CQM submission deadline for the
Medicare EHR Incentive Program from
February 28, 2019 to the end of the first
quarter of 2019. We will take this
suggestion into consideration; however,
at this juncture, we are finalizing the
submission deadline for the 2018
reporting period as proposed.
After consideration of the public
comments we received, we are
finalizing the CY 2018 reporting
requirements as proposed, except for
our proposals pertaining to the
electronic reporting of CQM reporting
period and reporting criteria, which we
are finalizing with modifications. For
CY 2018, the CQM reporting period for
the Medicare and Medicaid EHR
Incentive Programs and the submission
period for the Medicare EHR Incentive
Program are as follows—for eligible
hospitals and CAHs reporting CQMs
electronically that demonstrate
meaningful use for the first time in 2018
or that have demonstrated meaningful
use in any year prior to 2018, the
reporting period is one, self-selected
calendar quarter of CY 2018 data, and
the submission period is the 2 months
following the close of the calendar year,
ending February 28, 2019.
For eligible hospitals and CAHs that
report CQMs by attestation under the
Medicare EHR Incentive Program as a
result of electronic reporting not being
feasible, and for eligible hospitals and
CAHs that report CQMs by attestation
under their State’s Medicaid EHR
Incentive Program, we established a
CQM reporting period of the full CY
2018 (consisting of 4 quarterly data
reporting periods) (80 FR 62893). We
also established an exception to this
full-year reporting period for eligible
hospitals and CAHs demonstrating
meaningful use for the first time under
their State’s Medicaid EHR Incentive
Program. Under this exception, the
CQM reporting period is any continuous
90-day period within CY 2018 (80 FR
62893). The submission period for
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eligible hospitals and CAHs reporting
CQMs by attestation under the Medicare
EHR Incentive Program is the 2 months
following the close of the CY 2018 CQM
reporting period, ending February 28,
2019. In regard to the Medicaid EHR
Incentive Program, we provide States
with the flexibility to determine the
method of reporting CQMs (attestation
or electronic reporting) and the
submission periods for reporting CQMs,
subject to prior approval by CMS.
For the CY 2018 reporting period, the
reporting criteria under the Medicare
and Medicaid EHR Incentive Program
for eligible hospitals and CAHs
reporting CQMs electronically is as
follows—for eligible hospitals and
CAHs participating only in the EHR
Incentive Program, or participating in
both the EHR Incentive Program and the
Hospital IQR Program, report on at least
4 self-selected CQMs of the available
CQMs from the table in the FY 2017
IPPS/LTCH PPS final rule at 81 FR
57255, which is also in section IX.E.3.a.
of the preamble to this final rule.
The reporting criteria for eligible
hospitals and CAHs that report CQMs
by attestation under the Medicare EHR
Incentive Program as a result of
electronic reporting not being feasible,
and for eligible hospitals and CAHs that
report CQMs by attestation under their
State’s Medicaid EHR Incentive
Program, for the reporting period in CY
2018—report on all 16 available CQMs
from the table in the FY 2017 IPPS/
LTCH PPS final rule at 81 FR 57255.
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c. CQM Reporting Form and Method for
the Medicare EHR Incentive Program in
2018
In the FY 2016 IPPS/LTCH PPS final
rule (80 FR 49759 through 49760), we
removed the QRDA–III as an option for
reporting under the Medicare EHR
Incentive Program for eligible hospitals
and CAHs. For the reporting periods in
2016 and future years, we are requiring
QRDA–I for CQM electronic
submissions for the Medicare EHR
Incentive Program. As noted in the FY
2016 IPPS/LTCH PPS final rule (80 FR
49760), States would continue to have
the option, subject to our prior approval,
to allow or require QRDA–III for CQM
reporting.
As noted in the FY 2016 IPPS/LTCH
PPS final rule (80 FR 49759), we
encourage health IT developers to test
any updates, including any updates to
the CQMs and CMS reporting
requirements based on the CMS
Implementation Guide for Quality
Reporting Document Architecture
(QRDA) Category I and Category III
(CMS Implementation Guide for QRDA)
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for Hospital Quality Reporting (HQR),
on an annual basis.
The form and method of electronic
submission are further explained in
subregulatory guidance and the
certification process. For example, the
following documents are updated
annually to reflect the most recent CQM
electronic specifications: The CMS
Implementation Guide for QRDA;
program specific performance
calculation guidance; and CQM
electronic specifications and guidance
documents. These documents are
located on the eCQI Resource Center
Web page at: https://ecqi.healthit.gov/.
For further information on CQM
reporting, we refer readers to the EHR
Incentive Program Web site where
guides and tip sheets are located at:
https://www.cms.gov/ehrincentive
programs. In the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 20133), for
the CY 2018 reporting period, we
proposed the following for CQM
submission under the Medicare EHR
Incentive Program:
• Eligible hospital and CAH
participating in the Medicare EHR
Incentive Program (single program
participation)—electronically report
CQMs through QualityNet Portal.
• Eligible hospital and CAH options
for electronic reporting for multiple
programs (that is, EHR Incentive
Program and Hospital IQR Program
participation)—electronically report
through QualityNet Portal.
As noted in the 2015 EHR Incentive
Programs Final Rule (80 FR 62894),
starting in 2018, eligible hospitals and
CAHs participating in the Medicare EHR
Incentive Program must electronically
report CQMs where feasible; and
attestation to CQMs will no longer be an
option except in certain circumstances
where electronic reporting is not
feasible.
For the Medicaid EHR Incentive
Program, States continue to be
responsible for determining whether
and how electronic reporting of CQMs
would occur, or if they wish to allow
reporting through attestation. Any
changes that States make to their CQM
reporting methods must be submitted
through the State Medicaid Health IT
Plan (SMHP) process for CMS review
and approval prior to being
implemented.
For CY 2018, we proposed to continue
our policy regarding the electronic
submission of CQMs, which would
require the use of the most recent
version of the CQM electronic
specification for each CQM to which the
EHR is certified. For the CY 2018
electronic reporting of CQMs, this
means eligible hospitals and CAHs
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would be required to use the Spring
2017 version of the CQM electronic
specifications and any applicable
addenda available on the eCQI Resource
Center Web page at: https://
ecqi.healthit.gov/. In addition, we
proposed to require that an eligible
hospital or CAH would need to have its
EHR technology certified to all 16
available CQMs from the table in the FY
2017 IPPS/LTCH PPS final rule at 81 FR
57255 in order to meet the reporting
requirements for CY 2018. In the 2015
EHR Incentive Programs Final Rule (80
FR 62767), we established that starting
in CY 2018, eligible hospitals and CAHs
are required to have EHR technology
certified to the 2015 Edition, although
as discussed in section IX.G.4 of the
preamble of this final rule, we are
changing that requirement for the EHR
reporting period in CY 2018.
Starting in CY 2018, we proposed to
require the use of EHR technology
certified to the 2015 Edition for CQM
reporting. Furthermore, we proposed
that an EHR certified for CQMs under
the 2015 Edition certification criteria
would not need to be recertified each
time it is updated to a more recent
version of the CQMs. We believe it is
not necessary for an EHR certified for
CQMs under the 2015 Edition
certification criteria to be recertified
each time it is updated to the most
recent version of the CQMs because the
EHR technology continues to meet the
2015 Edition certification criteria and
any updates to the CQM specifications
do not impact or change any elements
regarding certification and thus, we
proposed that recertification is not
necessary. For further discussion
regarding EHR certification
requirements for 2018, we refer readers
to section IX.G.4. of the preamble of this
final rule. We invited public comment
on these proposals.
Comment: Many commenters did not
support the proposal requiring EHR
technology to be certified to the 2015
Edition for the CY 2018 reporting
period. Several commenters supported
the options described in the FY 2018
IPPS/LTCH PPS proposed rule that
would allow hospitals to use 2014
Edition CEHRT or a combination of
2014 and 2015 Edition CEHRT for the
CY 2018 CQM reporting period.
A few commenters recommended
CMS delay the requirement for EHR
technology to be certified to the 2015
Edition until the CY 2019 reporting
period. The commenters indicated that
additional time is necessary since the
certification requirements for the 2015
Edition are extensive and expensive,
and noted that health IT vendors will
continue to struggle with completing the
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certification process by January 1, 2018.
One commenter mentioned that turn
over in the industry has caused a
backlog in the certification process.
Another commenter expressed concern
that the slow pace of certification, the
number of upgrades that need to be
performed, and the number of trainings
yet to be held makes it highly unlikely
that health systems and medical
practices will be prepared to submit
CQMs using EHR technology certified to
the 2015 Edition for the CY 2018
reporting period. Another commenter
noted that implementing the 2015
Edition of CEHRT does not
automatically create the ability to
submit appropriate or complete quality
data.
Response: We recognize that there is
burden associated with the development
and deployment of each new edition of
CEHRT, but we believe it is important
to continue to encourage the use of the
most recent edition of CEHRT, which
incorporates updated standards and
criteria, as it allows the collection of
more relevant and accurate electronic
data. We believe there are many benefits
associated with upgrading to EHR
technology certified to the 2015 Edition.
Specifically, the 2015 Edition health IT
certification criteria enables health
information exchange through new and
enhanced certification criteria
standards, and implementation
specifications for interoperability while
incorporating changes that are designed
to spur innovation and provide more
choices to health care providers and
patients for the exchange of electronic
health information including new
application access (API) certification
criteria.
However, based on the comments we
received that did not support our
proposal, we are also finalizing a
modified version of our proposal to
require the use of EHR technology
certified to the 2015 Edition for the
CQM reporting period in CY 2018. For
the CY 2018 CQM reporting period,
eligible hospitals and CAHs will have
the flexibility to use EHR technology
certified to the 2014 Edition or 2015
Edition, or a combination of both
Editions. We believe this provides
sufficient time for eligible hospitals and
CAHs to test and deploy the 2015
Edition of CEHRT in subsequent years.
The utilization of the most recent
version of CEHRT will provide the most
relevant data, which is critical for
eligible hospitals and CAHs to collect,
use, and share data. We believe
improved systems interoperability and
use of the most current standards will
facilitate more robust and accurate
quality data reporting. One of the main
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purposes of the ONC 2015 Edition final
rule (80 FR 62603) is to facilitate greater
interoperability for several clinical
health information purposes and enable
health information exchange through
new and enhanced certification criteria,
standards, and implementation
specifications. We note that we have
worked closely with ONC to enhance
testing and validation of certified
technology’s ability to capture,
exchange, and report electronic patient
data, such as improved testing and
certification through the Cypress CQM
testing and certification tool.
In addition, in response to the
concern regarding the burden associated
with upgrading EHR technology
certified to the 2015 Edition for the CY
2018 CQM reporting period, as
discussed in this section of the
preamble of this final rule, we are
finalizing a modified version of our
proposal regarding CQM reporting
requirements for the CY 2018 reporting
period that require reporting on 4 selfselected CQMs for one, self-selected
calendar quarter of data to reduce
burden. By allowing eligible hospitals
and CAHs to self-select the quarters of
data they report, eligible hospitals and
CAHs will have more flexibility to meet
certification and EHR system upgrades,
such as transitioning to the 2015
Edition.
We are also finalizing a modified
version of our proposal to require the
use of EHR technology certified to the
2015 Edition for the CQM reporting
period in CY 2018. For the CY 2018
CQM reporting period, eligible hospitals
and CAHs will have the flexibility to
use EHR technology certified to the
2014 Edition or 2015 Edition, or a
combination of both Editions. We
believe this provides sufficient time for
eligible hospitals and CAHs to test and
deploy the 2015 Edition of CEHRT in
subsequent years.
Comment: One commenter expressed
concern that allowing the flexibility to
use a combination of the 2014 and 2015
Editions of CEHRT for the CY 2018
reporting period may create more
problems than it could potentially solve.
Response: We acknowledge the
concern from the commenter and note
that we do not believe allowing
hospitals to use a combination of EHR
technology certified to the 2014 and
2015 Editions would make it more
difficult for them to meet the CQM
reporting requirements in CY 2018. We
have allowed this flexibility for the CY
2016 and CY 2017 reporting periods and
we are not aware of any specific issues
in QRDA I file creation or submission.
Based on the comments received, many
eligible hospitals, CAHs, and health IT
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vendors would prefer to have greater
time and flexibility to implement
upgrades to the 2015 Edition.
Comment: Several commenters
supported the proposal to require EHR
technology to be certified to all 16
CQMs for the CY 2018 reporting period
since all 16 CQMs should be available
for submission to allow for reporting
flexibility to better reflect the
populations served by hospitals.
Response: We thank the commenters
for their support regarding our proposal
to require EHR technology to be
certified to all 16 CQMs for the CY 2018
reporting period.
Comment: Several commenters did
not support the proposal to require that
EHR technology be certified to all 16
CQMs for the CY 2018 reporting period.
A few of these commenters noted that
there is not a requirement as a condition
of ONC certification for EHR technology
to support all CQM reporting options for
hospitals, leaving each hospital or
health system to work independently
with health IT vendors in implementing
their measures. The commenters
expressed concern that these conditions
may result in additional costs and hours
of additional work for hospitals, and
cause a tremendous waste of limited
financial and personnel resources.
In addition, some commenters
expressed concern that the proposal to
require EHR technology be certified to
all 16 CQMs for the CY 2018 reporting
period inappropriately places the
burden on hospitals, rather than health
IT vendors, to meet the requirement,
especially for hospitals transitioning to
EHR technology certified to the 2015
Edition and preparing for long-planned
system upgrades. These commenters
urged CMS to work with ONC and
health IT vendors to ensure that the
2015 Edition CEHRT is capable of
supporting hospital CQM reporting,
including the reporting of any of the
CQMs available to report in the
Medicare and Medicaid EHR Incentive
Programs.
One commenter expressed concern
that this policy eliminates the
opportunity for a specialty product to
focus on measures only applicable to its
domain, such as a surgical suite product
focusing on surgery measures. The
commenter also noted its concern that
this policy would reduce the availability
of CEHRT for hospitals or lead to poorer
workflows for capturing quality data.
Response: We appreciate commenters
expressing their concerns regarding the
proposal to require EHR technology be
certified to all available CQMs for the
CY 2018 reporting period. We recognize
the challenges associated with the
electronic reporting of CQMs. We
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believe that requiring EHR technology to
be certified to all available CQMs is
important in allowing us to collect the
most relevant electronic data. Further,
we believe that requiring EHR
technology to be certified to all available
CQMs would help streamline the
electronic data extrapolation component
of hospital workflow in the future. In
addition, having EHR technology
certified to all available CQMs will
prevent hospitals from having to go back
and consult their health IT vendors each
time they want/need to report on a new
or different CQM.
We do not agree that the proposal
places the burden on hospitals, rather
than health IT vendors, to meet the
requirement. We will continue to seek
stakeholder input and collaborate with
ONC to define standards for EHR
organization and structure, which
would allow for documentation to fit
into the clinical workflow and to ensure
our policies are responsive to evolving
electronic standards to the greatest
extent possible. We also seek to ensure
that EHR technology certified to the
2015 Edition is capable of supporting
hospital CQM reporting requirements,
including the electronic reporting of any
of the CQMs that are available to report
under the Medicare and Medicaid EHR
Incentive Programs. We encourage
eligible hospitals and CAHs to work
with their health IT vendors to continue
refining their electronic reporting
implementation activities to
successfully achieve electronic data
capture and reporting despite mapping
and integration issues.
With respect to the concern indicating
that this policy eliminates the
opportunity for a specialty product to
focus on measures only applicable to its
domain, such as a surgical suite product
focusing on surgery measures and that
it would reduce the availability of
CEHRT for hospitals or lead to poorer
workflows for capturing quality data, we
believe focusing first on consistency and
alignment across all measures and EHR
systems will provide an opportunity for
all specialties to report equally within
the EHR technology. Focusing on
unique and individual specialties is a
consideration for future rules once the
concept of electronic reporting is fully
established. Therefore, requiring EHR
technology to be certified to all available
CQMs at this time outweighs the
potential limitations on specialty
products and any impact this might
have on their workflow.
After consideration of the public
comments we received, we are
finalizing the following policies
regarding CQM reporting form and
method as proposed. For CY 2018, we
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will continue our policy regarding the
electronic submission of CQMs, which
requires the use of the most recent
version of the CQM electronic
specification for each CQM to which the
EHR is certified. For the CY 2018
electronic reporting of CQMs, this
means eligible hospitals and CAHs are
required to use the Spring 2017 version
of the CQM electronic specifications
and any applicable addenda available
on the eCQI Resource Center Web page
at: https://ecqi.healthit.gov/. In addition,
we are requiring that an eligible hospital
or CAH will need to have its EHR
technology certified to all 16 available
CQMs from the table in the FY 2017
IPPS/LTCH PPS final rule at 81 FR
57255 in order to meet the reporting
requirements for CY 2018.
In regard to the proposal requiring
eligible hospitals and CAHs to utilize
EHR technology certified to the 2015
Edition for CQM reporting in CY 2018,
we are finalizing a modification to our
proposal. As discussed above and in
section IX.G.4 of the preamble of this
final rule, for the CY 2018 CQM
reporting period, eligible hospitals and
CAHs will have the flexibility to use
EHR technology certified to either the
2014 Edition or 2015 Edition, or a
combination of both Editions. We note
that an EHR technology certified for
CQMs under the 2014 or 2015 Edition
certification criteria will not need to be
recertified each time it is updated to a
more recent version of the CQMs.
F. Clinical Quality Measurement for
Eligible Professionals (EPs) Participating
in the Medicaid EHR Incentive Program
in 2017
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20134 through
20135), we discussed clinical quality
measurement for eligible professionals
(EPs) participating in the Medicaid EHR
Incentive Program in 2017. We
explained that the proposals in this
section would apply only to EPs
participating in the Medicaid EHR
Incentive Program. They would not
apply to eligible hospitals or CAHs, or
to the Medicare EHR Incentive Program.
1. Modifications to the CQM Reporting
Period for EPs in 2017
In the 2015 EHR Incentive Programs
Final Rule (80 FR 62762), we
established for the Medicare and
Medicaid EHR Incentive Programs a
CQM reporting period of the full CY
2017 for EPs who have demonstrated
meaningful use in a prior year and a
CQM reporting period of any
continuous 90 days within CY 2017 for
EPs who are demonstrating meaningful
use for the first time (80 FR 62891
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through 62892). We also noted that we
would continue to allow the States to
determine the form and manner in
which Medicaid EPs should report
CQMs, subject to CMS approval (80 FR
62891, 62894).
In the final rule with comment period
titled Medicare Program; Merit-Based
Incentive Payment System (MIPS) and
Alternative Payment Model (APM)
Incentive Under the Physician Fee
Schedule, and Criteria for PhysicianFocused Payment Models (81 FR 77008)
(referred to as the ‘‘CY 2017 Quality
Payment Program final rule with
comment period’’), we established at
§ 414.1320(a), for the 2019 MIPS
payment year, a minimum of a
continuous 90-day performance period
within CY 2017, up to and including the
full CY 2017, for the quality
performance category of the MIPS. We
established at § 414.1320(b), for the
2020 MIPS payment year, a performance
period of the full CY 2018.
Following the publication of that final
rule with comment period, we received
feedback from EPs observing that having
CQM reporting or performance periods
for Medicare professionals under MIPS
that are different from the CQM
reporting period for EPs under the
Medicaid EHR Incentive Program would
create administrative burdens for EPs
who wish to participate in both
programs and to report CQMs
electronically. Our goal has always been
to align Medicare and Medicaid
reporting and quality improvement
programs to the extent possible. In
addition, while participation in MIPS is
required for professionals who are
considered ‘‘MIPS eligible clinicians,’’
participation in the Medicaid EHR
Incentive Program is not required. If the
CQM reporting periods and MIPS
performance periods are not aligned, we
believe it is less likely that MIPS eligible
clinicians will also participate as EPs in
the remaining years of the Medicaid
EHR Incentive Program.
Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 20134), we
proposed to change the CQM reporting
period for EPs who report CQMs
electronically in the Medicaid EHR
Incentive Program to match the
performance period established under
MIPS in the quality performance
category for MIPS eligible clinicians. We
proposed a minimum of a continuous
90-day period during CY 2017 for EPs
electronically reporting CQMs for the
Medicaid EHR Incentive Program. We
note that we consider the reporting
periods established through rulemaking
to be minimums and would encourage
States to accept data from longer
reporting periods. We proposed that the
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reporting period for CQMs for EPs who
choose to attest rather than report
electronically, and who have
demonstrated meaningful use in a
previous program year under the EHR
Incentive Program, would remain one
full year (CY 2017), which is in
alignment with the requirements for
eligible hospitals and CAHs for the
Medicare and Medicaid EHR Incentive
Programs for 2017 (80 FR 62892 through
62893). We noted that reporting CQMs
by attestation is not an option for
eligible clinicians under MIPS, so the
reason for proposing a shortened
reporting period for EPs reporting CQMs
electronically, which is to align this
reporting period with the MIPS
performance period, would not exist for
EPs who choose not to report
electronically. We explained that
nothing in this proposal would change
the CQM reporting period for EPs
demonstrating meaningful use for the
first time, which was established in the
2015 EHR Incentive Programs Final
Rule to be any continuous 90 day period
regardless of the method of CQM
submission (80 FR 62892).
We further explained that the CQM
reporting period for the Medicaid EHR
Incentive Program in 2018 for EPs that
have demonstrated meaningful use in a
previous program year would remain 1
full year (CY 2018) to align with the
corresponding performance period in
MIPS for MIPS eligible clinicians. If
changes are made to the MIPS
performance period through future
rulemaking, we will revisit the
Medicaid EHR Incentive Program
policies to continue our alignment
goals.
We explained that we intend to
reduce EP burden and simplify the
program through this proposal, which is
intended to better align CQM reporting
periods and CQM reporting for the
Medicaid EHR Incentive Program with
policies under MIPS. Overall, we
believe the proposed alignment at the
State attestation system and EP levels
would both reduce burden associated
with reporting on multiple CMS
programs and enhance State and CMS
operational efficiency.
We invited public comment on this
proposal, including on whether making
the proposed change would create
burdens for EPs or States.
Comment: The majority of
commenters supported our proposal to
change the CQM reporting period to any
continuous 90-day period during CY
2017 for EPs electronically reporting
CQMs for the Medicaid EHR Incentive
Program, which would align with the
MIPS performance period. Commenters
supported aligning the Medicaid EHR
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Incentive Program with MIPS when
possible to reduce EP burden.
Response: We appreciate these
comments and will continue to look for
ways to align the Medicaid EHR
Incentive Program with MIPS when
possible. Therefore, we are finalizing
the proposal to change the CQM
reporting period to any continuous 90day period during CY 2017 for Medicaid
EPs electronically reporting CQMs.
Comment: Several commenters,
including representatives of state
Medicaid agencies, requested that CMS
also change the CQM reporting period
for Medicaid EPs who attest to CQMs
rather than report electronically in CY
2017. These commenters noted that
establishing a 90-day reporting period
for all CQM reporting, regardless of
submission method, would further
reduce EP burden and streamline the
Medicaid EHR Incentive Program
requirements.
Response: We thank these
commenters and agree that establishing
a 90-day CQM reporting period during
CY 2017 for all Medicaid EPs, regardless
of submission method, would reduce
burden and streamline the program
requirements. Due to the comments we
received, the majority of which
encouraged us to make this change to
the proposed rule, we reconsidered the
benefits to all EPs of a 90-day CQM
reporting period in CY 2017. Therefore,
we are establishing a CQM reporting
period of any continuous 90-day period
during CY 2017 for all Medicaid EPs,
regardless of reporting method.
After consideration of the public
comments we received, we are
finalizing a CQM reporting period for
2017 of any continuous 90-day period
during CY 2017 for all Medicaid EPs,
regardless of submission method.
2. Modifications to CQM Reporting
Requirements for Medicaid EPs Under
the Medicaid EHR Incentive Program
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20134 through
20135), we also proposed to align the
specific CQMs available to EPs
participating in the Medicaid EHR
Incentive Program with those available
to clinicians participating in MIPS who
submit CQMs through their EHR. In the
final rule titled ‘‘Medicare and Medicaid
Programs; Electronic Health Record
Incentive Program—Stage 2,’’ we
established (77 FR 54058) that EPs are
required to report 9 CQMs covering at
least 3 of the National Quality Strategy
(NQS) domains from a list of 64 CQMs
(77 FR 54069, Table 8). Subsequently
and in the following years, in general,
there has been alignment between the
CQMs selected for the Medicaid and
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Medicare EHR Incentive Programs for
EPs and the electronic measures
selected for the PQRS Program. Updates
to the PQRS measure set were proposed
and finalized in the annual Physician
Fee Schedule (PFS) rule for purposes
such as keeping specifications in line
with industry standards and clinical
guidelines.
In the CY 2017 Quality Payment
Program final rule with comment period
(81 FR 77144), we revised the list of
CQMs for the 2019 MIPS payment year,
based on performance periods within
CY 2017, to better reflect updated
clinical standards and guidelines.
Specifically, we removed a number of
CQMs that had not been updated and
were no longer clinically relevant (81
FR 77773, Appendix, Table F). In order
to keep CQM specifications current, we
proposed to align the CQMs for
Medicaid EPs with those applicable for
MIPS. Specifically, we proposed that
the CQMs available for Medicaid EPs in
2017 would consist of the list of
available CQMs for reporting from an
EHR for MIPS in 2017, available in the
Appendix of the CY 2017 Quality
Payment Program final rule with
comment period under Table A, which
are denoted with a CMS e-Measure ID
number.
In the CY 2017 Quality Payment
Program final rule with comment period
(81 FR 77145), we noted that one
commenter requested that we engage
State Medicaid leaders to maximize
measure alignment across Medicare and
Medicaid. We responded that we intend
to align quality measures among all
CMS quality programs where possible,
including Medicaid, and would take
this comment into account in the future.
In addition, States have requested
alignment between the CQM set for
MIPS and the CQM set for EPs in the
Medicaid EHR Incentive Program for
consistency and convenience, to reduce
burden, and to avoid confusion. In
addition, we believe it is more likely
that professionals would participate in
both programs if the CQM sets are
aligned. While participation in MIPS is
required for professionals who are
considered ‘‘MIPS eligible clinicians,’’
participation in the Medicaid EHR
Incentive Program is not required. If the
CQMs are not aligned across both
programs, we believe it is less likely that
MIPS eligible clinicians would also
participate as EPs in the remaining years
of the Medicaid EHR Incentive Program.
Finally, as noted above, the CQMs that
were removed from MIPS (81 FR 77773,
Appendix, Table F) had not been
updated and were no longer clinically
relevant, and we believe that the revised
list of CQMs would better reflect
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updated clinical standards and
guidelines (81 FR 77144).
We noted in the proposed rule that we
anticipate that this proposal would
reduce burden for Medicaid EPs, and
that the systems changes that would be
needed to implement it would not be
significant for either States or EPs. The
set of 53 CQMs available to MIPS
participants is a subset of the 64 CQMs
currently available under the Medicaid
EHR Incentive Program. In addition, we
believe that if EPs also plan to
participate in MIPS, they should already
be prepared to report on the 53 CQMs.
However, we welcomed comments on
whether any EPs might be negatively
affected by the proposal; for example,
on whether any EPs might have EHRs
that do not measure enough of the 53
remaining CQMs because they were
relying on some of the 11 CQMs that
would be removed. We do not anticipate
that this would be a common situation
because these 11 CQMs are outdated,
and the industry is moving away from
them as EHRs are upgraded to meet the
MIPS requirements.
We also noted in the proposed rule
that we anticipate that the proposal to
reduce the number of available CQMs
would have only a minimal impact on
States, which would have to make
minor adjustments to State systems to
reduce the available measures from 64
to 53. It is our understanding that State
systems can turn off or easily exclude
CQMs from user visibility on the front
end and still easily manage on the back
end.
The data submission criteria for the
MIPS quality performance category at
§ 414.1335(a)(1)(i) provide that
individual MIPS eligible clinicians and
groups who elect to submit data via
claims, qualified registry, EHR or
qualified clinical data registry must
submit data on at least six quality
measures, including at least one
outcome measure (or, if an applicable
outcome measure is not available, one
other high priority measure). We refer
readers to § 414.1335(a)(2) and (3) for
the data submission criteria that apply
to individual MIPS eligible clinicians
and groups who elect to submit data via
other data submission mechanisms.
Instead of requiring MIPS eligible
clinicians to report on CQMs across a
certain number of NQS domains, MIPS
provides individual MIPS eligible
clinicians and groups with a variety of
alternatives for participating in MIPS,
including a variety of data submission
mechanisms and scoring criteria. We
noted in the proposed rule that we
believe that the burden on EPs and
States of adopting all of these MIPS
alternatives for the Medicaid EHR
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Incentive Program would outweigh any
benefits gained. The alternative
reporting options for MIPS are
calibrated as part of an overall quality
improvement program beyond what the
Medicare and Medicaid EHR Incentive
Programs are designed to be. We believe
it would be inappropriate to apply all of
these new requirements to the Medicaid
EHR Incentive Program.
We proposed to eliminate the
requirement to report on CQMs across 3
of the 6 NQS domains that existed in
previous years of the Medicaid EHR
Incentive Program, for improved
alignment with the data submission
criteria for the MIPS quality
performance category. The removal of
this requirement would provide EPs
greater flexibility in selecting CQMs to
report and would assure that they could
report on the same CQMs from their
EHR to both MIPS and the Medicaid
EHR Incentive Program.
We proposed that for 2017 Medicaid
EPs would be required to report on any
six measures that are relevant to the
EP’s scope of practice. This proposal
would better align with the data
submission criteria for the MIPS quality
performance category in 2017.
We noted that we would continue our
policy on allowing zero denominators to
be reported to allow EPs to meet the
CQM reporting requirements of the EHR
Incentive Programs (80 FR 62889).
Future years’ requirements for reporting
CQMs in the Medicaid EHR Incentive
Program will be established in future
rulemaking, as the policies for MIPS are
developed for 2018 and beyond. We will
continue to align the quality reporting
requirements, as logical and feasible, to
reduce EP burden.
We invited public comment on these
proposals, specifically on whether
making these proposed changes to CQM
measures and measure reporting
effective for 2017 would create burdens
on EPs or States. If so, we stated we
would consider making these proposed
changes to the CQM reporting
requirements effective beginning with
the reporting period in 2018.
Comment: The vast majority of
commenters supported CMS’ proposals
to change the CQM reporting
requirements for EPs participating in the
Medicaid EHR Incentive Program to
align with the MIPS requirements for
eligible clinicians and groups reporting
CQMs through their EHRs. Our proposal
to reduce and simplify the reporting
requirement, from nine CQMs across 3
NQS domains, to any six CQMs relevant
to an EP’s scope of practice, received
significant support from commenters.
Response: We appreciate the
comments and are finalizing the
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38487
proposals as proposed. In 2017,
Medicaid EPs will report any six CQMs
relevant to their scope of practice,
regardless of whether they report via
attestation or electronically.
Comment: One provider group
commented that removing CQMs from
the list of available CQMs could be an
issue for EPs who were expecting to
report on the removed measures in
2017.
Response: We did not receive any
comments from providers affirmatively
stating that this would be an issue. The
majority of provider comments were
very supportive of aligning the
Medicaid EHR Incentive Program CQM
reporting requirements with MIPS,
stating that it would reduce reporting
burden and allow providers to
participate in both programs. Reducing
the number of required CQMs from 9 to
6, and removing the domain
requirements gives EPs greater
flexibility to meet program
requirements. We believe that all
Medicaid EPs will be able to find six
CQMs that are relevant to their scope of
practice within the updated list of
available CQMs. Also, we note our
continued policy to allow ‘‘zero
denominator’’ CQM submissions, which
allows EPs to report on a CQM even if
they have no data on that CQM in their
EHR from the reporting period.
After consideration of the public
comments we received, we are
finalizing the proposals without
modification. For 2017, the CQMs
available for Medicaid EPs will consist
of the list of 53 available CQMs for
reporting from an EHR for MIPS for
2017 performance periods. Also, for
2017, Medicaid EPs are required to
report on any six measures that are
relevant to the EP’s scope of practice.
G. Changes to the Medicare and
Medicaid EHR Incentive Programs
1. Summaries of Final Policies Included
in This Final Rule
In this final rule, we are adopting
final policies based on proposals in the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 20135–20139) to continue
advancement of certified EHR
technology utilization, focusing on
interoperability and data sharing. For
the reasons discussed in section IX.G.2.
of the preamble of this final rule, we are
finalizing an EHR reporting period of a
minimum of any continuous 90-day
period in CY 2018 for new and
returning participants attesting to CMS
or their State Medicaid agency.
As mandated by the 21st Century
Cures Act (Pub. L. 114–255, enacted on
December 13, 2016), we proposed an
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exception from the Medicare payment
adjustments for EPs, eligible hospitals,
and CAHs who are unable to comply
with the requirements for being a
meaningful EHR user because their
CEHRT has been decertified under
ONC’s Health IT certification program
(82 FR 20136 through 20138). For the
reasons discussed in section IX.G.3. of
the preamble of this final rule, we are
finalizing the exception and application
process for EPs, eligible hospitals and
CAHs as proposed.
As mandated by the 21st Century
Cures Act, in the FY 2018 IPPS/LTCH
PPS proposed rule (81 FR 20138
through 20139), we proposed to
implement a policy in which no
payment adjustments will be made in
2017 and 2018 for eligible professionals
who furnish ‘‘substantially all’’ of their
covered professional services in an
Ambulatory Surgical Center (ASC). We
proposed to define an ASC-based EP
under § 495.4 as an EP who furnishes 75
percent or more (or alternatively, 90
percent or more) of his or her covered
professional services in sites of service
identified by the codes used in the
HIPAA standard transaction as an ASC
setting in the calendar year that is two
years before the payment adjustment
year. In addition, we proposed to use
Place of Service (POS) Code 24 to
identify services furnished in an ASC
and requested public comment on
whether other POS codes or
mechanisms should be used to identify
sites of service in addition to or in lieu
of POS code 24. For the reasons
discussed in section IX.G.4. of the
preamble of this final rule, we are
finalizing the definition of an ASCbased EP as an EP who furnishes 75
percent or more of his or her covered
professional services in sites of service
identified by POS 24.
In the proposed rule, we stated we
were working in cooperation with our
Federal partners at the ONC to monitor
progress on the 2015 Edition upgrade.
For the reasons discussed in section
IX.G.5. of the preamble of this final rule,
we are finalizing a policy to allow EPs,
eligible hospitals, and CAHs the
flexibility to use EHR technology
certified to the 2014 Edition, 2015
Edition, or a combination of the 2014
and 2015 Editions for an EHR reporting
period in 2018.
We also note that we received
comments specific to the EHR Incentive
Programs objectives and measures,
audits for meaningful use, Merit-Based
Incentive Payment System (MIPS) and
allocation of grant funding for CEHRT
which are out of scope for this rule.
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2. Revisions to the EHR Reporting
Period in 2018
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20136), we
proposed to change the EHR reporting
period in 2018 for new and returning
participants attesting to CMS or their
State Medicaid agency from the full year
(CY 2018) to a minimum of any
continuous 90-day period within CY
2018.
Therefore, EPs, eligible hospitals and
CAHs would attest to meaningful use for
an EHR reporting period of a minimum
of any continuous 90-day period from
January 1, 2018 through December 31,
2018. The applicable incentive payment
year and payment adjustment years for
the EHR reporting period in 2018, as
well as the deadlines for attestation and
other related program requirements,
would remain the same as established in
prior rulemaking. We proposed
corresponding changes to the definition
of ‘‘EHR reporting period’’ and ‘‘EHR
reporting period for a payment
adjustment year’’ at 42 CFR 495.4.
We invited public comment on our
proposal.
Comment: Commenters
overwhelmingly supported CMS’
proposal to change the EHR reporting
period to a minimum of any continuous
90-day period in CY 2018. Some
commenters requested an extension of
the 90-day EHR reporting period beyond
CY 2018. Another commenter stated for
the first year of any new ‘‘Stage’’ a
reduced reporting period should be
used. A few commenters stated CMS
should adopt a 90-day reporting period
for all programs, all submission
methods, and all years.
Response: We thank commenters for
their support on this proposed policy.
We disagree that a 90-day EHR reporting
period should be established
indefinitely for new and returning
participants in the EHR Incentive
Programs. We are finalizing a 90-day
EHR reporting period in CY 2018 to
allow participants additional time for
testing and implementation of the 2015
Edition, including the new application
programming interface (API)
functionality requirement for Stage 3.
We previously stated that we believe a
full year EHR reporting period is the
most effective way to ensure that all
actions related to patient safety which
leverage CEHRT are fully enabled for
the duration of the year. This is one of
the primary considerations of our
continued push for a full year EHR
reporting period. We will take
commenters’ suggestions under
advisement for purposes of future
rulemaking.
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Comment: A commenter requested
CMS clearly define the EHR reporting
period. A few commenters requested
clarity on whether CMS intends to have
a minimum of any continuous 90 days
for reporting the meaningful use
objectives and measures and the clinical
quality measures.
Response: The EHR reporting period
is a minimum of any continuous 90-day
period within the 2018 calendar year for
new and returning participants attesting
to CMS or their State Medicaid agency.
The EHR reporting period must occur
between January 1, 2018 and December
31, 2018. For information regarding the
reporting period for clinical quality
measures (CQMs) for 2018, we refer
readers to section IX.E.3.b. of the
preamble of this final rule.
Comment: Several commenters
requested clarification on when CEHRT
needs to be implemented for the
applicable EHR reporting period.
Response: An EP, eligible hospital, or
CAH may begin the EHR reporting
period and implement their EHR
technology before it is certified.
Certification need only be obtained
prior to the end of the EHR reporting
period. We caution that if an EP, eligible
hospital or CAH starts the EHR
reporting period without the
certification complete, it runs the risk of
not being a meaningful EHR user for
that EHR reporting period. See
FAQ2893 (available at: https://
questions.cms.gov/faq.php?isDept=0&
search=FAQ2893&searchType=
faqId&submitSearch=1&id=5005).
After consideration of the public
comments we received, we are
finalizing for new and returning EPs,
eligible hospitals, and CAHs attesting to
CMS or their State Medicaid agency, an
EHR reporting period in CY 2018 as a
minimum of any continuous 90 days
between January 1, 2018 through
December 31, 2018, as proposed. The
applicable incentive payment year and
payment adjustment years for the EHR
reporting period in 2018, as well as the
deadlines for attestation and other
related program requirements, will
remain the same as established in prior
rulemaking.
We are finalizing corresponding
changes to the definitions of ‘‘EHR
reporting period’’ and ‘‘EHR reporting
period for a payment adjustment year’’
in the regulations under 495.4.
3. Exception for Decertified EHR
Technology for EPs, Eligible Hospitals,
and CAHs Seeking To Avoid the
Medicare Payment Adjustment
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20136 through
20138), as mandated by sections
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4002(b)(1)(A) and (b)(2) of the 21st
Century Cures Act, we proposed to add
a new exception for EPs, eligible
hospitals and CAHs from the Medicare
payment adjustments under sections
1848(a)(7)(A), 1886(b)(3)(B)(ix)(I), and
1814(l)(4) of the Act, respectively, who
demonstrate through an application
process that compliance with the
requirement for being a meaningful EHR
user is not possible because the certified
EHR technology used has been
decertified under ONC’s Health IT
Certification Program.
We proposed that to be considered for
this exception, an EP, eligible hospital
and CAH must submit an application in
a form and manner specified by CMS
and must demonstrate in its application
and through supporting documentation
if available that they intended to attest
to meaningful use for a certain EHR
reporting period and made a good faith
effort to adopt and implement another
CEHRT in advance of that EHR
reporting period.
We proposed an EP may qualify for
this exception for the CY 2018 payment
adjustment year, which is the final year
of the payment adjustment for EPs
under section 1848(a)(7)(A) of the Act,
if their certified EHR technology was
decertified at any time during the 12month period preceding the applicable
EHR reporting period for the CY 2018
payment adjustment year or during the
applicable EHR reporting period for the
CY 2018 payment adjustment year,
which under § 495.4 is any continuous
90-day period in CY 2016 or 2017,
depending on whether the EP has
successfully demonstrated meaningful
use in a prior year.
We proposed an EP seeking to qualify
for this exception would submit an
application in the form and manner
specified by us by October 1, 2017, or
a later date specified by us. We
proposed an eligible hospital may
qualify for this exception beginning
with the FY 2019 payment adjustment
year, if their certified EHR technology
was decertified at any time during the
12-month period preceding the
applicable EHR reporting period for the
payment adjustment year, or during the
applicable EHR reporting period for the
payment adjustment year.
We proposed an eligible hospital
seeking to qualify for this exception
would submit an application in the form
and manner specified by us by July 1 of
the year before the payment adjustment
year (for example, for the FY 2019
payment adjustment year, by July 1,
2018), or a later date specified by us.
We proposed a CAH may qualify for
this exception beginning with the FY
2018 payment adjustment year if their
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certified EHR technology was
decertified at any time during the 12month period preceding the applicable
EHR reporting period for the payment
adjustment year, or during the
applicable EHR reporting period for the
payment adjustment year. We proposed
a CAH seeking to qualify for this
exception would submit an application
in the form and manner specified by us
by November 30 after the end of the
applicable payment adjustment year (for
example, for the FY 2018 payment
adjustment year, by November 30,
2018), or a later date specified by us.
We noted in the proposed rule that
sections 1848(a)(7)(B) and
1886(b)(3)(B)(ix)(II) of the Act provide
that in no case may an EP, eligible
hospital, or CAH be granted an
exemption from the payment
adjustment based on significant
hardship or decertified EHR technology
for more than five years.
We proposed to revise § 495.102(d) for
EPs, § 412.64(d)(4) for eligible hospitals
and § 413.70(a)(6) for CAHs to codify
this proposed new exception.
We invited public comment on these
proposals.
Comment: Many commenters
supported the proposed exception for
CEHRT that have been decertified by the
ONC Health IT Certification Program
stating it would help to mitigate
potential financial loss to participants.
Response: We thank the commenters
for their support. As we stated in the
proposed rule (82 FR 20137), we believe
participants in the Medicare EHR
Incentive Program will benefit from this
additional exception because there is a
6-step process that usually occurs with
implementation of a certified EHR
technology system. Health care
providers would likely have to go
through some phases of this cycle again,
and we understand that it would be
time consuming and may take up to a
year to implement. In addition, we note
that the decertification of a CEHRT by
the ONC Health IT Certification Program
would be outside of a health care
provider’s control, and we agree that
additional burden would likely result
from decertification. In implementing
this new exception, we are attempting to
reduce any potential burden while also
continuing to further the goal of
interoperability.
Comment: To account for the CEHRT
requests for proposals (RFP) and
selection process, implementation, and
a 90-day EHR reporting period, several
commenters requested a period of two
years rather than 12 months, and one
commenter suggested that CMS provide
an additional 18-month grace period.
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38489
Another commenter believed there
should be no requirements in moving to
a new CEHRT product and that they
should have at least three years to
switch to a new EHR system.
A commenter indicated that the use of
a 12-month period preceding the
applicable EHR reporting period is
confusing, stating that CMS should
consider applying the exception for
decertification that occurred at any time
within the full calendar year prior to the
EHR reporting period for the payment
adjustment year and during the EHR
reporting period for the payment
adjustment year.
Response: We disagree that the
exception should be extended beyond
the 12-month period preceding the
applicable EHR reporting period as
suggested by the commenters. As we
stated in the proposed rule at 82 FR
20137, we believe a 12-month period
preceding the applicable EHR reporting
period for the payment adjustment year
is reasonable because it should allow
ample time for health care providers to
procure and deploy new certified EHR
technology. We believe this provides
additional flexibilities and may partially
alleviate any financial burden placed
upon a health care provider for having
to procure a new EHR system.
Comment: Several commenters
suggested that certain situations where
a provider’s CEHRT is decertified
during the EHR reporting period would
prevent them from being able to make
a good faith effort to adopt and
implement another CEHRT in advance
of or during the remainder of the EHR
reporting period, and requested
clarification.
Response: We agree that acquiring
another CEHRT during the applicable
EHR reporting period would be difficult.
We disagree, however, that a health care
provider necessarily would be unable to
adopt and implement a new CEHRT
during the remainder of the EHR
reporting period. We believe a good
faith effort is necessary in order to
ensure the health care provider is
diligently working towards adopting
and implementing new CEHRT under
the circumstances presented. Health
care providers may apply for this
exception before or during the
applicable EHR reporting period, by the
deadlines we establish.
Comment: A commenter requested an
extension of the application deadline to
December 31st of the year of the EHR
reporting period.
Response: At this time it is not
feasible to extend the application until
December 31st. There are time
constraints we must adhere to for
system updates and changes, therefore
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we are unable to modify the proposed
deadlines for application submission as
outlined in 82 FR 20137 through 20138.
Comment: A commenter stated the
application process was unclear and
encouraged CMS to release timely
guidance on the application.
Response: We will provide additional
guidance regarding the application
process after the final rule is published.
After consideration of the public
comments we received, we are
finalizing the policy as proposed.
We are also finalizing as proposed the
corresponding changes to § 495.102(d)
for EPs, § 412.64(d)(4) for eligible
hospitals and § 413.70(a)(6) for CAHs.
4. Ambulatory Surgical Center (ASC)Based Eligible Professionals (EPs)
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20138 through
20139), as mandated by section 16003 of
the 21st Century Cures Act, we
proposed to implement a policy in
which no payment adjustments would
be made under section 1848(a)(7)(A) of
the Act for 2017 and 2018 for eligible
professionals who furnish ‘‘substantially
all’’ of their covered professional
services in an ambulatory surgical
center (ASC). We proposed to define an
ASC-based EP under § 495.4 as an EP
who furnishes 75 percent or more (or
alternatively, 90 percent or more) of his
or her covered professional services in
sites of service identified by the codes
used in the HIPAA standard transaction
as an ASC setting in the calendar year
that is two years before the payment
adjustment year. The percentages of
covered professional services in the
primary and alternative proposals were
based, respectively, on the percentages
used in the definitions of a hospitalbased MIPS eligible clinician under the
Quality Payment Program (§ 414.1305
and 81 FR 77238 through 77240) and
the definition of a hospital-based EP
under the EHR Incentive Programs
(§ 495.4 and 75 FR 44439 through
44442). In addition, we proposed to use
Place of Service (POS) code 24 to
identify services furnished in an ASC
and requested public comment on
whether other POS codes or
mechanisms to identify sites of service
should be used in addition to or in lieu
of POS code 24.
We invited public comment on these
proposals.
Comment: The majority of
commenters supported the proposal for
an ASC-based EP using 75 percent or
more to define eligible professionals
who furnish ‘‘substantially all’’ of their
covered professional services in an
ambulatory surgical center. The
commenters believe the exception from
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the payment adjustments for ASC-based
EPs will significantly reduce burden
and promote consistency between the
EHR Incentive Program and MIPS, but
also ensures EPs who have little control
over EHR decisions in their practice are
not subject to payment adjustments.
One commenter stated that the
definition of ASC-based EP should be as
broad as possible.
Response: We thank commenters for
their support. We are finalizing the
definition of ASC-based EP as proposed
using 75 percent or more to define
eligible professionals who furnish
‘‘substantially all’’ of their covered
professional services in an ASC, which
aligns with the hospital-based MIPS
eligible clinician definition under the
Quality Payment Program (§ 414.1305
and 81 FR 77238 through 77240). We
also agree that this policy will result in
a reduction in burden for ASC-based
EPs who have little control over the
EHR decisions in the practice.
Comment: A few commenters
suggested using 50 percent as the
threshold to define ‘‘substantially all’’ as
some EPs provide more than 50 percent,
but less than 75 percent or 90 percent,
of their services in an ASC.
Response: The statutory definition of
an ambulatory surgical center-based EP
provides that to be considered an
ambulatory surgical center-based EP, the
EP must provide ‘‘substantially all’’ of
his or her covered professional services
in an ambulatory surgical center.
Therefore, we must identify the
minimum percentage of an EP’s covered
professional services that must be
provided in an ambulatory surgical
center in order for the EP to be
considered as providing ‘‘substantially
all’’ of his or her covered professional
services in an ASC setting. We do not
believe that an EP who furnishes only
slightly more than half of his or her
covered professional services in an ASC
setting is furnishing substantially all of
such services in that setting. Based on
the hospital-based MIPS eligible
clinician definition we previously
established under the Quality Payment
Program, we believe that 75 percent is
an appropriate minimum percentage of
an EP’s covered professional services.
Comment: One commenter suggested
that CMS should change ‘‘substantially
all covered professional services’’ to
‘‘substantially all ASC covered
services.’’ The commenter believed that
CMS should combine ASC services with
all other Medicare Part B services when
determining whether the professional is
a meaningful user of CEHRT.
Response: We are unable to adopt the
commenter’s suggestion because the
statute refers to ‘‘covered professional
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services’’ furnished by the EP. When
determining if an EP qualifies as an
ASC-based EP, we would look at all of
their Medicare services billed using POS
24, and from that we would be able to
determine the percentage of covered
professional services that were
furnished in an ASC. In addition, we
requested comments on whether
additional place of service codes or
mechanisms should be utilized in
addition to or in lieu of POS 24, but did
not receive any specific comments on
this issue. We are finalizing the use of
Place of Service (POS) code 24 to
identify services furnished in an ASC.
Comment: One commenter suggested
a change in the proposed methodology
of using claims for services furnished in
the year that is two years before the
payment adjustment year to be
consistent with methodology used to
determine a hospital-based EP.
Response: We disagree with using the
same methodology for hospital-based
and ASC-based determinations. We
determine hospital-based status using
claims data from the fiscal year before
the year that is 1 year prior to the
payment adjustment year and the fiscal
year before the year that is 2 years prior
to the payment adjustment year (77 FR
54102). We adopted this methodology to
ensure EPs are made aware of their
hospital-based status in advance of the
applicable EHR reporting period for the
payment adjustment year, so they would
have time to adopt and implement
CEHRT and begin their EHR reporting
period. In contrast, for ASC-based
determinations, the applicable EHR
reporting periods under § 495.4 for the
2017 and 2018 payment adjustments
years have already occurred or are
currently underway in 2017, and thus it
is not feasible to notify EPs of their
ASC-based status in advance of the EHR
reporting period. In addition, we believe
our proposed methodology is clear and
easy for EPs to understand.
After consideration of the public
comments we received, we are
finalizing as proposed the definition of
ASC-based EP using 75 percent or more
to define eligible professionals who
furnish ‘‘substantially all’’ of their
covered professional services in an ASC.
In addition, we are finalizing Place of
Service (POS) code 24 to identify
services furnished in an ASC. We are
also finalizing the definition of ‘‘ASCbased EP’’ in the regulations under
§ 495.4.
5. Certification Requirements for 2018
In the 2015 EHR Incentive Program
final rule (80 FR 62871 through 62875),
we adopted a final policy regarding
which Edition of CEHRT must be used
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by EPs, eligible hospitals, and CAHs for
the EHR Incentive Program, which is
reflected in the definition of CEHRT
§ 495.4.
Starting with 2018, all EPs, eligible
hospitals, and CAHs would be required
to use technology certified to the 2015
Edition to demonstrate meaningful use
for an EHR reporting period in 2018 and
subsequent years (80 FR 62873 through
62875).
We received feedback from EPs,
eligible hospitals and hospital
associations after the 2015 EHR
Incentive Program final rule was
published expressing concerns
regarding the burden that will likely
occur as a result of the new
functionalities required in the
implementation of the Stage 3
requirements.
Based on our past experience with the
transition from the 2011 Edition to the
2014 Edition and concerns expressed by
stakeholders, we understand that
transitioning to technology certified to a
new Edition can be complex and can
require more resources and time than
anticipated, including the time
necessary to effectively deploy the
upgraded system and make the
necessary patient safety, staff training
and workflow investments. In the FY
2018 IPPS/LTCH PPS proposed rule (82
FR 20139), we stated that we
understood and appreciated these
concerns, and were working in
cooperation with our Federal partners at
ONC to monitor progress on the
deployment and implementation status
of EHR technology certified to the 2015
Edition. We further stated if we
identified a change in the current trends
and significant issues with the
certification and deployment of the
2015 Edition, we would consider
flexibility in 2018, for those EPs that
attest directly to a State for the State’s
Medicaid EHR Incentive Program and
eligible hospitals and CAHs attesting to
CMS or the State’s Medicaid EHR
Incentive Program that are not able to
implement 2015 Edition CEHRT to
attest for an EHR reporting period in
2018. We indicated one possibility was
the flexibility to use EHR technology
certified to the 2014 Edition or 2015
Edition, or a combination of EHR
technologies certified to the 2014 and
2015 Editions, for an EHR reporting
period in 2018.
In efforts to track certification
readiness for the 2015 Edition, ONC
considers the number of health care
providers likely to be covered by the
individual developers seeking
certification under the ONC Health IT
Certification Program in real time as the
testing and certification process
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progresses. The ONC considers trends
within the industry when projecting for
2015 Edition readiness. The market
trend of consolidation was considered
as part of the projection model and as
of the close of the first quarter this
analysis supported an estimate of
greater than 85 percent of hospitals will
be ready by the end of CY 2017.
However, ONC has continued to update
this tracking as the testing and
certification process continues and this
tracking as of the end of the second
quarter of 2017 indicates that overall
progress is behind the first quarter
projections. ONC has therefore updated
the overall estimate to reflect an
estimate of greater than 75 percent of
hospitals will be ready by the end of CY
2017.
This necessitates further
consideration, both for adoption of a 90
day reporting period as discussed in
IX.G.2 of this final rule and for the
adoption of flexibility for the 2018
calendar year in the requirement for
eligible hospitals and CAHs to use only
the 2015 Edition in CY 2018. While the
ONC estimates note that the majority of
eligible hospitals and CAHs will be
ready at the beginning of January 2018,
the tracking indicates that additional
flexibility should be allowed for all
hospitals to ensure that those hospitals
with limited resources to implement
upgrades and those hospitals that may
face challenges in implementing
appropriate and necessary workflows
are provided adequate time to
successfully implement the upgrade to
2015 Edition.
We invited public comment on
options for offering flexibility in CY
2018 with regard to EHR certification
requirements.
Comment: A majority of commenters
supported the flexibility to use 2014
Edition or 2015 Edition CEHRT in 2018
and stated the cost and administrative
burden of upgrading the EHR
technology is significant and delaying
the requirement to use the 2015 Edition
would reduce burden and improve
patient-physician interactions.
A commenter requested CMS not to
move forward with Stage 3 until further
progress is made toward achieving
interoperability and health information
exchange.
Response: We thank commenters for
their feedback and support of CEHRT
flexibility in 2018. In an effort to grant
more flexibility to health care providers
who are experiencing 2015 Edition
CEHRT product issues that impact the
ability to be a meaningful EHR user in
2018, we are adopting a final policy to
allow health care providers to use either
2014 Edition or 2015 Edition CEHRT, or
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a combination of 2014 Edition and 2015
Edition CEHRT, for their EHR reporting
period in 2018. We want to ensure that
health care providers have adequate
time to effectively deploy the 2015
Edition and make the updates necessary
to improve patient safety, staff training,
and workflow investments to be a
meaningful user. We note that the Stage
3 objectives and measures are designed
to promote interoperability with a focus
on the advanced use of EHR technology
and electronic standards, as well as the
interoperable exchange of health
information between systems.
Therefore, we believe implementing
Stage 3 is essential in achieving those
goals.
Comment: A few commenters
requested CMS finalize a policy
allowing for CEHRT flexibility by the
end of calendar year 2017, in order to
ensure that States have adequate time to
update their systems without any delay.
Response: We believe the final policy
established in this final rule will
provide flexibility with regard to which
Edition of CEHRT may be used in 2018.
Comment: Some commenters
requested clarification on how CMS
would implement flexibility in 2018
and whether providers would have the
option to attest to Modified Stage 2 or
Stage 3.
Several commenters were confused on
how to use a combination of the 2014
and 2015 Editions for an EHR reporting
period in 2018.
Response: Under the final policy we
are adopting, for an EHR reporting
period in CY 2018, health care providers
will have the option to attest to the
Modified Stage 2 objectives and
measures using 2014 Edition CEHRT,
2015 Edition CEHRT, or a combination
of 2014 and 2015 Edition CEHRT, as
long as the EHR technology they possess
can support the objectives and measures
to which they plan to attest. Similarly,
health care providers will have the
option to attest to the Stage 3 objectives
and measures using 2015 Edition
CEHRT or a combination of 2014 and
2015 Edition CEHRT, as long as their
EHR technology can support the
functionalities, objectives and measures
for Stage 3.
Upon attestation for an EHR reporting
period in CY 2018, health care providers
may select one of these options and
attest to the applicable objectives and
measures based on their Edition of
CEHRT. The requirements for reporting
of CQMs are found in section IX.E.3.b.
of the preamble of this final rule.
A health care provider utilizing 2015
Edition CEHRT in CY 2018 could attest
to the Stage 3 or the Modified Stage 2
objectives and measures depending on
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their ability to fully implement all of the
functionalities required of 2015 Edition
CEHRT, which may be limited by the
timing of product installation,
deployment of new processes and
workflows, and employee training. A
health care provider using a
combination of 2014 and 2015 Edition
CEHRT could attest to the Stage 3 or the
Modified Stage 2 objectives and
measures. Health care providers who
choose to attest to Modified Stage 2 will
attest to only the Modified Stage 2
objectives and measures at § 495.22.
Health care providers who choose to
attest to Stage 3 will attest to only the
Stage 3 objectives and measures at
§ 495.24. Health care providers who are
seeking to attest to Stage 3 in 2018 using
a combination of 2014 and 2015
Editions of CEHRT cannot do so without
the support of certain functions that are
only available for certification as part of
the 2015 Edition certification criteria.
Comment: Several commenters
requested that CMS not delay the 2015
Edition CEHRT and believed that health
IT vendors should be held accountable
for upgrading to the 2015 Edition so
there is no delay in getting certification
from ONC. These commenters believed
that the possible delay further hinders
the health care providers’ ability to
adopt and demonstrate meaningful use.
In addition the commenters stated they
believed the 2015 Edition eases data
sharing and offers increased
interoperability.
Response: We appreciate those
stakeholders who were able to fully
implement the 2015 Edition CEHRT.
Moreover, we understand the challenges
faced in accomplishing the upgrade and
wish to recognize the tremendous
amount of work from health care
providers and health IT vendors in
helping to move health IT forward.
However, because Stage 3 was optional
for CY 2017 and individual
circumstances may have prolonged the
certification process, we believe that
health IT vendors and providers should
be given additional time to implement
a product that functions as intended
utilizing the standards and criteria set
forth by the ONC. We received
numerous comments that
implementation of the 2015 Edition was
met with delays related to functionality
implementation (including APIs), was
administratively burdensome and
required more time and resources than
anticipated. Our intent in considering
these options to provide flexibility in
2018 was not to further complicate the
program, or hinder the advancement of
health information exchange or
interoperability. Rather, we sought to be
responsive to stakeholder concerns by
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considering options for health care
providers who were unable to fully
implement the 2015 Edition CEHRT for
an EHR reporting period in 2018
because of issues related to time
constraints, implementation of new
functionalities and testing new
workflows to support the technology,
implementation and training challenges
related to new functions and standards,
and potential unforeseen delays or
updates required throughout the
process. For those reasons we
considered introducing flexibility in the
use of certified EHR technology.
Comment: One commenter believed
that CMS should eliminate the
requirement for providers to upgrade to
2015 Edition CEHRT.
Response: We disagree that CMS
should eliminate this requirement
entirely, and we will require use of 2015
Edition CEHRT beginning with the EHR
reporting period in 2019. Vendors and
health care providers have already
invested time and energy in the 2015
Edition, and we believe it will lend to
an interoperable nationwide health
information infrastructure focusing on
the advanced use of EHR technology
and electronic standards. In addition,
the 2015 Edition facilitates the
accessibility and exchange of data and
establishes a framework that makes the
Health IT Certification Program open
and accessible to more types of health
IT that can support a variety of care and
practice settings, various HHS programs,
and public and private interests. We
have also heard from many health care
providers that they are prepared to
move to Stage 3. While this is not the
case for all health care providers, we
want to give those who are able to
successfully attest to the Stage 3
objectives and measures the opportunity
to do so.
Comment: One commenter believed
that CEHRT requirements should be
aligned across all programs where use of
CEHRT is required, including the
Quality Payment Program. Another
commenter suggested that CMS should
eliminate all certified EHR technology
requirements.
Response: We may not be able to align
CEHRT requirements across all
programs as each program has different
statutory authority and requirements.
However, in an effort to reduce burden
and promote interoperability, we will
continue to align the CEHRT
requirements where feasible. We cannot
eliminate all requirements of CEHRT as
suggested by the commenter because the
statute includes certain baseline
requirements (see, for example, section
1848(o)(4) of the Act).
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Comment: One commenter requested
more information on what CMS meant
by a health care provider not being able
to implement the 2015 Edition of
CEHRT as they believed a wide variety
of the 2015 Edition CEHRT products
already exist.
Another commenter requested
clarification on how to implement the
2015 Edition CEHRT and update to all
new standards and functionalities for
meeting the objectives and measures in
Stage 3.
Response: We do acknowledge that
some health care providers have
successfully updated to the 2015
Edition of CEHRT but this is not the
case in every situation. We also note
that ONC has advised us that there are
some vendors that are delayed in
receiving their certification for every
EHR module. In addition, as stated
above, we received comments indicating
a lack of preparedness for the 2015
Edition CEHRT in 2018. For these
reasons, we believe that delaying the
2015 Edition of CEHRT is necessary in
order to provide additional time to
implement those certain elements, such
as the API function, that we believe are
central to increasing interoperability.
For more information about the
implementation of the 2015 Edition of
CEHRT we refer readers to the 2015
Edition Health Information Technology
(Health IT) Certification Criteria, 2015
Edition Base Electronic Health Record
(EHR) Definition, and ONC Health IT
Program Modifications, Final Rule. 80
FR 62602 through 62759.
Comment: A commenter stated that
CMS is too focused on modifying
functional requirements and does not
emphasize outcomes or interoperability.
The commenter indicated that better
infrastructure is needed to support
interoperability for data management,
and to exchange content in a more
effective way. The commenter expressed
concerns around the expensive
workarounds necessary for certified
products that do not always function
accurately and expressed concern that
burden has shifted to staff having to
identify codes which they believe is
more time consuming and mundane.
Response: We disagree that we are too
focused on modifying functional
requirements and not enough on
outcomes or interoperability. We believe
the changes we are finalizing in this rule
focus on increasing interoperability and
ensure that we are reducing
administrative burden in hopes of
giving health care providers more time
with their patients. In addition, we
believe that as we move forward in
increasing interoperability by focusing
on certain objectives and measures we
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will improve the delivery of services
and improve patient outcomes. We
understand the cost burden that some of
the changes have on certain providers,
but we believe there is greater benefit in
having a truly integrated and
interoperable health care system. We
will continue to work with stakeholders.
After consideration of the public
comments we received, we are
finalizing a policy to allow health care
providers to use either 2014 Edition or
2015 Edition CEHRT, or a combination
of 2014 Edition and 2015 Edition
CEHRT, for an EHR reporting period in
CY 2018. As discussed above and in
section IX.E.3.c. of the preamble of this
final rule, for the CY 2018 CQM
reporting period, eligible hospitals and
CAHs will have the flexibility to use
EHR technology certified to either the
2014 Edition or 2015 Edition, or a
combination of both Editions.
All new and returning participants
attesting to CMS or their State Medicaid
agency have the option to attest to the
Modified Stage 2 objectives and
measures under § 495.22 for the EHR
reporting period in 2018 using 2014
Edition CEHRT, 2015 Edition CEHRT, or
a combination of 2014 and 2015 Edition
CEHRT, as long as the EHR technology
they possess can support the objectives
and measures to which they plan to
attest.
Similarly, all new and returning
participants attesting to CMS or their
State Medicaid agency have the option
to attest to the Stage 3 objectives and
measures under § 495.24 for the EHR
reporting period in 2018 using 2015
Edition CEHRT or a combination of
2014 and 2015 Edition CEHRT, as long
as their EHR technology can support the
functionalities, objectives and measures
for Stage 3.
Accordingly, we are revising the
definition of ‘‘Certified electronic health
record technology (CEHRT)’’ at § 495.4,
the meaningful use criteria at § 495.22
and § 495.24, and the requirements for
demonstrating meaningful use under
§ 495.40 to specify the flexible options
for using CEHRT in 2018 and the
objectives and associated measures to
which health care providers using these
options would attest.
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X. Revisions of Medicare Cost
Reporting and Provider Requirements
A. Electronic Signature and Submission
of the Certification and Settlement
Summary Page of the Medicare Cost
Report
1. Background
Sections 1815(a) and 1833(e) of the
Act provide that no payments will be
made to a provider unless it has
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furnished such information, as may be
requested by the Secretary, to determine
the amount of payments due the
provider under the Medicare program.
In general, providers submit this
information through annual cost reports
that cover a 12-month period of time.
Under the provisions of 42 CFR
413.20(b) and 413.24(f), providers are
required to submit cost reports
annually, with the reporting period
based on the provider’s accounting year.
For cost reporting periods beginning on
or after October 1, 1989, section
1886(f)(1) of the Act and § 413.24(f)(4) of
the regulations require hospitals to
submit cost reports in a standardized
electronic format, and the same
requirement was later imposed for other
types of providers.
Currently, under § 413.24(f)(4)(ii),
hospitals, skilled nursing facilities,
home health agencies, hospices, endstage renal disease facilities, organ
procurement organizations,
histocompatibility laboratories, rural
health clinics, Federally qualified health
centers, and community mental health
centers are required to file Medicare
cost reports in a standardized electronic
format. When preparing the cost report,
the provider’s electronic program must
produce the CMS standardized output
file in a form that can be read by the
contractor’s automated system. This
electronic file, also known as the
electronic cost report, is forwarded to
the contractor for processing through its
system. (42 CFR 413.24(f)(4)(ii) and (iii))
Although the Medicare cost report is
forwarded to the contractor in electronic
format, certain hard copy portions must
be separately submitted by the provider
to its contractor. Specifically, under
§ 413.24(f)(4)(iv), the provider is
required to submit a hard copy of the
settlement summary, if applicable,
which is a statement of certain
worksheet totals, and a certification
statement containing a signature by the
provider’s administrator or chief
financial officer certifying the accuracy
of the electronic file. The certification
statement and the settlement summary
both appear together on the
‘‘Certification and Settlement
Summary’’ page of the Medicare cost
report for all providers that are required
to file a Medicare cost report. By signing
the certification statement, the provider
is certifying, among other things, to the
accuracy of the electronic file, and also
that it has read the statement that
misrepresentation or falsification of
information contained in the cost report
may be punishable by criminal, civil or
administrative action.
This certification statement signed by
the provider’s administrator or chief
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38493
financial officer was incorporated into
§ 413.24(f)(4) of the regulations in a final
rule with comment period (59 FR 26964
through 26965) issued in response to
public comments received following the
Uniform Electronic Cost Reporting
System for Hospitals proposed rule (56
FR 41110). Currently, this certification
statement is required to have an original
signature. This original signature
requirement is also set forth in Chapter
1 of the Provider Reimbursement
Manual (CMS Pub. 15–2), which
explains that a facsimile or stamped
copy of the signature is unacceptable.
Due to the original signature
requirement, the Certification and
Settlement Summary page containing
the original signature is required to be
mailed by the provider to the contractor.
As set forth in § 413.24(f)(4)(iv) and
(5)(i) and (ii), an acceptable cost report
submission must include the electronic
cost report, along with a hard copy of
the Certification and Settlement
Summary page with an original
signature, the Provider Cost
Reimbursement Questionnaire, if
applicable, and the supporting
documentation required from teaching
hospitals (the Intern and Resident
Information System diskette).
2. Changes Relating to Electronic
Signature on the Certification and
Settlement Summary Page of the
Medicare Cost Report
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20139 through
20142), in lieu of requiring the provider
to sign the certification statement with
an original signature on a hard copy of
the Medicare cost report’s Certification
and Settlement Summary page, we
proposed to revise § 413.24(f)(4)(iv) to
allow providers to use an electronic
signature. For Medicare cost reporting
purposes, we proposed that this
electronic signature be placed on the
signature line of the certification
statement and may be (1) any format of
the original signature that contains the
first and last name of the provider’s
administrator or chief financial officer
(for example, photocopy or stamp) or (2)
an electronic signature that must be the
first and last name of the provider’s
administrator or chief financial officer
entered in the provider’s electronic
program. An electronic signature for this
purpose cannot be a symbol, numerical
characters, or codes. We stated in the
proposed rule that we believe allowing
providers to utilize an electronic
signature would afford providers greater
flexibility in signing the certification
statement and allow a faster and more
efficient submission of the Medicare
cost report.
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To indicate the provider’s election to
sign the certification statement with an
electronic signature, we proposed to add
an electronic signature checkbox placed
immediately after the certification
statement and above the signature line
on the Certification and Settlement
Summary page of the Medicare cost
report. We stated that the checkbox
electing the electronic signature would
read: ‘‘I have read and agree with the
above certification statement. I certify
that I intend my electronic signature on
this certification statement to be the
legally binding equivalent of my
original signature.’’ We proposed that
the checkbox must be checked to signify
that the certification statement has been
read and that an electronic signature
will be placed on the signature line by
the provider.
We proposed that only when the
checkbox is checked would the
signature line be accepted with an
electronic signature. We stated in the
proposed rule that completion of both
the electronic signature checkbox and
the electronic signature, placed on the
signature line by the provider’s
administrator or chief financial officer
under the certification statement, would
together constitute an accepted
electronic signature of the provider’s
administrator or chief financial officer
on the certification statement. By
signing the certification statement with
an electronic signature on the
Certification and Settlement Summary
page, the signatory would be attesting
that its electronic signature was
executed with the intent to sign the
certification statement, that the
electronic signature is being submitted
in lieu of an original signature, and
additionally that the electronic
signature has the same legal effect as an
original signature. Because we proposed
that it would be optional for providers
to utilize an electronic signature on the
certification statement, providers would
continue to be able to sign the
certification statement with an original
signature on a hard copy of the
Certification and Settlement Summary
page.
We invited public comments on our
proposals.
Comment: Many commenters
supported the utilization of technology
to allow for the electronic signature of
the Certification and Settlement
Summary page of the Medicare cost
report and further stated that this has
been long awaited in the industry. The
commenters stated that allowing
providers the option to electronically
sign the Certification and Settlement
Summary page will make the process
easier, more efficient, and allow for
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fewer errors than the current paper
process. Commenters also supported
allowing facilities an option to continue
using the current paper process to
manually sign the Certification and
Settlement Summary page.
Response: We appreciate the
commenters’ support.
Comment: One commenter suggested
that CMS’ proposal was to change the
title of the signatory to the certification
statement from the provider’s
administrator or ‘‘officer’’ to the
provider’s administrator or ‘‘chief
financial officer’’ and disagreed with
this alleged change, noting that many
smaller providers do not have a chief
financial officer.
Response: We disagree with this
commenter’s characterization of our
proposal. Our proposal to allow
providers the option to electronically
sign the certification statement on the
Certification and Settlement Summary
page of the Medicare cost report, did not
include a proposal to change the title of
the person required to sign the
certification statement. Section
413.24(f)(4)(iv) of the regulations
requires that the certification statement
be signed by the ‘‘provider’s
administrator or chief financial officer.’’
We did not propose to change the title
of the person required to sign the
certification statement. The
requirements pertaining to the title of
the person required to sign the
certification statement remain the same.
Comment: One commenter suggested
that CMS change the title of the person
required to sign the certification
statement on the Certification and
Settlement Summary page of the
Medicare cost report, citing that often
the signor is someone other than the
provider’s administrator or chief
financial officer.
Response: We consider this comment
to be outside the scope of the policies
we proposed in the proposed rule. We
note that § 413.24(f)(4)(iv) of the
regulations requires that the
certification statement be signed by the
‘‘provider’s administrator or chief
financial officer.’’
After consideration of the public
comments we received, for the reasons
discussed above, we are finalizing our
proposals discussed above without
modification. As proposed, we are
revising § 413.24(f)(4)(iv) to allow
providers the option to use an electronic
signature to sign the certification
statement on the Certification and
Settlement Summary page of the
Medicare cost report. Under
§ 413.24(f)(4)(iv)(C)(1) as finalized in
this rule, providers that are required to
file an electronic cost report may elect
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to sign the certification statement with
an electronic signature. As we proposed,
this electronic signature must be placed
on the signature line of the certification
statement and may be (1) any format of
the original signature that contains the
first and last name of the provider’s
administrator or chief financial officer
(for example, photocopy or stamp) or (2)
an electronic signature that must be the
first and last name of the provider’s
administrator or chief financial officer
entered in the provider’s electronic
program. An electronic signature for this
purpose cannot be a symbol, numerical
characters, or codes. Furthermore, as we
proposed, an electronic signature
checkbox will be placed immediately
after the certification statement and
above the signature line on the
Certification and Settlement Summary
page of the Medicare cost report. The
checkbox electing the electronic
signature will read: ‘‘I have read and
agree with the above certification
statement. I certify that I intend my
electronic signature on this certification
statement to be the legally binding
equivalent of my original signature.’’
The checkbox must be checked to
signify that the certification statement
has been read and that an electronic
signature will be placed on the signature
line by the provider. Completion of both
the electronic signature checkbox and
the electronic signature, placed on the
signature line by the provider’s
administrator or chief financial officer
under the certification statement, will
together constitute an accepted
electronic signature of the provider’s
administrator or chief financial officer
on the certification statement. By
signing the certification statement with
an electronic signature on the
Certification and Settlement Summary
page, the signatory is attesting that its
electronic signature was executed with
the intent to sign the certification
statement, that the electronic signature
is being submitted in lieu of an original
signature, and additionally that the
electronic signature has the same legal
effect as an original signature. Providers
that are required to file an electronic
cost report will still have the option
under § 413.24(f)(4)(iv)(C)(2), as
finalized in this rule, to sign the
certification statement with an original
signature and to submit a hard copy of
the settlement summary, if applicable,
and certification statement. In the
proposed rule, we also proposed that
these revisions would apply on a
prospective only basis, to provider cost
reporting periods that begin on or after
October 1, 2017, the effective date of
this final rule. However, after
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consideration of the proposed effective
date that would have delayed the period
of time for the providers to
electronically sign and submit the
Certification and Settlement Summary
page by almost one year and our desire
to ease cost and burden upon providers,
we have decided to allow providers the
option to use an electronic signature to
sign the certification statement on the
Certification and Settlement Summary
page of the Medicare cost report
effective for cost reporting periods that
end on or after December 31, 2017. This
will allow providers to electronically
sign and submit the Certification and
Settlement Summary page much sooner,
with their next cost reporting
submission in 2018. Accordingly, these
final revisions will apply, on a
prospective only basis, to provider cost
reporting periods ending on or after
December 31, 2017.
3. Changes Relating to Electronic
Submission of the Certification and
Settlement Summary Page of the
Medicare Cost Report
In section X.A.2. of the preamble of
the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 20140), we proposed to
allow providers to use an electronic
signature on the certification statement
of the Certification and Settlement
Summary page of the Medicare cost
report. We further proposed that if the
provider signs the certification
statement with an electronic signature
in the manner proposed in section
X.A.2. of the preamble of the proposed
rule and checks the electronic signature
checkbox, the provider also may submit
the Certification and Settlement
Summary page electronically to the
contractor at the same time and in the
same manner in which the Medicare
cost report is submitted. For example, if
the provider submits the electronic cost
report file via electronic mail to the
contractor, the provider may also
include the Certification and Settlement
Summary page signed with an
electronic signature.
Under our proposal, a provider could
still choose to sign the certification
statement with an original signature on
a hard copy of the Certification and
Settlement Summary page without
checking the electronic signature box.
However, if the provider chooses to do
so, this page would have to be mailed
to its contractor. We stated in the
proposed rule that we believe this
proposal to allow the electronic
submission of the Certification and
Settlement Summary page would reduce
the need for and storage of paper
documents. We stated that, under our
proposal, providers would have the
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option to submit the entire cost report
electronically, in lieu of the previous
requirement to mail a hard copy of the
Certification and Settlement Summary
page of the Medicare cost report to the
contractor. We stated that we believe
this proposed option would improve the
capability of providers to efficiently
transmit the Medicare cost report and
save providers an appreciable amount of
time as well as the cost of separately
mailing a hard copy of the Certification
and Settlement Summary page of the
Medicare cost report to the contractor.
We invited public comments on this
proposal.
Comment: One commenter asked
whether a provider’s option to use an
electronic signature on the certification
statement of the Certification and
Settlement Summary page of the
Medicare cost report and submit this
form electronically applied to outpatient
facilities and to low or no utilization
cost reports where the MAC is currently
requiring a signed certification
statement.
Response: As set forth in the preamble
of the proposed rule, (82 FR 20141) and
at § 413.24(f)(4)(iv)(C) (as finalized in
this rule), the option to use an electronic
signature on the certification statement
of the Certification and Settlement
Summary page and to submit this form
electronically applies to providers that
are required to file an electronic
Medicare cost report. These providers
are specified in § 413.24(f)(4)(ii). This
includes providers with low or no
utilization that submit a Certification
with a Settlement Summary, if
applicable.
Comment: One commenter asked
whether the cost report file and the
electronically signed certification
statement on the Certification and
Settlement Summary page would be
filed together and sent to the contractor
or sent separately but using the same
process.
Response: This final rule allows the
provider great flexibility to choose how
it wishes to electronically sign the
certification statement on the
Certification and Settlement Summary
page of the Medicare cost report and
electronically submit this page. As set
forth in section X.A.2. of the preamble
of the proposed rule (82 FR 20140), if
the provider chooses to sign the
certification statement with an
electronic signature, this signature must
be placed on the signature line of the
certification statement and may be (1)
any format of the original signature that
contains the first and last name of the
provider’s administrator or chief
financial officer (for example,
photocopy or stamp) or (2) an electronic
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38495
signature that must be the first and last
name of the provider’s administrator or
chief financial officer entered in the
provider’s electronic program.
Regardless of which electronic signature
method is selected by the provider, to
indicate the provider’s election to sign
the certification statement with an
electronic signature, the electronic
signature checkbox placed immediately
after the certification statement and
above the signature line on the
Certification and Settlement Summary
page of the Medicare cost report must be
checked to signify that the certification
statement has been read and that an
electronic signature will be placed on
the signature line by the provider. As
we stated earlier and in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
20140), a provider may submit the
Certification and Settlement Summary
page electronically to the contractor at
the same time and in the same manner
in which the Medicare cost report is
submitted. If the electronic signature is
in the format specified ‘‘(1)’’ or ‘‘(2)’’
above (and in section X.A.2. of the
preamble of the proposed rule), this
electronic signature on the Certification
and Settlement Summary page of the
Medicare cost report can be submitted
electronically with the electronic cost
report to the provider’s contractor. If the
provider submits the Medicare cost
report file to the contractor via email,
the provider may elect to also send the
electronically signed certification
statement on the Certification and
Settlement Summary page to the
contractor via the same email or
separately in a separate email. In
addition, if the certification statement is
signed with an electronic signature as in
‘‘(1)’’ or ‘‘(2)’’ above (and in section
X.A.2. of the preamble of the proposed
rule), the Certification and Settlement
Summary page of the Medicare cost
report can also be submitted on paper to
the contractor via regular mailing and
would still be considered to have an
electronic signature. We will provide
further instructions through manual
provisions and provider educational
materials.
After consideration of the public
comments we received, for the reasons
discussed above, we are finalizing our
proposals without modification. As
proposed, if the provider signs the
certification statement with an
electronic signature in the manner
described in this final rule and checks
the electronic signature checkbox, the
provider also may submit the
Certification and Settlement Summary
page electronically to the contractor at
the same time and in the same manner
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in which the Medicare cost report is
submitted. For example, if the provider
submits the electronic cost report file
via electronic mail to the contractor, the
provider may also include the
Certification and Settlement Summary
page signed with an electronic
signature. Thus, providers would have
the option to submit the entire cost
report electronically, in lieu of the
previous requirement to mail a hard
copy of the Certification and Settlement
Summary page of the Medicare cost
report to the contractor. We note that a
provider could still choose to sign the
certification statement with an original
signature on the Certification and
Settlement Summary page. However, if
the provider chooses to do so, this page
would have to be mailed to its
contractor.
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4. Clarifications Relating to the Items
Required To Be Submitted by Providers
With the Medicare Cost Report
a. Settlement Summary and
Certification Statement
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20141), we
clarified the portion of the language in
§ 413.24(f)(4)(iv) that describes the items
a provider is required to submit along
with the electronically filed cost report.
We stated that § 413.24(f)(4)(iv)
currently sets forth that a provider is
required to submit a hard copy of a
settlement summary, a statement of
certain worksheet totals found within
the electronic file, and a statement
signed by its administrator or chief
financial officer certifying the accuracy
of the electronic file or the manually
prepared cost report. These items are
contained on the Certification and
Settlement Summary page of the
Medicare cost report. As we stated in
the proposed rule, we believe that the
structure of the sentence in the
regulation text describing these items
may give rise to the impression that
these are three separate items: (1) A
‘‘settlement summary’’; (2) a ‘‘statement
of certain worksheet totals found within
the electronic file’’; and (3) a ‘‘statement
signed by its administrator or chief
financial officer certifying the accuracy
of the electronic file or the manually
prepared cost report,’’ also known as the
certification statement. In the proposed
rule, we clarified that ‘‘a statement of
certain worksheet totals found within
the electronic file’’ is not a separate item
but rather is intended as a descriptor of
the ‘‘settlement summary.’’ The
settlement summary is actually the list
of ‘‘certain worksheet totals found
within the electronic file.’’ Therefore, in
the FY 2018 IPPS/LTCH PPS proposed
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rule (82 FR 20141), we proposed to
revise § 413.24(f)(4)(iv) to clarify this.
We did not receive any public
comments on this proposal. Thus, for
the reasons discussed above, we are
finalizing, without modification, our
proposed revisions to § 413.24(f)(4)(iv)
(as further discussed in section X.A.5. of
this final rule).
b. Removal of the Transition Period
Language
Following the effective dates for
which certain providers were required
to submit cost reports in a standardized
electronic format under
§ 413.24(f)(4)(ii), a transition period was
implemented when certain providers
were required to submit a hard copy of
the completed cost report forms in
addition to the electronic file. In the FY
2018 IPPS/LTCH PPS proposed rule (82
FR 20141), we proposed to remove the
language in § 413.24(f)(4)(iv) which sets
forth this expired transition period.
Specifically, we proposed to remove the
language that specifies that, during a
transition period (first two costreporting periods on or after December
31, 2004 for hospices and end-stage
renal disease facilities, and the first two
cost-reporting periods on or after March
31, 2005 for organ procurement
organizations, histocompatibility
laboratories, rural health clinics,
federally qualified health centers, and
community mental health centers),
providers must submit a hard copy of
the completed cost report forms in
addition to the electronic file. We stated
that because the transition period has
expired and these providers are no
longer required to submit a hard copy of
the completed cost report forms in
addition to the electronic file, this
language in § 413.24(f)(4)(iv) is no
longer necessary. We did not receive
any public comments on this proposal,
and thus, for the reasons discussed
above, we are finalizing without
modification our proposal to remove
this language (as further discussed
below in section X.A.5. of the preamble
of this final rule).
5. Revisions to 42 CFR 413.24(f)(4)(iv)
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20139 through
20142), to reflect our proposals
discussed earlier, we proposed to revise
§ 413.24(f)(4)(iv) to specify that,
effective for cost reporting periods
beginning on or after October 1, 2017,
providers that are required to file an
electronic Medicare cost report may
elect to electronically submit the
settlement summary, if applicable, and
the cost report’s certification statement,
found on the Certification and
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Settlement Summary page of the
Medicare cost report, with an electronic
signature of the provider’s administrator
or chief financial officer. We stated that
a provider that elects to electronically
sign and submit the Certification and
Settlement Summary page would no
longer be required to send this page in
hard copy to its contractor with an
original signature. We further proposed
to revise § 413.24(f)(4)(iv) to specify that
the provider must check the electronic
signature checkbox that would be
placed immediately after the
certification statement and directly
above the signature line of the
certification statement. We proposed
that this electronic signature checkbox
would specify that the provider’s
administrator or chief financial officer
has read and agrees with the
certification statement, and certifies that
he or she intends the electronic
signature to be the legally binding
equivalent of his or her original
signature. We stated that the provider
must check the electronic signature
checkbox in order for the provider to
sign the certification statement with an
electronic signature and in order for the
electronic signature to be accepted. We
invited public comments on this
proposal.
After consideration of the public
comments we received (as summarized
in sections X.A.2. and in X.A.3. of the
preamble of this final rule), we are
finalizing our proposed revisions to
§ 413.24(f)(4)(iv) as discussed above
with the following modification. As
discussed in section X.A.2. of the
preamble of this final rule, after
consideration of the proposed effective
date that would have delayed the period
of time for the providers to
electronically sign and submit the
Certification and Settlement Summary
page by almost a year and our desire to
ease cost and burden upon providers
sooner, we have decided to allow
providers the option to use an electronic
signature to sign the certification
statement on the Certification and
Settlement Summary page of the
Medicare cost report and to
electronically submit this page effective
for cost reporting periods ending on or
after December 31, 2017. As such,
effective for cost reporting periods
ending on or after December 31, 2017,
providers that are required to file an
electronic Medicare cost report may
elect to electronically submit the
settlement summary, if applicable, and
the cost report’s certification statement,
found on the Certification and
Settlement Summary page of the
Medicare cost report, with an electronic
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signature of the provider’s administrator
or chief financial officer. A provider that
elects to electronically sign and submit
the Certification and Settlement
Summary page is no longer required to
send this page in hard copy to its
contractor with an original signature.
We are further revising § 413.24(f)(4)(iv),
as proposed, to specify that the provider
must check the electronic signature
checkbox that would be placed
immediately after the certification
statement and directly above the
signature line of the certification
statement. This electronic signature
checkbox specifies that the provider’s
administrator or chief financial officer
has read and agrees with the
certification statement, and certifies that
he or she intends the electronic
signature to be the legally binding
equivalent of his or her original
signature. The provider must check the
electronic signature checkbox in order
for the provider to sign the certification
statement with an electronic signature
and in order for the electronic signature
to be accepted.
In addition, we proposed to revise the
regulatory language under
§ 413.24(f)(4)(iv) to reflect our
clarification that the phrase ‘‘a
statement of certain worksheet totals
found within the electronic file’’
describes the settlement summary and
does not denote a separate item.
Specifically, we proposed to revise
§ 413.24(f)(4)(iv) to state that a provider
must submit a settlement summary, if
applicable, which is a statement of
certain worksheet totals found within
the electronic file, and a certification
statement signed by its administrator or
chief financial officer certifying the
accuracy of the electronic file or
manually prepared cost report. We
invited public comments on this
proposal. We did not receive any public
comments on our proposal. Therefore,
for the reasons discussed above, we are
finalizing, without modification, our
proposal to revise the regulatory
language under § 413.24(f)(4)(iv) to
reflect our clarification that the phrase
‘‘a statement of certain worksheet totals
found within the electronic file’’
describes the settlement summary and
does not denote a separate item.
In addition, as indicated earlier,
because the transition period during
which certain providers were required
to submit a hard copy of the completed
cost report forms in addition to the
electronic file has expired, we proposed
to remove the transition period language
in § 413.24(f)(4)(iv). We invited public
comments on this proposal. We did not
receive any public comments on this
proposal, and therefore, for the reasons
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discussed above, we are finalizing,
without modification, our proposal to
remove the language in § 413.24(f)(4)(iv)
that describes this expired transition
period.
Finally, we proposed to revise the
regulation text at § 413.24(f)(4)(iv) by
adding the certification statement from
the certification section of the
Certification and Settlement Summary
page of the Medicare cost report. This
certification statement appeared in all
caps in the proposed regulation text and
stated as follows: ‘‘Misrepresentation or
falsification of any information
contained in this cost report may be
punishable by criminal, civil and
administrative action, fine and/or
imprisonment under Federal law.
Furthermore if services identified in this
report were provided or procured
through the payment directly or
indirectly of a kickback or were
otherwise illegal, criminal, civil and
administrative action, fines, and/or
imprisonment may result.’’ This
language has appeared on the
Certification and Settlement Summary
page for many years. We stated in the
proposed rule that because the
certification section of the Medicare cost
report refers to it as having been read by
the provider, incorporation of it into the
regulation text would provide
completeness and clarification of the
certification statement.
We invited public comments on this
proposal. We did not receive any public
comments on our proposal. Therefore,
for the reasons discussed above, we are
finalizing our proposal, without
modification, to revise the regulation
text at § 413.24(f)(4)(iv) by adding the
certification statement from the
certification section of the Certification
and Settlement Summary page of the
Medicare cost report. This certification
statement appears in all caps and
informs the provider that
‘‘Misrepresentation or falsification of
any information contained in this cost
report may be punishable by criminal,
civil and administrative action, fine
and/or imprisonment under Federal
law. Furthermore if services identified
in this report were provided or procured
through the payment directly or
indirectly of a kickback or were
otherwise illegal, criminal, civil and
administrative action, fines, and/or
imprisonment may result.’’
B. Clarification of Limitations on the
Valuation of Depreciable Assets
Disposed of on or After December 1,
1997
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20142 through
20143), we proposed revisions to the
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38497
Medicare provider reimbursement
regulations to clarify our longstanding
policy pertaining to allowable costs and
the limits on the valuation of a
depreciable asset that may be
recognized in establishing an
appropriate allowance for depreciation
for assets disposed of on or after
December 1, 1997. Questions have
arisen with regard to whether this
limitation on the valuation of
depreciable assets depends on the
manner in which a provider disposes of
an asset. In the proposed rule, we
clarified that the elimination of the gain
or loss for depreciable assets applies to
assets a provider disposes of by sale or
scrapping on or after December 1, 1997,
regardless of whether the asset is
scrapped, sold as an individual asset of
a Medicare participating provider, or
sold incident to a provider’s change of
ownership.
Reasonable cost is defined at section
1861(v)(1)(A) of the Act and in the
implementing regulations at 42 CFR part
413. Since the inception of the Medicare
program, allowable costs under
Medicare have included a provider’s
direct and indirect costs necessary for
the provision of patient care, including
the cost of using assets in patient care.
Depreciation of these assets is an
allowable cost under Medicare and the
allowance is computed using the
depreciable basis and estimated useful
life of the assets (§ 413.134). Under
Medicare’s reasonable cost
reimbursement system, the appropriate
allowance for depreciation and for
interest on capital indebtedness on
buildings and equipment used in the
provision of patient care is based in part
on the historical cost of the asset
(§ 413.134(a) and (b)). When an asset is
disposed of, no further depreciation
may be taken on it. Gains and losses on
the disposition of depreciable assets
may be includable, as applicable, either
in computing allowable cost or in
computing the adjustment to Medicare
reimbursable cost, depending upon the
manner of disposition of the asset, the
date of the disposal, and the amount of
the depreciation adjustment (§ 413.134
and Part 1, Chapter 1 of the Provider
Reimbursement Manual (CMS Pub. 15–
1)).
Prior to the enactment of the Balanced
Budget Act (BBA) of 1997 (Pub. L. 105–
33), when a Medicare certified
provider’s capital asset was disposed of
through sale or scrapping, Medicare
shared in any gain or loss from the
transaction. In this regard, if a provider
realized a gain or loss from the sale or
scrapping of an asset, an adjustment to
the provider’s allowable costs was
necessary so that Medicare paid its
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share of the actual cost the provider
incurred in using the asset for patient
care. Generally, when a provider sold its
depreciable assets at more than the net
book value, Medicare shared in the gain.
If the provider sold its depreciable
assets at less than the net book value,
Medicare shared in the loss. The
amount of a gain was limited to the
amount of depreciation previously
included in Medicare allowable costs.
The amount of a loss was limited to the
undepreciated basis of the asset
permitted under the program.
In the BBA of 1997, Congress
eliminated Medicare’s recognition of
gains or losses on a provider’s
disposition of assets on or after
December 1, 1997. Section 4404 of the
BBA of 1997 amended section
1861(v)(1)(O)(i) of the Act to state that,
in establishing an appropriate allowance
for depreciation and for interest on
capital indebtedness with respect to an
asset of a provider of services which has
undergone a change of ownership, such
regulations shall provide, except as
provided in clause (iii), that the
valuation of the asset after such change
of ownership shall be the historical cost
of the asset, as recognized under the
Medicare program, less depreciation
allowed, to the owner of record as of
August 5, 1997 (or, in the case of an
asset not in existence as of August 5,
1997, the first owner of record of the
asset after August 5, 1997).
In enacting section 4404 of the BBA
of 1997, Congress was concerned with
providers that may have been ‘‘creating
specious ‘losses’ ’’ on the disposition of
assets ‘‘in order to be eligible for
additional Medicare payments’’ (H. Rep.
No. 105–149 (1997)). In addition,
Congress cited the June 1997 OIG report,
Medicare Losses on Hospital Sales
(OEI–03–96–00170), which indicated
that there were substantial Medicare
losses due to depreciation adjustments
for hospitals that underwent changes of
ownership. In a January 1998 final rule
with comment period (63 FR 1379), we
conformed the regulations at § 413.134
to section 1861(v)(1)(O) of the Act, as
amended by section 4404 of the BBA of
1997. In that rule, we stated that, under
the provisions of section 4404 of the
BBA of 1997, ‘‘when a depreciable asset
of a provider undergoes a change of
ownership, the valuation of the asset,
for purposes of establishing a Medicare
allowance for depreciation and interest,
will be the historical cost of the asset to
the owner of record, less depreciation
allowed. Thus, when a depreciable asset
is sold, the value of the asset to the
seller will be the historical cost (as
recognized under Medicare) to the
owner of record as of August 5, 1997,
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less depreciation allowed. In this case,
there will be no adjustment for gain or
loss on the sale. For the buyer, the value
of the asset will also be the historical
cost (as recognized under Medicare) to
the owner of record as of August 5,
1997, less depreciation allowed.
Accordingly, the new owner’s
allowance for depreciation and interest
will be based on this value. Stated
simply, the asset moves from the hands
of the seller to the hands of the buyer
at the asset’s net book value defined in
§ 413.134(b)(9)’’ (63 FR 1381).
Our policy referenced the asset of a
provider undergoing a change of
ownership, meaning the asset itself
changing owners, regardless of whether
the provider changes ownership. In
conforming the regulations to the new
statutory provision, we revised the
regulations at § 413.134(f)(1) to specify
that ‘‘[d]epreciable assets may be
disposed of through sale, scrapping,
trade-in, exchange, demolition,
abandonment, condemnation, fire, theft,
or other casualty. If disposal of a
depreciable asset, including the sale or
scrapping of an asset before December 1,
1997, results in a gain or loss, an
adjustment is necessary in the
provider’s allowable cost. (No gain or
loss is recognized on either the sale or
the scrapping of an asset that occurs on
or after December 1, 1997.) The amount
of a gain included in the determination
of allowable cost is limited to the
amount of depreciation previously
included in Medicare allowable costs.
The amount of a loss to be included is
limited to the undepreciated basis of the
asset permitted under the program. The
treatment of the gain or loss depends
upon the manner of disposition of the
asset, as specified in paragraphs (f)(2)
through (6) of [§ 413.134]. The gain or
loss on the disposition of depreciable
assets has no retroactive effect on a
proprietary provider’s equity capital for
years prior to the year of disposition.’’
In the January 1998 final rule with
comment period, we added the
parenthetical ‘‘(No gain or loss is
recognized on either the sale or the
scrapping of an asset that occurs on or
after December 1, 1997)’’ to
§ 413.134(f)(1). This parenthetical was
intended to implement section 4404 of
the BBA of 1997 by disallowing the gain
or loss when a provider sells or scraps
an asset.
We believe that, under section 4404 of
the BBA of 1997, Medicare’s
nonrecognition of a loss or gain with
respect to an asset a provider disposes
of by sale or scrapping applies,
regardless of whether the sale of the
asset occurs incident to a provider’s
change of ownership or whether the
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asset is otherwise sold or scrapped by a
currently participating Medicare
provider.
We note that following the enactment
of the Deficit Reduction Act of 1984
(Pub. L. 98–369, section 2314), in which
Congress amended section 1861(v)(1) of
the Act by adding new subparagraph (O)
concerning the valuation and
determination of historical costs of
assets after July 18, 1984, we stated that
the new provisions applied ‘‘not only to
the sale or purchase of groups of assets,
but also to the sale or purchase of
individual assets’’ (57 FR 43913).
Similarly, we believe section 4404 of the
BBA of 1997 applies to a provider’s
disposition of assets through sale or
scrapping, including the sale or
scrapping of individual provider assets
and assets sold or scrapped incident to
a provider’s change of ownership.
Accordingly, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 20142
through 20143), we proposed to revise
the regulation text at § 413.134(f)(1) to
clarify our longstanding policy that
Medicare does not recognize a
provider’s gain or loss on the sale or
scrapping of an asset that occurs on or
after December 1, 1997, regardless of
whether the asset is sold incident to a
provider’s change of ownership or is
otherwise sold or scrapped as an asset
of a Medicare participating provider.
We did not receive any public
comments on our proposal. We are
finalizing our proposal to revise the
Medicare provider reimbursement
regulations at § 413.134(f)(1) to clarify
our longstanding policy that Medicare
does not recognize a provider’s gain or
loss on the sale or scrapping of an asset
that occurs on or after December 1,
1997, regardless of whether the asset is
sold incident to a provider’s change of
ownership or is otherwise sold or
scrapped as an asset of a Medicare
participating provider.
XI. Changes Relating to Survey and
Certification Requirements
A. Revisions to the Application and ReApplication Procedures for National
Accrediting Organizations (AOs), and
Posting of Survey Reports and
Acceptable Plans of Corrections (PoCs)
In an effort to increase transparency,
in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20143), we
proposed to require AOs with CMSapproved accreditation programs to post
final accreditation survey reports and
PoCs on public facing Web site
designated by the AO. All current AOs
with CMS-approved accreditation
programs have Web sites that inform the
general public about their organization.
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We stated in the proposed rule that
establishing the standard for posting
both accredited and non-accredited
provider and supplier survey reports,
which would include initial and
recertification surveys, and PoCs, would
expand transparency even further.
Disclosure of survey findings protects
both patient health and safety, in which
public disclosure of findings currently
only shows the subset of complaint
activity. Expanding these requirements
through the posting of all survey reports
and PoCs would allow for a more
comprehensive way to show a
provider’s or supplier’s compliance
with all health and safety requirements.
In the proposed rule, we proposed to
revise § 488.5 of the regulations to
incorporate this proposed requirement.
We further proposed to add a new
standard at § 488.5(a)(21) to require that
each national AO applying or
reapplying for CMS-approval of its
Medicare provider or supplier
accreditation program provide a
statement acknowledging that it agreed
to make all Medicare provider or
supplier final accreditation survey
reports (including statements of
deficiency findings), as well as
acceptable PoCs publicly available on
its Web site within 90 days after such
information is made available to those
facilities for the most recent 3 years.
This provision would include all
triennial, full, follow-up, focused, and
complaint surveys, whether they were
performed onsite or offsite. We invited
public comments on these proposals.
After consideration of the public
comments received, we are not
finalizing our proposed changes to 42
CFR 488.5. Section 1865(b) of the Act
prohibits CMS from disclosing survey
reports or compelling the AOs to
disclose their reports themselves. The
suggestion by CMS to have the AOs post
their survey reports may appear as if
CMS was attempting to circumvent the
provision of section 1865(b) of the Act.
Therefore, this provision is effectively
being withdrawn.
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B. Changes to Termination Public
Notice Requirements for Certain
Providers and Suppliers
1. Background
Under the provisions of sections
1866(b)(2) of the Act and implementing
regulations at 42 CFR 489.53, the
Secretary may terminate an agreement
with a provider of services if it is
determined that the provider is not in
substantial compliance with applicable
requirements governing provider
agreements. For instance, CMS must
determine that the provider:
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• Is not complying substantially with
the terms of the agreement, the
provisions of title XVIII, or regulations
promulgated thereunder;
• Has failed to supply information
necessary to determine whether
payments are or were due and the
amounts of such payments;
• Refuses to permit examination of
fiscal and other records (including
medical records) necessary for the
verification of information furnished as
a basis for claiming payment under the
Medicare program; or
• Refuses to permit photocopying of
any records or other information
necessary to determine or verify
compliance with participation
requirements.
Sections 1866(b)(1) and (2) of the Act
require reasonable public notice, as
prescribed in regulations, of both
voluntary and involuntary terminations
of Medicare and Medicaid participating
providers and suppliers. Various
existing regulations specify the
requirements of public notice for
voluntary and involuntary terminations
prior to termination of a provider or
supplier agreement. Specifically, for
voluntary terminations, providers at 42
CFR 489.52(c)(2), RHCs at 42 CFR
405.2404(d), FQHCs at 42 CFR
405.2442, ASCs at 42 CFR 416.35(d),
and OPOs at 42 CFR 486.312(e) are
required to publish termination notices
in the local public newspaper.
2. Basis for Changes
The existing regulations requiring
termination notices to be published in
local newspapers have become outdated
over time as the public and beneficiaries
increasingly turn to the Internet and
other electronic forums for information.
Currently, rural health centers (RHCs),
federally qualified health centers
(FQHCs), ambulatory surgical centers
(ASCs), and organ procurement
organizations (OPOs) are required to
publish public notices of voluntary and
involuntary termination of participation
in the Medicare and Medicaid programs
in one or more local newspapers.
Providers and suppliers that voluntarily
terminate their participation agreement
must give notice to the public at least 15
days before the effective date of
termination and the notice must be
published in one or more local
newspapers. The use of hard copy local
newspaper through time has become
less effective, as a large majority of the
public uses alternate sources such as
Web sites or other online news and
resources.
According to national studies,
approximately 23 percent of the general
public continues to read print
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38499
newspapers.510 Many individuals have
turned to digital platforms to read news
rather than print news, which continues
to decline on an annual basis, therefore,
limiting the effectiveness of publishing
termination notices in local newspapers.
In light of the public’s increased access
to the Internet and other electronic
forums for information and the decline
of print newspaper readership, in this
proposed rule, in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 20145
and 20146), we proposed changes in the
existing regulations noted earlier
regarding newspaper publication of
termination notices to allow CMS
Regional Offices and providers and
suppliers more media platforms in
which to publish termination notices,
both voluntary and involuntary, with
the intent of making these notices more
visible and effective.
3. Changes to Regulations
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20145 and 20146),
we proposed to remove the regulatory
language specifying public notice of
terminations for FQHCs, RHCs, ASCs,
and OPOs to be exclusively in
newspapers to allow for more flexibility
for both the CMS Regional Offices and
providers and suppliers. Specifically,
we proposed changes to the regulations
for RHCs at 42 CFR 405.2404(d), for
FQHCs at 42 CFR 405.2442(a) and (b),
for ASCs at 42 CFR 416.35(d), and for
OPOs at 42 CFR 486.312(e) to remove
the reference to publication in
newspapers as the means for notifying
the community of involuntary and
voluntary terminations from
participation in Medicare and Medicaid
programs. This proposal for termination
notices to the public for RHCs, FHQCs,
ASCs, and OPOs would align with the
termination notices CMS currently has
set forth for all other providers and
suppliers. For example, under 42 CFR
488.456(c) (enforcement procedures for
long-term care facilities), CMS must
notify the public of a termination of a
nursing home’s provider agreement, but
the regulation does not specify through
which public forum this notice is to be
given. Similarly, 42 CFR 489.53(d)(5)
also does not specify the method of
public notification required for
terminations. Through this proposed
change, RHCs, FQHCs, ASCs, and OPOs
would have the same requirement for
the notice to the public as under 42 CFR
489.53(d)(5), where there is a
termination by CMS in which public
510 PewResearchCenter (2012) Number of
Americans Who Read Print Newspapers Continues
Decline. Available at: https://www.pewresearch.org/
daily-number/number-of-americans-who-readprint-newspapers-continues-decline/.
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notice is required but the method for
these providers or suppliers for
providing public notice is not specified,
to allow for flexibility.
In addition, we proposed to revise 42
CFR 489.52(c)(2) to remove the
requirement to publish notice in one or
more local newspapers in circumstances
of the termination of a provider
agreement by a provider and instead to
allow providers to inform the
community via public notice, without
specifying the method used for public
notice. We stated in the proposed rule
that we believe that these proposed
changes will ensure that the community
continues to be aware of terminations of
Medicare and Medicaid participating
providers and suppliers.
The method for delivering the
required public notice is no longer being
specified by removing the word
‘‘newspaper’’ from the regulations for
RHCs, FQHCs, ASCs, and OPOs.
Instead, we proposed to allow for
flexibility for the CMS Regional Offices
and the providers or suppliers to post
public notices through a manner in
which the maximum number of
community individuals and
beneficiaries would be informed. This
may include, but is not limited to State
Web site postings, facility Web sites, or
local news and social media channels.
It also would not preclude publication
in local newspapers. Through the
proposed rule, we will continue to
fulfill the regulatory requirement to
publically post involuntary termination
notices. We are also operationally
considering allowing voluntarily
terminating providers and suppliers the
same public notice platform used for
involuntary notices in order to meet
their regulatory public notice
requirements. This could include media
venues such as Web site postings and
press releases through the use of CMS
Regional press officers.
We invited public comments on our
proposals. In addition, we sought
suggestions from the public on
sufficient mechanisms to provide public
information, other than local
newspapers, for posting Medicare and
Medicaid participating provider and
supplier termination notices.
Comment: Several commenters
supported the proposal to eliminate the
use of newspapers to provide public
notice and agreed that the use of
newspapers has become outdated. One
commenter agreed with the proposal to
allow CMS Regional Offices to use
media platforms in which to publish
termination notices, both voluntary and
involuntary, in a more visible and
effective manner.
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Response: We thank the commenter
for its support.
We are finalizing our proposal to
remove the word ‘‘newspaper’’ from the
regulations for RHCs, FQHCs, ASCs, and
OPOs under the requirements for public
notices for terminations of the provider
agreement.
XII. MedPAC Recommendations
Under section 1886(e)(4)(B) of the
Act, the Secretary must consider
MedPAC’s recommendations regarding
hospital inpatient payments. Under
section 1886(e)(5) of the Act, the
Secretary must publish in the annual
proposed and final IPPS rules the
Secretary’s recommendations regarding
MedPAC’s recommendations. We have
reviewed MedPAC’s March 2017
‘‘Report to the Congress: Medicare
Payment Policy’’ and have given the
recommendations in the report
consideration in conjunction with the
policies set forth in this final rule.
MedPAC recommendations for the IPPS
for FY 2018 are addressed in Appendix
B to this final rule.
For further information relating
specifically to the MedPAC reports or to
obtain a copy of the reports, contact
MedPAC at (202) 653–7226, or visit
MedPAC’s Web site at: https://
www.medpac.gov.
XIII. Other Required Information
A. Requests for Data From the Public
IPPS-related data are available on the
Internet for public use. The data can be
found on the CMS Web site at: https://
www.cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/
AcuteInpatientPPS/. We
listed the IPPS-related data files that are
available in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 20146
through 20147).
Commenters interested in discussing
any data files used in construction of
this final rule should contact Michael
Treitel at (410) 786–4552.
B. Collection of Information
Requirements
1. Statutory Requirement for Solicitation
of Comments
Under the Paperwork Reduction Act
of 1995, we are required to provide 60day notice in the Federal Register and
solicit public comment before a
collection of information requirement is
submitted to the Office of Management
and Budget (OMB) for review and
approval. In order to fairly evaluate
whether an information collection
should be approved by OMB, section
3506(c)(2)(A) of the Paperwork
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Reduction Act of 1995 requires that we
solicit comment on the following issues:
• The need for the information
collection and its usefulness in carrying
out the proper functions of our agency.
• The accuracy of our estimate of the
information collection burden.
• The quality, utility, and clarity of
the information to be collected.
• Recommendations to minimize the
information collection burden on the
affected public, including automated
collection techniques.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20147 through
20158), we solicited public comment on
each of these issues for the following
sections of this document that contain
information collection requirements
(ICRs).
2. ICRs for Temporary Exception to the
LTCH PPS Site Neutral Payment Rate
for Certain Spinal Cord Specialty
Hospitals
In section VIII.E. of the preamble of
the proposed rule and this final rule, we
discuss the proposed implementation of
section 15009 of Public law 114–255,
which provides for a temporary
exception to the site neutral payment
rate for certain spinal cord specialty
hospitals under section 1886(m)(6)(F) of
the Act. Under this provision,
discharges occurring in cost reporting
periods beginning during FY 2018 and
FY 2019 for LTCHs that meet the
specified statutory criteria are excepted
from the site neutral payment rate (that
is, all discharges from such LTCHs
during this period would be paid at the
LTCH PPS standard Federal payment
rate). In order for an LTCH to qualify for
this temporary exception, the LTCH
must, among other things, meet the
‘‘significant out-of-state admissions
criterion’’ at section 1886(m)(6)(F)(iii) of
the Act. To meet the significant out-ofstate admissions criterion, an LTCH
must have discharged inpatients
(including both individuals entitled to,
or enrolled for, Medicare Part A benefits
and individuals not so entitled or
enrolled) during FY 2014 who had been
admitted from at least 20 of the 50
States, determined by the States of
residency of such inpatients and based
on such data submitted by the hospital
to the Secretary as the Secretary may
require. The statute further provides
authority for the Secretary to implement
the significant out-of-state admissions
criterion at section 1886(m)(6)(F)(iii) of
the Act by program instruction or
otherwise, and exempts the policy
initiatives from any information
collection requirements under the
Paperwork Reduction Act. As such, the
burden associated with the data
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submitted by the hospital to meet the
significant out-of-State admissions
criteria is not subject to the PRA.
However, our estimate of the burden
associated with this data submission is
discussed in section I.J. of Appendix A
of this final rule.
We did not receive any public
comments on this information
collection.
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3. ICRs for the Hospital Inpatient
Quality Reporting (IQR) Program
a. Background
OMB has currently approved
3,681,023 hours of burden and
approximately $121 million under OMB
control number 0938–1022, accounting
for burden experienced by 3,300 IPPS
hospitals and 1,100 non-IPPS hospitals
for the FY 2019 payment determination.
In section IX.A. of the preambles of the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 20031 through 20075) and this
final rule, we discuss the policies that
we expect to affect our burden
estimates. We refer readers to section
I.A.2.h. of the preamble of this final
rule, where we summarize our finalized
policies. The details about our finalized
policies that impact information
collection requirements for IPPShospitals are described below.
In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20149) and prior
rules (81 FR 57260) and (80 FR 49763),
we have estimated that reporting eCQMs
for the Hospital IQR Program could be
accomplished by staff with a median
hourly wage of $16.42 per hour.511 We
note that since the publication of the FY
2018 IPPS/LTCH PPS proposed rule,
more recent wage data have become
available, and we are updating the wage
rate used in these calculations in this
FY 2018 IPPS/LTCH PPS final rule. The
most recent data from the Bureau of
Labor Statistics reflects a median hourly
wage of $18.29 per hour for a Medical
Records and Health Information
Technician professional.512 We
calculated the cost of overhead,
including fringe benefits, at 100 percent
of the median hourly wage, consistent
with previous years (81 FR 57260). This
is necessarily a rough adjustment, both
because fringe benefits and overhead
costs vary significantly from employerto-employer and because methods of
estimating these costs vary widely from
study-to-study. Nonetheless, we believe
that doubling the hourly wage rate
($18.29 × 2 = $36.58) to estimate total
511 Occupational Outlook Handbook. Available at:
https://www.bls.gov/oes/2012/may/oes292071.htm.
512 Occupational Employment and Wages, May
2016. Available at: https://www.bls.gov/oes/current/
oes292071.htm.
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cost is a reasonably accurate estimation
method. Accordingly, we calculate cost
burden to hospitals using a wage plus
benefits estimate of $36.58 per hour
throughout the discussion below for the
Hospital IQR Program.
b. Burden Estimates for the
Modifications to the eCQM Reporting
Requirements for the CY 2017 Reporting
Period/FY 2019 Payment Determination
and CY 2018 Reporting Period/FY 2020
Payment Determination
In the FY 2017 IPPS/LTCH PPS final
rule, we finalized policies to require
hospitals to submit a full year (four
quarters) of data (81 FR 57159) for at
least eight of the available eCQMs in the
Hospital IQR Program measure set (81
FR 57157) for both the FY 2019 and FY
2020 payment determinations. In
section IX.A.8. of the preamble of this
final rule, we are finalizing modified,
reduced eCQM reporting requirements.
For both the CY 2017 reporting period/
FY 2019 payment determination and the
CY 2018 reporting period/FY 2020
payment determination, hospitals will
be required to report four eCQMs and to
submit one, self-selected calendar
quarter of data.
As in previous years, we believe the
total burden associated with eCQM
reporting will be similar to that
previously outlined in the Medicare
EHR Incentive Program Stage 2 final
rule (77 FR 54126 through 54133).
Under that program, the burden
estimate for a hospital to report one
eCQM is 10 minutes per record per
quarter. We believe this estimate is
accurate and appropriate to apply to the
Hospital IQR Program because we align
the eCQM reporting requirements
between both programs. Therefore,
using the estimate of 10 minutes per
record per quarter, we anticipate our
finalized policies to require: (1)
Reporting on at least four of the
available eCQMs; and (2) submission of
one, self-selected quarter of eCQM data,
will result in a burden reduction of 4.67
hours (280 minutes) per hospital for
each of the FY 2019 and FY 2020
payment determinations. This estimate
was calculated by considering the
burden difference between the updated
eCQM reporting requirements finalized
in section IX.A.8. of the preamble of this
final rule for each of the FY 2019 and
FY 2020 payment determinations,
which are the same (10 minutes per
record × 4 eCQMs × 1 quarter = 40
minutes for 1 quarter of reporting), and
the eCQM reporting requirements
previously finalized in the FY 2017
IPPS/LTCH PPS final rule for each of
the CY 2017 and CY 2018 reporting
periods (81 FR 57157 through 57159)
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38501
(10 minutes per record × 8 eCQMs × 4
quarters = 320 minutes for 4 quarters of
reporting). Through these calculations
(40 minutes¥320 minutes), we arrived
at a reduction of 280 minutes per
hospital per year, or 4.67 hours per
hospital per year, for each of the FY
2019 and FY 2020 payment
determinations.
In total, for each of the FY 2019 and
FY 2020 payment determinations, we
expect our finalized proposal to require
hospitals to report one, self-selected
calendar quarter of data for 4 eCQMs (as
compared to our previously finalized
requirements to report four quarters of
data for 8 eCQMs) to represent an
annual burden reduction of 15,400
hours across all 3,300 IPPS hospitals
participating in the Hospital IQR
Program (¥280 minutes per hospital/60
minutes per hour × 3,300 hospitals =
¥15,400 hours). Using the updated
wage estimate described above, we
expect this to represent a cost reduction
of $563,332 ($36.58 hourly wage ×
15,400 annual hours reduction) across
all 3,300 IPPS hospitals participating in
the Hospital IQR Program for each of the
FY 2019 and FY 2020 payment
determinations. In summary, we
estimate a revised total burden of 2,200
hours (40 minutes per hospital/60
minutes per hour × 3,300 hospitals) and
$80,476 (2,200 hours across 3,300
hospitals × $36.58 per hour) across all
hospitals associated with this finalized
policy.
c. Burden Estimate for the Modifications
to eCQM Certification Requirements for
the FY 2019 and FY 2020 Payment
Determinations
In section IX.10.d. of the preamble of
this final rule, we discuss changes we
are finalizing to the Hospital IQR
Program eCQM submission
requirements to align them with the
Medicare EHR Incentive Program for
eligible hospitals and CAHs.
Specifically, for both the CY 2017
reporting period/FY 2019 payment
determination and the CY 2018
reporting period/FY 2020 payment
determination, we are finalizing that: (1)
A hospital using EHR technology
certified to the 2014 Edition, 2015
Edition, or a combination of both, but
such EHR technology is not certified to
all available eCQMs, will be required to
have its EHR technology certified to all
eCQMs that are available to report; and
(2) EHR technology that is certified to
all available eCQMs will not need to be
recertified each time it is updated to a
more recent version of the eCQM
specifications. Further, we are finalizing
that: (1) For the CY 2017 reporting
period, hospitals will be required to use
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the most recent version of the CQM
electronic specifications (namely, the
Spring 2016 version of the eCQM
specifications and any applicable
addenda); and (2) for the CY 2018
reporting period, hospitals be required
to use the most recent version of the
CQM electronic specifications (namely,
the Spring 2017 version of the eCQM
specifications and any applicable
addenda). Because the use of certified
EHR technology is already required for
the Medicare EHR Incentive Program,
we believe that harmonizing these
finalized policies will create no
additional burden for hospitals under
the Hospital IQR Program. We refer
readers to OMB control number 0938–
1158 for a discussion of the burden
associated with the requirements for the
Medicare EHR Incentive Program.
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d. Burden Estimates for the
Modifications to the Existing Data
Validation Processes
(1) Calculations for Modifications to the
Validation of eCQM Data for the FY
2020 and FY 2021 Payment
Determinations and Subsequent Years
In section IX.A.11. of the preamble of
this final rule, we discuss our finalized
policies for the eCQM data validation
process for the Hospital IQR Program
data beginning with validation for the
FY 2020 payment determination. First,
we are finalizing our proposal to require
hospitals selected for eCQM data
validation to submit 8 cases per quarter
for eCQM validation for the FY 2020
payment determination and subsequent
years. As applied with our finalized
modified, reduced policy to require one,
self-selected calendar quarter of data for
each of the CY 2017 and CY 2018 eCQM
reporting periods, hospitals will be
required to submit 8 records (eight cases
per quarter over one quarter) for each of
the FY 2020 and FY 2021 payment
determinations. Second, we are
finalizing our proposal to add additional
exclusion criteria to our hospital and
case selection process for eCQM data
validation for the FY 2020 payment
determination and subsequent years.
Third, we are finalizing our proposal to
continue our previously finalized
medical record submission
requirements (81 FR 57181), for the FY
2021 payment determination and
subsequent years. We believe these
additional exclusions and maintaining
previously finalized medical record
submission requirements will have no
effect on burden for hospitals, because,
while they influence which hospitals
and cases will be selected, they will not
change the number of hospitals that
must participate in eCQM validation,
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the number of records that will be
collected for validation, or the
validation reporting requirements for
the hospitals selected. We discuss the
burden associated with the finalized
eCQM data validation process in more
detail below.
In previous years (79 FR 50347), we
estimated a burden of 16 hours (960
minutes) for the submission of 12
records, which will equal 1 hour and 20
minutes (or 80 minutes) per record (960
minutes / 12 records) for validation of
eCQM data. Applying the time per
individual submission of 1 hour and 20
minutes (or 80 minutes) per record for
the 8 records we are requiring hospitals
selected for eCQM data validation to
submit for each of the FY 2020 and FY
2021 payment determinations, we
estimate a total burden of approximately
10.67 hours (80 minutes × 8 records/60
minutes per hour) for each hospital
selected for participation in eCQM data
validation for the FY 2020 and FY 2021
payment determinations. We estimate
that the total burden will be
approximately 2,133 hours across the
200 hospitals selected for eCQM
validation (10.67 hours per hospital ×
200 hospitals = 2,133 hours). As
compared to our total burden estimate
of 8,533 hours previously estimated in
the FY 2017 IPPS/LTCH PPS final rule
(81 FR 57261), this represents a burden
reduction of approximately 6,400 hours
across up to 200 hospitals selected for
eCQM validation (2,133 hours estimated
in this final rule—8,533 hours estimated
in the FY 2017 IPPS/LTCH PPS final
rule = ¥6,400 hours). Using the
estimated hourly labor cost of $36.58,
we estimate an annual cost reduction of
$234,112 (6,400 hours × $36.58 per
hour) across the 200 hospitals selected
for eCQM validation due to our
finalized policy to decrease the number
of records collected for validation from
32 records to 8 records for each of the
FY 2020 and FY 2021 payment
determinations. In summary, we
estimate a revised total burden of 2,133
hours (10.67 hours × 200 hospitals) and
$78,025 (2,133 hours across 200
hospitals × $36.58 per hour) associated
with this finalized policy.
(2) Calculations for Modifications to the
eCQM Data Validation Exclusions for
the FY 2020 Payment Determination
and Subsequent Years
In section IX.A.11.b. of the preamble
of this final rule, we are finalizing our
an additional eCQM data validation
exclusion criterion. Specifically,
hospitals that do not have at least five
discharges for at least one reported
eCQM (among the 4 required eCQMs
finalized for each of the CY 2017 and
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CY 2018 eCQM reporting periods)
included in their QRDA I file
submissions will be excluded from the
random sample of up to 200 hospitals
selected for eCQM validation for the FY
2020 payment determination and
subsequent years. For the FY 2020
payment determination and subsequent
years, hospitals meeting this newly
finalized exclusion criterion discussed
above and/or either of the two
additional exclusion criteria previously
finalized in the FY 2017 IPPS/LTCH
PPS final rule (81 FR 57178) will be
excluded from the random sample of up
to 200 hospitals selected for eCQM data
validation. Lastly, we are finalizing our
proposal that the three exclusion criteria
will be applied before the random
selection of 200 hospitals for eCQM
validation, such that hospitals meeting
any one of these exclusions will not be
eligible for selection.
In section IX.A.11.b. of the preamble
of this final rule, we are finalizing our
proposal to exclude the following cases
from validation for those hospitals
selected to participate in eCQM data
validation: (1) Episodes of care that are
longer than 120 days; and (2) cases with
a zero denominator for each measure,
for the FY 2020 payment determination
and subsequent years. We do not believe
that these finalized policies will affect
the burden experienced by hospitals
because, while they influence which
hospitals and cases will be selected,
they will not change the number of
hospitals that must participate in eCQM
validation, the number of records that
will be collected for validation, or the
validation reporting requirements for
the hospitals selected.
e. Burden Estimate for Voluntary
Reporting on the Hybrid Hospital-Wide
30-Day Readmission Measure for the CY
2018 Reporting Period
In section IX.A.7. of the preamble of
this final rule, we are finalizing our
proposal to begin voluntary reporting on
the Hybrid Hospital-Wide 30-Day
Readmission (HWR) measure for CY
2018 reporting period. This measure
uses both claims-based data as well as
a set of 13 core clinical data elements
from patient electronic health records
(EHRs) and 6 linking variables. We do
not expect any additional burden to
hospitals to report the claims-based
portion of this measure because these
data are already reported to the
Medicare program for payment
purposes.
As described in section IX.A.7.b. of
the preamble of this final rule, we are
finalizing our proposal that hospitals
may voluntarily submit the 13 core
clinical data elements and the six data
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elements required for linking with
claims data for this measure using the
same submission process required for
eCQM reporting, specifically, that these
data be reported using QRDA I files
submitted to the CMS data receiving
system. Accordingly, we expect the
burden associated with voluntary
reporting of this measure to be similar
to our estimates for eCQM reporting
(that is 10 minutes per measure, per
quarter). Consistent with estimates for
previous voluntary reporting of quality
measures, such as the eCQM reporting
pilot, we anticipate that approximately
100 hospitals will voluntarily report the
Hybrid HWR measure. Therefore, using
the estimate of 10 minutes per measure
per quarter, we estimate that our
proposal will result in a burden increase
of 0.67 hours (40 minutes) per
participating hospital for the one year (4
quarters) during which this voluntary
measure will take place (10 minutes per
record × 1 measure × 4 quarters / 60
minutes per hour = 0.67 hours). In total,
for the one year duration of voluntary
reporting the Hybrid HWR measure, we
estimate an annual burden increase of
67 hours across up to 100 hospitals
voluntarily participating (40 minutes
per hospital / 60 minutes per hour × 100
hospitals = 67 hours). Using the updated
wage estimate described above, we
estimate this to represent a cost increase
of $2,451 ($36.58 hourly wage × 67
annual hours) across up to 100 hospitals
voluntarily participating in reporting for
the Hybrid HWR measure. We note that
the claims-based version of the
Hospital-Wide All-Cause Unplanned
Readmission measure is currently a part
of the Hospital IQR Program measure
set, as adopted in the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53530).
f. Burden Estimate for the Refinement of
the HCAHPS Survey Measure for the FY
2020 Payment Determination and
Subsequent Years
In section IX.A.6.a. of the preamble of
this final rule, we are finalizing our
proposal to update the HCAHPS survey
measure (OMB control number 0938–
0981) by replacing the current set of
three Pain Management questions
(HCAHPS Q12, Q13, and Q14) with new
questions referred to collectively as the
‘‘Communication About Pain’’
composite measure beginning with the
FY 2020 payment determination. There
is no additional information collection
burden associated with the refinement
of these questions because we are
rewording the existing questions and
not changing the total number of
questions.
g. Burden Estimate for the Refinement of
the Hospital 30-Day, All-Cause, RiskStandardized Mortality Rate Following
Acute Ischemic Stroke Measure for the
FY 2023 Payment Determination and
Subsequent Years
In section IX.A.6.b. of the preamble of
this final rule, we are finalizing our
proposal to refine the Hospital 30-Day,
All-Cause, Risk-Standardized Mortality
Rate Following Acute Ischemic Stroke
measure to include the use of NIH
stroke scale claims data for risk
adjustment beginning with the FY 2023
payment determination. Because this
refinement will result only in the
inclusion of additional claims-based
data that are already reported to the
Medicare program for payment
purposes, we believe no additional
burden on hospitals will result from the
update to the stroke mortality measure.
h. Burden Estimate for the Changes to
the Hospital IQR Program Extraordinary
Circumstances Exceptions (ECE) Policy
for the FY 2020 Payment Determination
and Subsequent Years
In section IX.A.15.b. of the preamble
of this final rule we discuss our
alignment of the naming of this
exception policy and update to 42 CFR
412.140 to reflect our current ECE
policies. We also are clarifying the
timing of CMS’ response to ECE
requests. Because we are not seeking
38503
any new or additional information in
our ECE finalized proposals, we believe
the updates will have no effect on
burden for hospitals.
i. Summary of Burden Estimates for the
Hospital IQR Program
In summary, under OMB control
number 0938–1022, we estimate: (1) A
burden reduction of 15,400 hours
(¥15,400 hours due to the finalized
modifications to the CY 2017 reporting
period/FY 2019 payment determination
eCQM reporting requirements) and a
total cost reduction of $563,332
(¥15,400 hours × $36.58 per hour) for
the FY 2019 payment determination; (2)
a burden reduction of 21,733 hours
(¥15,400 hours due to the finalized
modifications to the CY 2018 eCQM
reporting requirements for the CY 2018
reporting period/FY 2020 payment
determination ¥6,400 hours due to the
finalized modifications to the eCQM
data validation process for the FY 2020
payment determination + 67 hours for
the voluntary reporting of the Hybrid
HWR measure) and a total cost
reduction of $794,993 (¥21,733 hours ×
$36.58 per hour) for the FY 2020
payment determination; and (3) a
burden reduction of 6,400 hours
(¥6,400 hours due to the finalized
modifications to eCQM validation
process for the FY 2021 payment
determination) and a total cost
reduction of $234,112 (¥6,400 hours ×
$36.58 per hour) for the FY 2021
payment determination. We therefore
estimate a total burden reduction of
43,533 hours and $1,592,437 across all
hospitals as a result of the finalized
proposals in this final rule. These are
the burden estimate updates for which
we are requesting OMB approval under
OMB number 0938–1022.
HOSPITAL IQR PROGRAM CY 2017 REPORTING PERIOD/FY 2019 PAYMENT DETERMINATION BURDEN ESTIMATES
Annual recordkeeping and reporting requirements under OMB control number 0938–1022
for CY 2017 reporting period/FY 2019 payment determination
Activity
sradovich on DSK3GMQ082PROD with RULES2
Estimated time per record
(minutes)
Reporting on 4 eCQMs for
1 Quarter.
40 (10 minutes × 4 measures).
Number
reporting
quarters
per year
Average
number
records per
hospital
per quarter
Number
of IPPS
hospitals
reporting
1
3,300
1
Annual
burden
(hours)
per
hospital
Newly
finalized
annual
burden
(hours) across
IPPS hospitals
Previously
finalized
annual
burden (hours)
across
IPPS hospitals
2,200
17,600
0.67
Total Change in Burden Hours: ¥15,400
Total Cost Estimate: Updated Hourly Wage ($36.58) × Change in Burden Hours (¥15,400) = ¥$563,332
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E:\FR\FM\14AUR2.SGM
14AUR2
Net
difference
in annual
burden
hours
¥15,400
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HOSPITAL IQR PROGRAM CY 2018 REPORTING PERIOD/FY 2020 PAYMENT DETERMINATION BURDEN ESTIMATES
Annual recordkeeping and reporting requirements under OMB control number 0938–1022
for CY 2018 reporting period/FY 2020 payment determination
Activity
Estimated time per record
(minutes)
Reporting on 4 eCQMs for
1 Quarter.
FY 2020 eCQM Data Validation.
Hybrid Hospital-Wide 30Day Readmission Measure Voluntary Reporting.
Number
reporting
quarters
per year
Average
number
records per
hospital
per quarter
Number
of IPPS
hospitals
reporting
Annual
burden
(hours)
per
hospital
Newly
finalized
annual
burden
(hours) across
IPPS hospitals
Previously
finalized
annual
burden
(hours)
across
IPPS hospitals
Net
difference
in annual
burden
hours
40 (10 minutes × 4 measures).
80 ......................................
1
3,300
1
0.67
2,200
17,600
¥15,400
1
200
8
10.67
2,133
8,533
¥6,400
10 ......................................
4
100
1
0.67
67
0
67
Total Change in Burden Hours: ¥21,733
Total Cost Estimate: Updated Hourly Wage ($36.58) × Change in Burden Hours (¥21,733) = ¥$794,993
HOSPITAL IQR PROGRAM CY 2019 REPORTING PERIOD/FY 2021 PAYMENT DETERMINATION BURDEN ESTIMATES
Annual recordkeeping and reporting requirements under OMB control number 0938–1022
for CY 2019 reporting period/FY 2021 payment determination
Activity
Estimated time per record
(minutes)
FY 2021 eCQM Data Validation.
80 ......................................
Number
reporting
quarters
per year
Average
number
records per
hospital
per quarter
Number
of IPPS
hospitals
reporting
1
200
Annual
burden
(hours)
per
hospital
8
Newly
finalized
annual
burden
(hours) across
IPPS hospitals
Previously
finalized
annual
burden (hours)
across
IPPS hospitals
2,133
8,533
10.67
Net
difference
in annual
burden
hours
¥6,400
sradovich on DSK3GMQ082PROD with RULES2
Total Change in Burden Hours: ¥6,400
Total Cost Estimate: Updated Hourly Wage ($36.58) × Change in Burden Hours (¥6,400) = ¥$234,112
We received the following public
comment regarding our burden
estimates.
Comment: One commenter objected to
the notion that reporting eCQMs for the
Hospital IQR Program measures could
be accomplished by staff with a mean
hourly wage of $16.42 per hour. The
commenter encouraged CMS to
reevaluate this calculation and utilize
the salary surveys by professional
organizations like the Health
Information Management System
Society (HIMSS).
Response: As we noted in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR
20149), we acknowledge that more
recent wage data have become available
from the Bureau of Labor and Statistics
(BLS),513 and we have updated the
Hospital IQR Program wage estimate
above using these updated data in this
final rule. We believe the BLS is the
most appropriate source of these data,
because the BLS collects a far greater
volume of employment and wage data
through its surveys than other sources
such as the HIMSS Compensation
Survey.514 In addition, the HIMSS
Compensation Survey is a proprietary
tool intended to assist health
information technology professionals
compare salaries and compensation
packages, whereas the BLS is intended
to provide a large-scale survey of
national employment statistics. HIMSS
does not suggest what level employee
would likely be doing this work; we
note that while the HIMSS
Compensation Survey 2015 provides
overall salary data, it does not explicitly
state, or provide granular enough
employee groupings to be able to
determine which level of employee
would likely be doing this work. We
utilized data from the BLS since we
could ascertain a specific wage rate for
the associated position of a person
doing this work. We will continue to
evaluate the appropriateness of using
the BLS wage rate in future years.
513 Occupational Employment and Wages, May
2016. Available at: https://www.bls.gov/oes/current/
oes292071.htm.
514 2015 HIMSS Salary Calculator &
Compensation Survey. Available at: https://
www.himss.org/compensationSurvey.
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4. ICRs for PPS-Exempt Cancer Hospital
Quality Reporting (PCHQR) Program
As discussed in sections IX.B. of the
preambles of the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 20075
through 20086) and this final rule,
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section 1866(k)(1) of the Act requires,
for purposes of FY 2014 and each
subsequent fiscal year, that a hospital
described in section 1886(d)(1)(B)(v) of
the Act (a PPS-exempt cancer hospital,
or a PCH) submit data in accordance
with section 1866(k)(2) of the Act with
respect to such fiscal year. There is no
financial impact to PCH Medicare
reimbursement if a PCH does not
participate.
We refer readers to the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50957
through 50959), the FY 2015 IPPS/LTCH
PPS final rule (79 FR 50347 through
50348), the FY 2016 IPPS/LTCH PPS
final rule (80 FR 49764), and the FY
2017 IPPS/LTCH PPS final rule (81 FR
57182), as well as to OMB Control
Number 0938–1175, for a detailed
discussion of the burden related to the
program requirements that we have
previously adopted. Below we discuss
only changes in burden that will result
from the policies we are finalizing in
this final rule.
a. Estimated Hourly Labor Cost
Previously, we used $66 as our hourly
labor cost in calculating the burden
associated with chart-abstraction
activities in the PCHQR Program.
However, our experience working with
our data analysis contractors and those
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performing chart abstraction indicates
that this work is performed by a
different labor category than we
previously thought. In addition, our
previous labor costs are different from
those used in other quality reporting
and value-based purchasing programs,
and we do not believe there is a
justification for these different values
given the similarity in quality measures
and required staff. Therefore, to align
the estimated hourly labor costs (hourly
wage plus fringe and overhead, as
discussed below) used to calculate
burden in the PCHQR Program with
those used in other CMS quality
reporting programs, including the
Hospital IQR Program, we are finalizing
our proposal to revise our hourly labor
cost estimate to $36.58 ($32.84 515 with
a modification) which incorporates
hourly wage plus fringe benefits and
overhead costs.
This labor cost is based on the May
2016 BLS wage for a Medical Records
and Health Information Technician. The
BLS is ‘‘the principal Federal agency
responsible for measuring labor market
activity, working conditions, and price
changes in the economy.’’ 516 The BLS
describes Medical Records and Health
Information Technicians as those
responsible for organizing and managing
health information data; therefore, we
believe it is reasonable to assume that
these individuals will be tasked with
abstracting clinical data for submission
for the PCHQR Program. According to
the BLS, the median pay for Medical
Records and Health Information
Technicians which we used in the
proposed rule was $16.42 per hour,
before inclusion of overhead and fringe
benefits. However, we have learned that
the BLS has updated the median pay for
Medical Records and Health
Information Technicians to $18.29 per
hour, before inclusion of overhead and
fringe benefits. We used this updated
estimate for this final rule.
Obtaining data on overhead costs is
challenging because overhead costs vary
across PCHs, and cost elements assigned
as ‘‘indirect’’ or ‘‘overhead’’ costs, as
opposed to direct costs or employee
wages, are subject to interpretation at
the facility level. Therefore, we are
finalizing our proposal to calculate the
cost of overhead, including fringe
benefits, at 100 percent of the median
hourly wage, as is currently done in
other CMS quality reporting
programs.517 This is necessarily a rough
515 https://www.bls.gov/oes/2012/may/
oes292071.htm.
516 https://www.bls.gov/bls/infohome.htm.
517 See, for example, FY 2016 IPPS/LTCH PPS
final rule (80 FR 49764 FN 153).
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adjustment, both because fringe benefits
and overhead costs vary significantly
from employer to employer and because
methods of estimating these costs vary
widely from study to study.
Nonetheless, we believe that doubling
the updated hourly wage rate ($18.29 ×
2 = $36.58) to estimate total cost is a
reasonably accurate estimation method.
Accordingly, we are finalizing, with a
modification to update the hourly labor
cost, our proposal to use an hourly labor
cost estimate of $36.58 ($18.29 base
salary + $18.29 fringe and overhead) for
calculation of burden forthwith. We
again note that because more recent
wage data has become available, we are
updating the wage rate used in these
calculations in this FY 2018 IPPS/LTCH
PPS final rule.
We did not receive any public
comments on this proposal.
b. Estimated Burden of PCHQR Program
Finalized Proposals for the FY 2020
Program Year
In section IX.B.4. of the preamble of
this final rule, we are finalizing our
proposals to adopt four claims-based
measures beginning with the FY 2020
program: (1) Proportion of Patients Who
Died from Cancer Receiving
Chemotherapy in the Last 14 Days of
Life (NQF #0210); (2) Proportion of
Patients Who Died from Cancer
Admitted to the ICU in the Last 30 Days
of Life (NQF #0213); (3) Proportion of
Patients Who Died from Cancer Not
Admitted to Hospice (NQF #0215); and
(4) Proportion of Patients Who Died
from Cancer Admitted to Hospice for
Less Than Three Days (NQF #0216).
In conjunction with these finalized
policies, in section IX.B.3.b. of the
preamble of this final rule, we are
finalizing the removal of three existing
chart-abstracted measures beginning
with the FY 2020 program—(1)
Adjuvant Chemotherapy is Considered
or Administered Within 4 Months (120
Days) of Diagnosis to Patients Under the
Age of 80 with AJCC III (Lymph Node
Positive) Colon Cancer (PCH–01/NQF
#0223); (2) Combination Chemotherapy
is Considered or Administered Within 4
Months (120 Days) of Diagnosis for
Women Under 70 with AJCC T1c, or
Stage II or III Hormone Receptor
Negative Breast Cancer (PCH–02/NQF
#0559); and (3) Adjuvant Hormonal
Therapy (PCH–03/NQF #0220)).
Therefore, the PCHQR Program measure
set will consist of 18 measures for the
FY 2020 program.
Our finalized policy to remove the
three chart-abstracted measures will
reduce the burden associated with
quality data reporting on PCHs. We
relied on the estimates finalized in the
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FY 2013 IPPS/LTCH PPS final rule to
estimate the reduction in burden
because the measures we proposed to
remove were adopted in the FY 2013
IPPS/LTCH PPS final rule, and the
burden estimates for these chartabstracted measures have not been
amended since their introduction. The
burden associated with these reporting
requirements is currently under OMB
Control Number 0938–1175. Therefore,
based on the FY 2013 IPPS/LTCH PPS
final rule (77 FR 53667) finalized
estimates of the burden of collecting
measure information, submitting
measure information, and training
personnel, we estimate the reduction in
burden for collecting measure
information, submitting measure
information, and training personnel
provided by the removal of the three
measures to be approximately 3,776
hours per year for each PCH, or an
average reduction in burden of 315
hours per month per PCH. Therefore, we
estimate a reduction in hourly burden of
chart abstraction and data submission of
approximately 41,537 hours per year
across the 11 PCHs.518
We do not anticipate any increase in
burden on the PCHs corresponding to
our finalized policy to adopt four
claims-based measures into the PCHQR
Program beginning with the FY 2020
program year. The four measures are
claims-based and therefore do not
require facilities to report any additional
data. Because these measures do not
require facilities to submit any
additional data, we do not believe that
there is any increase in burden
associated with this proposal.
In summary, as a result of our
finalized policies, we estimate a
reduction of 41,537 hours of burden per
year associated with the proposals
above for all 11 PCHs beginning with
the FY 2020 program. Coupled with our
updated estimated salary costs, we
estimate that these proposed changes
will result in a reduction in annual
labor costs of $1,519,427 (41,537.1
hours × $36.58 hourly labor cost) across
the 11 PCHs beginning with the FY 2020
PCHQR Program. The burden associated
with these reporting requirements is
currently under OMB Control Number
518 In the FY 2013 IPPS/LTCH PPS final rule (77
FR 53667), we originally calculated the burden for
reporting the three chart-abstracted cancer measures
and two NHSN CDC measures (CLABSI and CAUTI)
at approximately 6,293.5 hours annually for each
PCH, or 69,228.5 burden hours annually for all 11
PCHs. To calculate the reduction in burden
achieved by removing three of these five measures,
we multiplied the annual burden by 11 (the number
of PCHs), divided by 5 (the total number of
measures making up the burden estimate), and
multiplied the result by 3 (the total number of
measures being removed).
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report to the Medicare program for
payment purposes. In this final rule, we
are finalizing our proposal to remove
5. ICRs for the Hospital Value-Based
the All-Cause Unplanned Readmission
Purchasing (VBP) Program
Measure for 30 Days Post-Discharge
In section V.J. of the preambles of the
from LTCHs (NQF #2512) from the
FY 2018 IPPS/LTCH PPS proposed rule
LTCH QRP measure set, beginning with
(82 FR 19968 through 19986) and this
the FY 2019 LTCH QRP. However,
final rule, we discuss proposed and
because LTCHs will still be required to
newly finalized requirements for the
report data on this measure for payment
Hospital VBP Program. Specifically, in
purposes, we believe that the removal of
this final rule, with respect to quality
this measure will not affect the burden
measures, we are finalizing our
estimate for the LTCH QRP.
The LTCH CARE Data Set Version
proposals to: (1) Remove the current
3.00 was implemented April 1, 2016
Patient Safety for Selected Indicators
(PSI 90) measure beginning with the FY and is approved under OMB control
number 0938–1163. The LTCH CARE
2019 program year; (2) adopt the
Data Set Version 3.00 is available on the
Hospital-Level, Risk-Standardized
LTCH QRP Web site at: https://
Payment Associated with a 30-Day
www.cms.gov/Medicare/QualityEpisode-of-Care for Pneumonia (PN
Initiatives-Patient-AssessmentPayment) measure beginning with the
FY 2022 program year; and (3) adopt the Instruments/LTCH-Quality-Reporting/
LTCH-CARE-Data-Set-and-LTCH-QRPPatient Safety and Adverse Events
(Composite) (NQF #0531) (modified PSI Manual.html. For a discussion of
90) beginning with the FY 2023 program burden related to LTCH CARE Data Set
Version 3.00, we refer readers to the FY
year.
2017 IPPS/LTCH PPS final rule (81 FR
As required under section
57339 through 57341).
1886(o)(2)(A) of the Act, Hospital VBP
The LTCH CARE Data Set Version
Program measures, including the
4.00 will be effective July 1, 2018, as
finalized additional and updated
discussed in section IX.C.11.d. of the
measures, are used in the Hospital IQR
preamble of the proposed rule. The
Program. Therefore, their inclusion in
associated burden for the Drug Regimen
the Hospital VBP Program does not
result in any additional burden because Review Conducted with Follow-Up for
the Hospital VBP Program uses data that Identified Issues-PAC LTCH QRP
are required for and collected under the quality measure was finalized in the FY
2017 IPPS/LTCH PPS final rule (81 FR
Hospital IQR Program. Therefore, the
57219 through 57223).
burden associated with these reporting
In this final rule, we are finalizing our
requirements is currently approved
under OMB Control Number 0938–1022. proposals to adopt three measures:
Changes in Skin Integrity Post-Acute
6. ICRs for the Long-Term Care Hospital Care: Pressure Ulcer/Injury; and two
Quality Reporting Program (LTCH QRP) new measures related to ventilator
weaning, Compliance with SBT by Day
As discussed in section IX.C.7.a. of
2 of the LTCH Stay and Ventilator
the preamble of this final rule, we are
Liberation Rate.
finalizing our proposals to replace the
Adoption of the proposed pressure
current pressure ulcer measure
ulcer measure, Change in Skin Integrity
beginning with the FY 2020 LTCH QRP
Post-Acute Care: Pressure Ulcer Injury,
and adopt two new measures also
beginning with the FY 2020 LTCH QRP. to replace the current pressure ulcer
measure, Percent of Residents or
Patients with Pressure Ulcers That Are
LTCH QRP QUALITY MEASURES
New or Worsened (Short Stay) (NQF
NEWLY FINALIZED IN THIS FY 2018 #0678), will result in the removal of
IPPS/LTCH PPS FINAL RULE BE- some data elements related to pressure
GINNING WITH THE FY 2020 LTCH ulcer assessment that we believe are
QRP
duplicative or no longer necessary. As a
result, the estimated burden and cost for
Measure title
LTCHs to report the measure we are
finalizing in this final rule will be
Changes in Skin Integrity Post-Acute Care:
reduced from the burden and cost to
Pressure Ulcer/Injury.
report the current measure. Specifically,
Compliance with Spontaneous Breathing
we believe that there will be a 3-minute
Trial (SBT) by Day 2 of the LTCH Stay.
reduction in clinical staff time to report
Ventilator Liberation Rate.
data. We estimate 146,592 discharges
The LTCH QRP measure set also
from 426 LTCHs annually. This equates
currently includes claims-based
to a decrease of 7,330 hours in burden
measures that are calculated based on
for all LTCHs (0.05 hours × 146,592
data that LTCHs are already required to
discharges). Given 3 minutes of RN time
sradovich on DSK3GMQ082PROD with RULES2
0938–1175. The information collection
will be revised and submitted to OMB.
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at $69.40 per hour completing an
average of 344 sets of LTCH CARE Data
Set assessments per provider per year,
we estimated the total cost will be
reduced by $1,194.07 per LTCH
annually, or $508,674 for all LTCHs
annually. This decrease in burden will
be accounted for in the information
collection under OMB control number
(0938–1163).
We estimate the additional data
elements for the newly finalized
Compliance with SBT by Day 2 of the
LTCH Stay quality measure will take 1.5
minutes of clinical staff time to report
data on admission. We believe that the
additional LTCH CARE Data Set items
we are finalizing will be completed by
registered nurses and respiratory
therapists (RT). Individual LTCHs
determine the staffing resources
necessary. We estimate 146,592
discharges from 426 LTCHs annually.
This equates to an increase of 3,665
hours in burden for all LTCHs (0.025
hours × 146,592 discharges). Given 0.75
minutes of RN time at $69.40 per hour
and 0.75 minutes of RT time at $58.30
per hour completing an average of 344
sets of LTCH CARE Data Set
assessments per provider per year, we
estimated the total cost will be
increased by $549.29 per LTCH
annually, or $233,997 for all LTCHs
annually. This increase in burden will
be accounted for in the information
collection under OMB control number
(0938–1163).
We estimate the additional elements
for the newly finalized Ventilator
Liberation Rate quality measure will
take 2.7 minutes of clinical staff time to
report data on admission and 0.3
minutes of clinical staff time to report
data on discharge, for a total of 3
minutes. We believe that the additional
LTCH CARE Data Set items we are
finalizing will be completed by
registered nurses and respiratory
therapists. Individual LTCHs determine
the staffing resources necessary. We
estimate 146,592 discharges from 426
LTCHs annually. This equates to an
increase of 7,330 hours in burden for all
LTCHs (0.05 hours × 146,592
discharges). Given 2.85 minutes of RN
time at $69.40 per hour and 0.15
minutes of respiratory therapist (RT)
time at $58.30 per hour completing an
average of 344 sets of LTCH CARE Data
Set assessments per provider per year,
we estimated the total cost will be
increased by $1,184.52 per LTCH
annually, or $504,606 for all LTCHs
annually. This increase in burden will
be accounted for in the information
collection under OMB control number
(0938–1163).
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We are finalizing our proposal to
remove the program interruption items
from the LTCH CARE Data Set.
Specifically, we are finalizing our
proposal to remove the following items:
(1) A2500, Program Interruption(s); (2)
A2510, Number of Program
Interruptions During This Stay in This
Facility; and (3) A2525, Program
Interruption Dates, because we do not
currently utilize this information nor do
we have plans to utilize this information
for the LTCH QRP. As a result, the
estimated burden and cost for LTCHs
will be reduced. Specifically, we believe
that there will be a 3.6 minute reduction
in clinical staff time to report data. We
estimate 146,592 discharges from 426
LTCHs annually. This equates to a
decrease of 8,796 hours in burden for all
LTCHs (0.06 hours × 146,592
discharges). Given 3.6 minutes of RN
time at $69.40 per hour completing an
average of 344 sets of LTCH CARE Data
Set assessments per provider per year,
we estimated the total cost will be
reduced by $1,432.89 per LTCH
annually, or $610,409 for all LTCHs
annually. This decrease in burden will
be accounted for in the information
collection under OMB control number
(0938–1163).
Also, in section IX.C.10. of the
preamble of this final rule, we are
finalizing standardized patient
assessment data proposals with respect
to the Functional Status and Medical
Condition and Comorbidity categories.
All of the data elements are already
included on the LTCH CARE Data Set,
and therefore our finalized proposal to
characterize those data elements as
standardized patient assessment data
will not result in an additional reporting
burden for LTCHs.
We are not finalizing our proposals to
adopt 25 new standardized patient
assessment data elements with respect
to LTCH admissions and 17 new
standardized patient assessment data
elements with respect to LTCH
discharges. In the FY 2018 IPPS/LTCH
PPS proposed rule (81 FR 20225
through 20226), we discussed that our
burden estimates for these proposals
were estimated at an additional
$4,080.30 per LTCH annually, or
$1,738,206 for all LTCHs annually.
Because we are not finalizing the
proposals, this results in a burden
reduction from what was proposed.
In summary, the 4.5-minute increase
in burden for the two finalized
ventilator weaning quality measures is
offset by the 3 minute reduction in
burden for the finalized pressure ulcer
quality measure and the 3.6 minute
reduction in burden for the program
interruption items. This results in a net
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reduction in burden of 2.1 minutes.
Overall, this results in a net decrease in
cost associated with the finalized
changes to the LTCH QRP, which we
estimate to be reduced by $893.14 per
LTCH annually, or $380,480 for all
LTCHs annually.
The finalized LTCH CARE Data Set
Version 4.00 is available on the LTCH
QRP Web site at: https://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/LTCH-QualityReporting/LTCH-CARE-Data-Set-andLTCH-QRP-Manual.html.
Under section 1899B(m) of the Act,
the Paperwork Reduction Act does not
apply to the specific changes to the
collections of information described in
this final rule. While the reporting of
data on quality measures is an
information collection, we believe that
the burden associated with
modifications to the LTCH CARE Data
Set discussed in this final rule fall
under the PRA exceptions provided in
1899B(m) of the Act because they are
required to achieve the standardization
of patient assessment data. Section
1899B(m) of the Act provides that the
PRA does not apply to section 1899B
and the sections referenced in section
1899B(a)(2)(B) of the Act that require
modification to achieve the
standardization of patient assessment
data. We are, however, setting out the
burden as a courtesy to advise interested
parties of the proposed actions’ time
and costs and we also refer readers to
section I.M. of Appendix A of the
preamble of this final rule. The
requirement and burden will be
submitted to OMB for review and
approval when the modifications to the
LTCH CARE Data Set are not used to
achieve standardization and are not
exempt from the requirements under
section 1899B(m) of the Act.
For a discussion of the revised burden
calculations related to LTCH CARE Data
Set Version 4.00, and our discussion
and response to public comments we
received on these information collection
requirements, we refer readers to section
I.M. of Appendix A of the preamble of
this final rule.
7. ICRs for the Inpatient Psychiatric
Facility Quality Reporting (IPFQR)
Program
We refer readers to the FY 2015 IPF
PPS final rule (79 FR 45978 through
45980), the FY 2016 IPF PPS final rule
(80 FR 46720 through 46721), and the
FY 2017 IPPS/LTCH PPS final rule (81
FR 57265 through 57266) for a detailed
discussion of the burden for the
program requirements that we have
previously adopted. Additional
information on the full burden of
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existing requirements can also be found
in the information collection approved
under OMB Control number 0938–1171.
In section IX.D. of the preambles of the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 20120 through 20130) and this
final rule, we discuss and finalize
provisions that affect the FY 2019
payment determination (through
procedural requirements that occur in
FY 2018). We are not finalizing the
adoption of the Medication
Continuation following Inpatient
Psychiatric Discharge measure for the
FY 2020 payment determination and
subsequent years. ICRs associated with
finalized proposals for each period are
discussed in more detail below.
a. Burden Associated With Finalized
Procedural Proposals for the FY 2019
Payment Determination and Subsequent
Years
In this final rule, we are finalizing: (1)
Proposed updates to the Extraordinary
Circumstances Exception (ECE) process
(affecting submission of ECE requests in
FY 2018, which will impact payment
determination year FY 2019 and
subsequent years); (2) proposals to
adopt measure removal factors,
including criteria for determining when
a measure is ‘‘topped-out,’’ and measure
retention factors (which will take effect
immediately following the finalization
of this rule for updates to be proposed
through future rulemaking); and (3)
changes associated with procedural
deadlines (which affect the FY 2019
payment determination and subsequent
years).
First, for the ECE proposals, we are
specifically finalizing our proposals to:
(1) Specify that ECE forms may be
signed by either the CEO or the
designated personnel as listed in the
contact information section of the form;
(2) change the ECE request form
submission deadline to within 90 days
of the date that the extraordinary
circumstance occurred; and (3) state that
we will strive to complete our review of
ECE requests within 90 days of receipt.
These changes to the ECE process will
not change data submission
requirements for facilities requesting
ECEs, but update procedural
requirements related to ECE requests
instead. Therefore, we do not expect any
changes to burden associated with these
proposals.
Second, the finalized proposal to
adopt measures removal and retention
factors does not affect the data
submission requirements. These factors
are intended to improve transparency of
our measure review and evaluation
process.
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Third, for the procedural deadlines,
we are finalizing our proposals to: (1)
Change the submission deadline such
that facilities have a 45-day submission
period beginning at least 30 days
following the end of the data collection
period for a measure; (2) change the
submission timeframes for both NOPs
and withdrawals to the end of the data
submission period before each
respective payment determination year;
and (3) provide exact dates that define
the end of the data submission period/
NOP/withdrawal submission deadline
through subregulatory means. These
finalized proposals do not affect the
data that a facility must submit; instead,
these proposals affect the specification
of timeframes.
Because none of the policies that we
are finalizing for FY 2018 and
subsequent years affects the data that
IPFs are required to submit, we do not
believe there will be any change in
burden as compared to the burden
finalized in prior rulemakings, which is
described in more detail in the FY 2015
IPF PPS final rule (79 FR 45978 through
45980), the FY 2016 IPF PPS final rule
(80 FR 46720 through 46721), and the
FY 2017 IPPS/LTCH PPS final rule (81
FR 57265 through 57266) and in the
information collection previously
approved under OMB Control number
0938–1171.
sradovich on DSK3GMQ082PROD with RULES2
b. Burden Associated With the FY 2020
Payment Determination and Subsequent
Years
For FY 2020 and subsequent years, we
are not finalizing our proposal to adopt
one measure, Medication Continuation
following Inpatient Psychiatric
Discharge.
8. ICRs for the Electronic Health Record
(EHR) Incentive Programs and
Meaningful Use
In section IX.E. of the preambles of
the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 20130 through 20133) and
this final rule, we discuss proposed and
newly finalized policies for eligible
hospitals and CAHs reporting CQMs
electronically under the Medicare and
Medicaid EHR Incentive Programs in
2017 and 2018. As outlined in this final
rule, we are finalizing modifications to
our proposals and making the following
modifications to the CY 2017 final CQM
policies: (1) Revise the CY 2017
reporting period for eligible hospitals
and CAHs reporting CQMs
electronically to require the submission
of one self-selected quarter of data; and
(2) revise the number of CQMs eligible
hospitals and CAHs are required to
report electronically for CY 2017 to 4
(self-selected) available CQMs.
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In addition, we are finalizing
modifications to our proposals that
adopt the following CQM reporting
requirements for CY 2018: (1) For
eligible hospitals and CAHs reporting
CQMs electronically that demonstrate
meaningful use for the first time in 2018
or that have demonstrated meaningful
use in any year prior to 2018, the
reporting period will be one, selfselected quarter of data from CY 2018
with a submission period (Medicare
EHR Incentive Program only) consisting
of the 2 months following the close of
the calendar year, ending on February
28, 2019; (2) eligible hospitals and
CAHs reporting CQMs electronically are
required to report at least 4 (selfselected) of the available CQMs; (3)
eligible hospitals and CAHs that report
CQMs by attestation under the Medicare
EHR Incentive Program because
electronic reporting is not feasible, and
eligible hospitals and CAHs that report
CQMs by attestation under their State’s
Medicaid EHR Incentive Program, will
be required to report on all 16 available
CQMs; and (4) eligible hospitals and
CAHs reporting CQMs by attestation
under the Medicare EHR Incentive
Program will have a submission period
that will be the 2 months following the
close of the CY 2018 CQM reporting
period, ending February 28, 2019.
Because the finalized reporting
requirements for data collection
regarding the reporting of CQMs
electronically under the Medicare and
Medicaid EHR Incentive Programs will
align with the reporting requirements
under the Hospital IQR Program, we do
not believe that there is any additional
burden for the collection of such
information. We did not propose
modifications for the CQMs reporting
requirements by attestation in this
section. Therefore, no change in burden
associated with attestation of CQMs will
result from this section.
In section IX.F. of the preamble of this
final rule, we discuss newly finalized
policies regarding clinical quality
measurement for EPs participating in
the Medicaid EHR Incentive Program.
We note that there may be costs
incurred by States associated with
systems development as a result of the
newly finalized policies. State
attestation systems will likely require
minor updates, which may be eligible
for support through enhanced Federal
funding, subject to CMS prior approval,
if outlined in an updated
Implementation Advance Planning
Document (IAPD). We anticipate that
EPs may also face minor burden and
incremental capital cost for updating
clinical quality measures and reporting
capabilities in the EHR. We intend to
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reduce EP burden and simplify the
program through these newly finalized
policies, which are intended to better
align CQM reporting periods and CQM
reporting for the Medicaid EHR
Incentive Program with policies under
MIPS. Overall, we believe the newly
finalized CQM alignment at the State
attestation system and EP levels will
both reduce burden associated with
reporting on multiple CMS programs
and enhance state and CMS operational
efficiency.
In section IX.G.1. of the preamble of
the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 20135 through 20136) and
IX.G.2. of the preamble of this final rule,
we discuss our proposed and newly
finalized policy which changes the EHR
reporting period in 2018 from the full
CY 2018 to any continuous 90-day
period within CY 2018 for all new and
returning EPs, eligible hospitals and
CAHs attesting to meaningful use in the
Medicare and Medicaid EHR Incentive
Programs. We do not believe that
modifying the EHR reporting period for
attestation will cause an increase in
burden as the reporting requirements for
a 90-day EHR reporting period are
virtually the same as for a full calendar
year EHR reporting period and the same
objectives and measures will be used for
attestation for a full calendar year EHR
reporting period or a 90-day EHR
reporting period.
In section IX.G.2. of the preamble of
the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 20136 through 20138) and
IX.G.3. of the preamble of this final rule,
as required by the 21st Century Cures
Act (Pub. L. 114–255), we discuss and
finalize our proposal for an exemption
from the payment adjustments under
sections 1848(a)(7)(A),
1886(b)(3)(B)(ix)(I), and 1814(l)(4) of the
Act for EPs, eligible hospitals and
CAHs, respectively, that demonstrate
through an application process that
compliance with the requirement for
being a meaningful EHR user is not
possible because their certified EHR
technology has been decertified under
ONC’s Health IT Certification Program.
The application process involves
participants completing an application
form for an exception. While the form
is standardized, we believe it is exempt
from the PRA. The form is structured as
an attestation. Therefore, we believe it is
exempt under 5 CFR 1320.3(h)(1) of the
implementing regulations of the PRA.
The form is an attestation that imposes
no burden beyond what is required to
provide identifying information and to
attest to the applicable information.
In section IX.G.3. of the preamble of
the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 20138 through 20139) and
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IX.G.4. of the preamble of this final rule,
as required by the 21st Century Cures
Act, we discuss and finalize our
proposal to exempt ambulatory surgical
center-based EPs from the 2017 and
2018 payment adjustments under
section 1848(a)(7)(A) of the Act if they
furnish substantially all of their covered
professional services in an ambulatory
surgical center. We do not believe this
requirement will cause an increase in
burden as CMS will identify the EPs
who might meet this requirement. We
did not receive any public comments
regarding this information collection.
For the expected effects relating to the
above proposals, we refer readers to
section I.O. of Appendix A of this final
rule.
sradovich on DSK3GMQ082PROD with RULES2
9. ICRs Relating to Electronic Signature
and Electronic Submission of the
Certification and Settlement Summary
Page of Medicare Cost Reports
In section X.A. of the preambles of the
FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 20139 through 20142) and this
final rule, we discuss and finalize our
proposal to allow providers to use an
electronic signature on the certification
statement of the Certification and
Settlement Summary page of the
Medicare cost report and submit it
electronically. The Certification and
Settlement Summary page, which
contains the required provider signature
line, currently exists in the Medicare
cost report and is mailed to the
contractor from the provider. We are
finalizing our proposal to allow
providers the option to sign and submit
this page electronically. The signature
from the provider’s administrator or
chief financial officer is an existing data
collection requirement. There will be no
new data collection from providers
resulting from our new policy. The
policy, which allows providers to sign
this page electronically, is not a
substantive change to the existing data
collection instrument and would have a
minimal impact on providers to
complete. As discussed in section I.P. of
Appendix A of this final rule, we
estimate that this finalized proposal will
collectively save these providers
approximately $362,000 in postage
costs.
10. ICRs Relating to Changes in Public
Notices of Terminations
In section XI.B. of the preambles of
the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 20145 through 20146) and
this final rule, we discuss and finalize
our proposal to no longer require the
posting of voluntary and involuntary
termination public notice in newspapers
for RHCs, FQHCs, ASCs, and OPOs.
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These providers and suppliers will be
permitted to use other methods of
notification in light of the expanded use
of information technology. In this final
rule, we also are finalizing our proposal
to change the regulations regarding
termination of provider agreements by
CMS (that is, involuntary termination)
or providers or suppliers to remove the
provision for public notice through
‘‘newspapers’’ to allow flexibility in the
method of public notice.
We believe none of the provisions
would have a financial burden as we are
only eliminating the specification which
requires newspaper hard print to be the
notice source. We refer readers to the
economic impact provisions of section
I.Q. of Appendix A of this final rule for
additional information.
List of Subjects
42 CFR Part 405
Administrative practice and
procedure, Health facilities, Health
professions, Kidney diseases, Medicare,
Reporting and recordkeeping, Rural
areas, X-rays.
42 CFR Part 412
Administrative practice and
procedure, Health facilities, Medicare,
Puerto Rico, Reporting and
recordkeeping requirements.
Health facilities, Kidney diseases,
Medicare, Puerto Rico, Reporting and
recordkeeping requirements.
42 CFR Part 416
Health facilities, Health professions,
Medicare, Reporting and recordkeeping
requirements.
42 CFR Part 486
Grant programs—health, Health
facilities, Medicare, Reporting and
recordkeeping requirements, X-ray.
42 CFR Part 488
Administrative practice and
procedure, Health facilities, Medicare,
Reporting and recordkeeping
requirements.
42 CFR Part 489
Health facilities, Medicare, Reporting
and recordkeeping requirements.
42 CFR Part 495
Administrative practice and
procedure, Electronic health records,
Health facilities, Health professions,
Health maintenance organizations
(HMO), Medicaid, Medicare, Penalties,
Privacy, Reporting and recordkeeping
requirements.
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For the reasons set forth in the
preamble of this final rule, the Centers
for Medicare and Medicaid Services is
amending 42 CFR Chapter IV as set forth
below:
PART 405—FEDERAL HEALTH
INSURANCE FOR THE AGED AND
DISABLED
1. The authority citation for part 405
is revised to read as follows:
■
Authority: Secs. 205(a), 1102, 1142, 1861,
1862(a), 1869, 1871, 1874, 1881, and 1886(k)
of the Social Security Act (42 U.S.C. 405(a),
1302, 1320b–12, 1395x, 1395y(a), 1395ff,
1395hh, 1395kk, 1395rr, and 1395ww(k)),
and sec. 353 of the Public Health Service Act
(42 U.S.C. 263a).
2. Section 405.2404 is amended by
revising paragraph (d) introductory text
to read as follows:
■
§ 405.2404 Termination of rural health
clinic agreements.
*
*
*
*
*
(d) Notice to the public. Prompt notice
of the date and effect of termination
must be given to the public by either of
the following:
*
*
*
*
*
3. Section 405.2442 is amended by
revising paragraph (a) introductory text
and paragraph (b) to read as follows:
■
§ 405.2442
42 CFR Part 413
Sfmt 4700
38509
Notice to the public.
(a) When the FQHC voluntarily
terminates the agreement and an
effective date is set for the termination,
the FQHC must notify the public in the
area serviced by the FQHC prior to a
prospective effective date or on the
actual day that business ceases, if no
prospective date of termination has been
set. The notice must include—
*
*
*
*
*
(b) When CMS terminates the
agreement, CMS will notify the public
in the area serviced by the FQHC.
PART 412—PROSPECTIVE PAYMENT
SYSTEMS FOR INPATIENT HOSPITAL
SERVICES
4. The authority citation for part 412
is revised to read as follows:
■
Authority: Secs. 1102 and 1871 of the
Social Security Act (42 U.S.C. 1302 and
1395hh); sec. 124 of Pub. L. 106–113 (113
Stat. 1501A–332); sec. 1206 of Pub. L. 113–
67; sec. 112 of Pub. L. 113–93; sec. 231 of
Pub. L. 114–113; and secs. 15004, 15006,
15007, 15008, 15009, and 15010 of Pub. L.
114–255.
5. Section 412.22 is amended by
revising paragraph (e) introductory text
and paragraph (e)(1)(v) introductory text
and adding paragraph (i) to read as
follows:
■
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§ 412.22 Excluded hospitals and hospital
units: General rules.
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*
*
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*
(e) Hospitals-within-hospitals. A
hospital-within-a-hospital is a hospital
that occupies space in a building also
used by another hospital, or in one or
more separate buildings located on the
same campus as buildings used by
another hospital. Prior to October 1,
2017, except as provided in paragraphs
(e)(1)(vi) and (f) of this section, a
hospital-within-a-hospital must meet
the following criteria in order to be
excluded from the prospective payment
systems specified in § 412.1(a)(1). On or
after October 1, 2017, except as
provided in paragraphs (e)(1)(vi) and (f)
of this section, a hospital-withinhospital that is excluded from the
prospective payment systems specified
in § 412.1(a)(1) that occupies space in a
building also used by a hospital which
is not excluded from the prospective
payment systems specified in
§ 412.1(a)(1), or in one or more separate
buildings located on the same campus
as buildings used by a hospital not
excluded from the prospective payment
systems specified in § 412.1(a)(1) must
meet the following criteria in order to be
excluded from the prospective payment
systems specified in § 412.1(a)(1).
(1) * * *
(v) Performance of basic hospital
functions. Prior to October 1, 2017, the
hospital meets one of the following
criteria:
*
*
*
*
*
(i)(1) Requirements for extended
neoplastic disease care hospitals. For
cost reporting periods beginning on or
after January 1, 2015, an extended
neoplastic disease care hospital is a
hospital that was first excluded from the
prospective payment system under this
section in 1986 which has an average
inpatient length of stay for all patients,
including both Medicare and nonMedicare inpatients, of greater than 20
days and demonstrates that at least 80
percent of its annual Medicare inpatient
discharges in the 12-month cost
reporting period ending in fiscal year
1997 have a principal diagnosis that
reflects a finding of neoplastic disease
as defined in paragraph (f)(1)(iv) of this
section.
(2) Payment to extended neoplastic
disease care hospitals. Payment for
inpatient operating costs for hospitals
classified under paragraph (i)(1) of this
section is made as set forth in
§ 412.526(c)(3). Payment for capital
costs for hospitals classified under
paragraph (i)(1) of this section is made
as set forth in § 412.526(c)(4).
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6. Section 412.23 is amended by
revising paragraphs (e)(2)(ii), (e)(3)(vi),
and (e)(7)(iii) to read as follows:
■
§ 412.23 Excluded hospitals:
Classifications.
*
*
*
*
*
(e) * * *
(2) * * *
(ii) For cost reporting periods
beginning on or after August 5, 1997
and on or before December 31, 2014, a
hospital that was first excluded from the
prospective payment system under this
section in 1986 meets the length-of-stay
criterion if it has an average inpatient
length of stay for all patients, including
both Medicare and non-Medicare
inpatients, of greater than 20 days and
demonstrates that at least 80 percent of
its annual Medicare inpatient discharges
in the 12-month cost reporting period
ending in fiscal year 1997 have a
principal diagnosis that reflects a
finding of neoplastic disease as defined
in paragraph (f)(1)(iv) of this section.
(3) * * *
(vi) For cost reporting periods
beginning on or after October 1, 2015,
the Medicare inpatient days and
discharges that are paid at the site
neutral payment rate specified at
§ 412.522(c)(1) or paid under a Medicare
Advantage plan (Medicare Part C) will
not be included in the calculation of the
Medicare inpatient average length of
stay specified under paragraph (e)(2)(i)
of this section.
*
*
*
*
*
(7) * * *
(iii) April 1, 2014 through September
30, 2017—The number of Medicarecertified beds in an existing long-term
care hospital or an existing long-term
care hospital satellite facility must not
be increased beyond the number of
Medicare-certified beds prior to April 1,
2014, unless one of the exceptions
specified in paragraph (e)(6)(ii) of this
section is met.
*
*
*
*
*
■ 7. Section 412.64 is amended by—
■ a. Revising paragraph (d)(1)(vii);
■ b. Adding paragraph (d)(4)(iii);
■ c. Revising paragraph (h)(4)
introductory text and paragraph
(h)(4)(vi) introductory text; and
■ c. Revising paragraph (i)(3)(iii).
The revisions and addition read as
follows:
§ 412.64 Federal rates for inpatient
operating costs for Federal fiscal year 2005
and subsequent fiscal years.
*
*
*
*
*
(d) * * *
(1) * * *
(vii) For fiscal years 2017 and 2018,
the percentage increase in the market
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basket index (as defined in
§ 413.40(a)(3) of this chapter) for
prospective payment hospitals, subject
to the provisions of paragraphs (d)(2)
and (3) of this section, less a multifactor
productivity adjustment (as determined
by CMS) and less 0.75 percentage point.
*
*
*
*
*
(4) * * *
(iii) Exception for decertified EHR
technology. Beginning with the fiscal
year 2019 payment adjustment year, the
Secretary shall exempt an eligible
hospital that is not a qualifying eligible
hospital from the application of the
reduction under paragraph (d)(3) of this
section if the Secretary determines that
compliance with the requirement for
being a meaningful EHR user is not
possible because the certified EHR
technology used by the eligible hospital
has been decertified under ONC’s
Health IT Certification Program. To be
considered for an exception, an eligible
hospital must submit an application, in
the manner specified by CMS,
demonstrating that the certified EHR
technology was decertified during the
12-month period preceding the
applicable EHR reporting period for the
payment adjustment year, or during the
applicable EHR reporting period for the
payment adjustment year, and that the
eligible hospital made a good faith effort
to obtain another certified EHR
technology for that EHR reporting
period. (See § 495.4 of this chapter for
definitions of payment adjustment year,
EHR reporting period, and meaningful
EHR user.) Applications requesting this
exception must be submitted by July 1
of the year before the applicable
payment adjustment year, or a later date
specified by CMS. This exception is
subject to annual renewal, but in no
case may an eligible hospital be granted
an exception under paragraph (d)(4) of
this section for more than 5 years.
*
*
*
*
*
(h) * * *
(4) For discharges on or after October
1, 2004 and before October 1, 2018,
CMS establishes a minimum wage index
for each all-urban State, as defined in
paragraph (h)(5) of this section. This
minimum wage index value is
computed using the following
methodology:
*
*
*
*
*
(vi) For discharges on or after October
1, 2012 and before October 1, 2018, the
minimum wage index value for the State
is the higher of the value determined
under paragraph (h)(4)(iv) of this section
or the value computed using the
following alternative methodology:
*
*
*
*
*
(i) * * *
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(3) * * *
(iii) Any wage index adjustment made
under this paragraph (i) is effective for
a period of 3 fiscal years, except that
hospitals in a qualifying county may
elect to waive the application of the
wage index adjustment. A hospital may
waive the application of the wage index
adjustment by notifying CMS in writing
within 45 days of the date of public
display of the annual notice of proposed
rulemaking for the hospital inpatient
prospective payment system at the
Office of the Federal Register.
*
*
*
*
*
■ 8. Section 412.87 is amended by
revising paragraph (b)(2) to read as
follows:
§ 412.87 Additional payment for new
medical services and technologies: General
provisions.
*
*
*
*
*
(b) * * *
(2) A medical service or technology
may be considered new within 2 or 3
years after the point at which data begin
to become available reflecting the
inpatient hospital code (as defined in
section 1886(d)(5)(K)(iii) of the Social
Security Act) assigned to the new
service or technology (depending on
when a new code is assigned and data
on the new service or technology
become available for DRG recalibration).
After CMS has recalibrated the DRGs,
based on available data, to reflect the
costs of an otherwise new medical
service or technology, the medical
service or technology will no longer be
considered ‘‘new’’ under the criterion of
this section.
*
*
*
*
*
■ 9. Section 412.90 is amended by
revising paragraph (j) to read as follows:
§ 412.90
General rules.
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*
*
*
*
*
(j) Medicare-dependent, small rural
hospitals. For cost reporting periods
beginning on or after April 1, 1990, and
before October 1, 1994, and for
discharges occurring on or after October
1, 1997 and before October 1, 2017,
CMS adjusts the prospective payment
rates for inpatient operating costs
determined under subparts D and E of
this part if a hospital is classified as a
Medicare-dependent, small rural
hospital.
*
*
*
*
*
■ 10. Section 412.92 is amended by
revising paragraph (e)(3) introductory
text to read as follows:
§ 412.92 Special Treatment: Sole
community hospitals.
*
*
*
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*
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(e) * * *
(3) Effective for cost reporting periods
beginning before October 1, 2017, the
intermediary determines a lump sum
adjustment amount not to exceed the
difference between the hospital’s
Medicare inpatient operating costs and
the hospital’s total DRG revenue for
inpatient operating costs based on DRGadjusted prospective payment rates for
inpatient operating costs (including
outlier payments for inpatient operating
costs determined under subpart F of this
part and additional payments made for
inpatient operating costs for hospitals
that serve a disproportionate share of
low-income patients as determined
under § 412.106 and for indirect
medical education costs as determined
under § 412.105). Effective for cost
reporting periods beginning on or after
October 1, 2017, the MAC determines a
lump sum adjustment amount equal to
the difference between the hospital’s
fixed Medicare inpatient operating costs
and the hospital’s total MS–DRG
revenue based on MS–DRG-adjusted
prospective payment rates for inpatient
operating costs (including outlier
payments for inpatient operating costs
determined under subpart F of this part
and additional payments made for
inpatient operating costs for hospitals
that serve a disproportionate share of
low-income patients as determined
under § 412.106 and for indirect
medical education costs as determined
under § 412.105) multiplied by the ratio
of the hospital’s fixed inpatient
operating costs to its total inpatient
operating costs.
*
*
*
*
*
■ 11. Section 412.101 is amended by
revising paragraph (b)(2) introductory
text and adding paragraph (e) to read as
follows:
§ 412.101 Special treatment: Inpatient
hospital payment adjustment for lowvolume hospitals.
*
*
*
*
*
(b) * * *
(2) In order to qualify for this
adjustment, a hospital must meet the
following criteria, subject to the
provisions of paragraph (e) of this
section:
*
*
*
*
*
(e) Special treatment regarding
hospitals operated by the Indian Health
Service (IHS) or a Tribe. For discharges
occurring in FY 2018 and subsequent
fiscal years—
(1) A hospital operated by the IHS or
a Tribe will be considered to meet the
applicable mileage criterion specified
under paragraph (b)(2) of this section if
it is located more than the specified
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38511
number of road miles from the nearest
subsection (d) hospital operated by the
IHS or a Tribe.
(2) A hospital, other than a hospital
operated by the IHS or a Tribe, will be
considered to meet the applicable
mileage criterion specified under
paragraph (b)(2) of this section if it is
located more than the specified number
of road miles from the nearest
subsection (d) hospital other than a
subsection (d) hospital operated by the
IHS or a Tribe.
12. Section 412.106 is amended by
adding paragraph (g)(1)(iii)(C)(4) to read
as follows:
■
§ 412.106 Special treatment: Hospitals that
serve a disproportionate share of lowincome patients.
*
*
*
*
*
(g) * * *
(1) * * *
(iii) * * *
(C) * * *
(4) For fiscal year 2018, CMS will base
its estimates of the amount of hospital
uncompensated care on utilization data
for Medicaid and Medicare SSI patients,
as determined by CMS in accordance
with paragraphs (b)(2)(i) and (b)(4) of
this section, using data on Medicaid
utilization from 2012 and 2013 cost
reports from the most recent HCRIS
database extract and 2012 cost report
data submitted to CMS by IHS or Tribal
hospitals and the most recent available
2 years of data on Medicare SSI
utilization (or, for Puerto Rico hospitals,
a proxy for Medicare SSI utilization
data), and for hospitals other than
Puerto Rico hospitals, IHS or Tribal
hospitals, and all-inclusive rate
providers, data on uncompensated care
costs, defined as charity care costs plus
non-Medicare bad debt costs from 2014
cost reports from the most recent HCRIS
database extract.
*
*
*
*
*
13. Section 412.108 is amended by
revising paragraph (d)(3) introductory
text to read as follows:
■
§ 412.108 Special treatment: Medicaredependent, small rural hospitals.
*
*
*
*
*
(d) * * *
(3) The intermediary determines a
lump sum adjustment amount in
accordance with the methodology set
forth in § 412.92(e)(3).
*
*
*
*
*
14. Section 412.140 is amended by
revising paragraphs (c)(2) and (d)(2) to
read as follows:
■
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§ 412.140 Participation, data submission,
and validation requirements under the
Hospital Inpatient Quality Reporting (IQR)
Program.
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*
*
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(c) * * *
(2) Extraordinary circumstances
exceptions. CMS may grant an
exception with respect to quality data
reporting requirements in the event of
extraordinary circumstances beyond the
control of the hospital. CMS may grant
an exception as follows:
(i) For circumstances not relating to
the reporting of electronic clinical
quality measure data, a hospital
participating in the Hospital IQR
Program that wishes to request an
exception with respect to quality data
reporting requirements must submit its
request to CMS within 90 days of the
date that the extraordinary
circumstances occurred. For
circumstances relating to the reporting
of electronic clinical quality measures, a
hospital participating in the Hospital
IQR Program that wishes to request an
exception must submit its request to
CMS by April 1 following the end of the
reporting calendar year in which the
extraordinary circumstances occurred.
Specific requirements for submission of
a request for an exception are available
on QualityNet.org.
(ii) CMS may grant an exception to
one or more hospitals that have not
requested an exception if: CMS
determines that a systemic problem
with CMS data collection systems
directly affected the ability of the
hospital to submit data; or if CMS
determines that an extraordinary
circumstance has affected an entire
region or locale.
(d) * * *
(2)(i) A hospital meets the chartabstracted validation requirement with
respect to a fiscal year if it achieves a
75-percent score, as determined by
CMS.
(ii) A hospital meets the eCQM
validation requirement with respect to a
fiscal year if it submits at least 75
percent of sampled eCQM measure
medical records in a timely and
complete manner, as determined by
CMS.
*
*
*
*
*
■ 15. Section 412.211 is amended by
revising paragraph (f)(3)(iii) to read as
follows:
§ 412.211 Puerto Rico rates for Federal
fiscal year 2004 and subsequent fiscal
years.
*
*
*
(f) * * *
(3) * * *
VerDate Sep<11>2014
*
*
(iii) Any wage index adjustment made
under this paragraph (f) is effective for
a period of 3 fiscal years, except that
hospitals in a qualifying county may
elect to waive the application of the
wage index adjustment. A hospital may
waive the application of the wage index
adjustment by notifying CMS in writing
within 45 days of the date of public
display of the annual notice of proposed
rulemaking for the hospital inpatient
prospective payment system at the
Office of the FEDERAL REGISTER.
*
*
*
*
*
■ 16. Section 412.230 is amended by
revising paragraphs (a)(3) introductory
text, (a)(3)(i) and (ii), and (d)(3) to read
as follows:
§ 412.230 Criteria for an individual hospital
seeking redesignation to another rural area
or an urban area.
(a) * * *
(3) Special rules for sole community
hospitals and rural referral centers. To
be redesignated under the special rules
in this paragraph, a hospital must be
approved as a sole community hospital
or a rural referral center as of the date
of the MGCRB’s review.
(i) A hospital that is approved as a
rural referral center or a sole community
hospital, or both, does not have to
demonstrate a close proximity to the
area to which it seeks redesignation.
(ii) If a hospital that is approved as a
rural referral center or a sole community
hospital, or both, qualifies for urban
redesignation, it is redesignated to the
urban area that is closest to the hospital
or to the hospital’s geographic home
area. If the hospital is closer to another
rural area than to any urban area, it may
seek redesignation to either the closest
rural area or the closest urban area.
*
*
*
*
*
(d) * * *
(3) Rural referral center exceptions. (i)
If a hospital was ever approved as a
rural referral center, it does not have to
demonstrate that it meets the average
hourly wage criterion set forth in
paragraph (d)(1)(iii) of this section.
(ii) If a hospital was ever approved as
a rural referral center, it is required to
meet only the criterion that applies to
rural hospitals under paragraph
(d)(1)(iv) of this section, regardless of its
actual location in an urban or rural area.
*
*
*
*
*
■ 17. Section 412.273 is amended by
revising paragraphs (c)(1)(ii) and (c)(2)
to read as follows:
§ 412.273 Withdrawing an application,
terminating an approved 3-year
reclassification, or cancelling a previous
withdrawal or termination.
*
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*
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(c) * * *
(1) * * *
(ii) After the MGCRB issues a
decision, provided that the request for
withdrawal is received by the MCGRB
within 45 days of the date that CMS’
annual notice of proposed rulemaking is
issued in the Federal Register
concerning changes to the inpatient
hospital prospective payment system
and proposed payment rates for the
fiscal year for which the application has
been filed.
(2) A request for termination must be
received by the MGCRB within 45 days
of the date that CMS’ annual notice of
proposed rulemaking is issued in the
Federal Register concerning changes to
the inpatient hospital prospective
payment system and proposed payment
rates for the fiscal year for which the
termination is to apply.
*
*
*
*
*
■ 18. Section 412.500 is amended by
adding paragraphs (a)(7) and (8) to read
as follows:
§ 412.500
Basis and scope of subpart.
(a) * * *
(7) Section 411 of Public Law 114–10
which revises the annual update to the
LTCH PPS standard Federal payment
rate in FY 2018.
(8) Public Law 114–255 which at—
(i) Section 15004 amended the
moratorium on increasing beds in
existing LTCHs and LTCH satellite
facilities and amended high cost outlier
payment requirements;
(ii) Section 15006 amended moratoria
on certain payment policies;
(iii) Section 15007 amended the
average length of stay requirements;
(iv) Section 15009 temporally
excepted certain spinal cord specialty
hospitals from the site neutral payment
rate; and
(v) Section 15010 temporally excepted
certain wound care discharges from
certain LTCHs from the site neutral
payment rate.
*
*
*
*
*
■ 19. Section 412.522 is amended by
adding paragraphs (b)(3) and (4) to read
as follows:
§ 412.522 Application of site neutral
payment rate.
*
*
*
*
*
(b) * * *
(3) Temporary exception for certain
severe wound discharges.—(i)
Definitions. For purposes of this
paragraph (b)(3) the following
definitions are applicable:
Severe wound means a wound which
is a stage 3 wound, stage 4 wound,
unstageable wound, non-healing
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surgical wound, fistula, as identified by
the applicable code on the claim from
the long-term care hospital.
Wound means an injury, usually
involving division of tissue or rupture of
the integument or mucous membrane
with exposure to the external
environment.
(ii) Discharges for severe wounds. A
discharge that occurs in a cost reporting
period beginning during fiscal year 2018
for a patient who was treated for a
severe wound that meets all of the
following criteria is excluded from the
site neutral payment rate specified
under this section:
(A) The severe wound meets the
definition specified in paragraph
(b)(3)(i) of this section.
(B) The discharge is from a long-term
care hospital that is described in
§ 412.23(e)(2)(i) and meets the criteria of
§ 412.22(f); and
(C) The discharge is classified under
MS–LTC–DRG 539, 540, 602, or 603.
(4) Temporary exception for certain
spinal cord specialty hospitals. For
discharges in cost reporting periods
beginning in fiscal years 2018 and 2019,
the site neutral payment rate specified
under this section does not apply if
such discharge is from a long-term care
hospital that meets each of the following
requirements:
(i) The hospital was a not-for-profit
long-term care hospital on June 1, 2014,
as determined by cost report data;
(ii) Of the discharges in calendar year
2013 from the long-term care hospital
for which payment was made under
subpart O, at least 50 percent were
classified under MS–LTC–DRGs 28, 29,
52, 57, 551, 573, and 963; and
(iii) The long-term care hospital
discharged inpatients (including both
individuals entitled to, or enrolled for,
benefits under Medicare Part A and
individuals not so entitled or enrolled)
during fiscal year 2014 who had been
admitted from at least 20 of the 50
States determined by the States of
residency of such inpatients.
*
*
*
*
*
■ 20. Section 412.523 is amended by—
■ a. Adding paragraph (c)(3)(xiv);
■ b. Revising paragraph (d)(1); and
■ c. Adding paragraph (d)(5).
The additions and revision read as
follows:
§ 412.523 Methodology for calculating the
Federal prospective payment rates.
*
*
*
*
*
(c) * * *
(3) * * *
(xiv) For long-term care hospital
prospective payment system fiscal year
beginning October 1, 2017, and ending
September 30, 2018. The LTCH PPS
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standard Federal payment rate for the
long-term care hospital prospective
payment system beginning October 1,
2017, and ending September 30, 2018, is
the standard Federal payment rate for
the previous long-term care hospital
prospective payment system fiscal year
updated by 1.0 percent and further
adjusted, as appropriate, as described in
paragraph (d) of this section.
*
*
*
*
*
(d) * * *
(1) Outlier payments. CMS adjusts the
LTCH PPS standard Federal payment
rate by a reduction factor of 8 percent,
the estimated proportion of outlier
payments under § 412.525(a) payable for
discharges described in § 412.522(a)(2)
(notwithstanding the provisions of
§ 412.525(a)(2)(ii) for FY 2018 and
subsequent years.
*
*
*
*
*
(5) Adjustment for changes to the
short-stay outlier policy. The standard
Federal rate determined under
paragraph (c)(3) of this section is
permanently adjusted by a one-time
factor so that estimated aggregate
payments to LTCH PPS standard
Federal rate cases in FY 2018 are
projected to equal estimated aggregate
payments that would have been paid for
such cases without regard to the change
in the short-stay outlier policy for FY
2018 under § 412.529(c)(4).
*
*
*
*
*
■ 21. Section 412.525 is amended by
revising paragraph (a)(2) to read as
follows:
§ 412.525 Adjustments to the Federal
prospective payment.
(a) * * *
(2)(i) The fixed loss-amount for
discharges from a long-term care
hospital described under § 412.522(a)(2)
is determined for the long-term care
hospital prospective payment system
payment year, using the LTC–DRG
relative weights that are in effect at the
start of the applicable long-term care
hospital prospective payment system
payment year.
(ii) For FY 2018 and subsequent years,
the fixed-loss amount for long-term care
hospital discharges described under
§ 412.522(a)(2) is determined such that
the estimated proportion of outlier
payments under paragraph (a) of this
section payable for such discharges is
projected to be equal to 99.6875 of 8
percent.
*
*
*
*
*
■ 22. Section 412.529 is amended by—
■ a. Revising paragraph (c)(3)
introductory text;
■ b. Adding paragraph (c)(4); and
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38513
c. Revising paragraph (f) introductory
text.
The revisions and addition read as
follows:
■
§ 412.529 Special payment provision for
short-stay outliers.
*
*
*
*
*
(c) * * *
(3) Discharges occurring on or after
July 1, 2007 and before December 29,
2007 and discharges occurring on or
after December 29, 2012 and on or
before September 30, 2017. For
discharges from long-term care hospitals
described under § 412.23(e)(2)(i)
occurring on or after July 1, 2007, and
on or before December 29, 2007 and
discharges occurring on or after
December 29, 2012, and on or before
September 30, 2017, the LTCH
prospective payment system adjusted
payment amount for a short-stay outlier
case is adjusted by either of the
following:
*
*
*
*
*
(4) Discharges occurring on or after
October 1, 2017. For discharges
occurring on or after October 1, 2017,
short-stay outlier payments are
determined according to paragraph
(c)(2)(iv) of this section.
*
*
*
*
*
(f) Reconciliation of short-stay
payments. Payments for discharges
occurring before October 1, 2017 are
reconciled in accordance with one of
the following:
*
*
*
*
*
■ 23. Section 412.538 is amended by
revising paragraph (a)(1) to read as
follows:
§ 412.538 Limitation on long-term care
hospital admissions from referring
hospitals.
(a) * * *
(1) The provisions of this section
apply to all long-term care hospitals
excluded from the hospital inpatient
prospective payment system under
§ 412.23(e), except as specified in
paragraph (a)(2) of this section, effective
for discharges occurring on or after
October 1, 2018.
*
*
*
*
*
■ 24. Section 412.560 is amended by
revising the section heading, paragraph
(a), the paragraph (b) heading,
paragraphs (b)(1), (c) introductory text,
(c)(1), (c)(3)(vii), (c)(4)(ii), (d)(1), and
(d)(2)(vii), and adding paragraph (f) to
read as follows:
§ 412.560 Requirements under the LongTerm Care Hospital Quality Reporting
Program (LTCH QRP).
(a) Participation in the LTCH QRP. A
long-term-care hospital must begin
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submitting data on measures specified
under sections 1886(m)(5)(D),
1899B(c)(1), and 1899B(d)(1) of the Act,
and standardized patient assessment
data required under section 1899B(b)(1)
of the Act, under the LTCH QRP by no
later than the first day of the calendar
quarter subsequent to 30 days after the
date on its CMS Certification Number
(CCN) notification letter.
(b) Data submission requirements and
payment impact. (1) Except as provided
in paragraph (c) of this section, a longterm care hospital must submit to CMS
data on measures specified under
sections 1886(m)(5)(D), 1899B(c)(1) and
1899B(d)(1) of the Act, and standardized
patient assessment data required under
section 1899B(b)(1) of the Act. Such
data must be submitted in a form and
manner, and at a time, specified by
CMS.
*
*
*
*
*
(c) Exception and extension request
requirements. Upon request by a longterm care hospital, CMS may grant an
exception or extension with respect to
the measures data and standardized
patient assessment data reporting
requirements, for one or more quarters,
in the event of certain extraordinary
circumstances beyond the control of the
long-term care hospital, subject to the
following:
(1) A long-term care hospital that
wishes to request an exception or
extension with respect to measures data
and standardized patient assessment
data reporting requirements must
submit its request to CMS within 90
days of the date that the extraordinary
circumstances occurred.
*
*
*
*
*
(3) * * *
(vii) The date on which the long-term
care hospital will be able to again
submit measures data and standardized
patient assessment data under the LTCH
QRP and a justification for the proposed
date.
(4) * * *
(ii) A systemic problem with one of
CMS’ data collection systems directly
affected the ability of the long-term care
hospital to submit measures data and
standardized patient assessment data.
*
*
*
*
*
(d) * * *
(1) Written notification of
noncompliance decision. CMS will send
a long-term care hospital written
notification of a decision of
noncompliance with the measures data
and standardized patient assessment
data reporting requirements for a
particular fiscal year. CMS also will use
the Quality Improvement and
Evaluation system (QIES) Assessment
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Submission and Processing (ASAP)
System to provide notification of
noncompliance to the long-term care
hospital.
(2) * * *
(vii) Accompanying documentation
that demonstrates compliance of the
long-term care hospital with the LTCH
QRP requirements. This documentation
must be submitted electronically at the
same time as the reconsideration request
as an attachment to the email.
*
*
*
*
*
(f) Data completion thresholds. (1)
Long-term care hospitals must meet or
exceed two separate data completeness
thresholds: One threshold set at 80
percent for completion of measures data
and standardized patient assessment
data collected using the LTCH CARE
Data Set submitted through the QIES
ASAP System; and a second threshold
set at 100 percent for measures data
collected and submitted using the CDC
NHSN.
(2) The thresholds in paragraph (f)(1)
of this section apply to all data that
must be submitted under paragraph (b)
of this section.
(3) A long-term care hospital must
meet or exceed both thresholds in
paragraph (f)(1) of this section to avoid
receiving a 2 percentage point reduction
to its annual payment update for a given
fiscal year, beginning with the FY 2019
LTCH QRP.
PART 413—PRINCIPLES OF
REASONABLE COST
REIMBURSEMENT; PAYMENT FOR
END-STAGE RENAL DISEASE
SERVICES; OPTIONAL
PROSPECTIVELY DETERMINED
PAYMENT RATES FOR SKILLED
NURSING FACILITIES
25. The authority for part 413 is
revised to read as follows:
■
Authority: Secs. 1102, 1812(d), 1814(b),
1815, 1833(a), (i), and (n), 1861(v), 1871,
1881, 1883 and 1886 of the Social Security
Act (42 U.S.C. 1302, 1395d(d), 1395f(b),
1395g, 1395l(a), (i), and (n), 1395x(v),
1395hh, 1395rr, 1395tt, and 1395ww); and
sec. 124 of Public Law 106–113, 113 Stat.
1501A–332; sec. 3201 of Public Law 112–96,
126 Stat. 156; sec. 632 of Public Law 112–
240, 126 Stat. 2354; sec. 217 of Public Law
113–93, 129 Stat. 1040; and sec. 204 of Public
Law 113–295, 128 Stat. 4010; and sec. 808 of
Public Law 114–27, 129 Stat. 362.
26. Section 413.24 is amended by
revising paragraph (f)(4)(iv) to read as
follows:
■
§ 413.24
finding.
*
Adequate cost data and cost
*
*
(f) * * *
(4) * * *
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(iv)(A) Effective as specified in
paragraphs (f)(4)(iv)(A)(1) through (4)
and except as provided in paragraph
(f)(4)(iv)(C) of this section, a provider
must submit a hard copy of a settlement
summary, if applicable, which is a
statement of certain worksheet totals
found within the electronic file, and the
certification statement described in
paragraph (f)(4)(iv)(B) of this section
signed by its administrator or chief
financial officer certifying the accuracy
of the electronic file or the manually
prepared cost report.
(1) For hospitals, effective for cost
reporting periods ending on or after
September 30, 1994;
(2) For skilled nursing facilities and
home health agencies, effective for cost
reporting periods ending on or after
February 1, 1997;
(3) For hospices and end-stage renal
disease facilities, effective for cost
reporting periods ending on or after
December 31, 2004; and
(4) For organ procurement
organizations, histocompatibility
laboratories, rural health clinics,
Federally qualified health centers, and
community mental health centers,
effective for cost reporting periods
ending on or after March 31, 2005.
(B) The following certification
statement must immediately precede the
dated original signature, or electronic
signature as set forth in paragraph
(f)(4)(iv)(C)(1) of this section, of the
provider’s administrator or chief
financial officer:
MISREPRESENTATION OR
FALSIFICATION OF ANY
INFORMATION CONTAINED IN THIS
COST REPORT MAY BE PUNISHABLE
BY CRIMINAL, CIVIL AND
ADMINISTRATIVE ACTION, FINE
AND/OR IMPRISONMENT UNDER
FEDERAL LAW. FURTHERMORE, IF
SERVICES IDENTIFIED IN THIS
REPORT WERE PROVIDED OR
PROCURED THROUGH THE PAYMENT
DIRECTLY OR INDIRECTLY OF A
KICKBACK OR WERE OTHERWISE
ILLEGAL, CRIMINAL, CIVIL AND
ADMINISTRATIVE ACTION, FINES
AND/OR IMPRISONMENT MAY
RESULT.
I hereby certify that I have read the
above certification statement and that I
have examined the accompanying
electronically filed or manually
submitted cost report and the Balance
Sheet and Statement of Revenue and
Expenses prepared by llll
(Provider Name(s) and Number(s)) for
the cost reporting period beginning ll
la and ending llla and that to the
best of my knowledge and belief, this
report and statement are true, correct,
complete and prepared from the books
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and records of the provider in
accordance with applicable instructions,
except as noted. I further certify that I
am familiar with the laws and
regulations regarding the provision of
health care services, and that the
services identified in this cost report
were provided in compliance with such
laws and regulations.
(C) Effective for cost reporting periods
ending on or after December 31, 2017—
(1) A provider that is required to file an
electronic cost report may elect to
electronically submit the settlement
summary, if applicable, and the
certification statement with an
electronic signature of the provider’s
administrator or chief financial officer.
The following checkbox for electronic
signature and submission will
immediately follow the certification
statement as set forth in paragraph
(f)(4)(iv)(B) of this section and must be
checked if electronic signature and
submission is elected.
b I have read and agree with the
above certification statement. I certify
that I intend my electronic signature on
this certification statement to be the
legally binding equivalent of my
original signature.
(2) A provider that is required to file
an electronic cost report but does not
elect to electronically submit the
certification statement with an
electronic signature, must submit a hard
copy of the settlement summary, if
applicable, and a certification statement
with an original signature of the
provider’s administrator or chief
financial officer as set forth in
paragraphs (f)(4)(iv)(A) and (B) of this
section.
*
*
*
*
*
■ 27. Section 413.65 is amended by
revising paragraph (m) introductory text
to read as follows:
§ 413.65 Requirements for a determination
that a facility or an organization has
provider-based status.
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*
*
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(m) Status of Indian Health Service
and Tribal facilities and organizations.
Facilities and organizations operated by
the Indian Health Services and Tribes
will be considered to be departments of
hospitals operated by the Indian Health
Service or Tribes if they furnish only
services that are billed, using the CCN
of the main provider and with the
consent of the main provider, as if they
had been furnished by a department of
a hospital operated by the Indian Health
Service or a Tribe and they are:
*
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*
*
*
■ 28. Section 413.70 is amended by—
■ a. Redesignating paragraph (a)(6)(iii)
as paragraph (a)(6)(iv);
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b. Adding a new paragraph (a)(6)(iii)
; and
■ c. Revising newly redesignated
paragraph (a)(6)(iv).
The addition and revisionto read as
follows:
■
§ 413.70
Payment for services of a CAH.
(a) * * *
(6) * * *
(iii) Exception for decertified EHR
technology. Beginning with the fiscal
year 2018 payment adjustment year, the
Secretary shall exempt a CAH that is not
a qualifying CAH from the application
of the payment adjustment under
paragraph (a)(6)(i) of this section if the
Secretary determines that compliance
with the requirement for being a
meaningful EHR user is not possible
because the certified EHR technology
used by the CAH has been decertified
under ONC’s Health IT Certification
Program. In order to be considered for
an exception, a CAH must submit an
application, in the manner specified by
CMS, demonstrating that the certified
EHR technology was decertified during
the 12-month period preceding the
applicable EHR reporting period for the
payment adjustment year, or during the
applicable EHR reporting period for the
payment adjustment year, and that the
CAH made a good faith effort to obtain
another certified EHR technology for
that EHR reporting period. Applications
requesting this exception must be
submitted by November 30 after the end
of the applicable payment adjustment
year, or a later date specified by CMS.
(iv) Exceptions granted under
paragraphs (a)(6)(ii) and (iii) of this
section are subject to annual renewal,
but in no case may a CAH be granted
such an exception for more than 5 years.
*
*
*
*
*
■ 29. Section 413.134 is amended by
revising paragraph (f)(1) to read as
follows:
§ 413.134 Depreciation: Allowance for
deprecation based on asset costs.
*
*
*
*
*
(f) * * *
(1) General. Depreciable assets may be
disposed of through sale, scrapping,
trade-in, exchange, demolition,
abandonment, condemnation, fire, theft,
or other casualty.
(i) Disposal of an asset before
December 1, 1997. If disposal of a
depreciable asset, including the sale or
scrapping of an asset before December 1,
1997, results in a gain or loss, an
adjustment is necessary in the
provider’s allowable cost.
(A) The amount of a gain included in
the determination of allowable cost is
limited to the amount of depreciation
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38515
previously included in Medicare
allowable costs.
(B) The amount of a loss to be
included is limited to the undepreciated
basis of the asset permitted under the
program.
(C) The treatment of the gain or loss
depends upon the manner of disposition
of the asset, as specified in paragraphs
(f)(2) through (6) of this section.
(D) The gain or loss on the disposition
of depreciable assets has no retroactive
effect on a proprietary provider’s equity
capital for years prior to the year of
disposition.
(ii) Disposal of an asset on or after
December 1, 1997. No gain or loss is
recognized on either the sale or
scrapping of an asset that occurs on or
after December 1, 1997, regardless of
whether the asset is sold incident to a
provider’s change of ownership, or
otherwise sold or scrapped as an asset
of a Medicare participating provider.
Gains or losses on dispositions other
than sales or scrapping are recognized to
the same extent as prior to December 1,
1997.
*
*
*
*
*
PART 416—AMBULATORY SURGICAL
SERVICES
30. The authority citation for part 416
is revised to read as follows:
■
Authority: Secs. 1102, 1138, and 1871 of
the Social Security Act (42 U.S.C. 1302,
1320b–8, and 1395hh) and section 371 of the
Public Health Service Act (42 U.S.C. 273).
31. Section 416.35 is amended by
revising paragraph (d) introductory text
to read as follows:
■
§ 416.35
Termination of agreement.
*
*
*
*
*
(d) Notice to the public. Prompt notice
of the date and effect of termination is
given to the public by—
*
*
*
*
*
PART 486—CONDITIONS FOR
COVERAGE OF SPECIALIZED
SERVICES FURNISHED BY
SUPPLIERS
32. The authority citation for part 486
continues to read as follows:
■
Authority: Secs. 1102, 1138, and 1871 of
the Social Security Act (42 U.S.C. 1302,
1320b–8, and 1395hh) and section 371 of the
Public Health Service Act (42 U.S.C. 273).
33. Section 486.312 is amended by
revising paragraph (e) to read as follows:
■
§ 486.312
De-certification.
*
*
*
*
*
(e) Public notice. Once CMS approves
the date for a voluntary termination, the
OPO must provide prompt public notice
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in the service area of the date of decertification and such other information
as CMS may require. In the case of
involuntary termination or nonrenewal
of an agreement, CMS also provides
notice to the public in the service area
of the date of de-certification. No
payment under titles XVIII or XIX of the
Act will be made with respect to organ
procurement costs attributable to the
OPO on or after the effective date of decertification.
PART 488—SURVEY, CERTIFICATION,
AND ENFORCEMENT PROCEDURES
34. The authority citation for part 488
is revised to read as follows:
■
Authority: Secs. 1102, 1128l, 1864, 1865,
1871, and 1875 of the Social Security Act,
unless otherwise noted (42 U.S.C. 1302,
1320a–7, 1395aa, 1395bb, 1395hh, and
1395ll).
35. Section 488.5 is amended by
adding paragraph (a)(21) to read as
follows:
■
§ 488.5 Application and re-application
procedures for national accrediting
organizations.
(a) * * *
(21) A statement acknowledging that
the organization agrees to make all
Medicare cited deficiencies, both
standard and condition level, immediate
jeopardy situations, and dates of
correction, for final accreditation survey
reports publicly available on the
organization’s Web site within 90 days
after the survey report is made available
to those facilities for the most recent 3
years, on an ongoing basis in a manner
specified by CMS. This
acknowledgement includes all initial,
triennial, full, follow-up, focused, and
complaint surveys.
*
*
*
*
*
PART 489—PROVIDER AGREEMENTS
AND SUPPLIER APPROVAL
36. The authority citation for part 489
continues to read as follows:
■
Authority: Secs. 1102 1819, 1820(E), 1861,
1864(M), 1866, 1869, and 1871 of the Social
Security Act (42 U.S.C. 1302, 1395i–3, 1395x,
1395aa(m), 1395cc, 1395ff, and 1395(hh)).
37. Section 489.52 is amended by
revising paragraph (c)(2) introductory
text to read as follows:
sradovich on DSK3GMQ082PROD with RULES2
■
§ 489.52
Termination by the provider.
*
*
*
*
*
(c) * * *
(2) The notice must—
*
*
*
*
*
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PART 495—STANDARDS FOR THE
ELECTRONIC HEALTH RECORD
TECHNOLOGY INCENTIVE PROGRAM
38. The authority citation for part 495
continues to read as follows:
■
Authority: Secs. 1102 and 1871 of the
Social Security Act (42 U.S.C. 1302 and
1395hh).
39. Section 495.4 is amended by—
a. Adding in alphabetical order a
definition of ‘‘Ambulatory surgical
center-based EP’’;
■ b. In the definition of ‘‘EHR reporting
period,’’ revising paragraph (1)(ii)
introductory text, adding paragraph
(1)(ii)(D), revising paragraph (1)(iii)
introductory text, revising paragraph
(2)(ii) introductory text, adding
paragraph (2)(ii)(D) and revising
paragraph (2)(iii) introductory text; and
■ c. In the definition of ‘‘EHR reporting
period for a payment adjustment year’’,
revising paragraph (2)(ii) introductory
text, adding paragraph (2)(ii)(D),
revising paragraph (2)(iii) introductory
text, revising paragraph (3)(ii)
introductory text, adding paragraph
(3)(ii)(D), and revising paragraph (3)(iii)
introductory text.
The additions and revisions read as
follows:
■
■
§ 495.4
Definitions.
*
*
*
*
*
Ambulatory surgical center-based EP
means an EP who furnishes 75 percent
or more of his or her covered
professional services in sites of service
identified by the codes used in the
HIPAA standard transaction as an ASC
setting in the calendar year that is 2
years before the payment adjustment
year.
*
*
*
*
*
EHR reporting period. * * *
(1) * * *
(ii) The following are applicable for
2015, 2016, 2017, and 2018:
*
*
*
*
*
(D) For the CY 2018 payment year
under the Medicaid EHR Incentive
Program:
(1) For the EP first demonstrating he
or she is a meaningful EHR user, any
continuous 90-day period within CY
2018.
(2) For the EP who has successfully
demonstrated he or she is a meaningful
EHR user in any prior year, any
continuous 90-day period within CY
2018.
(iii) The following are applicable
beginning with the CY 2019 payment
year under the Medicaid EHR Incentive
Program:
*
*
*
*
*
(2) * * *
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(ii) The following are applicable for
2015, 2016, 2017, and 2018:
*
*
*
*
*
(D) For the FY 2018 payment year
under the Medicaid EHR Incentive
Program:
(1) For the eligible hospital or CAH
first demonstrating it is a meaningful
EHR user, any continuous 90-day period
within CY 2018.
(2) For the eligible hospital or CAH
that has successfully demonstrated it is
a meaningful EHR user in any prior
year, any continuous 90-day period
within CY 2018.
(iii) The following are applicable
beginning with the FY 2019 payment
year under the Medicaid EHR Incentive
Program:
*
*
*
*
*
EHR reporting period for a payment
adjustment year. * * *
(2) * * *
(ii) The following are applicable for
2015, 2016, 2017, and 2018:
*
*
*
*
*
(D) In 2018 as follows:
(1) If an eligible hospital has not
successfully demonstrated it is a
meaningful EHR user in a prior year, the
EHR reporting period is any continuous
90-day period within CY 2018 and
applies for the FY 2019 and 2020
payment adjustment years. For the FY
2019 payment adjustment year, the EHR
reporting period must end before and
the eligible hospital must successfully
register for and attest to meaningful use
no later than October 1, 2018.
(2) If in a prior year an eligible
hospital has successfully demonstrated
it is a meaningful EHR user, the EHR
reporting period is any continuous 90day period within CY 2018 and applies
for the FY 2020 payment adjustment
year.
(iii) The following are applicable
beginning in 2019:
*
*
*
*
*
(3) * * *
(ii) The following are applicable for
2015, 2016, 2017, and 2018:
*
*
*
*
*
(D) In 2018 as follows:
(1) If a CAH has not successfully
demonstrated it is a meaningful EHR
user in a prior year, the EHR reporting
period is any continuous 90-day period
within CY 2018 and applies for the FY
2018 payment adjustment year.
(2) If in a prior year a CAH has
successfully demonstrated it is a
meaningful EHR user, the EHR reporting
period is any continuous 90-day period
within CY 2018 and applies for the FY
2018 payment adjustment year.
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(iii) The following are applicable
beginning in 2019:
*
*
*
*
*
■ 40. Section 495.22 is amended by—
■ a. Revising the section heading;
■ b. Revising paragraph (a);
■ c. Revising the paragraph (b) heading
and the paragraph (b)(1) heading;
■ d. Revising the paragraph (c) heading
and paragraph (c)(1);
■ e. Revising the paragraph (e) heading
and paragraphs (e)(8)(i)(A)(2)(ii),
(e)(8)(ii)(A)(2)(ii), and (e)(9)(ii)(A)(3);
and
■ f. Revising the paragraph (f) heading.
The revisions read as follows:
sradovich on DSK3GMQ082PROD with RULES2
§ 495.22 Meaningful use objectives and
measures for EPs, eligible hospitals, and
CAHs for 2015 through 2018.
(a) General rules. (1) Subject to the
provisions of paragraph (a)(2) of this
section, the criteria specified in this
section are applicable for EPs, eligible
hospitals, and CAHs for 2015 through
2018.
(2) For 2017 and 2018, EPs, eligible
hospitals, and CAHs that have
successfully demonstrated meaningful
use in a prior year have the option to
use the criteria specified for 2019 in
§ 495.24 instead of the criteria specified
for 2017 and 2018 under paragraphs (e)
and (f) of this section.
(b) Criteria for EPs for 2015 through
2018—(1) General rule regarding criteria
for meaningful use for 2015 through
2018 for EPs. * * *
(c) Criteria for eligible hospitals and
CAHs for 2015 through 2018.—(1)
General rule regarding criteria for
meaningful use for 2015 through 2018
for eligible hospitals and CAHs. Except
as specified in paragraph (c)(2) of this
section, eligible hospitals and CAHs
attesting to CMS must meet all
objectives and associated measures of
the meaningful use criteria specified
under paragraph (e) of this section to
meet the definition of a meaningful EHR
user in 2015 and 2016 and must meet
all objectives and associated measures
of the meaningful use criteria specified
under paragraph (f) of this section to
meet the definition of a meaningful EHR
user in 2017 and 2018. Except as
specified in paragraph (c)(2) of this
section, eligible hospitals and CAHs
attesting to a State for the Medicaid EHR
Incentive Program must meet all
objectives and associated measures of
the meaningful use criteria specified
under paragraph (e) of this section to
meet the definition of a meaningful EHR
user in 2015 through 2018.
*
*
*
*
*
(e) Meaningful use objectives and
measures for EPs for 2015 through 2018,
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for eligible hospitals and CAHs attesting
to CMS for 2015 and 2016, and for
eligible hospitals and CAHs attesting to
a State for the Medicaid EHR Incentive
Program for 2015 through 2018. * * *
(8) * * *
(i) * * *
(A) * * *
(2) * * *
(ii) In 2017 and 2018, more than 5
percent of unique patients seen by the
EP during the EHR reporting period (or
their authorized representatives) views,
downloads or transmits their health
information to a third party during the
EHR reporting period.
*
*
*
*
*
(ii) * * *
(A) * * *
(2) * * *
(ii) In 2017 and 2018, more than 5
percent of unique patients (or patientauthorized representatives) discharged
from the inpatient or emergency
department (POS 21 or POS 23) of an
eligible hospital or CAH during the EHR
reporting period view, download or
transmit to a third party their health
information during the EHR reporting
period.
*
*
*
*
*
(9) * * *
(ii) * * *
(A) * * *
(3) In 2017 and 2018, for more than
5 percent of unique patients seen by the
EP during the EHR reporting period, a
secure message was sent using the
electronic messaging function of CEHRT
to the patient (or the patient-authorized
representative), or in response to a
secure message sent by the patient (or
the patient-authorized representative)
during the EHR reporting period.
*
*
*
*
*
(f) Meaningful use objectives and
measures for eligible hospitals and
CAHs attesting to CMS for 2017 and
2018—* * *
*
*
*
*
*
■ 41. Section 495.24 is amended by—
■ a. Revising the section heading;
■ b. Revising the introductory text;
■ c. Revising the paragraph (c) heading
and
■ d. Revising the paragraph (d) heading
and paragraphs (d)(6)(i)(B)(2)(i) and (ii),
(d)(6)(ii)(B)(1)(iv), and (d)(6)(ii)(B)(2)(i)
and (ii).
The revisions read as follows:
§ 495.24 Stage 3 meaningful use
objectives and measures for EPs, eligible
hospitals and CAHs for 2019 and
subsequent years.
The criteria specified in paragraphs
(c) and (d) of this section are optional
for 2017 and 2018 for EPs, eligible
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38517
hospitals, and CAHs that have
successfully demonstrated meaningful
use in a prior year. The criteria specified
in paragraph (c) of this section are
applicable for eligible hospitals and
CAHs attesting to CMS for 2019. The
criteria specified in paragraph (d) of this
section are applicable for all EPs for
2019 and subsequent years, and for
eligible hospitals and CAHs attesting to
a State for the Medicaid EHR Incentive
Program for 2019.
*
*
*
*
*
(c) Stage 3 objectives and measures
for eligible hospitals and CAHs attesting
to CMS for 2019—* * *
(d) Stage 3 objectives and measures
for all EPs for 2019 and subsequent
years, and for eligible hospitals and
CAHs attesting to a State for the
Medicaid EHR Incentive Program for
2019—* * *
(6) * * *
(i) * * *
(B) * * *
(2) * * *
(i) For an EHR reporting period in
2017 and 2018, for more than 5 percent
of all unique patients seen by the EP
during the EHR reporting period, a
secure message was sent using the
electronic messaging function of CEHRT
to the patient (or their authorized
representatives), or in response to a
secure message sent by the patient; or
(ii) For an EHR reporting period other
than 2017 and 2018, for more than 25
percent of all unique patients seen by
the EP during the EHR reporting period,
a secure message was sent using the
electronic messaging function of CEHRT
to the patient (or their authorized
representatives), or in response to a
secure message sent by the patient.
*
*
*
*
*
(ii) * * *
(B) * * *
(1) * * *
(iv) For an EHR reporting period in
2017 and 2018, an eligible hospital or
CAH may meet a threshold of 5 percent
instead of 10 percent for the measure at
paragraph (d)(6)(ii)(B)(1) of this section.
(2) * * *
(i) For an EHR reporting period in
2017 and 2018, for more than 5 percent
of all unique patients discharged from
the eligible hospital or CAH inpatient or
emergency department (POS 21 or 23)
during the EHR reporting period, a
secure message was sent using the
electronic messaging function of CEHRT
to the patient (or their authorized
representatives), or in response to a
secure message sent by the patient (or
their authorized representatives).
(ii) For an EHR reporting period other
than 2017 and 2018, for more than 25
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percent of all unique patients
discharged from the eligible hospital or
CAH inpatient or emergency department
(POS 21 or 23) during the EHR reporting
period, a secure message was sent using
the electronic messaging function of
CEHRT to the patient (or their
authorized representatives), or in
response to a secure message sent by the
patient (or their authorized
representatives).
*
*
*
*
*
■ 42. Section 495.40 is amended by—
■ a. Amending paragraph (a)(2)(i)(F) by
adding ‘‘and CY 2018’’ after ‘‘For CY
2017’’;
■ b. Revising paragraph (a)(2)(i)(G); and
■ c. Revising paragraphs (b)(2)(i)(F)
introductory text and (b)(2)(i)(G)
introductory text.
The revisions read as follows:
§ 495.40
criteria.
Demonstration of meaningful use
(a) * * *
(2) * * *
(i) * * *
(G) For CY 2019 and subsequent
years, satisfied the required objectives
and associated measures under
§ 495.24(d) for meaningful use.
*
*
*
*
*
(b) * * *
(2) * * *
(i) * * *
(F) For CY 2017 and CY 2018:
*
*
*
*
*
(G) For CY 2019:
*
*
*
*
*
■ 43. Section 495.102 is amended by
redesignating paragraph (d)(5) as
paragraph (d)(6) and adding new
paragraphs (d)(5) and (7) to read as
follows:
§ 495.102
sradovich on DSK3GMQ082PROD with RULES2
Addendum—Schedule of Standardized
Amounts, Update Factors, Rate-ofIncrease Percentages Effective with Cost
Reporting Periods Beginning on or after
October 1, 2017, and Payment Rates for
LTCHs Effective for Discharges
Occurring on or after October 1, 2017
*
*
*
*
(d) * * *
(5) Exception for decertified EHR
technology. The Secretary shall exempt
an EP from the application of the
payment adjustment for CY 2018 under
paragraph (d)(1) of this section if the
Secretary determines that compliance
with the requirement for being a
meaningful EHR user is not possible
because the certified EHR technology
used by the EP has been decertified
under ONC’s Health IT Certification
Program. To be considered for an
exception, an EP must submit, in the
manner specified by CMS, an
application demonstrating that the
certified EHR technology was
decertified during the 12-month period
preceding the applicable EHR reporting
period for the CY 2018 payment
adjustment year, or during the
VerDate Sep<11>2014
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Jkt 241001
Dated: July 26, 2017.
Seema Verma,
Administrator, Centers for Medicare &
Medicaid Services.
Dated: July 27, 2017.
Thomas E. Price,
Secretary, Department of Health and Human
Services.
Note: The following Addendum and
Appendixes will not appear in the Code of
Federal Regulations.
Incentive payments to EPs.
*
applicable EHR reporting period for the
CY 2018 payment adjustment year, and
that the EP made a good faith effort to
obtain another certified EHR technology
for that EHR reporting period.
Applications requesting this exception
must be submitted no later than October
1, 2017, or a later date specified by
CMS.
*
*
*
*
*
(7) Payment adjustments not
applicable to ambulatory surgical
center-based EPs. For the CY 2017 and
CY 2018 payment adjustment years, no
payment adjustment under paragraphs
(d)(1) through (3) of this section may be
made in the case of an ambulatory
surgical center-based eligible
professional, as defined in § 495.4.
I. Summary and Background
In this Addendum, we are setting forth a
description of the methods and data we used
to determine the prospective payment rates
for Medicare hospital inpatient operating
costs and Medicare hospital inpatient capitalrelated costs for FY 2018 for acute care
hospitals. We also are setting forth the rateof-increase percentage for updating the target
amounts for certain hospitals excluded from
the IPPS for FY 2018. We note that, because
certain hospitals excluded from the IPPS are
paid on a reasonable cost basis subject to a
rate-of-increase ceiling (and not by the IPPS),
these hospitals are not affected by the figures
for the standardized amounts, offsets, and
budget neutrality factors. Therefore, in this
final rule, we are setting forth the rate-ofincrease percentage for updating the target
amounts for certain hospitals excluded from
the IPPS that will be effective for cost
reporting periods beginning on or after
October 1, 2017.
In addition, we are setting forth a
description of the methods and data we used
to determine the standard Federal payment
rate that will be applicable to Medicare
LTCHs for FY 2018.
In general, except for SCHs, for FY 2018,
each hospital’s payment per discharge under
the IPPS is based on 100 percent of the
Federal national rate, also known as the
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national adjusted standardized amount. This
amount reflects the national average hospital
cost per case from a base year, updated for
inflation. We note that, under section 205 of
the Medicare Access and CHIP
Reauthorization Act of 2015 (MACRA) (Pub.
L. 114–10, enacted on April 16, 2015), the
MDH program is set to expire at the end of
FY 2017. SCHs are paid based on whichever
of the following rates yields the greatest
aggregate payment: the Federal national rate
(including, as discussed in section V.G. of the
preamble of this final rule, uncompensated
care payments under section 1886(r)(2) of the
Act); the updated hospital-specific rate based
on FY 1982 costs per discharge; the updated
hospital-specific rate based on FY 1987 costs
per discharge; the updated hospital-specific
rate based on FY 1996 costs per discharge; or
the updated hospital-specific rate based on
FY 2006 costs per discharge. As noted, under
current law, the MDH program is set to
expire at the end of FY 2017.
As discussed in section V.B. of the
preamble of this final rule, in accordance
with section 1886(d)(9)(E) of the Act as
amended by section 601 of the Consolidated
Appropriations Act, 2016 (Pub. L. 114–113),
for FY 2018, subsection (d) Puerto Rico
hospitals will continue to be paid based on
100 percent of the national standardized
amount. Because Puerto Rico hospitals are
paid 100 percent of the national standardized
amount and are subject to the same national
standardized amount as subsection (d)
hospitals that receive the full update, our
discussion below does not include references
to the Puerto Rico standardized amount or
the Puerto Rico-specific wage index.
As discussed in section II. of this
Addendum, we are making changes in the
determination of the prospective payment
rates for Medicare inpatient operating costs
for acute care hospitals for FY 2018. In
section III. of this Addendum, we discuss our
policy changes for determining the
prospective payment rates for Medicare
inpatient capital-related costs for FY 2018. In
section IV. of this Addendum, we are setting
forth the rate-of-increase percentage for
determining the rate-of-increase limits for
certain hospitals excluded from the IPPS for
FY 2018. In section V. of this Addendum, we
discuss policy changes for determining the
standard Federal rate for LTCHs paid under
the LTCH PPS for FY 2018. The tables to
which we refer in the preamble of this final
rule are listed in section VI. of this
Addendum and are available via the Internet
on the CMS Web site.
II. Changes to Prospective Payment Rates for
Hospital Inpatient Operating Costs for Acute
Care Hospitals for FY 2018
The basic methodology for determining
prospective payment rates for hospital
inpatient operating costs for acute care
hospitals for FY 2005 and subsequent fiscal
years is set forth under § 412.64. The basic
methodology for determining the prospective
payment rates for hospital inpatient
operating costs for hospitals located in Puerto
Rico for FY 2005 and subsequent fiscal years
is set forth under §§ 412.211 and 412.212.
Below we discuss the factors we used for
determining the prospective payment rates
for FY 2018.
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In summary, the standardized amounts set
forth in Tables 1A, 1B, and 1C that are listed
and published in section VI. of this
Addendum (and available via the Internet on
the CMS Web site) reflect—
• Equalization of the standardized
amounts for urban and other areas at the
level computed for large urban hospitals
during FY 2004 and onward, as provided for
under section 1886(d)(3)(A)(iv)(II) of the Act.
• The labor-related share that is applied to
the standardized amounts to give the hospital
the highest payment, as provided for under
sections 1886(d)(3)(E) and 1886(d)(9)(C)(iv)
of the Act. For FY 2018, depending on
whether a hospital submits quality data
under the rules established in accordance
with section 1886(b)(3)(B)(viii) of the Act
(hereafter referred to as a hospital that
submits quality data) and is a meaningful
Hospital
submitted
quality data
and is a
meaningful
EHR user
FY 2018
sradovich on DSK3GMQ082PROD with RULES2
Market Basket Rate-of-Increase ......................................................................
Adjustment for Failure to Submit Quality Data under Section
1886(b)(3)(B)(viii) of the Act .........................................................................
Adjustment for Failure to be a Meaningful EHR User under Section
1886(b)(3)(B)(ix) of the Act ..........................................................................
MFP Adjustment under Section 1886(b)(3)(B)(xi) of the Act ..........................
Statutory Adjustment under Section 1886(b)(3)(B)(xii) of the Act ...................
Applicable Percentage Increase Applied to Standardized Amount .................
We note that section 1886(b)(3)(B)(viii) of
the Act, which specifies the adjustment to
the applicable percentage increase for
‘‘subsection (d)’’ hospitals that do not submit
quality data under the rules established by
the Secretary, is not applicable to hospitals
located in Puerto Rico.
In addition, section 602 of Public Law 114–
113 amended section 1886(n)(6)(B) of the Act
to specify that Puerto Rico hospitals are
eligible for incentive payments for the
meaningful use of certified EHR technology,
effective beginning FY 2016, and also to
apply the adjustments to the applicable
percentage increase under section
1886(b)(3)(B)(ix) of the Act to Puerto Rico
hospitals that are not meaningful EHR users,
effective FY 2022. Accordingly, because the
provisions of section 1886(b)(3)(B)(ix) of the
Act are not applicable to hospitals located in
Puerto Rico until FY 2022, the adjustments
under this provision are not applicable for
FY 2018.
• An adjustment to the standardized
amount to ensure budget neutrality for DRG
recalibration and reclassification, as provided
for under section 1886(d)(4)(C)(iii) of the Act.
• An adjustment to ensure the wage index
and labor-related share changes are budget
neutral, as provided for under section
1886(d)(3)(E)(i) of the Act (as discussed in
the FY 2006 IPPS final rule (70 FR 47395)
and the FY 2010 IPPS final rule (74 FR
44005). We note that section 1886(d)(3)(E)(i)
of the Act requires that when we compute
such budget neutrality, we assume that the
provisions of section 1886(d)(3)(E)(ii) of the
Act (requiring a 62-percent labor-related
share in certain circumstances) had not been
enacted.
• An adjustment to ensure the effects of
geographic reclassification are budget
neutral, as provided for under section
1886(d)(8)(D) of the Act, by removing the FY
2017 budget neutrality factor and applying a
revised factor.
• Removal of the adjustment in FY 2017 to
offset the cost of the 3-year hold harmless
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EHR user under section 1886(b)(3)(B)(ix) of
the Act (hereafter referred to as a hospital
that is a meaningful EHR user), there are four
possible applicable percentage increases that
can be applied to the national standardized
amount. We refer readers to section V.B. of
the preamble of this final rule for a complete
discussion on the FY 2018 inpatient hospital
update. Below is a table with these four
options:
Hospital
submitted
quality data
and is NOT a
meaningful
EHR user
Hospital did
NOT submit
quality data
and is a
meaningful
EHR user
Hospital did
NOT submit
quality data
and is NOT a
meaningful
EHR user
2.7
2.7
2.7
2.7
0.0
0.0
¥0.675
¥0.675
0.0
¥0.6
¥0.75
1.35
¥2.025
¥0.6
¥0.75
¥0.675
0.0
¥0.6
¥0.75
0.675
¥2.025
¥0.6
¥0.75
¥1.35
transitional wage index provisions provided
by CMS as a result of the implementation of
the new OMB labor market area delineations
(beginning with FY 2015).
• A single positive adjustment of 0.4588 in
FY 2018 as required under section 15005 of
the 21st Century Cures Act (Pub. L. 114–255),
which amended section 7(b)(1)(B) of the
TMA, as amended by section 631 of the
ATRA and section 414 of the MACRA, to
reduce the adjustment for FY 2018 from 0.5
percentage point to 0.4588 percentage point.
• An adjustment to remove the FY 2017
outlier offset and apply an offset for FY 2018,
as provided for in section 1886(d)(3)(B) of the
Act.
• As discussed in section V.M. of the
preamble of this final rule, a factor of (1/
1.006) in the calculation of the FY 2018
standardized amount. Specifically, in the FY
2017 IPPS/LTCH PPS final rule (81 FR 57058
through 57060), using our authority under
section 1886(d)(5)(I)(i) of the Act, we
finalized a policy to include a permanent
factor of (1/0.998) and a temporary one-time
factor of (1.006) in the calculation of the FY
2017 standardized amount and to include a
factor of (1/1.006) in the calculation of the FY
2018 standardized amount to remove the
temporary one-time factor of 1.006 applied in
FY 2017 to address the effects of the 0.2
percent reduction to the rate for the 2midnight policy in effect for FY 2014, FY
2015, and FY 2016. Therefore, in this final
rule, for FY 2018, we are removing the
temporary one-time prospective increase to
the FY 2017 standardized amount of 0.6
percent or a factor of 1.006.
For FY 2018, consistent with current law,
we are applying the rural floor budget
neutrality adjustment to hospital wage
indexes. Also, consistent with section 3141
of the Affordable Care Act, instead of
applying a State-level rural floor budget
neutrality adjustment to the wage index, we
are applying a uniform, national budget
neutrality adjustment to the FY 2018 wage
index for the rural floor. We note that, in
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section III.H.2.b. of the preamble to this final
rule, we are extending the imputed floor
policy (both the original methodology and
alternative methodology) for FY 2018.
Therefore, for FY 2018, in this final rule, we
are continuing to include the imputed floor
(calculated under the original methodology
and alternative methodology) in calculating
the uniform, national rural floor budget
neutrality adjustment, which is reflected in
the FY 2018 wage index.
In prior fiscal years, CMS made an
adjustment to ensure the effects of the Rural
Community Hospital Demonstration Program
required under section 410A of Public Law
108–173, as amended by sections 3123 and
10313 of Public Law 111–148, which
extended the demonstration program for an
additional 5 years, were budget neutral as
required under section 410A(c)(2) of Public
Law 108–173. As discussed in section V.L.3.
of the preamble to this final rule, section
15003 of Public Law 114–255 amended
section 410A of Public Law 108–173 to
provide for a 10-year extension of the
demonstration (in place of the 5-year
extension required by the Affordable Care
Act) beginning on the date immediately
following the last day of the initial 5-year
period under section 410A(a)(5) of Public
Law 108–173. Therefore, section 15003 of
Public Law 114–255 requires an additional 5year extension of the demonstration.
Regarding the costs of the demonstration
specifically for FY 2018, as described in
section V.L.3. of the preamble to this final
rule, we proposed in the FY 2018 IPS/LTCH
PPS proposed rule (82 FR 19994) that if the
selection of additional hospitals pursuant to
section 410A(g)(6) of Public Law 108–173 (as
added by section 15003 of Pub. L. 114–255)
was announced by June 2017, we would
include in the FY 2018 IPPS/LTCH PPS final
rule an estimate of the costs of the
demonstration for FY 2018 and the resulting
budget neutrality offset amount for the newly
selected hospitals (Cohort 3 hospitals) and
for the previously participating hospitals
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(Cohorts 1 and 2 hospitals). We stated that if
the final selection of the additional hospitals
is not announced by June 2017, we would
not be able to include an estimate of the costs
of the demonstration for any participating
hospitals or an estimated budget neutrality
adjustment for FY 2018 in the FY 2018 IPPS/
LTCH PPS final rule. As of June 2017, we did
not announce the final selection of the
additional hospitals. Therefore, for this final
rule, we are not able to include an estimate
of the costs of the demonstration for any
participating hospitals or an estimated
budget neutrality adjustment for FY 2018. We
refer readers to section V.L.3. of the preamble
of this final rule for complete details on the
Rural Community Hospital Demonstration
Program and our methodology for calculating
budget neutrality for this demonstration.
A. Calculation of the Adjusted Standardized
Amount
1. Standardization of Base-Year Costs or
Target Amounts
In general, the national standardized
amount is based on per discharge averages of
adjusted hospital costs from a base period
(section 1886(d)(2)(A) of the Act), updated
and otherwise adjusted in accordance with
the provisions of section 1886(d) of the Act.
The September 1, 1983 interim final rule (48
FR 39763) contained a detailed explanation
of how base-year cost data (from cost
reporting periods ending during FY 1981)
were established for urban and rural
hospitals in the initial development of
standardized amounts for the IPPS.
Sections 1886(d)(2)(B) and 1886(d)(2)(C) of
the Act require us to update base-year per
discharge costs for FY 1984 and then
standardize the cost data in order to remove
the effects of certain sources of cost
variations among hospitals. These effects
include case-mix, differences in area wage
levels, cost-of-living adjustments for Alaska
and Hawaii, IME costs, and costs to hospitals
serving a disproportionate share of lowincome patients.
For FY 2018, we are rebasing and revising
the national labor-related and nonlaborrelated shares (based on the 2014-based
hospital market basket discussed in section
IV. of the preamble of this final rule).
Specifically, under section 1886(d)(3)(E) of
the Act, the Secretary estimates, from time to
time, the proportion of payments that are
labor-related and adjusts the proportion (as
estimated by the Secretary from time to time)
of hospitals’ costs which are attributable to
wages and wage-related costs of the DRG
prospective payment rates. We refer to the
proportion of hospitals’ costs that are
attributable to wages and wage-related costs
as the ‘‘labor-related share.’’ For FY 2018, as
discussed in section IV.B.3. of the preamble
of this final rule, we are applying a laborrelated share of 68.3 percent for the national
standardized amounts for all IPPS hospitals
(including hospitals in Puerto Rico) that have
a wage index value that is greater than
1.0000. Consistent with section 1886(d)(3)(E)
of the Act, we are applying the wage index
to a labor-related share of 62 percent of the
national standardized amount for all IPPS
hospitals (including hospitals in Puerto Rico)
whose wage index values are less than or
equal to 1.0000.
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The standardized amounts for operating
costs appear in Tables 1A, 1B, and 1C that
are listed and published in section VI. of the
Addendum to this final rule and are available
via the Internet on the CMS Web site.
2. Computing the National Average
Standardized Amount
Section 1886(d)(3)(A)(iv)(II) of the Act
requires that, beginning with FY 2004 and
thereafter, an equal standardized amount be
computed for all hospitals at the level
computed for large urban hospitals during FY
2003, updated by the applicable percentage
update. Accordingly, we calculated the FY
2018 national average standardized amount
irrespective of whether a hospital is located
in an urban or rural location.
3. Updating the National Average
Standardized Amount
Section 1886(b)(3)(B) of the Act specifies
the applicable percentage increase used to
update the standardized amount for payment
for inpatient hospital operating costs. We
note that, in compliance with section 404 of
the MMA, in this final rule, we used the
rebased and revised 2014-based IPPS
operating and capital market baskets for FY
2018. As discussed in section V.B. of the
preamble of this final rule, in accordance
with section 1886(b)(3)(B) of the Act, as
amended by section 3401(a) of the Affordable
Care Act, we reduced the FY 2018 applicable
percentage increase (which is based on IGI’s
second quarter 2017 forecast of the 2014based IPPS market basket) by the MFP
adjustment (the 10-year moving average of
MFP for the period ending FY 2018) of 0.6
percentage point, which is also calculated
based on IGI’s second quarter 2017 forecast.
In addition, in accordance with section
1886(b)(3)(B)(i) of the Act, as amended by
sections 3401(a) and 10319(a) of the
Affordable Care Act, we further updated the
standardized amount for FY 2018 by the
estimated market basket percentage increase
less 0.75 percentage point for hospitals in all
areas. Sections 1886(b)(3)(B)(xi) and (xii) of
the Act, as added and amended by sections
3401(a) and 10319(a) of the Affordable Care
Act, further state that these adjustments may
result in the applicable percentage increase
being less than zero. The percentage increase
in the market basket reflects the average
change in the price of goods and services
required as inputs to provide hospital
inpatient services.
Based on IGI’s 2017 second quarter forecast
of the hospital market basket increase (as
discussed in Appendix B of this final rule),
the forecast of the hospital market basket
increase for FY 2018 for this final rule is 2.7
percent. As discussed earlier, for FY 2018,
depending on whether a hospital submits
quality data under the rules established in
accordance with section 1886(b)(3)(B)(viii) of
the Act and is a meaningful EHR user under
section 1886(b)(3)(B)(ix) of the Act, there are
four possible applicable percentage increases
that can be applied to the standardized
amount. We refer readers to section V.B. of
the preamble of this final rule for a complete
discussion on the FY 2018 inpatient hospital
update to the standardized amount. We also
refer readers to the table above for the four
possible applicable percentage increases that
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will be applied to update the national
standardized amount. The standardized
amounts shown in Tables 1A through 1C that
are published in section VI. of this
Addendum and that are available via the
Internet on the CMS Web site reflect these
differential amounts.
Although the update factors for FY 2018
are set by law, we are required by section
1886(e)(4) of the Act to recommend, taking
into account MedPAC’s recommendations,
appropriate update factors for FY 2018 for
both IPPS hospitals and hospitals and
hospital units excluded from the IPPS.
Section 1886(e)(5)(A) of the Act requires that
we publish our recommendations in the
Federal Register for public comment. Our
recommendation on the update factors is set
forth in Appendix B of this final rule.
4. Methodology for Calculation of the
Average Standardized Amount
The methodology we used to calculate the
FY 2018 standardized amount is as follows:
• To ensure we are only including
hospitals paid under the IPPS in the
calculation of the standardized amount, we
apply the following inclusion and exclusion
criteria: Include hospitals whose last four
digits fall between 0001 and 0879 (section
2779A1 of Chapter 2 of the State Operations
Manual on the CMS Web site at: https://
www.cms.gov/Regulations-and-Guidance/
Guidance/Manuals/Downloads/
som107c02.pdf); exclude CAHs at the time of
this final rule; exclude hospitals in Maryland
(because these hospitals are paid under an all
payer model under section 1115A of the Act);
and remove PPS-excluded cancer hospitals
that have a ‘‘V’’ in the fifth position of their
provider number or a ‘‘E’’ or ‘‘F’’ in the sixth
position.
• As in the past, we adjusted the FY 2018
standardized amount to remove the effects of
the FY 2017 geographic reclassifications and
outlier payments before applying the FY
2018 updates. We then applied budget
neutrality offsets for outliers and geographic
reclassifications to the standardized amount
based on FY 2018 payment policies.
• We do not remove the prior year’s budget
neutrality adjustments for reclassification
and recalibration of the DRG relative weights
and for updated wage data because, in
accordance with sections 1886(d)(4)(C)(iii)
and 1886(d)(3)(E) of the Act, estimated
aggregate payments after updates in the DRG
relative weights and wage index should equal
estimated aggregate payments prior to the
changes. If we removed the prior year’s
adjustment, we would not satisfy these
conditions.
Budget neutrality is determined by
comparing aggregate IPPS payments before
and after making changes that are required to
be budget neutral (for example, changes to
MS–DRG classifications, recalibration of the
MS–DRG relative weights, updates to the
wage index, and different geographic
reclassifications). We include outlier
payments in the simulations because they
may be affected by changes in these
parameters.
• Consistent with our methodology
established in the FY 2011 IPPS/LTCH PPS
final rule (75 FR 50422 through 50433),
because IME Medicare Advantage payments
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are made to IPPS hospitals under section
1886(d) of the Act, we believe these
payments must be part of these budget
neutrality calculations. However, we note
that it is not necessary to include Medicare
Advantage IME payments in the outlier
threshold calculation or the outlier offset to
the standardized amount because the statute
requires that outlier payments be not less
than 5 percent nor more than 6 percent of
total ‘‘operating DRG payments,’’ which does
not include IME and DSH payments. We refer
readers to the FY 2011 IPPS/LTCH PPS final
rule for a complete discussion on our
methodology of identifying and adding the
total Medicare Advantage IME payment
amount to the budget neutrality adjustments.
• Consistent with the methodology in the
FY 2012 IPPS/LTCH PPS final rule, in order
to ensure that we capture only fee-for-service
claims, we are only including claims with a
‘‘Claim Type’’ of 60 (which is a field on the
MedPAR file that indicates a claim is an FFS
claim).
• Consistent with our methodology
established in the FY 2017 IPPS/LTCH PPS
final rule (81 FR 57277), in order to further
ensure that we capture only FFS claims, we
are excluding claims with a ‘‘GHOPAID’’
indicator of 1 (which is a field on the
MedPAR file that indicates a claim is not an
FFS claim and is paid by a Group Health
Organization).
• Consistent with our methodology
established in the FY 2011 IPPS/LTCH PPS
final rule (75 FR 50422 through 50423), we
examine the MedPAR file and remove
pharmacy charges for anti-hemophilic blood
factor (which are paid separately under the
IPPS) with an indicator of ‘‘3’’ for blood
clotting with a revenue code of ‘‘0636’’ from
the covered charge field for the budget
neutrality adjustments. We also remove organ
acquisition charges from the covered charge
field for the budget neutrality adjustments
because organ acquisition is a pass-through
payment not paid under the IPPS.
• The Bundled Payments for Care
Improvement (BPCI) initiative, developed
under the authority of section 3021 of the
Affordable Care Act (codified at section
1115A of the Act), is comprised of four
broadly defined models of care, which link
payments for multiple services beneficiaries
receive during an episode of care. Under the
BPCI initiative, organizations enter into
payment arrangements that include financial
and performance accountability for episodes
of care. On January 31, 2013, CMS
announced the first set of health care
organizations selected to participate in the
BPCI initiative. Additional organizations
were selected in 2014. For additional
information on the BPCI initiative, we refer
readers to the CMS Center for Medicare and
Medicaid Innovation’s Web site at: https://
innovation.cms.gov/initiatives/BundledPayments/.
In the FY 2013 IPPS/LTCH PPS final rule
(77 FR 53341 through 53343), for FY 2013
and subsequent fiscal years, we finalized a
methodology to treat hospitals that
participate in the BPCI initiative the same as
prior fiscal years for the IPPS payment
modeling and ratesetting process (which
includes recalibration of the MS–DRG
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relative weights, ratesetting, calculation of
the budget neutrality factors, and the impact
analysis) without regard to a hospital’s
participation within these bundled payment
models (that is, as if they are not
participating in those models under the BPCI
initiative). For FY 2018, as we proposed, we
are continuing to include all applicable data
from subsection (d) hospitals participating in
BPCI Models 1, 2, and 4 in our IPPS payment
modeling and ratesetting calculations.
• Consistent with our methodology
established in the FY 2013 IPPS/LTCH PPS
final rule (77 FR 53687 through 53688), we
believe that it is appropriate to include
adjustments for the Hospital Readmissions
Reduction Program and the Hospital VBP
Program (established under the Affordable
Care Act) within our budget neutrality
calculations.
Both the hospital readmissions payment
adjustment (reduction) and the hospital VBP
payment adjustment (redistribution) are
applied on a claim-by-claim basis by
adjusting, as applicable, the base-operating
DRG payment amount for individual
subsection (d) hospitals, which affects the
overall sum of aggregate payments on each
side of the comparison within the budget
neutrality calculations.
In order to properly determine aggregate
payments on each side of the comparison, as
we have done for the last 4 fiscal years, for
FY 2018 and subsequent years, we are
continuing to apply the hospital
readmissions payment adjustment and the
hospital VBP payment adjustment on each
side of the comparison, consistent with the
methodology that we adopted in the FY 2013
IPPS/LTCH PPS final rule (77 FR 53687
through 53688). That is, we applied the
readmissions payment adjustment factor and
the hospital VBP payment adjustment factor
on both sides of our comparison of aggregate
payments when determining all budget
neutrality factors described in section II.A.4.
of this Addendum.
For the proposed rule, for the purpose of
calculating the FY 2018 readmissions
payment adjustment factors, we used excess
readmission ratios and aggregate payments
for excess readmissions based on admissions
from the prior fiscal year’s applicable period
because, at that time, hospitals not yet had
the opportunity to review and correct the
data before the data were made public under
the policy we adopted regarding the
reporting of hospital-specific readmission
rates, consistent with section 1886(q)(6) of
the Act. For FY 2018, in this final rule, we
calculated the readmissions payment
adjustment factors using excess readmission
ratios and aggregate payments for excess
readmissions based on admissions from the
finalized applicable period for FY 2018 as
hospitals have had the opportunity to review
and correct these data under our policy
regarding the reporting of hospital-specific
readmission rates consistent with section
1886(q)(6) of the Act. We discuss our final
policy regarding the reporting of hospitalspecific readmission rates for FY 2018 in
section V.I.5. of the preamble of this final
rule. (For additional information on our
general policy for the reporting of hospitalspecific readmission rates, consistent with
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38521
section 1886(q)(6) of the Act, we refer readers
to the FY 2013 IPPS/LTCH PPS final rule (77
FR 53399 through 53400).)
In addition, for FY 2018, in this final rule,
for the purpose of modeling aggregate
payments when determining all budget
neutrality factors, we used proxy hospital
VBP payment adjustment factors for FY 2018
that are based on data from a historical
period because hospitals have not yet had an
opportunity to review and submit corrections
for their data from the FY 2018 performance
period. (For additional information on our
policy regarding the review and correction of
hospital-specific measure rates under the
Hospital VBP Program, consistent with
section 1886(o)(10)(A)(ii) of the Act, we refer
readers to the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53578 through 53581), the CY
2012 OPPS/ASC final rule with comment
period (76 FR 74544 through 74547), and the
Hospital Inpatient VBP final rule (76 FR
26534 through 26536).)
• The Affordable Care Act also established
section 1886(r) of the Act, which modifies
the methodology for computing the Medicare
DSH payment adjustment beginning in FY
2014. Beginning in FY 2014, IPPS hospitals
receiving Medicare DSH payment
adjustments receive an empirically justified
Medicare DSH payment equal to 25 percent
of the amount that would previously have
been received under the statutory formula set
forth under section 1886(d)(5)(F) of the Act
governing the Medicare DSH payment
adjustment. In accordance with section
1886(r)(2) of the Act, the remaining amount,
equal to an estimate of 75 percent of what
otherwise would have been paid as Medicare
DSH payments, reduced to reflect changes in
the percentage of individuals under age 65
who are uninsured and an additional
statutory adjustment, will be available to
make additional payments to Medicare DSH
hospitals based on their share of the total
amount of uncompensated care reported by
Medicare DSH hospitals for a given time
period. In order to properly determine
aggregate payments on each side of the
comparison for budget neutrality, prior to FY
2014, we included estimated Medicare DSH
payments on both sides of our comparison of
aggregate payments when determining all
budget neutrality factors described in section
II.A.4. of this Addendum.
To do this for FY 2018 (as we did for the
last 4 fiscal years), we included estimated
empirically justified Medicare DSH payments
that will be paid in accordance with section
1886(r)(1) of the Act and estimates of the
additional uncompensated care payments
made to hospitals receiving Medicare DSH
payment adjustments as described by section
1886(r)(2) of the Act. That is, we considered
estimated empirically justified Medicare DSH
payments at 25 percent of what would
otherwise have been paid, and also the
estimated additional uncompensated care
payments for hospitals receiving Medicare
DSH payment adjustments on both sides of
our comparison of aggregate payments when
determining all budget neutrality factors
described in section II.A.4. of this
Addendum.
• When calculating total payments for
budget neutrality, to determine total
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payments for SCHs, we model total hospitalspecific rate payments and total Federal rate
payments and then include whichever one of
the total payments is greater. As discussed in
section V.G. of the preamble to this final rule
and below, we are continuing the FY 2014
finalized methodology under which we take
into consideration uncompensated care
payments in the comparison of payments
under the Federal rate and the hospitalspecific rate for SCHs. Therefore, we
included estimated uncompensated care
payments in this comparison.
• We are including an adjustment to the
standardized amount for those hospitals that
are not meaningful EHR users in our
modeling of aggregate payments for budget
neutrality for FY 2018. Similar to FY 2017,
we included this adjustment based on data
on the prior year’s performance. Payments for
hospitals will be estimated based on the
applicable standardized amount in Tables 1A
and 1B for discharges occurring in FY 2018.
a. Recalibration of MS–DRG Relative Weights
Section 1886(d)(4)(C)(iii) of the Act
specifies that, beginning in FY 1991, the
annual DRG reclassification and recalibration
of the relative weights must be made in a
manner that ensures that aggregate payments
to hospitals are not affected. As discussed in
section II.G. of the preamble of this final rule,
we normalized the recalibrated MS–DRG
relative weights by an adjustment factor so
that the average case relative weight after
recalibration is equal to the average case
relative weight prior to recalibration.
However, equating the average case relative
weight after recalibration to the average case
relative weight before recalibration does not
necessarily achieve budget neutrality with
respect to aggregate payments to hospitals
because payments to hospitals are affected by
factors other than average case relative
weight. Therefore, as we have done in past
years, we are making a budget neutrality
adjustment to ensure that the requirement of
section 1886(d)(4)(C)(iii) of the Act is met.
For FY 2018, to comply with the
requirement that MS–DRG reclassification
and recalibration of the relative weights be
budget neutral for the standardized amount
and the hospital-specific rates, we used FY
2016 discharge data to simulate payments
and compared the following:
• Aggregate payments using the FY 2017
labor-related share percentages, the FY 2017
relative weights, and the FY 2017 prereclassified wage data, and applied the FY
2018 hospital readmissions payment
adjustments and estimated FY 2018 hospital
VBP payment adjustments; and
• Aggregate payments using the FY 2017
labor-related share percentages, the FY 2018
relative weights, and the FY 2017 prereclassified wage data, and applied the same
FY 2018 hospital readmissions payment
adjustments and estimated FY 2018 hospital
VBP payment adjustments applied above. (As
discussed in section II.G. of the preamble of
this final rule, in response to public
comments, we are adopting a temporary
measure for FY 2018 for MS–DRGs where the
relative weight would have declined by more
than 20 percent. Specifically, for these MS
DRGs, the FY 2018 relative weight is set at
80 percent of the FY 2017 final relative
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weight, and it is these FY 2018 relative
weights that are used to determine the MS–
DRG reclassification and recalibration budget
neutrality factor in this final rule.)
Based on this comparison, we computed a
budget neutrality adjustment factor equal to
0.997432 and applied this factor to the
standardized amount. As discussed in
section IV. of this Addendum, we also
applied the MS–DRG reclassification and
recalibration budget neutrality factor of
0.997432 to the hospital-specific rates that
are effective for cost reporting periods
beginning on or after October 1, 2017.
b. Updated Wage Index—Budget Neutrality
Adjustment
Section 1886(d)(3)(E)(i) of the Act requires
us to update the hospital wage index on an
annual basis beginning October 1, 1993. This
provision also requires us to make any
updates or adjustments to the wage index in
a manner that ensures that aggregate
payments to hospitals are not affected by the
change in the wage index. Section
1886(d)(3)(E)(i) of the Act requires that we
implement the wage index adjustment in a
budget neutral manner. However, section
1886(d)(3)(E)(ii) of the Act sets the laborrelated share at 62 percent for hospitals with
a wage index less than or equal to 1.0000,
and section 1886(d)(3)(E)(i) of the Act
provides that the Secretary shall calculate the
budget neutrality adjustment for the
adjustments or updates made under that
provision as if section 1886(d)(3)(E)(ii) of the
Act had not been enacted. In other words,
this section of the statute requires that we
implement the updates to the wage index in
a budget neutral manner, but that our budget
neutrality adjustment should not take into
account the requirement that we set the
labor-related share for hospitals with wage
indexes less than or equal to 1.0000 at the
more advantageous level of 62 percent.
Therefore, for purposes of this budget
neutrality adjustment, section 1886(d)(3)(E)(i)
of the Act prohibits us from taking into
account the fact that hospitals with a wage
index less than or equal to 1.0000 are paid
using a labor-related share of 62 percent.
Consistent with current policy, for FY 2018,
we adjusted 100 percent of the wage index
factor for occupational mix. We describe the
occupational mix adjustment in section III.E.
of the preamble of this final rule.
To compute a budget neutrality adjustment
factor for wage index and labor-related share
percentage changes, we used FY 2016
discharge data to simulate payments and
compared the following:
• Aggregate payments using the FY 2018
relative weights and the FY 2017 prereclassified wage indexes, applied the FY
2017 labor-related share of 69.6 percent to all
hospitals (regardless of whether the
hospital’s wage index was above or below
1.0000), and applied the FY 2018 hospital
readmissions payment adjustment and the
estimated FY 2018 hospital VBP payment
adjustment; and
• Aggregate payments using the FY 2018
relative weights and the FY 2018 prereclassified wage indexes, applied the laborrelated share for FY 2018 of 68.3 percent to
all hospitals (regardless of whether the
hospital’s wage index was above or below
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1.0000), and applied the same FY 2018
hospital readmissions payment adjustments
and estimated FY 2018 hospital VBP
payment adjustments applied above.
In addition, we applied the MS–DRG
reclassification and recalibration budget
neutrality adjustment factor (derived in the
first step) to the payment rates that were used
to simulate payments for this comparison of
aggregate payments from FY 2017 to FY
2018. By applying this methodology, we
determined a budget neutrality adjustment
factor of 1.001148 for changes to the wage
index.
c. Reclassified Hospitals—Budget Neutrality
Adjustment
Section 1886(d)(8)(B) of the Act provides
that certain rural hospitals are deemed urban.
In addition, section 1886(d)(10) of the Act
provides for the reclassification of hospitals
based on determinations by the MGCRB.
Under section 1886(d)(10) of the Act, a
hospital may be reclassified for purposes of
the wage index.
Under section 1886(d)(8)(D) of the Act, the
Secretary is required to adjust the
standardized amount to ensure that aggregate
payments under the IPPS after
implementation of the provisions of sections
1886(d)(8)(B) and (C) and 1886(d)(10) of the
Act are equal to the aggregate prospective
payments that would have been made absent
these provisions. We note that the wage
index adjustments provided for under section
1886(d)(13) of the Act are not budget neutral.
Section 1886(d)(13)(H) of the Act provides
that any increase in a wage index under
section 1886(d)(13) shall not be taken into
account in applying any budget neutrality
adjustment with respect to such index under
section 1886(d)(8)(D) of the Act. To calculate
the budget neutrality adjustment factor for
FY 2018, we used FY 2016 discharge data to
simulate payments and compared the
following:
• Aggregate payments using the FY 2018
labor-related share percentages, the FY 2018
relative weights, and the FY 2018 wage data
prior to any reclassifications under sections
1886(d)(8)(B) and (C) and 1886(d)(10) of the
Act, and applied the FY 2018 hospital
readmissions payment adjustments and the
estimated FY 2018 hospital VBP payment
adjustments; and
• Aggregate payments using the FY 2018
labor-related share percentages, the FY 2018
relative weights, and the FY 2018 wage data
after such reclassifications, and applied the
same FY 2018 hospital readmissions
payment adjustments and the estimated FY
2018 hospital VBP payment adjustments
applied above.
We note that the reclassifications applied
under the second simulation and comparison
are those listed in Table 2 associated with
this final rule, which is available via the
Internet on the CMS Web site. This table
reflects reclassification crosswalks for FY
2018, and apply the policies explained in
section III. of the preamble to this final rule.
Based on these simulations, we calculated a
budget neutrality adjustment factor of
0.988008 to ensure that the effects of these
provisions are budget neutral, consistent
with the statute. The FY 2018 budget
neutrality adjustment factor was applied to
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the standardized amount after removing the
effects of the FY 2017 budget neutrality
adjustment factor. We note that the FY 2018
budget neutrality adjustment reflects FY 2018
wage index reclassifications approved by the
MGCRB or the Administrator at the time of
development of this final rule.
d. Rural Floor Budget Neutrality Adjustment
Under § 412.64(e)(4), we make an
adjustment to the wage index to ensure that
aggregate payments after implementation of
the rural floor under section 4410 of the BBA
(Pub. L. 105–33) and the imputed floor under
§ 412.64(h)(4) are equal to the aggregate
prospective payments that would have been
made in the absence of such provisions.
Consistent with section 3141 of the
Affordable Care Act and as discussed in
section III.H. of the preamble of this final rule
and codified at § 412.64(e)(4)(ii), the budget
neutrality adjustment for the rural floor and
imputed floor is a national adjustment to the
wage index.
As noted above and as discussed in section
III.H.2. of the preamble of this final rule, we
are extending the imputed floor policy (both
the original policy and alternative
methodology) for FY 2018. Therefore, in
order to ensure that aggregate payments to
hospitals are not affected, similar to prior
years, for FY 2018 we follow our policy of
including the imputed floor (calculated
under the original and alternative
methodologies) in the national rural floor
budget neutrality adjustment to the wage
index.
Similar to our calculation in the FY 2015
IPPS/LTCH PPS final rule (79 FR 50369
through 50370), for FY 2018, we calculated
a national rural Puerto Rico wage index.
Because there are no rural Puerto Rico
hospitals with established wage data, our
calculation of the FY 2018 rural Puerto Rico
wage index is based on the policy adopted
in the FY 2008 IPPS final rule with comment
period (72 FR 47323). That is, we use the
unweighted average of the wage indexes from
all CBSAs (urban areas) that are contiguous
(share a border with) to the rural counties to
compute the rural floor (72 FR 47323; 76 FR
51594). Under the OMB labor market area
delineations, except for Arecibo, Puerto Rico
(CBSA 11640), all other Puerto Rico urban
areas are contiguous to a rural area.
Therefore, based on our existing policy, the
FY 2018 rural Puerto Rico wage index is
calculated based on the average of the FY
2018 wage indexes for the following urban
areas: Aguadilla-Isabela, PR (CBSA 10380);
Guayama, PR (CBSA 25020); Mayaguez, PR
(CBSA 32420); Ponce, PR (CBSA 38660); San
German, PR (CBSA 41900); and San JuanCarolina-Caguas, PR (CBSA 41980).
To calculate the national rural floor and
imputed floor budget neutrality adjustment
factor, we used FY 2016 discharge data to
simulate payments and the post-reclassified
national wage indexes and compared the
following:
• National simulated payments without
the national rural floor and imputed floor;
and
• National simulated payments with the
national rural floor and imputed floor.
Based on this comparison, we determined
a national rural floor and imputed floor
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budget neutrality adjustment factor of
0.993348. The national adjustment was
applied to the national wage indexes to
produce a national rural floor and imputed
floor budget neutral wage index.
e. Adjustment for FY 2018 Required Under
Section 414 of Public Law 114–10 (MACRA)
and Section 15005 of Public Law 114–255
As stated in the FY 2017 IPPS/LTCH PPS
final rule (81 FR 56785), once the
recoupment required under section 631 of
the ATRA was complete, we had anticipated
making a single positive adjustment in FY
2018 to offset the reductions required to
recoup the $11 billion under section 631 of
the ATRA. However, section 414 of the
MACRA (which was enacted on April 16,
2015) replaced the single positive adjustment
we intended to make in FY 2018 with a 0.5
percent positive adjustment for each of FYs
2018 through 2023. In the FY 2017
rulemaking, we indicated that we would
address the adjustments for FY 2018 and
later fiscal years in future rulemaking. As
noted previously, section 15005 of the 21st
Century Cures Act (Public Law 114–255),
which was enacted December 13, 2016,
amended section 7(b)(1)(B) of the TMA, as
amended by section 631 of the ATRA and
section 414 of the MACRA, to reduce the
adjustment for FY 2018 from 0.5 percentage
points to 0.4588 percentage points.
Therefore, for FY 2018, we are implementing
the required +0.4588 percent adjustment to
the standardized amount. This is a
permanent adjustment to payment rates. In
the FY 2018 IPPS/LTCH PPS proposed rule,
we noted, that while we are not proposing
future adjustments required under section
414 of the MACRA and section 15005 of
Public Law 114–255 at this time, we expect
to propose positive 0.5 percent adjustments
to the standardized amounts for FYs 2019
through 2023.
f. Outlier Payments
Section 1886(d)(5)(A) of the Act provides
for payments in addition to the basic
prospective payments for ‘‘outlier’’ cases
involving extraordinarily high costs. To
qualify for outlier payments, a case must
have costs greater than the sum of the
prospective payment rate for the MS–DRG,
any IME and DSH payments, uncompensated
care payments, any new technology add-on
payments, and the ‘‘outlier threshold’’ or
‘‘fixed-loss’’ amount (a dollar amount by
which the costs of a case must exceed
payments in order to qualify for an outlier
payment). We refer to the sum of the
prospective payment rate for the MS–DRG,
any IME and DSH payments, uncompensated
care payments, any new technology add-on
payments, and the outlier threshold as the
outlier ‘‘fixed-loss cost threshold.’’ To
determine whether the costs of a case exceed
the fixed-loss cost threshold, a hospital’s CCR
is applied to the total covered charges for the
case to convert the charges to estimated costs.
Payments for eligible cases are then made
based on a marginal cost factor, which is a
percentage of the estimated costs above the
fixed-loss cost threshold. The marginal cost
factor for FY 2018 is 80 percent, or 90
percent for burn MS–DRGs 927, 928, 929,
933, 934 and 935. We have used a marginal
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38523
cost factor of 90 percent since FY 1989 (54
FR 36479 through 36480) for designated burn
DRGs as well as a marginal cost factor of 80
percent for all other DRGs since FY 1995 (59
FR 45367).
In accordance with section
1886(d)(5)(A)(iv) of the Act, outlier payments
for any year are projected to be not less than
5 percent nor more than 6 percent of total
operating DRG payments (which does not
include IME and DSH payments) plus outlier
payments. When setting the outlier
threshold, we compute the 5.1 percent target
by dividing the total operating outlier
payments by the total operating DRG
payments plus outlier payments. We do not
include any other payments such as IME and
DSH within the outlier target amount.
Therefore, it is not necessary to include
Medicare Advantage IME payments in the
outlier threshold calculation. Section
1886(d)(3)(B) of the Act requires the
Secretary to reduce the average standardized
amount by a factor to account for the
estimated proportion of total DRG payments
made to outlier cases. More information on
outlier payments may be found on the CMS
Web site at: https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/outlier.htm.
(1) FY 2018 Outlier Fixed-Loss Cost
Threshold
In the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50977 through 50983), in response to
public comments on the FY 2013 IPPS/LTCH
PPS proposed rule, we made changes to our
methodology for projecting the outlier fixedloss cost threshold for FY 2014. We refer
readers to the FY 2014 IPPS/LTCH PPS final
rule for detailed discussion of the changes.
As we have done in the past, to calculate
the FY 2018 outlier threshold, we simulated
payments by applying FY 2018 payment rates
and policies using cases from the FY 2016
MedPAR file. Therefore, in order to
determine the FY 2018 outlier threshold, we
inflated the charges on the MedPAR claims
by 2 years, from FY 2016 to FY 2018. As
discussed in the FY 2015 IPPS/LTCH PPS
final rule, we believe a methodology that is
based on 1-year of charge data will provide
a more stable measure to project the average
charge per case because our prior
methodology used a 6-month measure, which
inherently uses fewer claims than a 1-year
measure and makes it more susceptible to
fluctuations in the average charge per case as
a result of any significant charge increases or
decreases by hospitals. As finalized in the FY
2017 IPPS/LTCH PPS final rule (81 FR
57282), we used the following methodology
to calculate the charge inflation factor for FY
2018:
• To produce the most stable measure of
charge inflation, we applied the following
inclusion and exclusion criteria of hospitals
claims in our measure of charge inflation:
Include hospitals whose last four digits fall
between 0001 and 0899 (section 2779A1 of
Chapter 2 of the State Operations Manual on
the CMS Web site at https://www.cms.gov/
Regulations-and-Guidance/Guidance/
Manuals/Downloads/som107c02.pdf);
include CAHs that were IPPS hospitals for
the time period of the MedPAR data being
used to calculate the charge inflation factor;
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include hospitals in Maryland; and remove
PPS-excluded cancer hospitals who have a
‘‘V’’ in the fifth position of their provider
number or a ‘‘E’’ or ‘‘F’’ in the sixth position.
• We excluded Medicare Advantage IME
claims for the reasons described in section
I.A.4. of this Addendum. We refer readers to
the FY 2011 IPPS/LTCH PPS final rule for a
complete discussion on our methodology of
identifying and adding the total Medicare
Advantage IME payment amount to the
budget neutrality adjustments.
• In order to ensure that we capture only
FFS claims, we included claims with a
‘‘Claim Type’’ of 60 (which is a field on the
MedPAR file that indicates a claim is an FFS
claim).
• In order to further ensure that we capture
only FFS claims, we excluded claims with a
‘‘GHOPAID’’ indicator of 1 (which is a field
on the MedPAR file that indicates a claim is
not an FFS claim and is paid by a Group
Health Organization).
• We examined the MedPAR file and
removed pharmacy charges for antihemophilic blood factor (which are paid
separately under the IPPS) with an indicator
of ‘‘3’’ for blood clotting with a revenue code
of ‘‘0636’’ from the covered charge field. We
also removed organ acquisition charges from
the covered charge field because organ
acquisition is a pass-through payment not
paid under the IPPS.
In the FY 2016 IPPS/LTCH PPS final rule
(80 FR 49779 through 49780), we stated that
commenters were concerned that they were
unable to replicate the calculation of the
charge inflation factor that CMS used in the
proposed rule. In response to those
comments, we stated that we continue to
believe that it is optimal to use the most
recent period of charge data available to
measure charge inflation. In response to
those comments, similar to FY 2016 and
2017, for FY 2018 we grouped claims data by
quarter in the table below in order that the
public would be able to replicate the claims
summary for the claims with discharge dates
through September 30, 2016, that are
available under the current LDS structure. In
order to provide even more information in
response to the commenters’ request, similar
to FY 2016 and FY 2017, for FY 2018 we
have made available on the CMS Web site at:
https://www.cms.gov/Medicare/MedicareFee-for-Service-Payment/AcuteInpatientPPS/
index.html (click on the link on the left titled
‘‘FY 2018 IPPS Proposed Rule Home Page’’’
and then click the link ‘‘FY 2018Proposed
Rule Data Files’’’) a more detailed summary
table by provider with the monthly charges
that were used to compute the charge
inflation factor. In the proposed rule, we
stated that we would continue to work with
our systems teams and privacy office to
explore expanding the information available
in the current LDS, perhaps through the
provision of a supplemental data file for
future rulemaking.
Covered charges
(January 1, 2015,
through December 31,
2015)
Cases
January 1,
2015, through
December 31,
2015)
Covered Charges
(January 1, 2016,
through December 31,
2016)
Cases
(January 1,
2016, through
December 31,
2016)
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
$134,654,491,108
128,043,608,047
125,070,725,661
130,224,314,081
2,550,009
2,432,111
2,352,162
2,386,486
$140,324,387,852
134,274,423,481
129,395,535,792
104,063,409,952
2,503,723
2,401,159
2,318,480
1,850,535
Total ..................................................................................
517,93,138,897
9,720,768
508,057,757,077
9,073,897
Quarter
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1
2
3
4
Under this methodology, to compute the 1year average annualized rate-of-change in
charges per case for FY 2018, we compared
the average covered charge per case of
$53,287 ($517,993,138,897/9,720,768) from
the second quarter of FY 2015 through the
first quarter of FY 2016 (January 1, 2015,
through December 31, 2015) to the average
covered charge per case of $55,991
($508,057,757,077/9,073,897) from the
second quarter of FY 2016 through the first
quarter of FY 2017 (January 1, 2016, through
December 31, 2016). This rate-of-change was
5.1 percent (1.05074) or 10.4 percent
(1.104055) over 2 years. The billed charges
are obtained from the claim from the
MedPAR file and inflated by the inflation
factor specified above.
Comment: Several commenters were
concerned with what they stated was a lack
of transparency with respect to the charge
inflation component of the fixed-loss
threshold calculation. One commenter
requested that CMS not implement the
increase in the outlier threshold from FY
2017 to FY 2018 until the agency provides
data that can be independently validated to
demonstrate the need for an increase in the
outlier threshold.
Another commenter stated that it was
unable to match the figures in the table from
the proposed rule with publicly available
data sources and that CMS did not disclose
the source of the data. The commenter
further stated that CMS has not made the
necessary data available, or any guidance that
describes whether and how CMS edited such
data to arrive at the total of quarterly charges
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and charges per case used to measure charge
inflation. Consequently, the commenter
stated that the table provided in the proposed
rule was not useful in assessing the accuracy
of the charge inflation figure that CMS used
in the proposed rule to calculate the outlier
threshold. The commenter noted that CMS
provided a detailed summary table by
provider with the monthly charges that were
used to compute the charge inflation factor.
The commenters appreciated the additional
data, but still believed that CMS has not
provided enough specific information and
data to allow the underlying numbers used
in CMS’ calculation of the charge inflation
factor to be replicated and/or tested for
accuracy. The commenter concluded that, in
the absence of more specific data and
information about how the data were edited
by CMS to arrive at the totals used in the
charge inflation calculation, CMS has not
provided adequate notice to allow for
meaningful comment.
Response: We responded to a similar
comment in the FY 2015 IPPS/LTCH PPS
final rule (79 FR 50375), FY 2016 IPPS/LTCH
PPS final rule (80 FR 49779 through 49780)
and FY 2017 IPPS/LTCH PPS final rule (81
FR 57283) and refer readers to those final
rules for our complete response. As
previously noted in the FY 2015 IPPS/LTCH
PPS final rule (79 FR 50375), we did not have
sufficient time to restructure the files (such
as ensuring that personal identification
information is compliant with privacy
regulations) prior to the publication of the
proposed and this final rule. As we stated in
last year’s final rule, while the charge data
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may not be immediately available after the
issuance of this final rule, we believe the data
and supporting files we have provided will
provide the commenters with additional
information that can be verified once the
charge data are available. We have produced
the actual figures we used and disclosed our
formula. We intend to post the actual charge
data as soon as possible so that the public
can verify the raw data with the figures we
used in the calculation. As stated earlier and
in the proposed rule, the charge data used to
calculate the charge inflation factor are
sourced from our MedPAR database.
In addition, as stated in last year’s final
rule, for this final rule we continue to believe
that it is optimal to use the most recent
period of charge data available to measure
charge inflation. Similar to last year, the
commenters did not propose to use charge
data from a different period to compute the
charge inflation factor. If we computed the
charge inflation factor using the latest data
available to the public at the time of issuance
of this final rule, we would need to compare
charge data from FY 2015 (October 2014—
September 2015) to FY 2016 (October 2015—
September 2016), data which would be at
least 10 months old compared to the charge
data we currently use that are 4 months old.
Comment: One commenter requested that
CMS add the claims data used to compute
the charge inflation factor to the list of
limited data set (LDS) files that can be
ordered through the usual LDS data request
process.
Response: As we stated in response to a
similar comment in last year’s final rule,
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there are limitations on how expeditiously
we can add the charge data to the LDS. After
consulting with our systems teams and
privacy office, we do not anticipate being
able to provide the charge data we currently
use to calculate the charge inflation factor
within the commenter’s requested timeframe.
We prefer using the latest data available at
the time of the proposed and final rules to
compute the charge inflation factor because
we believe it leads to greater accuracy in the
calculation of the fixed-loss cost outlier
threshold. As noted earlier and in last year’s
final rule, we believe that using older data
may not provide the same accuracy as the
current data we use. We invite commenters
to inform us if they believe their need to have
complete access to the data we use in our
methodology outweighs the greater accuracy
provided by the use of more up-to-date data.
As noted above, the data we currently use
will eventually be publicly available for
replication but not in the timeframe the
commenter has requested. To summarize, we
are confronted with a dilemma—either we
use older data that commenters can access
earlier, or we use the most up-to-date data
which will be more accurate, but will not be
available to the public until after publication
of the proposed and final rules. For this final
rule, we continue to believe the latter
approach, using the best available data to
produce a more accurate charge inflation
factor, is preferable. However, for the FY
2019 IPPS/LTCH PPS proposed rule, we are
considering using data that commenters can
access earlier. As we have done in the past,
in the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 20173), we proposed to establish
the FY 2018 outlier threshold using hospital
CCRs from the December 2016 update to the
Provider-Specific File (PSF)—the most recent
available data at the time of the development
of the proposed rule. We proposed to apply
the following edits to providers’ CCRs in the
PSF. We believe these edits are appropriate
in order to accurately model the outlier
threshold. We first search for Indian Health
Service providers and those providers
assigned the statewide average CCR from the
current fiscal year. We then replace these
CCRs with the statewide average CCR for the
upcoming fiscal year. We also assign the
statewide average CCR (for the upcoming
fiscal year) to those providers that have no
value in the CCR field in the PSF or whose
CCRs exceed the ceilings described later in
this section (3.0 standard deviations from the
mean of the log distribution of CCRs for all
hospitals). We do not apply the adjustment
factors described below to hospitals assigned
the statewide average CCR.
For FY 2018, we proposed to continue to
apply an adjustment factor to the CCRs to
account for cost and charge inflation (as
explained below). We proposed that, if more
recent data became available, we would use
that data to calculate the final FY 2018
outlier threshold.
In the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50979), we adopted a new
methodology to adjust the CCRs. Specifically,
we finalized a policy to compare the national
average case-weighted operating and capital
CCR from the most recent update of the PSF
to the national average case-weighted
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operating and capital CCR from the same
period of the prior year.
Therefore, as we have done since FY 2014,
we proposed to adjust the CCRs from the
December 2016 update of the PSF by
comparing the percentage change in the
national average case-weighted operating
CCR and capital CCR from the December
2015 update of the PSF to the national
average case-weighted operating CCR and
capital CCR from the December 2016 update
of the PSF. We note that, in the proposed
rule, we used total transfer-adjusted cases
from FY 2016 to determine the national
average case-weighted CCRs for both sides of
the comparison. As stated in the FY 2014
IPPS/LTCH PPS final rule (78 FR 50979), we
believe that it is appropriate to use the same
case count on both sides of the comparison
because this will produce the true percentage
change in the average case-weighted
operating and capital CCR from one year to
the next without any effect from a change in
case count on different sides of the
comparison.
Using the proposed methodology above, for
the proposed rule, we calculated a December
2015 operating national average caseweighted CCR of 0.274139 and a December
2016 operating national average caseweighted CCR of 0.26579. We then calculated
the percentage change between the two
national operating case-weighted CCRs by
subtracting the December 2015 operating
national average case-weighted CCR from the
December 2016 operating national average
case-weighted CCR and then dividing the
result by the December 2015 national
operating average case-weighted CCR. This
resulted in a proposed national operating
CCR adjustment factor of 0.979187.
We used the same methodology proposed
above to adjust the capital CCRs. Specifically,
for the proposed rule, we calculated a
December 2015 capital national average caseweighted CCR of 0.024047 and a December
2016 capital national average case-weighted
CCR of 0.022967. We then calculated the
percentage change between the two national
capital case-weighted CCRs by subtracting
the December 2015 capital national average
case-weighted CCR from the December 2016
capital national average case-weighted CCR
and then dividing the result by the December
2015 capital national average case-weighted
CCR. This resulted in a proposed national
capital CCR adjustment factor of 0.955068.
As discussed in section III.B.3. of the
preamble to the FY 2011 IPPS/LTCH PPS
final rule (75 FR 50160 and 50161) and in
section III.H.3. of the preamble of the
proposed rule and this final rule, in
accordance with section 10324(a) of the
Affordable Care Act, we created a wage index
floor of 1.0000 for all hospitals located in
States determined to be frontier States. We
note that the frontier State floor adjustments
were calculated and applied after rural floor
budget neutrality adjustments were
calculated for all labor market areas, in order
to ensure that no hospital in a frontier State
will receive a wage index less than 1.0000
due to the rural floor adjustment. In
accordance with section 10324(a) of the
Affordable Care Act, the frontier State
adjustment will not be subject to budget
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38525
neutrality, and will only be extended to
hospitals geographically located within a
frontier State. However, for purposes of
estimating the outlier threshold for FY 2018,
it was necessary to adjust the wage index of
those eligible hospitals in a frontier State
when calculating the outlier threshold that
results in outlier payments being 5.1 percent
of total payments for FY 2018. If we did not
take the above into account, our estimate of
total FY 2018 payments would be too low,
and, as a result, our outlier threshold would
be too high, such that estimated outlier
payments would be less than our projected
5.1 percent of total payments.
As we did in establishing the FY 2009
outlier threshold (73 FR 57891), in our
projection of FY 2018 outlier payments, we
proposed not to make any adjustments for the
possibility that hospitals’ CCRs and outlier
payments may be reconciled upon cost report
settlement. We stated that we continue to
believe that, due to the policy implemented
in the June 9, 2003 Outlier Final Rule (68 FR
34494), CCRs will no longer fluctuate
significantly and, therefore, few hospitals
will actually have these ratios reconciled
upon cost report settlement. In addition, it is
difficult to predict the specific hospitals that
will have CCRs and outlier payments
reconciled in any given year. We note that we
have instructed MACs to identify for CMS
any instances where (1) a hospital’s actual
CCR for the cost reporting period fluctuates
plus or minus 10 percentage points compared
to the interim CCR used to calculate outlier
payments when a bill is processed; and (2)
the total outlier payments for the hospital
exceeded $500,000.00 for that period. Our
simulations assume that CCRs accurately
measure hospital costs based on information
available to us at the time we set the outlier
threshold. For these reasons, we proposed
not to make any assumptions regarding the
effects of reconciliation on the outlier
threshold calculation.
Comment: Commenters were concerned
with CMS’ decision not to consider outlier
reconciliation in developing the outlier
threshold and stated that CMS did not
provide objective data concerning the
number of hospitals that have been subjected
to reconciliation and the amounts recovered
during this process.
Response: The commenters’ views were
similar to comments received and responded
to in the FY 2015 IPPS/LTCH PPS final rule
(79 FR 50376 through 50377), and we refer
readers to that rule for our response.
As described in sections V.I. and V.J.,
respectively, of the preamble of this final
rule, sections 1886(q) and 1886(o) of the Act
establish the Hospital Readmissions
Reduction Program and the Hospital VBP
Program, respectively. We do not believe that
it is appropriate to include the hospital VBP
payment adjustments and the hospital
readmissions payment adjustments in the
outlier threshold calculation or the outlier
offset to the standardized amount.
Specifically, consistent with our definition of
the base operating DRG payment amount for
the Hospital Readmissions Reduction
Program under § 412.152 and the Hospital
VBP Program under § 412.160, outlier
payments under section 1886(d)(5)(A) of the
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Act are not affected by these payment
adjustments. Therefore, outlier payments will
continue to be calculated based on the
unadjusted base DRG payment amount (as
opposed to using the base-operating DRG
payment amount adjusted by the hospital
readmissions payment adjustment and the
hospital VBP payment adjustment).
Consequently, we proposed to exclude the
hospital VBP payment adjustments and the
hospital readmissions payment adjustments
from the calculation of the outlier fixed-loss
cost threshold.
We note that, to the extent section 1886(r)
of the Act modifies the DSH payment
methodology under section 1886(d)(5)(F) of
the Act, the uncompensated care payment
under section 1886(r)(2) of the Act, like the
empirically justified Medicare DSH payment
under section 1886(r)(1) of the Act, may be
considered an amount payable under section
1886(d)(5)(F) of the Act such that it would be
reasonable to include the payment in the
outlier determination under section
1886(d)(5)(A) of the Act. As we have done
since the implementation of uncompensated
care payments in FY 2014, for FY 2018 we
proposed allocating an estimated perdischarge uncompensated care payment
amount to all cases for the hospitals eligible
to receive the uncompensated care payment
amount in the calculation of the outlier fixedloss cost threshold methodology. We
continue to believe that allocating an eligible
hospital’s estimated uncompensated care
payment to all cases equally in the
calculation of the outlier fixed-loss cost
threshold would best approximate the
amount we would pay in uncompensated
care payments during the year because, when
we make claim payments to a hospital
eligible for such payments, we would be
making estimated per-discharge
uncompensated care payments to all cases
equally. Furthermore, we continue to believe
that using the estimated per-claim
uncompensated care payment amount to
determine outlier estimates provides
predictability as to the amount of
uncompensated care payments included in
the calculation of outlier payments.
Therefore, consistent with the methodology
used since FY 2014 to calculate the outlier
fixed-loss cost threshold, for FY 2018, we
proposed to include estimated FY 2018
uncompensated care payments in the
computation of the outlier fixed-loss cost
threshold. Specifically, we proposed to use
the estimated per-discharge uncompensated
care payments to hospitals eligible for the
uncompensated care payment for all cases in
the calculation of the proposed outlier fixedloss cost threshold methodology.
Using this methodology, we used the
formula described in section I.C.1 of this
Addendum to simulate and calculate the
Federal payment rate and outlier payments
for all claims. We proposed a threshold of
$26,713 and calculated total operating
Federal payments of $89,955,398,001 and
total outlier payments of $4,587,838,750. We
then divided total outlier payments by total
operating Federal payments plus total outlier
payments and determined that this threshold
met the 5.1 percent target. As a result, we
proposed an outlier fixed-loss cost threshold
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for FY 2018 equal to the prospective payment
rate for the MS–DRG, plus any IME,
empirically justified Medicare DSH
payments, estimated uncompensated care
payment, and any add-on payments for new
technology, plus $26,713.
Comment: One commenter noted that
dividing the total outlier payments of
$4,587,838,750 by total operating Federal
payments of $89,955,398,001 plus total
outlier payments of $4,587,838,750 yields
4.85 percent instead of 5.1 percent.
Response: The commenter is correct. We
inadvertently summed total operating
Federal payments with total outlier payments
in the number of $89,955,398,001 above. The
corrected total operating Federal payments
for the proposed rule is $85,367,559,251.
Dividing the proposed total outlier payments
of $4,587,838,750 by the corrected proposed
total operating Federal payments of
$85,367,559,251 plus proposed total outlier
payments of $4,587,838,750 yields the 5.1
percent target. We thank the commenter for
noting this error.
Comment: One commenter believed that it
is important that CMS accurately calculate
prior year actual payment comparisons to the
5.1 percent target. The commenter asserted
that it is not possible for CMS to
appropriately modify the methodology to
achieve an accurate result if CMS is not
aware of, or misinformed about, inaccuracies
resulting from the prior year’s methodology.
The commenter cited the FY 2017 IPPS/
LTCH PPS proposed rule as an example
where CMS indicated that actual outlier
payments for FY 2015 were approximately
4.68 percent of overall payments. The
commenter stated that it was concerned that
CMS believed the agency would reach the 5.1
percent target for FY 2015 only to learn that
the original estimate was overestimated and
still raise the threshold for the subsequent
year.
The same commenter noted that the final
outlier threshold established by CMS is
always significantly lower than the threshold
set forth in the proposed rule. The
commenter believed the decline is most
likely due to the use of updated CCRs or
other data in calculating the final threshold.
The commenter stated this emphasizes that
CMS must use the most recent data available
when the agency calculates the outlier
threshold. The commenter cited as an
example that, in the proposed rule, CMS
used data from the December 2016 PSF file,
but at the time the proposed rule was issued,
the March 2017 PSF file was available.
Response: We responded to similar
comments in the FY 2015 IPPS/LTCH PPS
final rule (79 FR 50378 through 50379) and
refer the reader to that rule for our response.
Comment: One commenter asked if CMS
used more updated data for the FY 2017
proposed rule than in prior years because the
variance in the outlier fixed-loss cost
threshold from the FY 2017 proposed rule
($23,681) to the FY 2017 final rule ($23,573)
was much smaller than prior fiscal years
(approximately $100 versus a variance of
approximately $1,000 to $2,000 from FY
2009 through FY 2016).
Response: Regarding the data used for the
FY 2017 proposed and final rule, we used the
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Sfmt 4700
same update of the MedPAR data as in prior
fiscal years. Specifically, we use the
December update of the MedPAR for the
proposed rule and the March update of the
MedPAR for the final rule.
Comment: Some commenters believed that
the outlier threshold should be further
reduced because outlier payments this year
are on target to fall below the 5.1 percent
target. The commenter suggested that CMS
consider calculating the threshold at the
midpoint of the target (approximately 5.5
percent) in order to ensure that the final total
of outlier payments is between the statutory
requirements of 5 to 6 percent of total
payments.
Some commenters recommended that the
threshold be maintained at the FY 2017
outlier threshold because CMS has underpaid
outlier payments in prior fiscal years with no
adjustment to make up for the shortfalls. One
commenter noted that CMS’ estimate of FY
2016 outlier payments in the proposed rule
was 5.37 percent, which is above the 5.1
percent target. The commenter favored a
simplified methodology and believed that by
applying a 2-year charge inflation factor and
a 1-year CCR factor that CMS is inadvertently
compounding its charge increase with lower
costs and overstating the outlier threshold.
The commenter suggested that CMS apply
the following formula to compute the FY
2018 outlier threshold: Step 1—FY 2016
Difference = (FY 2016 estimate of 5.37
percent ¥5.1 percent target = 0.27 percent)
/ 5.1 percent target = 5.29 percent; Step 2—
Suggested FY 2018 Threshold = Threshold
from FY 2017 of $23,570 * (100 + 5.29 from
Step 1 = 105.29 percent) = $24,817. The
commenter concluded that the FY 2018
fixed-loss cost threshold should not exceed
$24,817.
Response: We responded to similar
comments in the FY 2015 IPPS/LTCH PPS
final rule (79 FR 50379) and the FY 2016
IPPS/LTCH PPS final rule (80 FR 49783) and
refer readers to those final rules for our
complete responses.
Comment: One commenter asked that CMS
consider whether it is appropriate to include
extreme cases when calculating the
threshold. The commenter explained that
high charge cases have a significant impact
on the threshold. The commenter observed
that the amount of cases with over $1.5
million in charges has increased significantly
from FY 2011 (926 cases) to FY 2016 (1,733
cases). The commenter believed that the
impact of these cases will cause the threshold
to rise and recommended that CMS consider
the removal of high charge cases from the
calculation of the threshold.
Response: We thank the commenter for its
analysis. The methodology used to calculate
the outlier threshold includes all claims in
order to account for all different types of
cases, including high charge cases, to ensure
that CMS meets the 5.1 percent target. As the
commenter pointed out, the volume of these
cases continues to rise, making their impact
on the threshold significant. We believe
excluding these cases would artificially
lower the threshold. We believe it is
important to include all cases in the
calculation of the threshold no matter how
high or low the charges. Including these
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cases with high charges lends more accuracy
to the threshold, as these cases have an
impact on the threshold and continue to rise
in volume. Therefore, we disagree with the
commenter.
After consideration of the public comments
we received, we are not making any changes
Quarter
Covered charges
(April 1, 2015, through
March 31, 2016)
Cases
(April 1, 2015, through
March 31, 2016)
Similar to the table provided in the
proposed rule, for this final rule, we are
providing the following table that displays
covered charges and cases by quarter in the
periods used to calculate the charge inflation
factor based on the latest claims data from
the MedPAR file.
Covered charges
(April 1, 2016, through
March 31, 2017)
Cases
(April 1, 2016, through
March 31, 2017)
.......................................
.......................................
.......................................
.......................................
$141,152,765,310
128,006,070,168
125,050,723,246
130,279,257,188
2,511,643
2,429,952
2,350,572
2,385,573
$117,678,018,441
135,162,474,098
131,355,245,078
135,647,775,015
2,041,566
2,412,323
2,344,249
2,374,373
Total ..........................
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1
2
3
4
to our methodology in this final rule for FY
2018. Therefore, we are using the same
methodology we proposed to calculate the
final outlier threshold. We note that, as stated
above, we will consider for FY 2019 using
data that commenters can access earlier to
validate the charge inflation factor.
38527
524,488,815,912
9,677,740
519,843,512,632
9,172,511
Under our current methodology, to
compute the 1-year average annualized rateof-change in charges per case for FY 2018, we
compared the average covered charge per
case of $54,195 ($524,488,815,912/9,677,740)
from the third quarter of FY 2015 through the
second quarter of FY 2016 (April 1, 2015,
through March 31, 2016) to the average
covered charge per case of $56,674
($519,843,512,632/9,172,511) from the third
quarter of FY 2016 through the second
quarter of FY 2017 (April 1, 2016, through
March 31, 2017). This rate-of-change is 4.6
percent (1.04574) or 9.4 percent (1.09357)
over 2 years. The billed charges are obtained
from the claim from the MedPAR file and
inflated by the inflation factor specified
above.
Similar to the proposed rule, for this final
rule, we have made available a more detailed
summary table by provider with the monthly
charges that were used to compute the charge
inflation factor on the CMS Web site at:
https://www.cms.gov/Medicare/MedicareFee-for-Service-Payment/AcuteInpatientPPS/
index.html (click on the link on the left titled
‘‘FY 2018 IPPS Final Rule Home Page’’ and
then click the link ‘‘FY 2018 Final Rule Data
Files’’).
As we have done in the past, we are
establishing the FY 2018 outlier threshold
using hospital CCRs from the March 2017
update to the Provider-Specific File (PSF)—
the most recent available data at the time of
the development of this final rule. For FY
2018, we also are continuing to apply an
adjustment factor to the CCRs to account for
cost and charge inflation (as explained
below).
Therefore, as we did for the last 4 fiscal
years, we are adjusting the CCRs from the
March 2017 update of the PSF by comparing
the percentage change in the national average
case-weighted operating CCR and capital
CCR from the March 2016 update of the PSF
to the national average case-weighted
operating CCR and capital CCR from the
March 2017 update of the PSF. We note that
we used total transfer-adjusted cases from FY
2016 to determine the national average caseweighted CCRs for both sides of the
comparison.
Using the methodology above, for this final
rule, we calculated a March 2016 operating
national average case-weighted CCR of
0.269558 and a March 2017 operating
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national average case-weighted CCR of
0.265668. We then calculated the percentage
change between the two national operating
case-weighted CCRs by subtracting the March
2016 operating national average caseweighted CCR from the March 2017 operating
national average case-weighted CCR and then
dividing the result by the March 2016
national operating average case-weighted
CCR. This resulted in a national operating
CCR adjustment factor of 0.985569 (the
factors used to determine this result were
based on unrounded numbers).
We used the same methodology above to
adjust the capital CCRs. Specifically, for this
final rule, we calculated a March 2016 capital
national average case-weighted CCR of
0.023751 and a March 2017 capital national
average case-weighted CCR of 0.22615. We
then calculated the percentage change
between the two national capital caseweighted CCRs by subtracting the March
2016 capital national average case-weighted
CCR from the March 2017 capital national
average case-weighted CCR and then dividing
the result by the March 2016 capital national
average case-weighted CCR. This resulted in
a national capital CCR adjustment factor of
0.952173 (the factors used to determine this
result were based on unrounded numbers).
As discussed above, similar to the
proposed rule, for FY 2018 we applied the
following policies (see discussion above for
more details):
• In accordance with section 10324(a) of
the Affordable Care Act, we created a wage
index floor of 1.0000 for all hospitals located
in States determined to be frontier States.
• As we did in establishing the FY 2009
outlier threshold (73 FR 57891), in our
projection of FY 2018 outlier payments, we
did not make any adjustments for the
possibility that hospitals’ CCRs and outlier
payments may be reconciled upon cost report
settlement.
• We excluded the hospital VBP payment
adjustments and the hospital readmissions
payment adjustments from the calculation of
the outlier fixed-loss cost threshold.
• We used the estimated per-discharge
uncompensated care payments to hospitals
eligible for the uncompensated care payment
for all cases in the calculation of the outlier
fixed-loss cost threshold methodology.
Using this methodology, we used the
formula described in section I.C.1. of this
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Addendum to simulate and calculate the
Federal payment rate and outlier payments
for all claims. We calculated a threshold of
$26,601 and calculated total operating
Federal payments of $85,942,484,975 and
total outlier payments of $4,618,707,285. We
then divided total outlier payments by total
operating Federal payments plus total outlier
payments and determined that this threshold
met the 5.1 percent target. As a result, we are
finalizing an outlier fixed-loss cost threshold
for FY 2018 equal to the prospective payment
rate for the MS–DRG, plus any IME,
empirically justified Medicare DSH
payments, estimated uncompensated care
payment, and any add-on payments for new
technology, plus $26,601.
(2) Other Changes Concerning Outliers
As stated in the FY 1994 IPPS final rule (58
FR 46348), we establish an outlier threshold
that is applicable to both hospital inpatient
operating costs and hospital inpatient
capital-related costs. When we modeled the
combined operating and capital outlier
payments, we found that using a common
threshold resulted in a lower percentage of
outlier payments for capital-related costs
than for operating costs. We project that the
thresholds for FY 2018 will result in outlier
payments that will equal 5.1 percent of
operating DRG payments and 5.16 percent of
capital payments based on the Federal rate.
In accordance with section 1886(d)(3)(B) of
the Act, we reduced the FY 2018
standardized amount by the same percentage
to account for the projected proportion of
payments paid as outliers.
The outlier adjustment factors that were
applied to the standardized amount based on
the FY 2018 outlier threshold are as follows:
Operating
standardized
amounts
National .........
Capital
federal
rate
0.948999
0.948400
We applied the outlier adjustment factors
to the FY 2018 payment rates after removing
the effects of the FY 2017 outlier adjustment
factors on the standardized amount.
To determine whether a case qualifies for
outlier payments, we apply hospital-specific
CCRs to the total covered charges for the
case. Estimated operating and capital costs
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for the case are calculated separately by
applying separate operating and capital
CCRs. These costs are then combined and
compared with the outlier fixed-loss cost
threshold.
Under our current policy at § 412.84, we
calculate operating and capital CCR ceilings
and assign a statewide average CCR for
hospitals whose CCRs exceed 3.0 standard
deviations from the mean of the log
distribution of CCRs for all hospitals. Based
on this calculation, for hospitals for which
the MAC computes operating CCRs greater
than 1.16 or capital CCRs greater than 0.155,
or hospitals for which the MAC is unable to
calculate a CCR (as described under
§ 412.84(i)(3) of our regulations), statewide
average CCRs are used to determine whether
a hospital qualifies for outlier payments.
Table 8A listed in section VI. of this
Addendum (and available only via the
Internet on the CMS Web site) contains the
statewide average operating CCRs for urban
hospitals and for rural hospitals for which
the MAC is unable to compute a hospitalspecific CCR within the above range. These
statewide average ratios will be effective for
discharges occurring on or after October 1,
2017 and will replace the statewide average
ratios from the prior fiscal year. Table 8B
listed in section VI. of this Addendum (and
available via the Internet on the CMS Web
site) contains the comparable statewide
average capital CCRs. As previously stated,
the CCRs in Tables 8A and 8B will be used
during FY 2018 when hospital-specific CCRs
based on the latest settled cost report either
are not available or are outside the range
noted above. Table 8C listed in section VI. of
this Addendum (and available via the
Internet on the CMS Web site) contains the
statewide average total CCRs used under the
LTCH PPS as discussed in section V. of this
Addendum.
We finally note that we published a
manual update (Change Request 3966) to our
outlier policy on October 12, 2005, which
updated Chapter 3, Section 20.1.2 of the
Medicare Claims Processing Manual. The
manual update covered an array of topics,
including CCRs, reconciliation, and the time
value of money. We encourage hospitals that
are assigned the statewide average operating
and/or capital CCRs to work with their MAC
on a possible alternative operating and/or
capital CCR as explained in Change Request
3966. Use of an alternative CCR developed by
the hospital in conjunction with the MAC
can avoid possible overpayments or
underpayments at cost report settlement,
thereby ensuring better accuracy when
making outlier payments and negating the
need for outlier reconciliation. We also note
that a hospital may request an alternative
operating or capital CCR at any time as long
as the guidelines of Change Request 3966 are
followed. In addition, as mentioned above,
we published an additional manual update
(Change Request 7192) to our outlier policy
on December 3, 2010, which also updated
Chapter 3, Section 20.1.2 of the Medicare
Claims Processing Manual. The manual
update outlines the outlier reconciliation
process for hospitals and Medicare
contractors. To download and view the
manual instructions on outlier reconciliation,
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we refer readers to the CMS Web site: https://
www.cms.hhs.gov/manuals/downloads/
clm104c03.pdf.
(3) FY 2016 Outlier Payments
Our current estimate, using available FY
2016 claims data, is that actual outlier
payments for FY 2016 were approximately
5.41 percent of actual total MS–DRG
payments. Therefore, the data indicate that,
for FY 2016, the percentage of actual outlier
payments relative to actual total payments is
higher than we projected for FY 2016.
Consistent with the policy and statutory
interpretation we have maintained since the
inception of the IPPS, we do not make
retroactive adjustments to outlier payments
to ensure that total outlier payments for FY
2016 are equal to 5.1 percent of total MS–
DRG payments. As explained in the FY 2003
Outlier Final Rule (68 FR 34502), if we were
to make retroactive adjustments to all outlier
payments to ensure total payments are 5.1
percent of MS–DRG payments (by
retroactively adjusting outlier payments), we
would be removing the important aspect of
the prospective nature of the IPPS. Because
such an across-the-board adjustment would
either lead to more or less outlier payments
for all hospitals, hospitals would no longer
be able to reliably approximate their payment
for a patient while the patient is still
hospitalized. We believe it would be neither
necessary nor appropriate to make such an
aggregate retroactive adjustment.
Furthermore, we believe it is consistent with
the statutory language at section
1886(d)(5)(A)(iv) of the Act not to make
retroactive adjustments to outlier payments.
This section calls for the Secretary to ensure
that outlier payments are equal to or greater
than 5 percent and less than or equal to 6
percent of projected or estimated (not actual)
MS–DRG payments. We believe that an
important goal of a PPS is predictability.
Therefore, we believe that the fixed-loss
outlier threshold should be projected based
on the best available historical data and
should not be adjusted retroactively. A
retroactive change to the fixed-loss outlier
threshold would affect all hospitals subject to
the IPPS, thereby undercutting the
predictability of the system as a whole.
We note that because the MedPAR claims
data for the entire FY 2017 will not be
available until after September 30, 2017, we
are unable to provide an estimate of actual
outlier payments for FY 2017 based on FY
2017 claims data in this final rule. We will
provide an estimate of actual FY 2017 outlier
payments in the FY 2019 IPPS/LTCH PPS
proposed rule.
Comment: One commenter noted that, in
the proposed rule, CMS stated that actual
outlier payments for FY 2016 were
approximately 5.37 percent of total MS–DRG
payments. The commenter performed its own
analysis and concluded that outlier payments
for FY 2016 are approximately 5.27 percent
of total MS–DRG payments. The commenter
was concerned that CMS’ estimate was
overstated.
Response: We thank the commenter for the
comments. We reviewed our data to ensure
the estimate provided is accurate. Therefore,
we believe we have provided a reliable
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Sfmt 4700
estimate of the outlier percentage for FY
2016. The commenter did not provide details
regarding the discrepancy. We welcome
additional suggestions from the public,
including the commenter, to improve the
accuracy of our estimate of actual outlier
payments.
5. FY 2018 Standardized Amount
The adjusted standardized amount is
divided into labor-related and nonlaborrelated portions. Tables 1A and 1B listed and
published in section VI. of this Addendum
(and available via the Internet on the CMS
Web site) contain the national standardized
amounts that we are applying to all hospitals,
except hospitals located in Puerto Rico, for
FY 2018. The standardized amount for
hospitals in Puerto Rico is shown in Table 1C
listed and published in section VI. of this
Addendum (and available via the Internet on
the CMS Web site). The amounts shown in
Tables 1A and 1B differ only in that the
labor-related share applied to the
standardized amounts in Table 1A is 68.3
percent, and the labor-related share applied
to the standardized amounts in Table 1B is
62 percent. In accordance with sections
1886(d)(3)(E) and 1886(d)(9)(C)(iv) of the Act,
we are applying a labor-related share of 62
percent, unless application of that percentage
would result in lower payments to a hospital
than would otherwise be made. In effect, the
statutory provision means that we will apply
a labor-related share of 62 percent for all
hospitals whose wage indexes are less than
or equal to 1.0000.
In addition, Tables 1A and 1B include the
standardized amounts reflecting the
applicable percentage increases for FY 2018.
The labor-related and nonlabor-related
portions of the national average standardized
amounts for Puerto Rico hospitals for FY
2018 are set forth in Table 1C listed and
published in section VI. of this Addendum
(and available via the Internet on the CMS
Web site). Similar to above, section
1886(d)(9)(C)(iv) of the Act, as amended by
section 403(b) of Public Law 108–173,
provides that the labor-related share for
hospitals located in Puerto Rico be 62
percent, unless the application of that
percentage would result in lower payments
to the hospital.
The following table illustrates the changes
from the FY 2017 national standardized
amount to the FY 2018 national standardized
amount. The second through fifth columns
display the changes from the FY 2017
standardized amounts for each applicable FY
2018 standardized amount. The first row of
the table shows the updated (through FY
2017) average standardized amount after
restoring the FY 2017 offsets for outlier
payments, geographic reclassification budget
neutrality, new labor market delineation
wage index transition budget neutrality and
removing the FY 2017 2-midnight rule onetime prospective increase. The MS–DRG
reclassification and recalibration and wage
index budget neutrality adjustment factors
are cumulative. Therefore, those FY 2017
adjustment factors are not removed from this
table.
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38529
CHANGES FROM FY 2017 STANDARDIZED AMOUNTS TO THE FY 2018 STANDARDIZED AMOUNTS
Hospital submitted quality
data and is a meaningful
EHR user
FY 2018 Base Rate after
removing:
1. FY 2017 Geographic Reclassification Budget Neutrality (0.988136).
2. FY 2017 Operating
Outlier Offset
(0.948998).
3. FY 2017 2-Midnight
Rule One-Time Prospective Increase
(1.006).
4. FY 2017 Labor Market Delineation
Wage Index Transition Budget Neutrality Factor
(0.999997).
Hospital submitted quality
data and is NOT a meaningful EHR user
Hospital did NOT submit
quality data and is a
meaningful EHR user
Hospital did NOT submit
quality data and is NOT a
meaningful EHR user
If Wage Index is Greater
Than 1.0000:
If Wage Index is Greater
Than 1.0000:
If Wage Index is Greater
Than 1.0000:
If Wage Index is Greater
Than 1.0000:
Labor (68.3%):
$3,993.72.
Labor (68.3%):
$3,993.72.
Labor (68.3%):
$3,993.72.
Labor (68.3%):
$3,993.72.
Nonlabor (30.4%):
$1,853.60.
Nonlabor (30.4%):
$1,853.60.
Nonlabor (30.4%):
$1,853.60.
Nonlabor (30.4%):
$1,853.60.
If Wage Index is less
Than or Equal to
1.0000:
If Wage Index is less
Than or Equal to
1.0000:
If Wage Index is less
Than or Equal to
1.0000:
If Wage Index is less
Than or Equal to
1.0000:
Labor (62%): $3,625.34 ....
Nonlabor (38%): $2,221.98
sradovich on DSK3GMQ082PROD with RULES2
FY 2018 Update Factor .....
FY 2018 MS-DRG Recalibration Budget Neutrality Factor.
FY 2018 Wage Index
Budget Neutrality Factor.
FY 2018 Reclassification
Budget Neutrality Factor.
FY 2018 Operating Outlier
Factor.
Adjustment for FY 2018
Required under Section
414 of Public Law 114–
10 (MACRA) and Section 15005 of Public Law
114–255.
National Standardized
Amount for FY 2018 if
Wage Index is Greater
Than 1.0000; Labor/NonLabor Share Percentage
(68.3/31.7).
National Standardized
Amount for FY 2018 if
Wage Index is less Than
or Equal to 1.0000;
Labor/Non-Labor Share
Percentage (62/38).
Labor (62%): $3,625.34 ....
Nonlabor (38%): $2,221.98
Labor (62%): $3,625.34 ....
Nonlabor (38%): $2,221.98
1.0135 ...............................
0.997432 ...........................
0.99325 .............................
0.997432 ...........................
1.00675 .............................
0.997432 ...........................
Labor (62%): $3,625.34.
Nonlabor (38%):
$2,221.98.
0.9865.
0.997432.
1.001148 ...........................
1.001148 ...........................
1.001148 ...........................
1.001148.
0.988008 ...........................
0.988008 ...........................
0.988008 ...........................
0.988008.
0.948999 ...........................
0.948999 ...........................
0.948999 ...........................
0.98999.
1.004588 ...........................
1.004588 ...........................
1.004588 ...........................
1.004588.
Labor: $3,807.12 ...............
Nonlabor: $1,766.99 .........
Labor: $3,731.05 ...............
Nonlabor: $1,731.69 .........
Labor: $3,781.76 ...............
Nonlabor: $1,755.22 .........
Labor: $3,705.70.
Nonlabor: $1,719.92.
Labor: $3,455.95 ...............
Nonlabor: $2,118.16 .........
Labor: $3,386.90 ...............
Nonlabor: $2,075.84 .........
Labor: $3,432.93 ...............
Nonlabor: $2,104.05 .........
Labor: $3,363.88.
Nonlabor: $2,061.74.
We note that, in recent years, we have
estimated the MS–DRG recalibration budget
neutrality factor, wage index budget
neutrality factor, reclassification budget
neutrality factor and operating outlier factor
to six decimal places. In the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 20176), we
stated that while we are not proposing to
make any changes at this time, we were
interested in receiving comments from the
public as to the continued necessity of six
decimal places for these four estimates or if
fewer decimal places would be sufficient. We
did not receive any public comments
regarding the necessity of six decimals. We
will consider the use of fewer decimals in
future rulemaking.
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B. Adjustments for Area Wage Levels and
Cost-of-Living
Tables 1A through 1C, as published in
section VI. of this Addendum (and available
via the Internet on the CMS Web site),
contain the labor-related and nonlaborrelated shares that we used to calculate the
prospective payment rates for hospitals
located in the 50 States, the District of
Columbia, and Puerto Rico for FY 2018. This
section addresses two types of adjustments to
the standardized amounts that are made in
determining the prospective payment rates as
described in this Addendum.
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1. Adjustment for Area Wage Levels
Sections 1886(d)(3)(E) and
1886(d)(9)(C)(iv) of the Act require that we
make an adjustment to the labor-related
portion of the national prospective payment
rate to account for area differences in
hospital wage levels. This adjustment is
made by multiplying the labor-related
portion of the adjusted standardized amounts
by the appropriate wage index for the area in
which the hospital is located. For FY 2018,
as discussed in section IV.B.3. of the
preamble of this final rule, we will apply a
labor-related share of 68.3 percent for the
national standardized amounts for all IPPS
hospitals (including hospitals in Puerto Rico)
that have a wage index value that is greater
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Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
than 1.0000. Consistent with section
1886(d)(3)(E) of the Act, we will apply the
wage index to a labor-related share of 62
percent of the national standardized amount
for all IPPS hospitals (including hospitals in
Puerto Rico) whose wage index values are
less than or equal to 1.0000. In section III. of
the preamble of this final rule, we discuss the
data and methodology for the FY 2018 wage
index.
2. Adjustment for Cost-of-Living in Alaska
and Hawaii
Section 1886(d)(5)(H) of the Act provides
discretionary authority to the Secretary to
make adjustments as the Secretary deems
appropriate to take into account the unique
circumstances of hospitals located in Alaska
and Hawaii. Higher labor-related costs for
these two States are taken into account in the
adjustment for area wages described above.
To account for higher nonlabor-related costs
for these two States, we multiply the
nonlabor-related portion of the standardized
amount for hospitals in Alaska and Hawaii
by an adjustment factor. For FY 2011 and in
prior fiscal years, we used the most recent
cost-of-living adjustment (COLA) factors
obtained from the U.S. Office of Personnel
Management (OPM) Web site at https://
www.opm.gov/oca/cola/rates.asp to update
this nonlabor portion.
In the FY 2012 IPPS/LTCH PPS final rule
(76 FR 51797), we explained that 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. We finalized that, for
FY 2012, as OPM transitioned away from
COLAs, we would continue to use the same
‘‘frozen’’ COLA factors (published by OPM)
that we used to adjust payments in FY 2011
(which were based on OPM’s 2009 COLA
factors) to adjust the nonlabor-related portion
of the standardized amount for hospitals
located in Alaska and Hawaii. We refer
readers to the FY 2012 IPPS/LTCH PPS final
rule for a more detailed discussion of our
rationale for continuing to use the frozen
COLAs in FY 2012.
In the FY 2013 IPPS/LTCH PPS final rule
(77 FR 53700 and 53701), for FY 2013, we
continued to use the same COLA factors that
were used to adjust payments in FY 2012 (as
originally used to adjust payments in FY
2011, which were based on OPM’s 2009
COLA factors). We also established a
methodology to update the COLA factors
published by OPM every 4 years (at the same
time as the update of the labor-related share
of the IPPS market basket), beginning in FY
2014. We refer readers to the FY 2013 IPPS/
LTCH PPS proposed rule (77 FR 28145 and
28146) for a detailed description of this
methodology. For FY 2014, we updated the
COLA factors for Alaska and Hawaii
published by OPM for 2009 using the
methodology finalized in the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53700 and
53701).
For FY 2018, we proposed to continue to
update the COLA factors published by OPM
for 2009 (as these are the last COLA factors
OPM published prior to transitioning from
COLAs to locality pay) using the
methodology that we finalized in the FY
2013 IPPS/LTCH PPS final rule and
implemented for the FY 2014 IPPS update.
Specifically, we proposed to update the 2009
OPM COLA factors by a comparison of the
growth in the Consumer Price Indices (CPIs)
for Anchorage, AK, and Honolulu, HI,
relative to the growth in the CPI for the
average U.S. city as published by the Bureau
of Labor Statistics (BLS). Because BLS
publishes CPI data for only Anchorage and
Honolulu, using the methodology we
finalized in the FY 2013 IPPS/LTCH PPS
final rule, we used the comparison of the
growth in the overall CPI relative to the
growth in the CPI for those cities 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 appropriate
proxies for the relative price differences
between the ‘‘other areas’’ of Alaska and
Hawaii and the United States.
BLS publishes the CPI for All Items for
Anchorage, Honolulu, and for the average
U.S. city. However, consistent with our
methodology finalized in the FY 2013 IPPS/
LTCH PPS final rule, we created reweighted
CPIs for each of the respective areas to reflect
the underlying composition of the IPPS
market basket nonlabor-related share. The
current composition of the CPI for All Items
for all of the respective areas is
approximately 40 percent commodities and
60 percent services. However, the IPPS
nonlabor-related share is comprised of a
different mix of commodities and services.
Therefore, we created reweighted indexes for
Anchorage, Honolulu, and the average U.S.
city using the respective CPI commodities
index and CPI services index and using the
approximate 55 percent commodities/45
percent services shares obtained from the
proposed 2014-based IPPS market basket,
which is being finalized without
modification as discussed in section IV. of
the preamble of this final rule. We created
reweighted indexes using BLS data for 2009
through 2016—the most recent data available
at the time of this final rulemaking. In the FY
2014 IPPS/LTCH PPS final rule (78 FR 50985
through 50987), we created reweighted
indexes based on the FY 2010-based IPPS
market basket (which was adopted for the FY
2014 IPPS update) and BLS data for 2009
through 2012 (the most recent BLS data at the
time of the FY 2014 IPPS/LTCH PPS
rulemaking).
We continue to believe this methodology is
appropriate because we continue to make a
COLA for hospitals located in Alaska and
Hawaii by multiplying the nonlabor-related
portion of the standardized amount by a
COLA factor. We note that OPM’s COLA
factors were calculated with a statutorily
mandated cap of 25 percent. As stated in the
FY 2014 IPPS/LTCH PPS final rule (78 FR
50985 through 50987), under the COLA
update methodology we finalized in the FY
2013 IPPS/LTCH PPS final rule, we exercised
our discretionary authority to adjust
payments to hospitals in Alaska and Hawaii
by incorporating this cap. In applying this
finalized methodology for updating the
COLA factors, for FY 2018, we proposed to
continue to use such a cap, as our policy is
based on OPM’s COLA factors (updated by
the methodology described above).
Applying this methodology, the COLA
factors that we proposed to establish for FY
2018 to adjust the nonlabor-related portion of
the standardized amount for hospitals
located in Alaska and Hawaii are shown in
the table below. For comparison purposes,
we also are showing the FY 2013 COLA
factors (which were based on OPM’s
published COLA factors for 2009) and the FY
2014 COLA factors.
Lastly, as we finalized in the FY 2013
IPPS/LTCH PPS final rule (77 FR 53700 and
53701), we are updating the COLA factors
based on our methodology every 4 years, at
the same time as the update to the laborrelated share of the IPPS market basket.
COST-OF-LIVING ADJUSTMENT FACTORS: ALASKA AND HAWAII HOSPITALS
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Area
FY 2013
Alaska:
City of Anchorage and 80-kilometer (50-mile) radius by road .............................................
City of Fairbanks and 80-kilometer (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 ..............................................................................
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FY 2014
through
FY 2017
Proposed
FY 2018
1.23
1.23
1.23
1.25
1.23
1.23
1.23
1.25
1.25
1.25
1.25
1.25
1.25
1.18
1.25
1.25
1.25
1.19
1.25
1.25
1.25
1.21
1.25
1.25
14AUR2
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We note that the reweighted CPI for
Honolulu, HI grew faster than the reweighted
CPI for the average U.S. city over the 2009
to 2016 time period, at 13.7 percent and 10.5
percent, respectively. As a result, for FY
2018, we calculated proposed COLA factors
for the City and County of Honolulu, County
of Kauai, County of Maui, and County of
Kalawao to be 1.29 compared to the FY 2013
COLA factor of 1.25 (which was based on
OPM’s published COLA factors for 2009, as
described above). However, as stated above,
we are applying our methodology as finalized
in the FY 2013 IPPS/LTCH PPS final rule to
incorporate a cap of 1.25 for these areas. In
addition, the proposed COLA factor we
calculated for the County of Hawaii for FY
2018 is 1.21 compared to the FY 2013 COLA
factor of 1.18. The COLA factors adopted in
FY 2014 using this same methodology can be
found in the table above.
Similarly, the reweighted CPI for
Anchorage, AK grew faster than the
reweighted CPI for the average U.S. city over
the 2009 to 2016 time period, at 12.4 percent
and 10.5 percent, respectively. As a result,
for FY 2018, we calculated proposed COLA
factors for the City of Anchorage, City of
Fairbanks, and City of Juneau to be 1.25
compared to the FY 2013 COLA factor of
1.23. For FY 2018, we calculated a proposed
COLA factor of 1.27 for the rest of Alaska
compared to the FY 2013 COLA factor of
1.25. However, as stated above, we are
applying our methodology as finalized in the
FY 2013 IPPS/LTCH PPS final rule to
incorporate a cap of 1.25 for the Rest of
Alaska.
As stated above, the COLA factors adopted
in the FY 2014 IPPS/LTCH PPS final rule
were based on the same methodology we
proposed to use to determine the FY 2018
COLA factors but utilizing BLS data from
2009 through 2012 (the most recent data
available at the time of FY 2014 rulemaking)
rather than through 2016 (the most recent
data available at the time of this rulemaking).
As we noted in the proposed rule, compared
to the FY 2014 COLA factors, the proposed
FY 2018 COLA factors are higher—with all
areas either reaching or exceeding the cap of
1.25 except the County of Hawaii.
We did not receive any public comments
on our proposal to continue to update the
COLA factors published by OPM for 2009
using the methodology that we finalized in
the FY 2013 IPPS/LTCH PPS final rule and
implemented for the FY 2014 IPPS update. In
this final rule, we are finalizing the COLA
factors as proposed effective for FY 2018.
C. Calculation of the Prospective Payment
Rates
General Formula for Calculation of the
Prospective Payment Rates for FY 2018
In general, the operating prospective
payment rate for all hospitals (including
hospitals in Puerto Rico) paid under the
IPPS, except SCHs, for FY 2018 equals the
Federal rate (which includes uncompensated
care payments).
SCHs are paid based on whichever of the
following rates yields the greatest aggregate
payment: The Federal national rate (which,
as discussed in section V.G. of the preamble
of this final rule, includes uncompensated
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care payments); the updated hospital-specific
rate based on FY 1982 costs per discharge;
the updated hospital-specific rate based on
FY 1987 costs per discharge; the updated
hospital-specific rate based on FY 1996 costs
per discharge; or the updated hospitalspecific rate based on FY 2006 costs per
discharge to determine the rate that yields
the greatest aggregate payment.
The prospective payment rate for SCHs for
FY 2018 equals the higher of the applicable
Federal rate, or the hospital-specific rate as
described below.
1. Operating and Capital Federal Payment
Rate and Outlier Payment Calculation
Note: The formula below is used for actual
claim payment and is also used by CMS to
project the outlier threshold for the
upcoming fiscal year. The difference is the
source of some of the variables in the
formula. For example, operating and capital
CCRs for actual claim payment are from the
PSF while CMS uses an adjusted CCR (as
described above) to project the threshold for
the upcoming fiscal year. In addition, charges
for a claim payment are from the bill while
charges to project the threshold are from the
MedPAR data with an inflation factor applied
to the charges (as described earlier).
Step 1—Determine the MS–DRG and MS–
DRG relative weight for each claim based on
the ICD–10–CM procedure and diagnosis
codes on the claim.
Step 2—Select the applicable average
standardized amount depending on whether
the hospital submitted qualifying quality data
and is a meaningful EHR user, as described
above.
Step 3—Compute the operating and capital
Federal payment rate:
—Federal Payment Rate for Operating Costs
= MS–DRG Relative Weight × [(LaborRelated Applicable Standardized Amount
× Applicable CBSA Wage Index) +
(Nonlabor-Related Applicable
Standardized Amount × Cost-of-Living
Adjustment)] × (1 + IME + (DSH * 0.25))
—Federal Payment for Capital Costs = MS–
DRG Relative Weight × Federal Capital
Rate × Geographic Adjustment Fact × (l +
IME + DSH)
Step 4—Determine operating and capital
costs:
—Operating Costs = (Billed Charges ×
Operating CCR)
—Capital Costs = (Billed Charges × Capital
CCR).
Step 5—Compute operating and capital
outlier threshold (CMS applies a geographic
adjustment to the operating and capital
outlier threshold to account for local cost
variation):
—Operating CCR to Total CCR = (Operating
CCR)/(Operating CCR + Capital CCR)
—Operating Outlier Threshold = [Fixed Loss
Threshold × ((Labor-Related Portion ×
CBSA Wage Index) + Nonlabor-Related
portion)] × Operating CCR to Total CCR +
Federal Payment with IME, DSH +
Uncompensated Care Payment + New
Technology Add-On Payment Amount
—Capital CCR to Total CCR = (Capital CCR)/
(Operating CCR + Capital CCR)
—Capital Outlier Threshold = (Fixed Loss
Threshold × Geographic Adjustment Factor
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38531
× Capital CCR to Total CCR) + Federal
Payment with IME and DSH
Step 6—Compute operating and capital
outlier payments:
—Marginal Cost Factor = 0.80 or 0.90
(depending on the MS–DRG)
—Operating Outlier Payment = (Operating
Costs—Operating Outlier Threshold) ×
Marginal Cost Factor
—Capital Outlier Payment = (Capital Costs—
Capital Outlier Threshold) × Marginal Cost
Factor
The payment rate may then be further
adjusted for hospitals that qualify for a lowvolume payment adjustment under section
1886(d)(12) of the Act and 42 CFR
412.101(b). The base-operating DRG payment
amount may be further adjusted by the
hospital readmissions payment adjustment
and the hospital VBP payment adjustment as
described under sections 1886(q) and 1886(o)
of the Act, respectively. Payments also may
be reduced by the 1-percent adjustment
under the HAC Reduction Program as
described in section 1886(p) of the Act. We
also make new technology add-on payments
in accordance with section 1886(d)(5)(K) and
(L) of the Act. Finally, we add the
uncompensated care payment to the total
claim payment amount. As noted in the
formula above, we take uncompensated care
payments and new technology add-on
payments into consideration when
calculating outlier payments.
2. Hospital-Specific Rate (Applicable Only to
SCHs)
a. Calculation of Hospital-Specific Rate
Section 1886(b)(3)(C) of the Act provides
that SCHs are paid based on whichever of the
following rates yields the greatest aggregate
payment: The Federal rate; the updated
hospital-specific rate based on FY 1982 costs
per discharge; the updated hospital-specific
rate based on FY 1987 costs per discharge;
the updated hospital-specific rate based on
FY 1996 costs per discharge; or the updated
hospital-specific rate based on FY 2006 costs
per discharge to determine the rate that
yields the greatest aggregate payment. As
noted above, under section 205 of the
Medicare Access and CHIP Reauthorization
Act of 2015 (MACRA) (Pub. L. 114–10,
enacted on April 16, 2015), the MDH
program is set to expire at the end of FY
2017.
For a more detailed discussion of the
calculation of the hospital-specific rates, we
refer readers to the FY 1984 IPPS interim
final rule (48 FR 39772); the April 20, 1990
final rule with comment period (55 FR
15150); the FY 1991 IPPS final rule (55 FR
35994); and the FY 2001 IPPS final rule (65
FR 47082).
b. Updating the FY 1982, FY 1987, FY 1996,
FY 2002 and FY 2006 Hospital-Specific Rate
for FY 2018
Section 1886(b)(3)(B)(iv) of the Act
provides that the applicable percentage
increase applicable to the hospital-specific
rates for SCHs equals the applicable
percentage increase set forth in section
1886(b)(3)(B)(i) of the Act (that is, the same
update factor as for all other hospitals subject
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to the IPPS). Because the Act sets the update
factor for SCHs equal to the update factor for
all other IPPS hospitals, the update to the
hospital-specific rates for SCHs is subject to
the amendments to section 1886(b)(3)(B) of
the Act made by sections 3401(a) and
10319(a) of the Affordable Care Act.
Accordingly, the applicable percentage
Hospital
submitted
quality data
and is a
meaningful
EHR user
FY 2018
sradovich on DSK3GMQ082PROD with RULES2
Market Basket Rate-of-Increase ......................................................................
Adjustment for Failure to Submit Quality Data under Section
1886(b)(3)(B)(viii) of the Act .........................................................................
Adjustment for Failure to be a Meaningful EHR User under Section
1886(b)(3)(B)(ix) of the Act ..........................................................................
MFP Adjustment under Section 1886(b)(3)(B)(xi) of the Act ..........................
Statutory Adjustment under Section 1886(b)(3)(B)(xii) of the Act ...................
Applicable Percentage Increase Applied to Hospital-Specific Rate ................
For a complete discussion of the applicable
percentage increase applied to the hospitalspecific rates for SCHs, we refer readers to
section V.B. of the preamble of this final rule.
In addition, because SCHs use the same
MS–DRGs as other hospitals when they are
paid based in whole or in part on the
hospital-specific rate, the hospital-specific
rate is adjusted by a budget neutrality factor
to ensure that changes to the MS–DRG
classifications and the recalibration of the
MS–DRG relative weights are made in a
manner so that aggregate IPPS payments are
unaffected. Therefore, the hospital-specific
rate for an SCH is adjusted by the MS–DRG
reclassification and recalibration budget
neutrality factor of 0.997432, as discussed in
section III. of this Addendum. The resulting
rate is used in determining the payment rate
that an SCH will receive for its discharges
beginning on or after October 1, 2017. We
note that, in this final rule, for FY 2018, we
are not making a documentation and coding
adjustment to the hospital-specific rate. We
refer readers to section II.D. of the preamble
of this final rule for a complete discussion
regarding our policies and previously
finalized policies (including our historical
adjustments to the payment rates) relating to
the effect of changes in documentation and
coding that do not reflect real changes in
case-mix.
Also, as discussed in section V.M. of the
preamble of this final rule, we are including
a factor of (1/1.006) in the calculation of the
FY 2018 hospital-specific rates. Specifically,
in the FY 2017 IPPS/LTCH PPS final rule (81
FR 57058 through 57060), using our authority
under section 1886(d)(5)(I)(i) of the Act, we
finalized a policy to include a permanent
factor of (1/0.998) and a temporary one-time
factor of (1.006) in the calculation of the FY
2017 hospital-specific rates and to include a
factor of (1/1.006) in the calculation of the FY
2018 hospital-specific rates to remove the
temporary one-time factor of 1.006 applied in
FY 2017 to address the effects of the 0.2
percent reduction to the rates for the 2midnight policy in effect for FY 2014, FY
2015, and FY 2016. Therefore, in this final
rule, for FY 2018, we are removing the
temporary one-time prospective increase to
the FY 2017 hospital-specific rates of 0.6
percent or a factor of 1.006.
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Hospital
submitted
quality data
and is NOT a
meaningful
EHR user
Hospital did
NOT submit
quality data
and is a
meaningful
EHR user
Hospital did
NOT submit
quality data
and is NOT a
meaningful
EHR user
2.7
2.7
2.7
2.7
0.0
0.0
¥0.675
¥0.675
0.0
¥0.6
¥0.75
1.35
¥2.025
¥0.6
¥0.75
¥0.675
0.0
¥0.6
¥0.75
0.675
¥2.025
¥0.6
¥0.75
¥1.35
III. Changes to Payment Rates for Acute Care
Hospital Inpatient Capital-Related Costs for
FY 2018
The PPS for acute care hospital inpatient
capital-related costs was implemented for
cost reporting periods beginning on or after
October 1, 1991. Effective with that cost
reporting period, over a 10-year transition
period (which extended through FY 2001)
the payment methodology for Medicare acute
care hospital inpatient capital-related costs
changed from a reasonable cost-based
methodology to a prospective methodology
(based fully on the Federal rate).
The basic methodology for determining
Federal capital prospective rates is set forth
in the regulations at 42 CFR 412.308 through
412.352. Below we discuss the factors that
we used to determine the capital Federal rate
for FY 2018, which will be effective for
discharges occurring on or after October 1,
2017.
The 10-year transition period ended with
hospital cost reporting periods beginning on
or after October 1, 2001 (FY 2002). Therefore,
for cost reporting periods beginning in FY
2002, all hospitals (except ‘‘new’’ hospitals
under § 412.304(c)(2)) are paid based on the
capital Federal rate. For FY 1992, we
computed the standard Federal payment rate
for capital-related costs under the IPPS by
updating the FY 1989 Medicare inpatient
capital cost per case by an actuarial estimate
of the increase in Medicare inpatient capital
costs per case. Each year after FY 1992, we
update the capital standard Federal rate, as
provided at § 412.308(c)(1), to account for
capital input price increases and other
factors. The regulations at § 412.308(c)(2) also
provide that the capital Federal rate be
adjusted annually by a factor equal to the
estimated proportion of outlier payments
under the capital Federal rate to total capital
payments under the capital Federal rate. In
addition, § 412.308(c)(3) requires that the
capital Federal rate be reduced by an
adjustment factor equal to the estimated
proportion of payments for exceptions under
§ 412.348. (We note that, as discussed in the
FY 2013 IPPS/LTCH PPS final rule (77 FR
53705), there is generally no longer a need for
an exceptions payment adjustment factor.)
However, in limited circumstances, an
additional payment exception for
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increases to the hospital-specific rates
applicable to SCHs are the following:
extraordinary circumstances is provided for
under § 412.348(f) for qualifying hospitals.
Therefore, in accordance with
§ 412.308(c)(3), an exceptions payment
adjustment factor may need to be applied if
such payments are made. Section
412.308(c)(4)(ii) requires that the capital
standard Federal rate be adjusted so that the
effects of the annual DRG reclassification and
the recalibration of DRG weights and changes
in the geographic adjustment factor (GAF) are
budget neutral.
Section 412.374 provides for payments to
hospitals located in Puerto Rico under the
IPPS for acute care hospital inpatient capitalrelated costs. In the FY 2017 IPPS/LTCH PPS
final rule (81 FR 57061 through 57062), we
revised § 412.374 to add paragraph (e) to
provide that, effective with discharges on or
after October 1, 2016, capital IPPS payments
to hospitals located in Puerto Rico are based
on 100 percent of the Federal rate.
A. Determination of the Federal Hospital
Inpatient Capital-Related Prospective
Payment Rate Update for FY 2018
In the discussion that follows, we explain
the factors that we used to determine the
capital Federal rate for FY 2018. In
particular, we explain why the FY 2018
capital Federal rate will increase
approximately 1.61 percent, compared to the
FY 2017 capital Federal rate. As discussed in
the impact analysis in Appendix A to this
final rule, we estimate that capital payments
per discharge will increase approximately 2.5
percent during that same period. Because
capital payments constitute approximately 10
percent of hospital payments, a 1-percent
change in the capital Federal rate yields only
approximately a 0.1 percent change in actual
payments to hospitals.
1. Projected Capital Standard Federal Rate
Update
a. Description of the Update Framework
Under § 412.308(c)(1), the capital standard
Federal rate is updated on the basis of an
analytical framework that takes into account
changes in a capital input price index (CIPI)
and several other policy adjustment factors.
Specifically, we adjust the projected CIPI rate
of change as appropriate each year for casemix index-related changes, for intensity, and
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for errors in previous CIPI forecasts. The
update factor for FY 2018 under that
framework is 1.3 percent based on a
projected 1.3 percent increase in the 2014based CIPI, a 0.0 percentage point adjustment
for intensity, a 0.0 percentage point
adjustment for case-mix, a 0.0 percentage
point adjustment for the DRG reclassification
and recalibration, and a forecast error
correction of 0.0 percentage point. As
discussed in section III.C. of this Addendum,
we continue to believe that the CIPI is the
most appropriate input price index for
capital costs to measure capital price changes
in a given year. We also explain the basis for
the FY 2018 CIPI projection in that same
section of this Addendum. Below we
describe the policy adjustments that we are
applying in the update framework for FY
2018.
The case-mix index is the measure of the
average DRG weight for cases paid under the
IPPS. Because the DRG weight determines
the prospective payment for each case, any
percentage increase in the case-mix index
corresponds to an equal percentage increase
in hospital payments.
The case-mix index can change for any of
several reasons:
• The average resource use of Medicare
patient changes (‘‘real’’ case-mix change);
• Changes in hospital documentation and
coding of patient records result in higherweighted DRG assignments (‘‘coding
effects’’); and
• The annual DRG reclassification and
recalibration changes may not be budget
neutral (‘‘reclassification effect’’).
We define real case-mix change as actual
changes in the mix (and resource
requirements) of Medicare patients as
opposed to changes in documentation and
coding behavior that result in assignment of
cases to higher-weighted DRGs, but do not
reflect higher resource requirements. The
capital update framework includes the same
case-mix index adjustment used in the
former operating IPPS update framework (as
discussed in the May 18, 2004 IPPS proposed
rule for FY 2005 (69 FR 28816)). (We no
longer use an update framework to make a
recommendation for updating the operating
IPPS standardized amounts as discussed in
section II. of Appendix B to the FY 2006 IPPS
final rule (70 FR 47707).)
For FY 2018, we are projecting a 0.5
percent total increase in the case-mix index.
We estimated that the real case-mix increase
will equal 0.5 percent for FY 2018. The net
adjustment for change in case-mix is the
difference between the projected real
increase in case-mix and the projected total
increase in case-mix. Therefore, the net
adjustment for case-mix change in FY 2018
is 0.0 percentage point.
The capital update framework also
contains an adjustment for the effects of DRG
reclassification and recalibration. This
adjustment is intended to remove the effect
on total payments of prior year’s changes to
the DRG classifications and relative weights,
in order to retain budget neutrality for all
case-mix index-related changes other than
those due to patient severity of illness. Due
to the lag time in the availability of data,
there is a 2-year lag in data used to determine
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the adjustment for the effects of DRG
reclassification and recalibration. For
example, we have data available to evaluate
the effects of the FY 2016 DRG
reclassification and recalibration as part of
our update for FY 2018. We assume, for
purposes of this adjustment, that the estimate
of FY 2016 DRG reclassification and
recalibration resulted in no change in the
case-mix when compared with the case-mix
index that would have resulted if we had not
made the reclassification and recalibration
changes to the DRGs. Therefore, we are
making a 0.0 percentage point adjustment for
reclassification and recalibration in the
update framework for FY 2018.
The capital update framework also
contains an adjustment for forecast error. The
input price index forecast is based on
historical trends and relationships
ascertainable at the time the update factor is
established for the upcoming year. In any
given year, there may be unanticipated price
fluctuations that may result in differences
between the actual increase in prices and the
forecast used in calculating the update
factors. In setting a prospective payment rate
under the framework, we make an
adjustment for forecast error only if our
estimate of the change in the capital input
price index for any year is off by 0.25
percentage point or more. There is a 2-year
lag between the forecast and the availability
of data to develop a measurement of the
forecast error. Historically, when a forecast
error of the CIPI is greater than 0.25
percentage point in absolute terms, it is
reflected in the update recommended under
this framework. A forecast error of 0.2
percentage point was calculated for the FY
2016 update, for which there are historical
data. That is, current historical data indicate
that the forecasted FY 2016 CIPI (1.3 percent)
used in calculating the FY 2016 update factor
was 0.2 percentage points higher than actual
realized price increases (1.1 percent).
However, as this does not exceed the 0.25
percentage point threshold, we are not
making an adjustment for forecast error in the
update for FY 2018.
Under the capital IPPS update framework,
we also make an adjustment for changes in
intensity. Historically, we calculated this
adjustment using the same methodology and
data that were used in the past under the
framework for operating IPPS. The intensity
factor for the operating update framework
reflected how hospital services are utilized to
produce the final product, that is, the
discharge. This component accounts for
changes in the use of quality-enhancing
services, for changes within DRG severity,
and for expected modification of practice
patterns to remove noncost-effective services.
Our intensity measure is based on a 5-year
average.
We calculate case-mix constant intensity as
the change in total cost per discharge,
adjusted for price level changes (the CPI for
hospital and related services) and changes in
real case-mix. Without reliable estimates of
the proportions of the overall annual
intensity changes that are due, respectively,
to ineffective practice patterns and the
combination of quality-enhancing new
technologies and complexity within the DRG
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38533
system, we assume that one-half of the
annual change is due to each of these factors.
The capital update framework thus provides
an add-on to the input price index rate of
increase of one-half of the estimated annual
increase in intensity, to allow for increases
within DRG severity and the adoption of
quality-enhancing technology.
In this final rule, we are continuing to use
a Medicare-specific intensity measure that is
based on a 5-year adjusted average of cost per
discharge for FY 2018 (we refer readers to the
FY 2011 IPPS/LTCH PPS final rule (75 FR
50436) for a full description of our Medicarespecific intensity measure). Specifically, for
FY 2018, we are using an intensity measure
that is based on an average of cost per
discharge data from the 5-year period
beginning with FY 2011 and extending
through FY 2015. Based on these data, we
estimated that case-mix constant intensity
declined during FYs 2011 through 2015. In
the past, when we found intensity to be
declining, we believed a zero (rather than a
negative) intensity adjustment was
appropriate. Consistent with this approach,
because we estimate that intensity will
decline during that 5-year period, we believe
it is appropriate to continue to apply a zero
intensity adjustment for FY 2018. Therefore,
we are making a 0.0 percentage point
adjustment for intensity in the update for FY
2018.
Above, we described the basis of the
components we used to develop the 1.3
percent capital update factor under the
capital update framework for FY 2018 as
shown in the following table.
CMS FY 2018 UPDATE FACTOR TO
THE CAPITAL FEDERAL RATE
Capital Input Price Index * ...............................
Intensity: ..........................................................
Case-Mix Adjustment Factors:
Real Across DRG Change .......................
Projected Case-Mix Change ....................
1.3
0.0
0.5
0.5
Subtotal ....................................................
Effect of FY 2016 Reclassification and
Recalibration .........................................
Forecast Error Correction ........................
1.3
Total Update ............................................
1.3
0.0
0.0
* The capital input price index represents the
2014-based CIPI.
b. Comparison of CMS and MedPAC Update
Recommendation
In its March 2017 Report to Congress,
MedPAC did not make a specific update
recommendation for capital IPPS payments
for FY 2018. (We refer readers to MedPAC’s
Report to the Congress: Medicare Payment
Policy, March 2017, Chapter 3, available on
the Web site at: https://www.medpac.gov.)
2. Outlier Payment Adjustment Factor
Section 412.312(c) establishes a unified
outlier payment methodology for inpatient
operating and inpatient capital-related costs.
A single set of thresholds is used to identify
outlier cases for both inpatient operating and
inpatient capital-related payments. Section
412.308(c)(2) provides that the standard
Federal rate for inpatient capital-related costs
be reduced by an adjustment factor equal to
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the estimated proportion of capital-related
outlier payments to total inpatient capitalrelated PPS payments. The outlier thresholds
are set so that operating outlier payments are
projected to be 5.1 percent of total operating
IPPS DRG payments.
For FY 2017, we estimated that outlier
payments for capital would equal 6.14
percent of inpatient capital-related payments
based on the capital Federal rate in FY 2017.
Based on the thresholds as set forth in
section II.A. of this Addendum, we estimate
that outlier payments for capital-related costs
will equal 5.16 percent for inpatient capitalrelated payments based on the capital
Federal rate in FY 2018. Therefore, we are
applying an outlier adjustment factor of
0.9484 in determining the capital Federal rate
for FY 2018. Thus, we estimate that the
percentage of capital outlier payments to
total capital Federal rate payments for FY
2018 will be lower than the percentage for FY
2017.
The outlier reduction factors are not built
permanently into the capital rates; that is,
they are not applied cumulatively in
determining the capital Federal rate. The FY
2018 outlier adjustment of 0.9484 is a 1.04
percent change from the FY 2017 outlier
adjustment of 0.9386. Therefore, the net
change in the outlier adjustment to the
capital Federal rate for FY 2018 is
1.0104(0.9484/0.9386). Thus, the outlier
adjustment will increase the FY 2018 capital
Federal rate by 1.04 percent compared to the
FY 2017 outlier adjustment.
3. Budget Neutrality Adjustment Factor for
Changes in DRG Classifications and Weights
and the GAF
Section 412.308(c)(4)(ii) requires that the
capital Federal rate be adjusted so that
aggregate payments for the fiscal year based
on the capital Federal rate after any changes
resulting from the annual DRG
reclassification and recalibration and changes
in the GAF are projected to equal aggregate
payments that would have been made on the
basis of the capital Federal rate without such
changes. The budget neutrality factor for DRG
reclassifications and recalibration nationally
is applied in determining the capital IPPS
Federal rate, and is applicable for all
hospitals, including those hospitals located
in Puerto Rico.
To determine the national capital rate
factors for FY 2018, we compared estimated
aggregate capital Federal rate payments based
on the FY 2017 MS–DRG classifications and
relative weights and the FY 2017 GAF to
estimated aggregate capital Federal rate
payments based on the FY 2017 MS–DRG
classifications and relative weights and the
FY 2018 GAFs. To achieve budget neutrality
for the changes in the national GAFs, based
on calculations using updated data, we
applied an incremental budget neutrality
adjustment factor of 0.9994 for FY 2018 to
the previous cumulative FY 2017 adjustment
factor of 0.9850, yielding an adjustment
factor of 0.9844 through FY 2018.
We then compared estimated aggregate
capital Federal rate payments based on the
FY 2017 MS–DRG relative weights and the
FY 2018 GAFs to estimated aggregate capital
Federal rate payments based on the
cumulative effects of the FY 2018 MS–DRG
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classifications and relative weights and the
FY 2018 GAFs. The incremental adjustment
factor for DRG classifications and changes in
relative weights is 0.9993. The cumulative
adjustment factor for MS–DRG classifications
and changes in relative weights and for
changes in the GAFs through FY 2018 is
0.9837. (We note that all the values are
calculated with unrounded numbers.)
The GAF/DRG budget neutrality
adjustment factors are built permanently into
the capital rates; that is, they are applied
cumulatively in determining the capital
Federal rate. This follows the requirement
under § 412.308(c)(4)(ii) that estimated
aggregate payments each year be no more or
less than they would have been in the
absence of the annual DRG reclassification
and recalibration and changes in the GAFs.
The methodology used to determine the
recalibration and geographic adjustment
factor (GAF/DRG) budget neutrality
adjustment is similar to the methodology
used in establishing budget neutrality
adjustments under the IPPS for operating
costs. One difference is that, under the
operating IPPS, the budget neutrality
adjustments for the effect of geographic
reclassifications are determined separately
from the effects of other changes in the
hospital wage index and the MS–DRG
relative weights. Under the capital IPPS,
there is a single GAF/DRG budget neutrality
adjustment factor for changes in the GAF
(including geographic reclassification) and
the MS–DRG relative weights. In addition,
there is no adjustment for the effects that
geographic reclassification has on the other
payment parameters, such as the payments
for DSH or IME.
The cumulative adjustment factor of 0.9986
(the product of the incremental national GAF
budget neutrality adjustment factor of 0.9994
and the incremental DRG budget neutrality
adjustment factor of 0.9993) accounts for the
MS–DRG reclassifications and recalibration
and for changes in the GAFs. It also
incorporates the effects on the GAFs of FY
2018 geographic reclassification decisions
made by the MGCRB compared to FY 2017
decisions. However, it does not account for
changes in payments due to changes in the
DSH and IME adjustment factors.
As discussed in the FY 2017 IPPS/LTCH
PPS final rule (81 FR 57062), we made an
adjustment of (1/0.998) to the national capital
Federal rate to remove the 0.2 percent
reduction (an adjustment factor of 0.998) to
the national capital Federal rate to offset the
estimated increase in capital IPPS
expenditures associated with the 2-midnight
policy. This was consistent with the
adjustment to the operating IPPS
standardized amount and the hospitalspecific payment rates. In addition,
consistent with the approach for the
operating IPPS standardized amount and
hospital-specific payment rates and for the
reasons discussed in the FY 2017 IPPS/LTCH
PPS final rule, we made a one-time
prospective adjustment of 1.006 in FY 2017
to the national capital Federal rate to address
the effect of the 0.2 percent reduction to the
national capital Federal rates in effect for FY
2014, FY 2015, and FY 2016. Furthermore, as
provided for in the FY 2017 IPPS/LTCH PPS
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final rule (81 FR 57294) we are removing this
one-time prospective adjustment through an
adjustment of (1/1.006) to the national capital
Federal rate in FY 2018, consistent with the
approach for the operating IPPS standardized
amount and hospital-specific payment rates
(as discussed in section V.M. of the preamble
of this final rule). We refer readers to sections
V.M. and VI.C. of the preamble of this final
rule for a complete discussion of these issues.
4. Capital Federal Rate for FY 2018
For FY 2017, we established a capital
Federal rate of $446.79 (81 FR 68947 through
68949 (Correction Notice)). We are
establishing an update of 1.61 percent in
determining the FY 2018 capital Federal rate
for all hospitals. As a result of this update,
the budget neutrality factors discussed
earlier, and the adjustment to remove the
one-time 0.6 percent adjustment made in FY
2017 to address the effect of the 0.2 percent
reduction to the national capital Federal rates
in effect for FY 2014, FY 2015, and FY 2016,
as finalized in the FY 2017 IPPS/LTCH PPS
final rule (81 FR 57294), we are establishing
a national capital Federal rate of $453.97 for
FY 2018. The national capital Federal rate for
FY 2018 was calculated as follows:
• The FY 2018 update factor is 1.0130; that
is, the update is 1.3 percent.
• The FY 2018 budget neutrality
adjustment factor that is applied to the
capital Federal rate for changes in the MS–
DRG classifications and relative weights and
changes in the GAFs is 0.9986.
• The FY 2018 outlier adjustment factor is
0.9484.
• The 2-midnight policy adjustment to
remove the one-time 0.6 percent adjustment
is 1/1.006.
(We note that, as discussed in section VI.C.
of the preamble of this final rule, we are not
making an additional MS–DRG
documentation and coding adjustment to the
capital IPPS Federal rate for FY 2018.)
Because the FY 2018 capital Federal rate
has already been adjusted for differences in
case-mix, wages, cost-of-living, indirect
medical education costs, and payments to
hospitals serving a disproportionate share of
low-income patients, we are not making
additional adjustments in the capital Federal
rate for these factors, other than the budget
neutrality factor for changes in the MS–DRG
classifications and relative weights and for
changes in the GAFs.
We are providing the following chart that
shows how each of the factors and
adjustments for FY 2018 affects the
computation of the FY 2018 national capital
Federal rate in comparison to the FY 2017
national capital Federal rate as presented in
the FY 2017 IPPS/LTCH PPS final rule (81 FR
57291 through 57295) as corrected in the
Correction Notice published October 5, 2016
(81 FR 68954). The FY 2018 update factor has
the effect of increasing the capital Federal
rate by 1.3 percent compared to the FY 2017
capital Federal rate. The GAF/DRG budget
neutrality adjustment factor has the effect of
decreasing the capital Federal rate by 0.14
percent. The FY 2018 outlier adjustment
factor has the effect of increasing the capital
Federal rate by 1.04 percent compared to the
FY 2017 capital Federal rate. The removal of
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the one-time 0.6 percent adjustment for FY
2017 relating to the 2-midnight policy has the
effect of decreasing the capital Federal rate
by 0.60 percent. The combined effect of all
the changes will increase the national capital
Federal rate by approximately 1.61 percent
compared to the FY 2017 national capital
Federal rate.
COMPARISON OF FACTORS AND ADJUSTMENTS: FY 2017 CAPITAL FEDERAL RATE AND FY 2018 CAPITAL FEDERAL RATE
FY 2017
Update Factor 1 ..........................................................................................
GAF/DRG Adjustment Factor 1 ..................................................................
Outlier Adjustment Factor 2 ........................................................................
Removal of One-Time 2-Midnight Policy Adjustment Factor ....................
Capital Federal Rate ..................................................................................
FY 2018
1.0090
0.9990
0.9386
1.0060
$446.79
Change
1.0130
0.9986
0.9484
1/1.006
$453.97
Percent
change
1.0130
0.9986
1.0104
0.9940
1.0161
1.30
¥0.14
1.04
¥0.60
3 1.61
1 The update factor and the GAF/DRG budget neutrality adjustment factors are built permanently into the capital Federal rates. Thus, for example, the incremental change from FY 2017 to FY 2018 resulting from the application of the 0.9986 GAF/DRG budget neutrality adjustment factor
for FY 2018 is a net change of 0.9986 (or ¥0.14 percent).
2 The outlier reduction factor is not built permanently into the capital Federal rate; that is, the factor is not applied cumulatively in determining
the capital Federal rate. Thus, for example, the net change resulting from the application of the FY 2018 outlier adjustment factor is 0.9484/
0.9386 or 1.0104 (or 1.04 percent).
3 Percent change may not sum due to rounding.
In this final rule, we also are providing the
following chart that shows how the final FY
2018 capital Federal rate differs from the
proposed FY 2018 capital Federal rate as
presented in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20179 through 20182).
COMPARISON OF FACTORS AND ADJUSTMENTS: PROPOSED FY 2018 CAPITAL FEDERAL RATE AND FINAL FY 2018
CAPITAL FEDERAL RATE
Proposed FY
2018
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Update Factor 1 ..........................................................................................
GAF/DRG Adjustment Factor 1 ..................................................................
Outlier Adjustment Factor 2 ........................................................................
Removal of One-Time 2-Midnight Policy Adjustment Factor ....................
Capital Federal Rate ..................................................................................
B. Calculation of the Inpatient CapitalRelated Prospective Payments for FY 2018
For purposes of calculating payments for
each discharge during FY 2018, the capital
Federal rate is adjusted as follows: (Standard
Federal Rate) × (DRG weight) × (GAF) ×
(COLA for hospitals located in Alaska and
Hawaii) × (1 + DSH Adjustment Factor + IME
Adjustment Factor, if applicable). The result
is the adjusted capital Federal rate.
Hospitals also may receive outlier
payments for those cases that qualify under
the thresholds established for each fiscal
year. Section 412.312(c) provides for a single
set of thresholds to identify outlier cases for
both inpatient operating and inpatient
capital-related payments. The outlier
thresholds for FY 2018 are in section II.A. of
this Addendum. For FY 2018, a case would
qualify as a cost outlier if the cost for the case
plus the (operating) IME and DSH payments
(including both the empirically justified
Medicare DSH payment and the estimated
uncompensated care payment, as discussed
in section II.A.4.g.(1) of this Addendum) is
greater than the prospective payment rate for
the MS–DRG plus the fixed-loss amount of
$26,601.
Currently, as provided under
§ 412.304(c)(2), we pay a new hospital 85
percent of its reasonable costs during the first
2 years of operation unless it elects to receive
payment based on 100 percent of the capital
Federal rate. Effective with the third year of
operation, we pay the hospital based on 100
percent of the capital Federal rate (that is, the
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Final FY 2018
1.0120
0.9992
0.9434
1/1.006
$451.37
same methodology used to pay all other
hospitals subject to the capital PPS).
C. Capital Input Price Index
1. Background
Like the operating input price index, the
capital input price index (CIPI) is a fixedweight price index that measures the price
changes associated with capital costs during
a given year. The CIPI differs from the
operating input price index in one important
aspect—the CIPI reflects the vintage nature of
capital, which is the acquisition and use of
capital over time. Capital expenses in any
given year are determined by the stock of
capital in that year (that is, capital that
remains on hand from all current and prior
capital acquisitions). An index measuring
capital price changes needs to reflect this
vintage nature of capital. Therefore, the CIPI
was developed to capture the vintage nature
of capital by using a weighted-average of past
capital purchase prices up to and including
the current year.
We periodically update the base year for
the operating and capital input price indexes
to reflect the changing composition of inputs
for operating and capital expenses. For this
FY 2018 IPPS/LTCH PPS final rule, we are
rebasing and revising the IPPS operating and
capital market baskets to reflect a 2014 base
year. For a complete discussion of this
rebasing, we refer readers to section IV. of the
preamble of this final rule.
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Change
1.0130
0.9986
0.9484
1/1.006
$453.97
Percent
change
1.0010
0.9994
1.0053
0.0000
1.0458
0.10
¥0.06
0.53
¥0.00
0.58
2. Forecast of the CIPI for FY 2018
Based on IGI, Inc.’s second quarter 2017
forecast, for this final rule, we are forecasting
the 2014-based CIPI to increase 1.3 percent
in FY 2018. This reflects a projected 1.6
percent increase in vintage-weighted
depreciation prices (building and fixed
equipment, and movable equipment), and a
projected 3.5 percent increase in other capital
expense prices in FY 2018, partially offset by
a projected 1.3 percent decline in vintageweighted interest expense prices in FY 2018.
The weighted average of these three factors
produces the forecasted 1.3 percent increase
for the 2014-based CIPI in FY 2018.
IV. Changes to Payment Rates for Excluded
Hospitals: Rate-of-Increase Percentages for
FY 2018
Payments for services furnished in
children’s hospitals, 11 cancer hospitals, and
hospitals located outside the 50 States, the
District of Columbia and Puerto Rico (that is,
short-term acute care hospitals located in the
U.S. Virgin Islands, Guam, the Northern
Mariana Islands, and American Samoa) that
are excluded from the IPPS are made on the
basis of reasonable costs based on the
hospital’s own historical cost experience,
subject to a rate-of-increase ceiling. A per
discharge limit (the target amount as defined
in § 413.40(a) of the regulations) is set for
each hospital based on the hospital’s own
cost experience in its base year, and updated
annually by a rate-of-increase percentage
specified in § 413.40(c)(3). In addition, in the
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FY 2018 IPPS/LTCH PPS proposed rule (82
FR 20029), we proposed that, for cost
reporting periods beginning during FY 2018,
the annual update to the target amount for
long-term care neoplastic disease hospitals
(hospitals described under § 412.23(j); now
§ 412.22(i) in this final rule) also would be
the rate-of-increase percentage specified in
§ 413.0(c)(3). (We note that, in accordance
with § 403.752(a), religious nonmedical
health care institutions (RNHCIs) are also
subject to the rate-of-increase limits
established under § 413.40 of the
regulations.)
As discussed in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 20003 and 20004),
the proposed FY 2018 rate-of-increase
percentage for updating the target amounts
for the 11 cancer hospitals, children’s
hospitals, the short-term acute care hospitals
located in the U.S. Virgin Islands, Guam, the
Northern Mariana Islands, and American
Samoa, and RNHCIs is the estimated
percentage increase in the IPPS operating
market basket for FY 2018, in accordance
with applicable regulations at § 413.40. Based
on IGI’s 2016 fourth quarter forecast, we
estimated that the proposed 2014-based IPPS
operating market basket update for FY 2018
was 2.9 percent (that is, the estimate of the
market basket rate-of-increase). However, we
proposed that if more recent data became
available for the final rule, we would use
them to calculate the IPPS operating market
basket update for FY 2018. For this final rule,
based on IGI’s 2017 second quarter forecast
(which is the most recent available data), we
estimated that the 2014-based IPPS operating
market basket update for FY 2018 is 2.7
percent (that is, the estimate of the market
basket rate-of-increase). Therefore, for
children’s hospitals, the 11 cancer hospitals,
hospitals located outside the 50 States, the
District of Columbia and Puerto Rico (that is,
short-term acute care hospitals located in the
U.S. Virgin Islands, Guam, the Northern
Mariana Islands, and American Samoa), as
well as long-term care neoplastic disease
hospitals, which will now be called extended
neoplastic disease care hospitals as discussed
in section VII. of the preamble to this final
rule, and RNHCIs, the FY 2018 rate-ofincrease percentage that will be applied to
the FY 2017 target amounts in order to
determine the FY 2018 target amounts is 2.7
percent.
The IRF PPS, the IPF PPS, and the LTCH
PPS are updated annually. We refer readers
to section VIII. of the preamble of this final
rule and section V. of the Addendum to this
final rule for the update changes to the
Federal payment rates for LTCHs under the
LTCH PPS for FY 2018. The annual updates
for the IRF PPS and the IPF PPS are issued
by the agency in separate Federal Register
documents.
V. Changes to the Payment Rates for the
LTCH PPS for FY 2018
A. LTCH PPS Standard Federal Payment Rate
for 2018
1. Overview
In section VIII. of the preamble of this final
rule, we discuss our annual updates to the
payment rates, factors, and specific policies
under the LTCH PPS for FY 2018.
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Under § 412.523(c)(3)(ii) of the regulations,
for LTCH PPS rate years beginning with RY
2004 through RY 2006, we updated the
standard Federal payment rate annually by a
factor to adjust for the most recent estimate
of the increases in prices of an appropriate
market basket of goods and services for
LTCHs. We established this policy of
annually updating the standard Federal
payment rate because, at that time, we
believed that was the most appropriate
method for updating the rate for years after
the initial implementation of the LTCH PPS
in FY 2003. Therefore, under
§ 412.523(c)(3)(ii), for RYs 2004 through
2006, the annual update to the LTCH PPS
standard Federal payment rate was equal to
the previous rate year’s Federal rate updated
by the most recent estimate of increases in
the appropriate market basket of goods and
services included in covered inpatient LTCH
services.
In determining the annual update to the
standard Federal payment rate for RY 2007,
based on our ongoing monitoring activity, we
believed that, rather than solely using the
most recent estimate of the LTCH PPS market
basket update as the basis of the annual
update factor, it was appropriate to adjust the
standard Federal payment rate to account for
the effect of documentation and coding in a
prior period that was unrelated to patients’
severity of illness (71 FR 27818).
Accordingly, we established under
§ 412.523(c)(3)(iii) that the annual update to
the standard Federal payment rate for RY
2007 was zero percent based on the most
recent estimate of the LTCH PPS market
basket at that time, offset by an adjustment
to account for changes in case-mix in prior
periods due to the effect of documentation
and coding that were unrelated to patients’
severity of illness. For RY 2008 through FY
2011, we also made an adjustment to account
for the effect of documentation and coding
that was unrelated to patients’ severity of
illness in establishing the annual update to
the standard Federal payment rate as set forth
in the regulations at §§ 412.523(c)(3)(iv)
through (c)(3)(vii). For FYs 2012 through
2017, we updated the standard Federal
payment rate by the most recent estimate of
the LTCH PPS market basket at that time,
including additional statutory adjustments
required by sections 1886(m)(3)(A)(i) (citing
sections 1886(b)(3)(B)(xi)(II),
1886(m)(3)(A)(ii), and 1886(m)(4) of the Act
as set forth in the regulations at
§§ 412.523(c)(3)(viii) through (c)(3)(xiii)).
Section 1886(m)(3)(A) of the Act, as added
by section 3401(c) of the Affordable Care Act,
specifies that, for rate year 2010 and each
subsequent rate year, any annual update to
the standard Federal payment rate shall be
reduced:
• For rate year 2010 through 2019, by the
other adjustment specified in section
1886(m)(3)(A)(ii) and (m)(4) of the Act; and
• For rate year 2012 and each subsequent
year, by the productivity adjustment
described in section 1886(b)(3)(B)(xi)(II) of
the Act (which we refer to as ‘‘the multifactor
productivity (MFP) adjustment’’) as
discussed in section VIII.E.2. of the preamble
of this final rule.
Section 1886(m)(3)(B) of the Act provides
that the application of paragraph (3) of
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section 1886(m) of the Act may result in the
annual update being less than zero for a rate
year, and may result in payment rates for a
rate year being less than such payment rates
for the preceding rate year. (As noted in
section VIII.C.2.b. of the preamble of this
final rule, the annual update to the LTCH
PPS occurs on October 1 and we have
adopted the term ‘‘fiscal year’’ (FY) rather
than ‘‘rate year’’ (RY) under the LTCH PPS
beginning October 1, 2010. Therefore, for
purposes of clarity, when discussing the
annual update for the LTCH PPS, including
the provisions of the Affordable Care Act, we
use the term ‘‘fiscal year’’ rather than ‘‘rate
year’’ for 2011 and subsequent years.)
Notwithstanding those provisions, however,
section 411(e) of Public Law 114–10 (the
MACRA) requires a 1 percent update in FY
2018.
For FY 2017, consistent with our historical
practice, we established an update to the
LTCH PPS standard Federal payment rate
based on the full estimated LTCH PPS market
basket increase of 2.8 percent and the 1.05
percentage point reductions required by
sections 1886(m)(3)(A)(i) and
1886(m)(3)(A)(ii) with 1886(m)(4)(F) of the
Act. Accordingly, at § 412.523(c)(3)(xiii) of
the regulations, we established an annual
update of 1.75 percent to the standard
Federal payment rate for FY 2017 (81 FR
57296 through 57297). In addition, as
discussed in that same final rule, the annual
update for FY 2017 was further reduced by
2.0 percentage points for LTCHs that failed
to submit quality reporting data in
accordance with the requirements of the
LTCH QRP under section 1886(m)(5) of the
Act.
Section 411(e) of the MACRA amended
section 1886(m)(3) of the Act by providing an
additional special rule for FY 2018.
Specifically, as amended, section
1886(m)(3)(C) of the Act requires that the
annual update for FY 2018, after applications
of the reductions for the MFP adjustment and
the ‘‘other adjustment’’ (under section
1886(m)(3)(A)) is 1 percent. (For additional
details, refer to section VIII.C.2. of the
preamble of this final rule.) Accordingly, in
this final rule, we are providing an annual
update to the LTCH PPS standard Federal
payment rate of 1 percent for FY 2018 as
required by section 411(e)(2) of the MACRA.
For LTCHs that fail to submit the required
quality reporting data for FY 2017 in
accordance with the LTCH QRP, the annual
update is reduced by 2.0 percentage points as
required by section 1886(m)(5) of the Act.
Accordingly, we are providing an annual
update to the LTCH PPS standard Federal
payment rate of ¥1.0 percent for LTCHs that
fail to submit the required quality reporting
data for FY 2018 (that is, the full update of
1 percent and less 2.0 percentage points for
failure to submit quality reporting data as
required by section 1886(m)(5) of the Act).
2. Development of the FY 2018 LTCH PPS
Standard Federal Payment Rate
Consistent with our historical practice, for
FY 2018, we are applying the annual update
to the LTCH PPS standard Federal payment
rate from the previous year. Furthermore, in
determining the LTCH PPS standard Federal
payment rate for FY 2018, we also are making
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certain regulatory adjustments, consistent
with past practices. Specifically, in
determining the FY 2018 LTCH PPS standard
Federal payment rate, we applied a budget
neutrality adjustment factor for the changes
related to the area wage adjustment (that is,
changes to the wage data and labor-related
share) in accordance with § 412.523(d)(4) and
a budget neutrality adjustment factor for the
change to the SSO payment methodology
(discussed in VIII.D. of the preamble of this
final rule).
For FY 2017, we established an annual
update to the LTCH PPS standard Federal
payment rate of 1.75 percent based on the
full estimated LTCH PPS market basket
increase of 2.8 percent, less the MFP
adjustment of 0.3 percentage point consistent
with section 1886(m)(3)(A)(i) of the Act and
less the 0.75 percentage point required by
sections 1886(m)(3)(A)(ii) and (m)(4)(F) of the
Act. Accordingly, at § 412.523(c)(3)(xiii), we
established an annual update to the LTCH
PPS standard Federal payment rate for FY
2017 of 1.75 percent. That is, we applied an
update factor of 1.0175 to the FY 2016
Federal rate of $41,762.85 to determine the
FY 2017 LTCH PPS standard Federal
payment rate. We also applied an area wage
level budget neutrality factor for FY 2017 of
0.999593 to the LTCH PPS standard Federal
payment rate to ensure that any changes to
the area wage level adjustment would not
result in any change in estimated aggregate
LTCH PPS payments. Consequently, we
established an LTCH PPS standard Federal
payment rate for FY 2017 of $42,476.41
(calculated as $41,762.85 × 1.0175 ×
0.999593) (81 FR 57297).
In this final rule, as required by statute, we
are establishing an annual update to the
LTCH PPS standard Federal payment rate of
1 percent for FY 2018 (as described above).
Accordingly, under § 412.523(c)(3)(xiii), we
are applying a factor of 1.01 to the FY 2017
LTCH PPS standard Federal payment rate of
$42,476.41 to determine the FY 2018 LTCH
PPS standard Federal payment rate. Also,
under finalized § 412.523(c)(3)(iv), in
conjunction with the provisions of
§ 412.523(c)(4), we are applying an annual
update to the LTCH PPS standard Federal
payment rate of –1.0 percent (that is, a
update factor of 0.99) for FY 2018 for LTCHs
that fail to submit the required quality
reporting data for FY 2018 as required under
the LTCH QRP. Consistent with
§ 412.523(d)(4), we also are applying an area
wage level budget neutrality factor to the FY
2018 LTCH PPS standard Federal payment
rate of 1.0006434, based on the best available
data at this time, to ensure that any changes
to the area wage level adjustment (that is, the
annual update of the wage index values and
labor-related share) would not result in any
change (increase or decrease) in estimated
aggregate LTCH PPS standard Federal rate
payments. Finally, we are applying a budget
neutrality adjustment of 0.9651 for our
changes to the SSO payment methodology
(discussed in VIII.D. of the preamble of this
final rule). Accordingly, we are establishing
an LTCH PPS standard Federal payment rate
of $41,430.56 (calculated as $42,476.41 ×
1.01 × 1.0006434 × 0.9651) for FY 2018. For
LTCHs that fail to submit quality reporting
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data for FY 2018, in accordance with the
requirements of the LTCHQRP under section
1886(m)(5) of the Act, we are establishing an
LTCH PPS standard Federal payment rate of
$40,610.16 (calculated as $42,476.41 × 0.99 ×
1.0006434 × 0.9651) for FY 2018.
B. Adjustment for Area Wage Levels Under
the LTCH PPS for FY 2018
1. Background
Under the authority of section 123 of the
BBRA, as amended by section 307(b) of the
BIPA, we established an adjustment to the
LTCH PPS standard Federal payment rate to
account for differences in LTCH area wage
levels under § 412.525(c). The labor-related
share of the LTCH PPS standard Federal
payment rate is adjusted to account for
geographic differences in area wage levels by
applying the applicable LTCH PPS wage
index. The applicable LTCH PPS wage index
is computed using wage data from inpatient
acute care hospitals without regard to
reclassification under section 1886(d)(8) or
section 1886(d)(10) of the Act.
When we implemented the LTCH PPS, we
established a 5-year transition to the full area
wage level adjustment. The area wage level
adjustment was completely phased-in for
cost reporting periods beginning in FY 2007.
Therefore, for cost reporting periods
beginning on or after October 1, 2006, the
applicable LTCH area wage index values are
the full LTCH PPS area wage index values
calculated based on acute care hospital
inpatient wage index data without taking into
account geographic reclassification under
section 1886(d)(8) and section 1886(d)(10) of
the Act. For additional information on the
phase-in of the area wage level adjustment
under the LTCH PPS, we refer readers to the
August 30, 2002 LTCH PPS final rule (67 FR
56015 through 56019) and the RY 2008 LTCH
PPS final rule (72 FR 26891).
2. Geographic Classifications (Labor Market
Areas) for the LTCH PPS Standard Federal
Payment Rate
In adjusting for the differences in area
wage levels under the LTCH PPS, the laborrelated portion of an LTCH’s Federal
prospective payment is adjusted by using an
appropriate area wage index based on the
geographic classification (labor market area)
in which the LTCH is located. Specifically,
the application of the LTCH PPS area wage
level adjustment under existing § 412.525(c)
is made based on the location of the LTCH—
either in an ‘‘urban area,’’ or a ‘‘rural area,’’
as defined in § 412.503. Under § 412.503, an
‘‘urban area’’ is defined as a Metropolitan
Statistical Area (MSA) (which includes a
Metropolitan division, where applicable), as
defined by the Executive OMB and a ‘‘rural
area’’ is defined as any area outside of an
urban area. (Information on OMB’s MSA
delineations based on the 2010 standards can
be found at: https://
obamawhitehouse.archives.gov/sites/default/
files/omb/assets/fedreg_2010/06282010_
metro_standards-Complete.pdf.)
The CBSA-based geographic classifications
(labor market area definitions) currently used
under the LTCH PPS, effective for discharges
occurring on or after October 1, 2014, are
based on the OMB labor market area
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38537
delineations based on the 2010 Decennial
Census data. The current statistical areas
(which were implemented beginning with FY
2015) are based on revised OMB delineations
issued on February 28, 2013, in OMB
Bulletin No. 13–01. We adopted these labor
market area delineations because they are
based on the best available data that reflect
the local economies and area wage levels of
the hospitals that are currently located in
these geographic areas. We also believe that
these OMB delineations will ensure that the
LTCH PPS area wage level adjustment most
appropriately accounts for and reflects the
relative hospital wage levels in the
geographic area of the hospital as compared
to the national average hospital wage level.
We noted that this policy was consistent with
the IPPS policy adopted in FY 2015 under
§ 412.64(b)(1)(ii)(D) of the regulations (79 FR
49951 through 49963). (For additional
information on the CBSA-based labor market
area (geographic classification) delineations
currently used under the LTCH PPS and the
history of the labor market area definitions
used under the LTCH PPS, we refer readers
to the FY 2015 IPPS/LTCH PPS final rule (79
FR 50180 through 50185).)
In general, it is our historical practice to
update the CBSA-based labor market area
delineations annually based on the most
recent updates issued by OMB. Generally,
OMB issues major revisions to statistical
areas every 10 years, based on the results of
the decennial census. However, OMB
occasionally issues minor updates and
revisions to statistical areas in the years
between the decennial censuses. As
discussed in the FY 2017 IPPS/LTCH PPS
final rule (81 FR 56913 through 56914), OMB
issued OMB Bulletin No. 15–01 on July 15,
2015 to update and supersede Bulletin No.
13–10. Bulletin No. 15–01 and its attachment
provide detailed information on the update
to statistical areas since the February 28,
2013 release of Bulletin No. 13–10 and are
based on the application of the 2010
Standards for Delineating Metropolitan and
Micropolitan Statistical Areas to Census
Bureau population estimates for July 1, 2012,
and July 1, 2013. A copy of this bulletin may
be obtained on the Web site at: https://
obamawhitehouse.archives.gov/sites/default/
files/omb/bulletins/2015/15-01.pdf.
We believe that these revisions to the
CBSA-based labor market area delineations
will ensure that the LTCH PPS area wage
level adjustment most appropriately accounts
for and reflects the relative hospital wage
levels in the geographic area of the hospital
as compared to the national average hospital
wage level based on the best available data
that reflect the local economies and area
wage levels of the hospitals that are currently
located in these geographic areas (81 FR
57298). Therefore, we are continuing to use
the CSBA-based labor market area
delineations adopted under the LTCH PPS,
effective October 1, 2017 (as adopted in the
FY 2017 IPPS/LTCH PPS final rule (81 FR
57298)). Moreover, the FY 2018 LTCH PPS
wage index values in Tables 12A and 12B
listed in section VI. of the Addendum of this
final rule (which are available via the
Internet on the CMS Web site) reflect the
revisions to the CBSA-based labor market
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area delineations described above. We note
that, as discussed in section III.A.2. of the
preamble of this final rule, the revisions to
the CBSA-based delineations also were
adopted under the IPPS, effective beginning
October 1, 2016.
3. Labor-Related Share for the LTCH PPS
Standard Federal Payment Rate
Under the payment adjustment for the
differences in area wage levels under
§ 412.525(c), the labor-related share of an
LTCH’s standard Federal payment rate
payment is adjusted by the applicable wage
index for the labor market area in which the
LTCH is located. The LTCH PPS labor-related
share currently represents the sum of the
labor-related portion of operating costs and a
labor-related portion of capital costs using
the applicable LTCH PPS market basket.
Additional background information on the
historical development of the labor-related
share under the LTCH PPS can be found in
the RY 2007 LTCH PPS final rule (71 FR
27810 through 27817 and 27829 through
27830) and the FY 2012 IPPS/LTCH PPS final
rule (76 FR 51766 through 51769 and 51808).
For FY 2013, we rebased and revised the
market basket used under the LTCH PPS by
adopting the newly created FY 2009-based
LTCH-specific market basket. In addition,
beginning in FY 2013, we determined the
labor-related share annually as the sum of the
relative importance of each labor-related cost
category of the 2009-based LTCH-specific
market basket for the respective fiscal year
based on the best available data. (For more
details, we refer readers to the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53477 through
53479).) As noted previously, we rebased and
revised the 2009-based LTCH-specific market
basket to reflect a 2013 base year. In
conjunction with that policy, as discussed in
section VIII.C. of the preamble of this final
rule, we are establishing that the LTCH PPS
labor-related share for FY 2018 is the sum of
the FY 2018 relative importance of each
labor-related cost category in the 2013-based
LTCH market basket using the most recent
available data. Specifically, we are
establishing that the labor-related share for
FY 2018 includes the sum of the labor-related
portion of operating costs from the 2013based LTCH market basket (that is, the sum
of the FY 2018 relative importance share of
Wages and Salaries; Employee Benefits;
Professional Fees: Labor-Related;
Administrative and Facilities Support
Services; Installation, Maintenance, and
Repair Services; All Other: Labor-related
Services) and a portion of the Capital-Related
cost weight from the 2013-based LTCH PPS
market basket. Based on IGI’s second quarter
2017 forecast of the 2013-based LTCH market
basket, we are establishing a labor-related
share under the LTCH PPS for FY 2018 of
66.2 percent. This labor-related share is
determined using the same methodology as
employed in calculating all previous LTCH
PPS labor-related shares. Consistent with our
historical practice, as we proposed, we used
more recent data available to determine the
final FY 2018 labor-related share in this final
rule.
The labor-related share for FY 2018 is the
sum of the FY 2018 relative importance of
each labor-related cost category, and reflects
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the different rates of price change for these
cost categories between the base year (2013)
and FY 2018. The sum of the relative
importance for FY 2018 for operating costs
(Wages and Salaries; Employee Benefits;
Professional Fees: Labor-Related;
Administrative and Facilities Support
Services; Installation, Maintenance, and
Repair Services; All Other: Labor-Related
Services) is 62.0 percent. The portion of
capital-related costs that is influenced by the
local labor market is estimated to be 46
percent (the same percentage applied to the
2009-based LTCH-specific market basket).
Because the relative importance for capitalrelated costs under our policies is 9.2 percent
of the 2013-based LTCH market basket in FY
2018, we are taking 46 percent of 9.2 percent
to determine the labor-related share of
capital-related costs for FY 2018 (0.46 × 9.2).
The result is 4.2 percent, which we added to
62.0 percent for the operating cost amount to
determine the total labor-related share for FY
2018. Therefore, the labor-related share
under the LTCH PPS for FY 2018 is 66.2
percent.
4. Wage Index for FY 2018 for the LTCH PPS
Standard Federal Payment Rate
Historically, we have established LTCH
PPS area wage index values calculated from
acute care IPPS hospital wage data without
taking into account geographic
reclassification under sections 1886(d)(8) and
1886(d)(10) of the Act (67 FR 56019). The
area wage level adjustment established under
the LTCH PPS is based on an LTCH’s actual
location without regard to the ‘‘urban’’ or
‘‘rural’’ designation of any related or
affiliated provider.
In the FY 2017 IPPS/LTCH PPS final rule
(81 FR 57299 through 57301), we calculated
the FY 2017 LTCH PPS area wage index
values using the same data used for the FY
2017 acute care hospital IPPS (that is, data
from cost reporting periods beginning during
FY 2013), without taking into account
geographic reclassification under sections
1886(d)(8) and 1886(d)(10) of the Act, as
these were the most recent complete data
available at that time. In that same final rule,
we indicated that we computed the FY 2017
LTCH PPS area wage index values, consistent
with the urban and rural geographic
classifications (labor market areas) that were
in place at that time and consistent with the
pre-reclassified IPPS wage index policy (that
is, our historical policy of not taking into
account IPPS geographic reclassifications in
determining payments under the LTCH PPS).
As with the IPPS wage index, wage data for
multicampus hospitals with campuses
located in different labor market areas
(CBSAs) are apportioned to each CBSA
where the campus (or campuses) are located.
We also continued to use our existing policy
for determining area wage index values for
areas where there are no IPPS wage data.
Consistent with our historical
methodology, as discussed in the FY 2018
IPPS/LTCH PPS proposed rule, to determine
the applicable area wage index values for the
FY 2018 LTCH PPS standard Federal
payment rate, under the broad authority of
section 123 of the BBRA, as amended by
section 307(b) of the BIPA, as we proposed,
we used wage data collected from cost
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reports submitted by IPPS hospitals for cost
reporting periods beginning during FY 2014,
without taking into account geographic
reclassification under sections 1886(d)(8) and
1886(d)(10) of the Act because these data are
the most recent complete data available. We
also note that these are the same data we are
using to compute the FY 2018 acute care
hospital inpatient wage index, as discussed
in section III. of the preamble of this final
rule. We computed the FY 2018 LTCH PPS
standard Federal payment rate area wage
index values consistent with the ‘‘urban’’ and
‘‘rural’’ geographic classifications (that is,
labor market area delineations, including the
updates, as previously discussed in section
V.B. of this Addendum) and our historical
policy of not taking into account IPPS
geographic reclassifications under sections
1886(d)(8) and 1886(d)(10) of the Act in
determining payments under the LTCH PPS.
As we also proposed, we are continuing to
apportion wage data for multicampus
hospitals with campuses located in different
labor market areas to each CBSA where the
campus or campuses are located, consistent
with the IPPS policy. Lastly, consistent with
our existing methodology for determining the
LTCH PPS wage index values, for FY 2018,
we are continuing to use our existing policy
for determining area wage index values for
areas where there are no IPPS wage data.
Under our existing methodology, the LTCH
PPS wage index value for urban CBSAs with
no IPPS wage data will be determined by
using an average of all of the urban areas
within the State, and the LTCH PPS wage
index value for rural areas with no IPPS wage
data will be determined by using the
unweighted average of the wage indices from
all of the CBSAs that are contiguous to the
rural counties of the State.
Based on the FY 2014 IPPS wage data that
we used to determine the FY 2018 LTCH PPS
standard Federal payment rate area wage
index values in this final rule, there are no
IPPS wage data for the urban area of
Hinesville, GA (CBSA 25980). Consistent
with the methodology discussed above, we
calculated the FY 2018 wage index value for
CBSA 25980 as the average of the wage index
values for all of the other urban areas within
the State of Georgia (that is, CBSAs 10500,
12020, 12060, 12260, 15260, 16860, 17980,
19140, 23580, 31420, 40660, 42340, 46660
and 47580), as shown in Table 12A, which
is listed in section VI. of the Addendum to
this final rule and available via the Internet
on the CMS Web site). We note that, as IPPS
wage data are dynamic, it is possible that
urban areas without IPPS wage data will vary
in the future.
Based on the FY 2014 IPPS wage data that
we used to determine the FY 2018 LTCH PPS
standard Federal payment rate area wage
index values in this final rule, there are no
rural areas without IPPS hospital wage data.
Therefore, it is not necessary to use our
established methodology to calculate a LTCH
PPS standard Federal payment rate wage
index value for proposed rural areas with no
IPPS wage data for FY 2018. We note that,
as IPPS wage data are dynamic, it is possible
that the number of rural areas without IPPS
wage data will vary in the future. The FY
2018 LTCH PPS standard Federal payment
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rate wage index values that will be applicable
for LTCH PPS standard Federal payment rate
discharges occurring on or after October 1,
2017, through September 30, 2018, are
presented in Table 12A (for urban areas) and
Table 12B (for rural areas), which are listed
in section VI. of the Addendum of this final
rule and available via the Internet on the
CMS Web site.
5. Budget Neutrality Adjustment for Changes
to the LTCH PPS Standard Federal Payment
Rate Area Wage Level Adjustment
Historically, the LTCH PPS wage index and
labor-related share are updated annually
based on the latest available data. Under
§ 412.525(c)(2), any changes to the area wage
index values or labor-related share are to be
made in a budget neutral manner such that
estimated aggregate LTCH PPS payments are
unaffected; that is, will be neither greater
than nor less than estimated aggregate LTCH
PPS payments without such changes to the
area wage level adjustment. Under this
policy, we determine an area wage-level
adjustment budget neutrality factor that will
be applied to the standard Federal payment
rate to ensure that any changes to the area
wage level adjustments are budget neutral
such that any changes to the area wage index
values or labor-related share would not result
in any change (increase or decrease) in
estimated aggregate LTCH PPS payments.
Accordingly, under § 412.523(d)(4), we apply
an area wage level adjustment budget
neutrality factor in determining the standard
Federal payment rate, and we also
established a methodology for calculating an
area wage level adjustment budget neutrality
factor. (For additional information on the
establishment of our budget neutrality policy
for changes to the area wage level
adjustment, we refer readers to the FY 2012
IPPS/LTCH PPS final rule (76 FR 51771
through 51773 and 51809).)
In this final rule, for FY 2018 LTCH PPS
standard Federal payment rate cases, in
accordance with § 412.523(d)(4), as we
proposed, we applied an area wage level
adjustment budget neutrality factor to adjust
the LTCH PPS standard Federal payment rate
to account for the estimated effect of the
adjustments or updates to the area wage level
adjustment under § 412.525(c)(1) on
estimated aggregate LTCH PPS payments
using a methodology that is consistent with
the methodology we established in the FY
2012 IPPS/LTCH PPS final rule (76 FR
51773). Specifically, as we proposed in the
FY 2018 IPPS/LTCH PPS proposed rule, we
determined an area wage level adjustment
budget neutrality factor that will be applied
to the LTCH PPS standard Federal payment
rate under § 412.523(d)(4) for FY 2018 using
the following methodology:
Step 1—We simulated estimated aggregate
LTCH PPS standard Federal payment rate
payments using the FY 2017 wage index
values and the FY 2017 labor-related share of
66.5 percent (as established in the FY 2017
IPPS/LTCH PPS final rule (81 FR 57099 and
57100)).
Step 2—We simulated estimated aggregate
LTCH PPS standard Federal payment rate
payments using the FY 2018 wage index
values (as shown in Tables 12A and 12B
listed in the Addendum to this final rule and
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available via the Internet on the CMS Web
site) and the FY 2018 labor-related share of
66.2 percent (based on the latest available
data as previously discussed in this
Addendum).
Step 3—We calculated the ratio of these
estimated total LTCH PPS standard Federal
payment rate payments by dividing the
estimated total LTCH PPS standard Federal
payment rate payments using the FY 2017
area wage level adjustments (calculated in
Step 1) by the estimated total LTCH PPS
standard Federal payment rate payments
using the FY 2018 area wage level
adjustments (calculated in Step 2) to
determine the area wage level adjustment
budget neutrality factor for FY 2018 LTCH
PPS standard Federal payment rate
payments.
Step 4—We then applied the FY 2018 area
wage level adjustment budget neutrality
factor from Step 3 to determine the FY 2018
LTCH PPS standard Federal payment rate
after the application of the FY 2018 annual
update (discussed previously in section V.A.
of this Addendum).
We note that, with the exception of cases
subject to the transitional blend payment rate
provisions in the first 2 years and certain
temporary exemptions for certain spinal cord
specialty hospitals and certain severe wound
cases, under the dual rate LTCH PPS
payment structure, only LTCH PPS cases that
meet the statutory criteria to be excluded
from the site neutral payment rate (that is,
LTCH PPS standard Federal payment rate
cases) are paid based on the LTCH PPS
standard Federal payment rate. Because the
area wage level adjustment under
§ 412.525(c) is an adjustment to the LTCH
PPS standard Federal payment rate, we only
used data from claims that would have
qualified for payment at the LTCH PPS
standard Federal payment rate if such rate
had been in effect at the time of discharge to
calculate the FY 2017 LTCH PPS standard
Federal payment rate area wage level
adjustment budget neutrality factor described
above.
For this final rule, using the steps in the
methodology previously described, we
determined a FY 2018 LTCH PPS standard
Federal payment rate area wage level
adjustment budget neutrality factor of
1.0006434. Accordingly, in section V.A. of
the Addendum to this final rule, to determine
the FY 2018 LTCH PPS standard Federal
payment rate, we applied an area wage level
adjustment budget neutrality factor of
1.0006434, in accordance with
§ 412.523(d)(4). The FY 2018 LTCH PPS
standard Federal payment rate shown in
Table 1E of the Addendum to this final rule
reflects this adjustment factor.
C. Cost-of-Living Adjustment (COLA) for
LTCHs Located in Alaska and Hawaii
Under § 412.525(b), a cost-of-living
adjustment (COLA) is provided for LTCHs
located in Alaska and Hawaii to account for
the higher costs incurred in those States.
Specifically, we apply a COLA to payments
to LTCHs located in Alaska and Hawaii by
multiplying the nonlabor-related portion of
the standard Federal payment rate by the
applicable COLA factors established annually
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38539
by CMS. Higher labor-related costs for LTCHs
located in Alaska and Hawaii are taken into
account in the adjustment for area wage
levels previously described.
Under our current methodology, we update
the COLA factors for Alaska and Hawaii
every 4 years (at the same time as the update
to the labor-related share of the IPPS market
basket) (77 FR 53712 through 53713). This
methodology is based on a comparison of the
growth in the Consumer Price Indexes (CPIs)
for Anchorage, Alaska, and Honolulu,
Hawaii, relative to the growth in the CPI for
the average U.S. city as published by the
Bureau of Labor Statistics (BLS). It also
includes a 25-percent cap on the CPI-updated
COLA factors. Under our current policy, we
update the COLA factors using the
methodology described above every 4 years;
the first year began in FY 2014. For FY 2014,
we updated the COLA factors for Alaska and
Hawaii published by OPM for 2009 using the
methodology finalized in FY 2013. (For
additional details on our current
methodology for updating the COLA factors
for Alaska and Hawaii, we refer readers to the
FY 2013 IPPS/LTCH PPS final rule (77 FR
53481 through 53482).) As discussed in the
FY 2018 IPPS/LTCH PPS proposed rule (82
FR 20186 through 20187) and this final rule,
we continue to believe that determining
updated COLA factors using this
methodology would appropriately adjust the
nonlabor-related portion of the LTCH PPS
standard Federal payment rate for LTCHs
located in Alaska and Hawaii.
For FY 2018, we are continuing to update
the COLA factors published by OPM for 2009
(as these are the last COLA factors OPM
published prior to transitioning from COLAs
to locality pay) using the methodology that
we finalized in the FY 2013 IPPS/LTCH PPS
final rule and implemented for the FY 2014
IPPS update. Specifically, we are updating
the 2009 OPM COLA factors by a comparison
of the growth in the Consumer Price Indices
(CPIs) for Anchorage, Alaska, and Honolulu,
Hawaii, relative to the growth in the CPI for
the average U.S. city as published by the
Bureau of Labor Statistics (BLS). Because
BLS publishes CPI data for only Anchorage
and Honolulu, using the methodology we
finalized in the FY 2013 IPPS/LTCH PPS
final rule, we use the comparison of the
growth in the overall CPI relative to the
growth in the CPI for those cities 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 U.S. (as measured by the CPIs
mentioned above) are appropriate proxies for
the relative price differences between the
‘‘other areas’’ of Alaska and Hawaii and the
United States.
BLS publishes the CPI for All Items for
Anchorage, Honolulu, and for the average
U.S. city. However, consistent with our
methodology finalized in the FY 2013 IPPS/
LTCH PPS final rule, we are creating
reweighted CPIs for each of the respective
areas to reflect the underlying composition of
the IPPS market basket nonlabor-related
share. The current composition of the CPI for
All Items for all of the respective areas is
approximately 40 percent commodities and
60 percent services. However, the IPPS
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nonlabor-related share is comprised of a
different mix of commodities and services.
Therefore, we create reweighted indexes for
Anchorage, Honolulu, and the average U.S.
city using the respective CPI commodities
index and CPI services index using the
approximate 55 percent commodities/45
percent services shares obtained from the
proposed 2014-based IPPS market basket. We
create reweighted indexes using BLS data for
2009 through 2016—the most recent data
available at the time of this rulemaking. In
the FY 2014 IPPS/LTCH PPS final rule (78 FR
50985 through 50987), we created reweighted
indexes based on the FY 2010-based IPPS
market basket (which was adopted for the FY
2014 update) and BLS data for 2009 through
2012 (the most recent BLS data at the time
of the FY 2014 IPPS/LTCH PPS rulemaking).
We continue to believe this methodology is
appropriate because we continue to make a
COLA for LTCHs located in Alaska and
Hawaii by multiplying the nonlabor-related
portion of the LTCH PPS standard Federal
rate by a COLA factor. We note that OPM’s
COLA factors were calculated with a
statutorily mandated cap of 25 percent. As
stated in the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50987), when developing the
COLA update methodology we finalized in
the FY 2013 IPPS/LTCH PPS final rule, we
exercised our discretionary authority to
adjust payments to LTCHs in Alaska and
Hawaii by incorporating this cap. In applying
this finalized methodology for updating the
COLA factors, our policy for FY 2018
continues to use a 25-percent cap, as our
policy is based on OPM’s COLA factors
(updated by the methodology described
earlier).
Applying this methodology, the COLA
factors that we are establishing for FY 2018
to adjust the nonlabor related portion of the
LTCH PPS standard Federal rate for LTCHs
located in Alaska and Hawaii are shown in
the table below. For comparison purposes,
we also are showing the FY 2013 COLA
factors (which were based on OPM’s
published COLA factors for 2009) and the
COLA factors for FYs 2014 through 2017.
Lastly, as we finalized in the FY 2013
IPPS/LTCH PPS final rule (77 FR 53700 and
53701), we are updating the COLA factors
based on our methodology every 4 years, at
the same time as the update to the laborrelated share of the IPPS market basket.
COST-OF-LIVING ADJUSTMENT FACTORS FOR ALASKA AND HAWAII UNDER THE LTCH PPS FOR FY 2018
Area
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Alaska:
City of Anchorage and 80-kilometer (50-mile) radius by road .......................................
City of Fairbanks and 80-kilometer (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 ........................................................................
We note that the reweighted CPI for
Honolulu, HI grew faster than the reweighted
CPI for the average U.S. city over the 2009
to 2016 time period at 13.7 percent and 10.5
percent, respectively. As a result, for FY
2018, we calculated a COLA factor of 1.29 for
the City and County of Honolulu, County of
Kauai, and County of Maui and County of
Kalawao. However, as stated earlier, we are
applying our methodology as finalized in the
FY 2013 IPPS/LTCH PPS final rule to
incorporate a cap of 1.25 for these areas and
thus proposed a COLA factor of 1.25 for the
City and County of Honolulu, the County of
Kauai, and the County of Maui and County
of Kalawao. In addition, the proposed COLA
factor we calculated for the County of Hawaii
for FY 2018 is 1.21 compared to the FY 2013
COLA factor of 1.18. The COLA factors
adopted in FY 2014 using this same
methodology can be found in the table above.
Similarly, the reweighted CPI for
Anchorage, AK grew faster than the
reweighted CPI for the average U.S. city over
the 2009 to 2016 time period, at 12.4 percent
and 10.5 percent, respectively. As a result,
for FY 2018, we calculated COLA factors for
the City of Anchorage, City of Fairbanks, and
City of Juneau to be 1.25 compared to the FY
2013 COLA factor of 1.23. For FY 2018, we
calculated a COLA factor of 1.27 for the Rest
of Alaska compared to the FY 2013 COLA
factor of 1.25. However, as stated above, we
are applying our methodology as finalized in
the FY 2013 IPPS/LTCH PPS final rule to
incorporate a cap of 1.25 for the rest of
Alaska.
As stated above, the COLA factors adopted
in the FY 2014 IPPS/LTCH PPS final rule
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FY 2014 through
FY 2017
FY 2013
were based on the same methodology used to
determine the FY 2018 COLA factors but
utilizing BLS data from 2009 through 2012
(the most recent data available at the time of
the FY 2014 rulemaking) rather than through
2016 (the most recent data available at the
time of this rulemaking). As we noted in the
proposed rule, compared to the FY 2014
COLA factors, the proposed FY 2018 COLA
factors are higher—with all areas either
reaching or exceeding the cap of 1.25 except
the County of Hawaii.
We did not receive any public comments
in response to our discussion of the proposed
FY 2018 COLA factors in the FY 2018 IPPS/
LTCH PPS proposed rule. In this final rule,
we are finalizing the COLA factors as
proposed, effective for FY 2018.
D. Adjustment for LTCH PPS High-Cost
Outlier (HCO) Cases
1. HCO Background
From the beginning of the LTCH PPS, we
have included an adjustment to account for
cases in which there are extraordinarily high
costs relative to the costs of most discharges.
Under this policy, additional payments are
made based on the degree to which the
estimated cost of a case (which is calculated
by multiplying the Medicare allowable
covered charge by the hospital’s overall
hospital CCR) exceeds a fixed-loss amount.
This policy results in greater payment
accuracy under the LTCH PPS and the
Medicare program, and the LTCH sharing the
financial risk for the treatment of
extraordinarily high-cost cases.
We retained the basic tenets of our HCO
policy in FY 2016 when we implemented the
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FY 2018
1.23
1.23
1.23
1.25
1.23
1.23
1.23
1.25
1.25
1.25
1.25
1.25
1.25
1.18
1.25
1.25
1.25
1.19
1.25
1.25
1.25
1.21
1.25
1.25
dual rate LTCH PPS payment structure under
section 1206 of Public Law 113–67. LTCH
discharges that meet the criteria for exclusion
from the site neutral payment rate (that is,
LTCH PPS standard Federal payment rate
cases) are paid at the LTCH PPS standard
Federal payment rate, which includes, as
applicable, HCO payments under
§ 412.523(e). LTCH discharges that do not
meet the criteria for exclusion are paid at the
site neutral payment rate, which includes, as
applicable, HCO payments under
§ 412.522(c)(2)(i). In the same rule, we
established separate fixed-loss amounts and
targets for the two different LTCH PPS
payment rates. Under this bifurcated policy,
the historic 8 percent HCO target was
retained for LTCH PPS standard Federal
payment rate cases, with the fixed-loss
amount calculated using only data from
LTCH cases that would have been paid at the
LTCH PPS standard Federal payment rate if
that rate had been in effect at the time of
those discharges. For site neutral payment
rate cases, we adopted the operating IPPS
HCO target (currently 5.1 percent) and set the
fixed-loss amount for site neutral payment
rate cases at the value of the IPPS fixed-loss
amount. Under the HCO policy for both
payment rates, an LTCH receives 80 percent
of the difference between the estimated cost
of the case and the applicable HCO
threshold, which is the sum of the LTCH PPS
payment for the case and the applicable
fixed-loss amount for such case.
In order to maintain budget neutrality,
consistent with the budget neutrality
requirement for HCO payments to LTCH PPS
standard Federal rate payment cases, we also
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adopted a budget neutrality requirement for
HCO payments to site neutral payment rate
cases by applying a budget neutrality factor
to the LTCH PPS payment for those site
neutral payment rate cases. (We refer readers
to § 412.522(c)(2)(i) of the regulations for
further details.) We note that, during the 2year transitional period, the site neutral
payment rate HCO budget neutrality factor
did not apply to the LTCH PPS standard
Federal payment rate portion of the blended
rate at § 412.522(c)(3) payable to site neutral
payment rate cases. (For additional details on
the HCO policy adopted for site neutral
payment rate cases under the dual rate LTCH
PPS payment structure, including the budget
neutrality adjustment for HCO payments to
site neutral payment rate cases, we refer
readers to the FY 2016 IPPS/LTCH PPS final
rule (80 FR 49617 through 49623).)
2. Determining LTCH CCRs Under the LTCH
PPS
a. Background
As noted above, CCRs are used to
determine payments for HCO adjustments for
both payment rates under the LTCH PPS, and
also are currently used to determine
payments for SSO cases under § 412.529 as
well as payments for site neutral payment
rate cases. (We note that the provisions of
§ 412.529 are only applicable to LTCH PPS
standard Federal payment rate cases).
However, we stated in the FY 2018 IPPS/
LTCH PPS proposed rule that if our proposed
SSO payment method is finalized, CCRs
would no longer be used to determine the
payment adjustment for SSO cases.
Therefore, as we are finalizing our proposed
SSO payment methodology, this discussion
will only apply to HCO and site neutral
payment rate calculations in FY 2018.
As noted earlier, in determining HCO, SSO
payments prior to FY 2018, and the site
neutral payment rate (regardless of whether
the case is also an HCO) payments, we
generally calculate the estimated cost of the
case by multiplying the LTCH’s overall CCR
by the Medicare allowable charges for the
case. An overall CCR is used because the
LTCH PPS uses a single prospective payment
per discharge that covers both inpatient
operating and capital-related costs. The
LTCH’s overall CCR is generally computed
based on the sum of LTCH operating and
capital costs (as described in Section 150.24,
Chapter 3, of the Medicare Claims Processing
Manual (Pub. 100–4)) as compared to total
Medicare charges (that is, the sum of its
operating and capital inpatient routine and
ancillary charges), with those values
determined from either the most recently
settled cost report or the most recent
tentatively settled cost report, whichever is
from the latest cost reporting period.
However, in certain instances, we use an
alternative CCR, such as the statewide
average CCR, a CCR that is specified by CMS,
or one that is requested by the hospital. (We
refer readers to § 412.525(a)(4)(iv) of the
regulations for further details regarding HCO
adjustments for either LTCH PPS payment
rate, § 412.529(f)(4) for SSO adjustments
under the current policy, and
§ 412.522(c)(1)(ii) for the site neutral
payment rate, respectively.)
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The LTCH’s calculated CCR is then
compared to the LTCH total CCR ceiling.
Under our established policy, an LTCH with
a calculated CCR in excess of the applicable
maximum CCR threshold (that is, the LTCH
total CCR ceiling, which is calculated as 3
standard deviations from the national
geometric average CCR) is generally assigned
the applicable statewide CCR. This policy is
premised on a belief that calculated CCRs
above the LTCH total CCR ceiling are most
likely due to faulty data reporting or entry,
and CCRs based on erroneous data should
not be used to identify and make payments
for outlier cases.
b. LTCH Total CCR Ceiling
Consistent with our historical practice, we
used the most recent data to determine the
LTCH total CCR ceiling for FY 2018 in this
final rule. Specifically, in this final rule,
using our established methodology for
determining the LTCH total CCR ceiling
based on IPPS total CCR data from the March
2017 update of the Provider Specific File
(PSF), which is the most recent data
available, we are establishing an LTCH total
CCR ceiling of 1.280 under the LTCH PPS for
FY 2018 in accordance with
§ 412.525(a)(4)(iv)(C)(2) for HCO cases under
either payment rate and § 412.522(c)(1)(ii) for
the site neutral payment rate. (For additional
information on our methodology for
determining the LTCH total CCR ceiling, we
refer readers to the FY 2007 IPPS final rule
(71 FR 48118 through 48119).)
c. LTCH Statewide Average CCRs
Our general methodology for determining
the statewide average CCRs used under the
LTCH PPS is similar to our established
methodology for determining the LTCH total
CCR ceiling because it is based on ‘‘total’’
IPPS CCR data. (For additional information
on our methodology for determining
statewide average CCRs under the LTCH PPS,
we refer readers to the FY 2007 IPPS final
rule (71 FR 48119 through 48120).) Under the
LTCH PPS HCO policy for cases paid under
either payment rate at
§ 412.525(a)(4)(iv)(C)(2), the current SSO
policy at § 412.529(f)(4)(iii)(B), and the site
neutral payment rate at § 412.522(c)(1)(ii), the
MAC may use a statewide average CCR,
which is established annually by CMS, if it
is unable to determine an accurate CCR for
an LTCH in one of the following
circumstances: (1) New LTCHs that have not
yet submitted their first Medicare cost report
(a new LTCH is defined as an entity that has
not accepted assignment of an existing
hospital’s provider agreement in accordance
with § 489.18); (2) LTCHs whose calculated
CCR is in excess of the LTCH total CCR
ceiling; and (3) other LTCHs for whom data
with which to calculate a CCR are not
available (for example, missing or faulty
data). (Other sources of data that the MAC
may consider in determining an LTCH’s CCR
include data from a different cost reporting
period for the LTCH, data from the cost
reporting period preceding the period in
which the hospital began to be paid as an
LTCH (that is, the period of at least 6 months
that it was paid as a short-term, acute care
hospital), or data from other comparable
LTCHs, such as LTCHs in the same chain or
in the same region.)
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Consistent with our historical practice of
using the best available data, in this final
rule, using our established methodology for
determining the LTCH statewide average
CCRs, based on the most recent complete
IPPS ‘‘total CCR’’ data from the March 2017
update of the PSF, we are establishing LTCH
PPS statewide average total CCRs for urban
and rural hospitals that will be effective for
discharges occurring on or after October 1,
2017, through September 30, 2018, in Table
8C listed in section VI. of the Addendum to
this final rule (and available via the Internet
on the CMS Web site). Consistent with our
historical practice, as we proposed, we used
more recent data to determine the LTCH PPS
statewide average total CCRs for FY 2018 in
this final rule.
Under the current LTCH PPS labor market
areas, all areas in Delaware, the District of
Columbia, New Jersey, and Rhode Island are
classified as urban. Therefore, there are no
rural statewide average total CCRs listed for
those jurisdictions in Table 8C. This policy
is consistent with the policy that we
established when we revised our
methodology for determining the applicable
LTCH statewide average CCRs in the FY 2007
IPPS final rule (71 FR 48119 through 48121)
and is the same as the policy applied under
the IPPS. In addition, although Connecticut
has areas that are designated as rural, in our
calculation of the LTCH statewide average
CCRs, there was no data available from shortterm, acute care IPPS hospitals to compute a
rural statewide average CCR or there were no
short-term, acute care IPPS hospitals or
LTCHs located in that area as of March 2017.
Therefore, consistent with our existing
methodology, we used the national average
total CCR for rural IPPS hospitals for rural
Connecticut in Table 8C. While
Massachusetts also has rural areas, the
statewide average CCR for rural areas in
Massachusetts is based on one provider
whose CCR is an atypical 1.222. Because this
is much higher than the statewide urban
average and furthermore implies costs
exceeded charges, as with Connecticut, we
used the national average total CCR for rural
hospitals for hospitals located in rural
Massachusetts. Furthermore, consistent with
our existing methodology, in determining the
urban and rural statewide average total CCRs
for Maryland LTCHs paid under the LTCH
PPS, we continued to use, as a proxy, the
national average total CCR for urban IPPS
hospitals and the national average total CCR
for rural IPPS hospitals, respectively. We
used this proxy because we believe that the
CCR data in the PSF for Maryland hospitals
may not be entirely accurate (as discussed in
greater detail in the FY 2007 IPPS final rule
(71 FR 48120)).
d. Reconciliation of HCO and SSO Payments
Under the HCO policy for cases paid under
either payment rate at § 412.525(a)(4)(iv)(D)
and SSO cases prior to FY 2018 at
§ 412.529(f)(4)(iv), the payments for HCO and
SSO cases are subject to reconciliation.
Specifically, any such payments are
reconciled at settlement based on the CCR
that is calculated based on the cost report
coinciding with the discharge. However,
under our changes to the SSO payment
methodology discussed in section VIII.D. of
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the preamble of this final rule, we removed
estimated cost as a consideration for payment
to SSO cases. As such, consistent with our
changes to the SSO payment methodology,
SSO payments are no longer be subject to
reconciliation. Specifically, as we proposed,
we are revising paragraph (f) of § 412.529 to
specify that SSO payments will be reconciled
only for discharges occurring before October
1, 2017.
For additional information on the
reconciliation policy, we refer readers to
Sections 150.26 through 150.28 of the
Medicare Claims Processing Manual (Pub.
100–4), as added by Change Request 7192
(Transmittal 2111; December 3, 2010), and
the RY 2009 LTCH PPS final rule (73 FR
26820 through 26821).
3. High-Cost Outlier Payments for LTCH PPS
Standard Federal Payment Rate Cases
a. Changes to High-Cost Outlier Payments for
LTCH PPS Standard Federal Payment Rate
Cases
When we implemented the LTCH PPS, we
established a fixed-loss amount so that total
estimated outlier payments are projected to
equal 8 percent of total estimated payments
under the LTCH PPS (67 FR 56022 through
56026). Furthermore, § 412.523(d)(1) requires
the LTCH PPS standard Federal payment rate
be adjusted by a reduction factor of 8 percent,
the estimated proportion of outlier payments
under § 412.525(a) payable to LTCH PPS
standard Federal payment rate cases. Section
15004(b) of the 21st Century Cures Act (Pub.
L. 114–255) amended section 1886(m) of the
Act by adding new paragraph (7), which
specifies certain treatment of HCO payments
for fiscal years beginning on or after October
1, 2017 (FY 2018). Specifically, section
1886(m)(7)(A) of the Act requires, beginning
in FY 2018, that the LTCH PPS standard
Federal payment rate be reduced as if
estimated HCO payments for standard
Federal payment rate cases would be equal
to 8 percent of estimated aggregate payments
for standard Federal payment rate cases for
a given year. In other words, section
1886(m)(7)(A) of the Act makes our existing
regulatory budget neutrality requirement at
§ 412.523(d)(1) for the 8 percent HCO target
for standard Federal payment rate cases a
statutory requirement beginning in FY 2018.
In addition, section 1886(m)(7)(B) of the Act
requires, beginning in FY 2018, that the
fixed-loss amount for HCO payments for
LTCH PPS standard Federal payment rate
cases be determined so that the estimated
aggregate amount of HCO payments for such
cases in a given year are equal to 99.6875
percent of the 8 percent estimated aggregate
payments for standard Federal payment rate
cases (that is, 7.975 percent). In other words,
sections 1886(m)(7)(A) and (7)(B) require that
we adjust the standard Federal payment rate
each year to ensure budget neutrality for
HCO payments as if estimated aggregate HCO
payments made for standard Federal
payment rate discharges remain at 8 percent,
while the fixed-loss amount for the HCO
payments is set each year so that the
estimated aggregate HCO payments for
standard Federal payment rate cases are
7.975 percent of estimated aggregate
payments for standard Federal payment rate
cases.
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More specifically, section 1886(m)(7)(A) of
the Act stipulates that, for fiscal years
beginning on or after October 1, 2017, the
Secretary shall reduce the standard Federal
payment rate as if the estimated aggregate
amount of HCO payments for standard
Federal payment rate discharges for each
such fiscal year would be equal to 8 percent
of estimated aggregate payments for standard
Federal payment rate discharges for each
such fiscal year; while section 1886(m)(7)(B)
of the Act states that the Secretary shall set
the fixed loss amount for HCO payments
such that the estimated aggregate amount of
HCO payments made for standard Federal
payment rate discharges for fiscal years
beginning on or after October 1, 2017, shall
be equal to 99.6875 percent of 8 percent of
estimated aggregate payments for standard
Federal payment rate discharges for each
such fiscal year. Furthermore, section
1886(m)(7)(C) of the Act requires that any
reduction in payments resulting from the
application of paragraph (B) shall not be
taken into account in applying any budget
neutrality provision. Finally, section
1886(m)(7)(D) of the Act provides there will
be no effect on HCO payments to site neutral
payment rate cases by this certain treatment
of HCO payments by requiring that this
paragraph shall not apply with respect to the
computation of the applicable site neutral
payment rate under section 1886(m)(6) of the
Act.
To codify the treatment of HCO payments
provided by section 15004(b) of the 21st
Century Cures Act (discussed earlier), as we
proposed, we are revising § 412.525(a) by
redesignating paragraph (2) as paragraph
(2)(i) and adding paragraph (2)(ii) which
would specify that, for FY 2018 and
subsequent years, the fixed-loss amount for
LTCH discharges described under
§ 412.522(a)(2) is determined such that the
estimated proportion of outlier payments
under § 412.522(a) that are payable for such
discharges is projected to be equal to 99.6875
percent of 8 percent. We also are making
conforming changes to § 412.523(d)(1) to
specify that the provisions under
§ 412.525(a)(2)(ii) will not affect the
reduction factor of 8 percent that is applied
to the LTCH PPS standard Federal payment
rate under § 412.523(d)(1).
b. Establishment of the Fixed-Loss Amount
for LTCH PPS Standard Federal Payment
Rate Cases for FY 2018
When we implemented the LTCH PPS, we
established a fixed loss amount so that total
estimated outlier payments are projected to
equal 8 percent of total estimated payments
under the LTCH PPS (67 FR 56022 through
56026). When we implemented the dual rate
LTCH PPS payment structure beginning in
FY 2016, we established that, in general, the
historical LTCH PPS HCO policy will
continue to apply to LTCH PPS standard
Federal payment rate cases. That is, the
fixed-loss amount and target for LTCH PPS
standard Federal payment rate cases is
determined using the LTCH PPS HCO policy
adopted when the LTCH PPS was first
implemented, but we limited the data used
under that policy to LTCH cases that would
have been LTCH PPS standard Federal
payment rate cases if the statutory changes
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had been in effect at the time of those
discharges.
To determine the applicable fixed-loss
amount for LTCH PPS standard Federal
payment rate cases, we estimate outlier
payments and total LTCH PPS payments for
each LTCH PPS standard Federal payment
rate case (or for each case that would have
been a LTCH PPS standard Federal payment
rate case if the statutory changes had been in
effect at the time of the discharge) using
claims data from the MedPAR files.
Historically, the applicable fixed-loss amount
for LTCH PPS standard Federal payment rate
cases results in estimated total outlier
payments being projected to be equal to 8
percent of projected total LTCH PPS
payments for LTCH PPS standard Federal
payment rate cases. We use MedPAR claims
data and CCRs based on data from the most
recent PSF (or from the applicable statewide
average CCR if an LTCH’s CCR data are faulty
or unavailable) to establish an applicable
fixed-loss threshold amount for LTCH PPS
standard Federal payment rate cases. For FY
2018 and subsequent fiscal years, as we
proposed, we are continuing to use the same
general approach as in previous years, but
the applicable fixed-loss amount for LTCH
PPS standard Federal payment rate cases will
be estimated so that total HCO payments are
7.975 percent (that is, 99.6875 percent of 8
percent) of projected total LTCH PPS
payments for LTCH PPS standard Federal
payment rate cases, consistent with section
1886(m)(7)(B) of the Act (as discussed above).
In the FY 2018 IPS/LTCH PPS proposed
rule (82 FR 20189), we proposed to continue
to use our current methodology to calculate
an applicable fixed-loss amount for LTCH
PPS standard Federal payment rate cases for
FY 2018 using the best available data that
would maintain estimated HCO payments at
the projected 7.975 percent of total estimated
LTCH PPS payments for LTCH PPS standard
Federal payment rate cases (based on the
rates and policies for these cases presented
in that proposed rule).
Specifically, based on the most recent
complete LTCH data available at that time
(that is, LTCH claims data from the December
2016 update of the FY 2016 MedPAR file and
CCRs from the December 2016 update of the
PSF), we determined that a proposed fixedloss amount for LTCH PPS standard Federal
payment rate cases for FY 2018 of $30,081
would result in estimated outlier payments
projected to be equal to 7.975 percent of
estimated FY 2018 payments for such cases.
Under this proposal, we would continue to
make an additional HCO payment for the cost
of an LTCH PPS standard Federal payment
rate case that exceeds the HCO threshold
amount that is equal to 80 percent of the
difference between the estimated cost of the
case and the outlier threshold (the sum of the
adjusted LTCH PPS standard Federal
payment rate payment and the fixed-loss
amount for LTCH PPS standard Federal
payment rate cases of $30,081). We also
noted that the proposed fixed-loss amount for
HCO cases paid under the LTCH PPS
standard Federal payment rate in FY 2018 of
$30,081 is notably higher than the FY 2017
fixed-loss amount for LTCH PPS standard
Federal payment rate cases of $21,943, and
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explained that the increase is largely
attributable to rate-of-change in the Medicare
allowable charges on the claims data in the
MedPAR file.
Based on the most recent available data at
the time of the proposed rule, we found that
the current FY 2017 HCO threshold of
$21,943 results in estimated HCO payments
for LTCH PPS standard Federal payment rate
cases of approximately 8.6 percent of the
estimated total LTCH PPS payments in FY
2016, which exceeds the 8 percent target by
0.6 percentage points. We also noted that
fluctuations in the fixed-loss amount
occurred in the first few years after the
implementation of the LTCH PPS, due, in
part, to the changes in LTCH behavior (such
as Medicare beneficiary treatment patterns)
in response to the new payment system and
the lack of data and information available to
predict how those changes would affect the
estimate costs of LTCH cases. As we gained
more experience with the effects and
implementation of the LTCH PPS, the annual
changes on the fixed-loss amount generally
stabilized relative to the fluctuations that
occurred in the early years of the LTCH PPS.
Therefore, we did not propose any changes
to our method for the inflation factor applied
to update the costs of each case (that is, an
inflation factor based on the most recent
estimate of the 2013-based LTCH market
basket as determined by the Office of the
Actuary) in determining the proposed fixedloss amount for LTCH PPS standard Federal
payment rate cases for FY 2018. We stated
our continued belief that it is appropriate to
continue to use our historical approach until
we gain experience with the effects and
implementation of the dual rate LTCH PPS
payment structure that began with discharges
occurring in cost reporting periods beginning
on or after October 1, 2015, and the types of
cases paid at the LTCH PPS standard Federal
payment rate under this dual rate payment
structure. We stated that we may revisit this
issue in the future if data demonstrate such
a change is warranted, and would propose
any changes in the future through the noticeand-comment rulemaking process.
Furthermore, we invited public comments on
potential improvements to the determination
of the fixed-loss amount for LTCH PPS
standard Federal payment rate cases,
including the most appropriate method of
determining an inflation factor for projecting
the costs of each case when determining the
fixed-loss threshold.
Comment: A few commenters expressed
concern with the increase in the proposed FY
2018 fixed-loss amount for LTCH PPS
standard Federal payment rate cases as
compared to the current fixed-loss amount
for such cases. Some of these commenters
expressed general support for using the
required target amount of 7.975 percent for
HCO payments for LTCH PPS standard
Federal payment rate cases. Some
commenters stated that they are concerned
about the potential instability in the fixedloss amount from year to year and requested
that CMS continue to be transparent about
the possible causes for such large year-to-year
changes in the fixed-loss amount and how
much of this variability may be attributable
to the new dual rate LTCH PPS payment. In
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addition to using the most recent LTCH
claims data and CCRs, some commenters
suggested we consider whether the new dual
rate LTCH PPS payment structure warrants
the use of other relevant data or a change in
the inflation factor for projecting the costs of
each case when determining the fixed-loss
amount, but did not make any specific
recommendations for other data or factors.
Response: We understand the commenters’
concern with the proposed increase to the
fixed-loss amount for LTCH PPS standard
Federal payment rate cases for FY 2018, and
we appreciate the commenters’ support for
our proposed use of a HCO target amount of
7.975 percent for LTCH PPS standard Federal
payment rate cases. As we discussed in the
proposed rule, based on the best available
data at that time and using our historical
methodology, we estimate that the current FY
2017 HCO fixed-loss amount of $21,943
results in estimated HCO payments for LTCH
PPS standard Federal payment rate cases in
excess of the FY 2017 target of 8 percent by
0.6 percentage points. Additionally, we note
that we invited public comment on potential
improvements to the determination of the
fixed-loss amount for LTCH PPS standard
Federal payment rate cases, including the
most appropriate method of determining an
inflation factor for projecting the costs of
each case when determining the fixed-loss
threshold but received no specific
suggestions from comments.
As discussed in the proposed rule,
fluctuations in the fixed-loss amount have
occurred previously under LTCH PPS, due,
in part, to the changes in LTCH behavior in
response to the changes in Medicare
payments and the lack of data and
information available to predict how those
changes affect the estimate costs of LTCH
cases. As was the case when there were
fluctuations in the fixed-loss amount in the
early years of the LTCH PPS, we expect
annual changes to the fixed-loss amount to
generally stabilize as experience is gained
under the new dual rate LTCH PPS payment
structure. We intend to continue to monitor
annual changes in the HCO fixed-loss
amount, including factors that drive any such
changes. We appreciate the general feedback
commenters’ noted for potential
improvements to the determination of the
fixed-loss amount for LTCH PPS standard
Federal payment rate cases, including the use
of other relevant data or a change in the
inflation factor for projecting the costs of
each case when determining the fixed-loss
amount. As we indicated in the proposed
rule, we may revisit this issue in the future
if data demonstrate such a change is
warranted, and would propose any changes
in the future through the notice-andcomment rulemaking process. For these
reasons we continue to maintain our
historical methodology and thus believe it is
necessary and appropriate to increase to the
fixed-loss amount for LTCH PPS standard
Federal payment rate cases for FY 2017 to
maintain estimated HCO payments would
equal 8 percent of estimated total LTCH PPS
payments for such cases as required under
§ 412.525(a). We note, as in greater detail
discussed below, the fixed-loss amount for
FY 2018 for LTCH PPS standard Federal
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38543
payment rate cases we are establishing in this
final rule, after consideration of public
comments and based on the most recent
LTCH claims data from the MedPAR file and
the latest CCRs from the PSF, does result in
a fixed-loss amount for such cases that is
lower than the proposed fixed-loss amount.
We also note that based on the most recent
available data for this final rule (discussed
below), the current FY 2017 HCO threshold
of $21,943 results in estimated HCO
payments for LTCH PPS standard Federal
payment rate cases which exceeds the FY
2017 target of 8 percent target by 0.1
percentage points. (We also note the change
in our estimate of FY 2017 HCO payments
between the proposed and final rule
decreased from 8.6 percent to 8.1 percent,
and this change is largely attributable to
updates to CCRs from the December 2016
update of the PSF to the March 2017 update
of the PSF.)
After consideration of the public comments
we received, for the reasons discussed above,
we are finalizing our proposal to continue to
use the current LTCH PPS HCO payment
methodology for LTCH PPS standard Federal
payment rate cases for FY 2018 without
modification, as we proposed. Therefore, in
this final rule, for FY 2018, we determined
an applicable fixed-loss amount for LTCH
PPS standard Federal payment rate cases
using data from LTCH PPS standard Federal
payment rate cases (or cases that would have
been LTCH PPS standard Federal payment
rate cases had the dual rate LTCH PPS
payment structure been in effect at the time
of those discharges). The fixed-loss amount
for LTCH PPS standard Federal payment rate
cases will continue to be determined so that
estimated HCO payments will be projected to
equal 7.975 percent of estimated total LTCH
PPS standard Federal payment rate cases.
Furthermore, in accordance with
§ 412.523(d)(1), a budget neutrality factor
will continue to be applied to LTCH PPS
standard Federal payment rate cases to offset
that 8 percent so that HCO payments for
LTCH PPS standard Federal payment rate
cases will be budget neutral. Below we
present our calculation of the fixed-loss
amount for LTCH PPS standard Federal
payment rate cases for FY 2018, which,
except for the statutory changes to the HCO
target from 8 percent to 7.975 percent, is
consistent with the methodology used to
establish the FY 2017 LTCH PPS fixed-loss
amount, as we proposed.
In this final rule, we are continuing to use
our current methodology to calculate an
applicable fixed-loss amount for LTCH PPS
standard Federal payment rate cases for FY
2018 using the best available data that will
maintain estimated HCO payments at the
projected 7.975 percent of total estimated
LTCH PPS payments for LTCH PPS standard
Federal payment rate cases (based on the
payment rates and policies for these cases
presented in this final rule). Specifically,
based on the most recent available data
available (that is, LTCH claims data from the
March 2017 update of the FY 2016 MedPAR
file and CCRs from the March 2017 update
of the PSF), we determined a fixed-loss
amount for LTCH PPS standard Federal
payment rate cases for FY 2018 results that
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will result in estimated outlier payments of
7.975 percent of estimated FY 2018 payments
for such cases. Under the broad authority of
section 123(a)(1) of the BBRA and section
307(b)(1) of the BIPA, we are establishing a
fixed-loss amount of $27,382 for LTCH PPS
standard Federal payment rate cases for FY
2018. Under our policy, we will continue to
make an additional HCO payment for the cost
of an LTCH PPS standard Federal payment
rate case that exceeds the HCO threshold
amount that is equal to 80 percent of the
difference between the estimated cost of the
case and the outlier threshold (the sum of the
adjusted LTCH PPS standard Federal
payment rate payment and the fixed-loss
amount for LTCH PPS standard Federal
payment rate cases of $27,382).
We note that the fixed-loss amount for
HCO cases paid under the LTCH PPS
standard Federal payment rate in FY 2018 of
$27,382 is somewhat lower than proposed FY
2018 fixed-loss amount of $30,081 but
notably higher than the FY 2017 fixed-loss
amount for LTCH PPS standard Federal
payment rate cases of $21,943. However,
based on the most recent available data at the
time of this final rule, we found that the
current FY 2017 HCO threshold of $21,943
results in estimated HCO payments for LTCH
PPS standard Federal payment rate cases of
approximately 8.1 percent of the estimated
total LTCH PPS payments in FY 2017, which
exceeds the 8 percent target by 0.1 percentage
points. We continue to believe, as discussed
in detail in the FY 2017 IPPS/LTCH PPS
proposed rule (81 FR 25287), this increase is
largely attributable to rate-of-change (that is,
increase) in the Medicare allowable charges
on the claims data in the MedPAR file. In
addition, using the historic 8-percent target
for projected aggregate outlier payments
(absent the required changes under the 21st
Century Cures Act for comparison purposes),
the HCO threshold would be $27,240, which
represents a 24-percent increase from the
final FY 2017 HCO threshold of $21,943.
This increase is in line with the 34 percent
increase in the HCO threshold between FY
2016 and FY 2017, and is consistent with our
expectation that annual changes to the fixedloss amount to generally stabilize as
experience is gained under the new dual rate
LTCH PPS payment structure. For these
reasons, we continue to believe it is
necessary and appropriate to increase the
fixed-loss amount for LTCH PPS standard
Federal payment rate cases for FY 2018 to
maintain estimated HCO payments that
would equal to 7.975 percent of estimated
total LTCH PPS payments for such cases as
required under § 412.525(a)(2)(ii).
c. Application of the High-Cost Outlier Policy
to Short Stay Outlier (SSO) Cases
Under our implementation of the dual rate
LTCH PPS payment structure required by
statute, in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20190), we proposed
that LTCH PPS standard Federal payment
rate cases (that is, LTCH discharges that meet
the criteria for exclusion from the site neutral
payment rate) would continue to be paid
based on the LTCH PPS standard Federal
payment rate, and would include all of the
existing payment adjustments under
§ 412.525(d), such as the adjustments for SSO
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cases under § 412.529. Under some rare
circumstances, an LTCH discharge can
qualify as an SSO case (as defined in the
regulations at § 412.529 in conjunction with
§ 412.503) and also as an HCO case, as
discussed in the August 30, 2002 final rule
(67 FR 56026). In this scenario, a patient
could be hospitalized for less than five-sixths
of the geometric average length of stay for the
specific MS–LTC–DRG, and yet incur
extraordinarily high treatment costs. If the
estimated costs exceeded the HCO threshold
(that is, the SSO payment plus the applicable
fixed-loss amount), the discharge is eligible
for payment as an HCO. (We noted that,
under our change to the SSO policy
discussed in section VIII.D. of this final rule,
SSO cases would still be eligible to qualify
for an HCO payment.) Therefore, for an SSO
case in FY 2018, as proposed, we are
establishing that the HCO payment will be 80
percent of the difference between the
estimated cost of the case and the outlier
threshold (the sum of the fixed-loss amount
of $27,382 and the amount paid under the
SSO policy as specified in § 412.529).
4. High-Cost Outlier Payments for Site
Neutral Payment Rate Cases
Under § 412.525(a), site neutral payment
rate cases receive an additional HCO
payment for costs that exceed the HCO
threshold that is equal to 80 percent of the
difference between the estimated cost of the
case and the applicable HCO threshold (80
FR 49618 through 49629). In the following
discussion, we note that the statutory
transitional payment method for cases that
are paid the site neutral payment rate for
LTCH discharges occurring in cost reporting
periods beginning during FY 2016 or FY
2017 uses a blended payment rate, which is
determined as 50 percent of the site neutral
payment rate amount for the discharge and
50 percent of the standard Federal
prospective payment rate amount for the
discharge (§ 412.522(c)(3)). The transitional
blended payment rate uses the same blend
percentages (that is, 50 percent) for both
years of the 2-year transition period. For FY
2018, the site neutral payment rate effective
date for a given LTCH is determined based
on the date on which that LTCH’s cost
reporting period begins during FY 2018.
Specifically, for a given LTCH, those site
neutral payment rate cases discharged in FY
2018 and in a cost reporting period that
begins before October 1, 2017 continue to be
paid under the blended payment rate.
However, site neutral payment rate cases
discharged in FY 2018 during the LTCH’s
cost reporting period beginning on or after
October 1, 2017 will no longer be paid under
the blended payment rate and instead will be
paid the site neutral payment rate amount as
determined under § 412.522(c)(1). As such,
for FY 2018 discharges paid under the
transitional payment method, the discussion
below pertains only to the site neutral rate
portion in § 412.522(c)(3)(i)) of the blended
payment rate (as well as to FY 2018
discharges paid the site neutral payment rate
amount determined under § 412.522(c)(1)).
When we implemented the application of
the site neutral payment rate in FY 2016, in
examining the appropriate fixed-loss amount
for site neutral payment rate cases issue, we
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considered how LTCH discharges based on
historical claims data would have been
classified under the dual rate LTCH PPS
payment structure and the CMS’ Office of the
Actuary projections regarding how LTCHs
will likely respond to our implementation of
policies resulting from the statutory payment
changes. We again relied on these
considerations and actuarial projections in
FY 2017 because the historical claims data
available in FY 2017 predated the LTCH PPS
dual rate payment system. Similarly, for FY
2018, we continue to rely on these
considerations and actuarial projections
because, due to the rolling effective date of
the site neutral payment policy, not all
claims in FY 2016 were subject to the site
neutral payment system.
For both FY 2016 and FY 2017, at that time
our actuaries projected that the proportion of
cases that would qualify as LTCH PPS
standard Federal payment rate cases versus
site neutral payment rate cases under the
statutory provisions would remain consistent
with what is reflected in the historical LTCH
PPS claims data. Although our actuaries did
not project an immediate change in the
proportions found in the historical data, they
did project cost and resource changes to
account for the lower payment rates. Our
actuaries also projected that the costs and
resource use for cases paid at the site neutral
payment rate would likely be lower, on
average, than the costs and resource use for
cases paid at the LTCH PPS standard Federal
payment rate and would likely mirror the
costs and resource use for IPPS cases
assigned to the same MS–DRG, regardless of
whether the proportion of site neutral
payment rate cases in the future remains
similar to what is found based on the
historical data. As discussed in the FY 2016
IPPS/LTCH PPS final rule (80 FR 49619), this
actuarial assumption is based on our
expectation that site neutral payment rate
cases would generally be paid based on an
IPPS comparable per diem amount under the
statutory LTCH PPS payment changes that
began in FY 2016, which, in the majority of
cases, is much lower than the payment that
would have been paid if these statutory
changes were not enacted. (We note, in
section I.J.1 of the Regulatory Impact in
Appendix A of this final rule, we summarize
and respond to a comment that references to
this actuarial assumption.) In light of these
projections and expectations, we discussed
that we believed that the use of a single
fixed-loss amount and HCO target for all
LTCH PPS cases would be problematic. In
addition, we discussed that we did not
believe that it would be appropriate for
comparable LTCH PPS site neutral payment
rate cases to receive dramatically different
HCO payments from those cases that would
be paid under the IPPS (80 FR 49617 through
49619 and 81 FR 57305 through 57307). For
those reasons, we stated that we believed that
the most appropriate fixed-loss amount for
site neutral payment rate cases for both FY
2016 and FY 2017 would be equal to the IPPS
fixed-loss amount for that year. Therefore, we
established the fixed-loss amount for site
neutral payment rate cases as the FY 2016
and FY 2017 IPPS fixed-loss amounts, in FY
2016 and FY 2017 respectively. In particular,
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in FY 2017, we established that the fixed-loss
amount for site neutral payment rate cases is
the FY 2017 IPPS fixed-loss amount of
$23,570.
As noted earlier, because not all claims in
the data used for this final rule were subject
to the site neutral payment rate system, we
continue to rely on the same considerations
and actuarial projections used in FY 2016
and FY 2017 when developing a fixed-loss
amount for site neutral payment rate cases for
FY 2018. Because our actuaries continue to
project that site neutral payment rate cases in
FY 2018 will continue to mirror an IPPS case
paid under the same MS–DRG, we continue
to believe that it would be inappropriate for
comparable LTCH PPS site neutral payment
rate cases to receive dramatically different
HCO payments from those cases that would
be paid under the IPPS. More specifically, as
with FY 2016 and FY 2017, our actuaries
project that the costs and resource use for FY
2018 cases paid at the site neutral payment
rate would likely be lower, on average, than
the costs and resource use for cases paid at
the LTCH PPS standard Federal payment rate
and will likely mirror the costs and resource
use for IPPS cases assigned to the same MS–
DRG, regardless of whether the proportion of
site neutral payment rate cases in the future
remains similar to what is found based on the
historical data. (Based on the most recent FY
2016 LTCH claims data, approximately 58
percent of LTCH cases would have been paid
the LTCH PPS standard Federal payment rate
and approximately 42 percent of LTCH cases
would have been paid the site neutral
payment rate if those rates had been in effect
at that time for all LTCH discharges occurring
in FY 2016, regardless of LTCHs’ cost
reporting period beginning dates.)
For these reasons, we continue to believe
that the most appropriate fixed-loss amount
for site neutral payment rate cases for FY
2018 is the IPPS fixed-loss amount for FY
2018. Therefore, consistent with past
practice, in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20191), for FY 2018, we
proposed that the applicable HCO threshold
for site neutral payment rate cases is the sum
of the site neutral payment rate for the case
and the IPPS fixed-loss amount. That is, we
proposed a fixed-loss amount for site neutral
payment rate cases of $26,713, which was the
same proposed FY 2018 IPPS fixed-loss
amount discussed in section II.A.4.g.(1) of
the Addendum to the proposed rule. We
continue to believe that this policy would
reduce differences between HCO payments
for similar cases under the IPPS and site
neutral payment rate cases under the LTCH
PPS and promote fairness between the two
systems. Accordingly, for FY 2018, we
proposed to calculate a HCO payment for site
neutral payment rate cases with costs that
exceed the HCO threshold amount, which is
equal to 80 percent of the difference between
the estimated cost of the case and the outlier
threshold (the sum of proposed site neutral
payment rate payment and the proposed
fixed-loss amount for site neutral payment
rate cases of $26,713).
Comment: Some commenters expressed
support for our proposal to continue to use
the FY 2017 IPPS fixed-loss amount and 5.1
percent HCO target for LTCH discharges paid
at the site neutral payment rate in FY 2018.
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Response: We appreciate the commenters
support for our proposal to continue to use
the FY 2018 IPPS fixed-loss amount and 5.1
percent HCO target for LTCH discharges paid
at the site neutral payment rate in FY 2018.
Given the current expectation that cases paid
at the site neutral payment rate would likely
be similar to IPPS cases assigned to the same
MS–DRG, we continue to believe the most
appropriate fixed-loss amount for site neutral
payment rate cases is the IPPS fixed-loss
amount for that fiscal year. As we indicated
in the FY 2016 IPPS/LTCH PPS final rule (80
FR 49619), to the extent experience under the
revised LTCH PPS indicates site neutral
payment rate cases differ sufficiently from
these expectations, we agree it would be
appropriate to revisit in future rulemaking
the most appropriate fixed-loss amount used
to determine HCO payments for site neutral
payment rate cases. As we discuss in greater
detail in section I.J.1., the Regulatory Impact
Analysis, in Appendix A of this final rule,
given the rolling nature of the start of the
transition to the site neutral payment rate,
many LTCH claims from FY 2016 were not
subject to the site neutral payment rate at all
as many LTCHs did not begin their FY 2016
cost reporting period until the fourth quarter
of that fiscal year. In addition, all claims
which were subject to the site neutral
payment rate in FY 2016 were paid under the
blended payment rate which included a
payment based on 50 percent of the LTCH
PPS standard Federal payment rate. As such,
FY 2016 claims may not yet reflect the
expected change in cost and resources once
the payment for site neutral payment rate
cases is fully based on the site neutral
payment rate.
After consideration of public comments we
received, we are finalizing without
modification, our proposals to use the FY
2018 IPPS fixed-loss amount and 5.1 percent
HCO target for LTCH discharges paid at the
site neutral payment rate in FY 2018.
Therefore, for FY 2018, as we proposed, we
are establishing that the applicable HCO
threshold for site neutral payment rate cases
is the sum of the site neutral payment rate
for the case and the IPPS fixed loss amount.
That is, we are establishing a fixed-loss
amount for site neutral payment rate cases of
$26,601, which is the same FY 2018 IPPS
fixed-loss amount discussed in section
II.A.4.g.(1). of the Addendum to this final
rule. We continue to believe that this policy
will reduce differences between HCO
payments for similar cases under the IPPS
and site neutral payment rate cases under the
LTCH PPS and promote fairness between the
two systems. Accordingly, under this policy,
for FY 2018, we will calculate a HCO
payment for site neutral payment rate cases
with costs that exceed the HCO threshold
amount, which is equal to 80 percent of the
difference between the estimated cost of the
case and the outlier threshold (the sum of site
neutral payment rate payment and the fixed
loss amount for site neutral payment rate
cases of $26,601).
In establishing a HCO policy for site
neutral payment rate cases, we established a
budget neutrality adjustment under
§ 412.522(c)(2)(i). We established this
requirement because we believed, and
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38545
continue to believe, that the HCO policy for
site neutral payment rate cases should be
budget neutral, just as the HCO policy for
LTCH PPS standard Federal payment rate
cases are budget neutral, meaning that
estimated site neutral payment rate HCO
payments should not result in any change in
estimated aggregate LTCH PPS payments.
To ensure that estimated HCO payments
payable to site neutral payment rate cases in
FY 2018 would not result in any increase in
estimated aggregate FY 2018 LTCH PPS
payments, under the budget neutrality
requirement at § 412.522(c)(2)(i), it is
necessary to reduce site neutral payment rate
payments (or the portion of the blended
payment rate payment for FY 2018
discharges occurring in LTCH cost reporting
periods beginning before October 1, 2017) by
5.1 percent to account for the estimated
additional HCO payments payable to those
cases in FY 2018. In order to achieve this, for
FY 2018, in general, as we proposed, we are
continuing to use the policy adopted for FY
2017.
As discussed earlier, consistent with the
IPPS HCO payment threshold, we expect a
fixed-loss threshold of $26,601 results in
HCO payments for site neutral payment rate
cases equal to 5.1 percent of the site neutral
payment rate payments that are based on the
IPPS comparable per diem amount. As such,
to ensure estimated HCO payments payable
for site neutral payment rate cases in FY 2018
would not result in any increase in estimated
aggregate FY 2018 LTCH PPS payments,
under the budget neutrality requirement at
§ 412.522(c)(2)(i), it is necessary to reduce the
site neutral payment rate amount paid under
§ 412.522(c)(1)(i) by 5.1 percent to account
for the estimated additional HCO payments
payable for site neutral payment rate cases in
FY 2018. In order to achieve this, for FY
2018, we proposed to apply a budget
neutrality factor of 0.949 (that is, the decimal
equivalent of a 5.1 percent reduction,
determined as 1.0 ¥ 5.1/100 = 0.949) to the
site neutral payment rate for those site
neutral payment rate cases paid under
§ 412.522(c)(1)(i). We noted that, consistent
with the policy adopted for FY 2017, under
this proposed policy the HCO budget
neutrality adjustment would not be applied
to the HCO portion of the site neutral
payment rate amount (80 FR 57309).
Comment: As was the case in the FY 2016
and FY 2017 rulemaking cycle, commenters
again objected to the proposed site neutral
payment rate HCO budget neutrality
adjustment, claiming that it results in savings
to the Medicare program instead of being
budget neutral. The commenters’ primary
objection was again based on their belief that,
because the IPPS base rates used in the IPPS
comparable per diem amount calculation of
the site neutral payment rate include a
budget neutrality adjustment for IPPS HCO
payments (that is, a 5.1 percent adjustment
on the operating IPPS standardized amount),
an ‘‘additional’’ budget neutrality factor is
not necessary and is, in fact, duplicative.
Response: We continue to disagree with
the commenters that a budget neutrality
adjustment for site neutral payment rate HCO
payments is inappropriate, unnecessary, or
duplicative. As we discussed in response to
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similar comments (81 FR 57308 through
57309 and 80 FR 49621 through 49622), we
have the authority to adopt the site neutral
payment rate HCO policy in a budget neutral
manner. More importantly, we continue to
believe this budget neutrality adjustment is
appropriate for reasons outlined in our
response to the nearly identical comments in
the FY 2017 IPPS/LTCH PPS final rule (81 FR
57308 through 57309) and our response to
similar comments in the FY 2016 IPPS/LTCH
PPS final rule (80 FR 49621 through 49622).
After consideration of the public comments
we received, we are finalizing our proposal
to apply a budget neutrality adjustment for
HCO payments made to site neutral payment
rate cases. Therefore, to ensure that estimated
HCO payments payable to site neutral
payment rate cases in FY 2018 will not result
any increase in estimated aggregate FY 2018
LTCH PPS payments, under the budget
neutrality requirement at § 412.522(c)(2)(i), it
is necessary to reduce the site neutral
payment rate portion of the blended rate
payment by 5.1 percent to account for the
estimated additional HCO payments payable
to those cases in FY 2018. In order to achieve
this, for FY 2018, in this final rule, to, as
proposed, we are applying a budget
neutrality factor of 0.949 (that is, the decimal
equivalent of a 5.1 percent reduction,
determined as 1.0—5.1/100 = 0.949) to the
site neutral payment rate (without any
applicable HCO payment).
E. Update to the IPPS Comparable/
Equivalent Amounts To Reflect the Statutory
Changes to the IPPS DSH Payment
Adjustment Methodology
In the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50766), we established a policy to
reflect the changes to the Medicare IPPS DSH
payment adjustment methodology made by
section 3133 of the Affordable Care Act in the
calculation of the ‘‘IPPS comparable amount’’
under the SSO policy at § 412.529 and the
‘‘IPPS equivalent amount’’ under the 25percent threshold payment adjustment policy
at § 412.534 and § 412.536. Historically, the
determination of both the ‘‘IPPS comparable
amount’’ and the ‘‘IPPS equivalent amount’’
includes an amount for inpatient operating
costs ‘‘for the costs of serving a
disproportionate share of low-income
patients.’’ Under the statutory changes to the
Medicare DSH payment adjustment
methodology that began in FY 2014, in
general, eligible IPPS hospitals receive an
empirically justified Medicare DSH payment
equal to 25 percent of the amount they
otherwise would have received under the
statutory formula for Medicare DSH
payments prior to the amendments made by
the Affordable Care Act. The remaining
amount, equal to an estimate of 75 percent
of the amount that otherwise would have
been paid as Medicare DSH payments,
reduced to reflect changes in the percentage
of individuals who are uninsured, is made
available to make additional payments to
each hospital that qualifies for Medicare DSH
payments and that has uncompensated care.
The additional uncompensated care
payments are based on the hospital’s amount
of uncompensated care for a given time
period relative to the total amount of
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uncompensated care for that same time
period reported by all IPPS hospitals that
receive Medicare DSH payments.
To reflect the statutory changes to the
Medicare DSH payment adjustment
methodology in the calculation of the ‘‘IPPS
comparable amount’’ and the ‘‘IPPS
equivalent amount’’ under the LTCH PPS, we
stated that we will include a reduced
Medicare DSH payment amount that reflects
the projected percentage of the payment
amount calculated based on the statutory
Medicare DSH payment formula prior to the
amendments made by the Affordable Care
Act that will be paid to eligible IPPS
hospitals as empirically justified Medicare
DSH payments and uncompensated care
payments in that year (that is, a percentage
of the operating Medicare DSH payment
amount that has historically been reflected in
the LTCH PPS payments that is based on
IPPS rates). We also stated that the projected
percentage will be updated annually,
consistent with the annual determination of
the amount of uncompensated care payments
that will be made to eligible IPPS hospitals.
We believe that this approach results in
appropriate payments under the LTCH PPS
and is consistent with our intention that the
‘‘IPPS comparable amount’’ and the ‘‘IPPS
equivalent amount’’ under the LTCH PPS
closely resemble what an IPPS payment
would have been for the same episode of
care, while recognizing that some features of
the IPPS cannot be translated directly into
the LTCH PPS (79 FR 50766 through 50767).
For FY 2018, as discussed in greater detail
in section V.G.3. of the preamble of this final
rule, based on the most recent data available,
our estimate of 75 percent of the amount that
would otherwise have been paid as Medicare
DSH payments (under the methodology
outlined in section 1886(r)(2) of the Act) is
adjusted to 58.01 percent of that amount to
reflect the change in the percentage of
individuals who are uninsured. The resulting
amount is then used to determine the amount
available to make uncompensated care
payments to eligible IPPS hospitals in FY
2018. In other words, the amount of the
Medicare DSH payments that would have
been made prior to the amendments made by
the Affordable Care Act will be adjusted to
43.51 percent (the product of 75 percent and
58.01 percent) and the resulting amount will
be used to calculate the uncompensated care
payments to eligible hospitals. As a result, for
FY 2018, we project that the reduction in the
amount of Medicare DSH payments pursuant
to section 1886(r)(1) of the Act, along with
the payments for uncompensated care under
section 1886(r)(2) of the Act, will result in
overall Medicare DSH payments of 68.51
percent of the amount of Medicare DSH
payments that would otherwise have been
made in the absence of the amendments
made by the Affordable Care Act (that is, 25
percent + 43.51 percent = 68.51 percent).
In the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 20192), for FY 2018, we proposed
to establish that the calculation of the ‘‘IPPS
comparable amount’’ under § 412.529 and the
‘‘IPPS equivalent amount’’ under § 412.538
would include an applicable operating
Medicare DSH payment amount that is equal
to 68.51 percent of the operating Medicare
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DSH payment amount that would have been
paid based on the statutory Medicare DSH
payment formula but for the amendments
made by the Affordable Care Act.
Furthermore, consistent with our historical
practice, we proposed that if more recent
data became available, if appropriate, we
would use that data to determine this factor
in the final rule.
We did not receive any public comments
on our proposal. In addition, there is no more
recent data available that would affect the
calculations in the proposed rule. Therefore,
we are finalizing our proposal that the
calculation of the ‘‘IPPS comparable amount’’
under § 412.529 and the ‘‘IPPS equivalent
amount’’ under § 412.538 would include an
applicable operating Medicare DSH payment
amount that is equal to 68.51 percent of the
operating Medicare DSH payment amount
that would have been paid based on the
statutory Medicare DSH payment formula but
for the amendments made by the Affordable
Care Act.
F. Computing the Adjusted LTCH PPS
Federal Prospective Payments for FY 2018
Section 412.525 sets forth the adjustments
to the LTCH PPS standard Federal payment
rate. Under the dual rate LTCH PPS payment
structure, only LTCH PPS cases that meet the
statutory criteria to be excluded from the site
neutral payment rate are paid based on the
LTCH PPS standard Federal payment rate.
Under § 412.525(c), the proposed LTCH PPS
standard Federal payment rate is adjusted to
account for differences in area wages by
multiplying the proposed labor-related share
of the LTCH PPS standard Federal payment
rate for a case by the applicable LTCH PPS
wage index (the FY 2018 values are shown
in Tables 12A through 12B listed in section
VI. of the Addendum of this final rule and
are available via the Internet on the CMS
Web site). The LTCH PPS standard Federal
payment rate is also adjusted to account for
the higher costs of LTCHs located in Alaska
and Hawaii by the applicable COLA factors
(the FY 2018 factors are shown in the chart
in section V.C. of this Addendum) in
accordance with § 412.525(b). In this final
rule, we are establishing an LTCH PPS
standard Federal payment rate for FY 2018 of
$41,430.56, as discussed in section V.A. of
the Addendum to this final rule. We
illustrate the methodology to adjust the
LTCH PPS standard Federal payment rate for
FY 2018 in the following example:
Example
During FY 2018, a Medicare discharge that
meets the criteria to be excluded from the site
neutral payment rate, that is, an LTCH PPS
standard Federal payment rate case, is from
an LTCH that is located in Chicago, Illinois
(CBSA 16974). The FY 2018 LTCH PPS wage
index value for CBSA 16974 is 1.0547
(obtained from Table 12A listed in section VI.
of the Addendum of this final rule and
available via the Internet on the CMS Web
site). The Medicare patient case is classified
into MS–LTC–DRG 189 (Pulmonary Edema &
Respiratory Failure), which has a relative
weight for FY 2018 of 0.9655 (obtained from
Table 11 listed in section VI. of the
Addendum of this final rule and available via
the Internet on the CMS Web site). The LTCH
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submitted quality reporting data for FY 2018
in accordance with the LTCHQRP under
section 1886(m)(5) of the Act.
To calculate the LTCH’s total adjusted
Federal prospective payment for this
Medicare patient case in FY 2018, we
computed the wage-adjusted proposed
Federal prospective payment amount by
multiplying the unadjusted FY 2018 LTCH
PPS standard Federal payment rate
($41,430.56) by the labor-related share (66.2
percent) and the wage index value (1.0547).
This wage-adjusted amount was then added
to the nonlabor-related portion of the
unadjusted LTCH PPS standard Federal
payment rate (33.8 percent; adjusted for cost
of living, if applicable) to determine the
adjusted LTCH PPS standard Federal
payment rate, which is then multiplied by
the MS–LTC–DRG relative weight (0.9655) to
calculate the total adjusted LTCH PPS
standard Federal prospective payment for FY
2018 ($41,449.71). The table below illustrates
the components of the calculations in this
example.
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Unadjusted LTCH PPS Standard Federal Prospective Payment Rate .......................................................................................
Labor-Related Share ...................................................................................................................................................................
Labor-Related Portion of the LTCH PPS Standard Federal Payment Rate ...............................................................................
Wage Index (CBSA 16974) .........................................................................................................................................................
Wage-Adjusted Labor Share of LTCH PPS Standard Federal Payment Rate ...........................................................................
Nonlabor-Related Portion of the LTCH PPS Standard Federal Payment Rate ($41,430.56 × 0.338) .......................................
Adjusted LTCH PPS Standard Federal Payment Amount ..........................................................................................................
MS–LTC–DRG 189 Relative Weight ...........................................................................................................................................
Total Adjusted LTCH PPS Standard Federal Prospective Payment ..........................................................................................
VI. Tables Referenced in This Final Rule and
Available Only Through the Internet on the
CMS Web site
This section lists the tables referred to
throughout the preamble of this final rule
and in this Addendum. In the past, a majority
of these tables were published in the Federal
Register as part of the annual proposed and
final rules. However, similar to FYs 2012
through 2017, for the FY 2018 rulemaking
cycle, the IPPS and LTCH tables will not be
published in the Federal Register in the
annual IPPS/LTCH PPS proposed and final
rules and will be available only through the
Internet. Specifically, all IPPS tables listed
below, with the exception of IPPS Tables 1A,
1B, 1C, and 1D, and LTCH PPS Table 1E will
be available only through the Internet. IPPS
Tables 1A, 1B, 1C, and 1D, and LTCH PPS
Table 1E are displayed at the end of this
section and will continue to be published in
the Federal Register as part of the annual
proposed and final rules.
As discussed in the FY 2016 IPPS/LTCH
PPS final rule (80 FR 49807), we streamlined
and consolidated the wage index tables for
FY 2016 and subsequent fiscal years.
As discussed in sections II.F.14., II.F.15.b.,
II.F.16., II.F.17.a., and II.F.19.a.1., a.3., and
c.1. of the preamble of this final rule, we
developed the following ICD–10–CM and
ICD–10–PCS code tables for FY 2018: Table
6A.—New Diagnosis Codes; Table 6B.—New
Procedure Codes; Table 6C.—Invalid
Diagnosis Codes; Table 6D.—Invalid
Procedure Codes; Table 6E.—Revised
Diagnosis Code Titles; Table 6F.—Revised
Procedure Code Titles; Table 6G.1.—
Secondary Diagnosis Order Additions to the
CC Exclusion List; Table 6G.2.—Principal
Diagnosis Order Additions to the CC
Exclusion List; Table 6H.1.—Secondary
Diagnosis Order Deletions to the CC
Exclusion List; Table 6H.2.—Principal
Diagnosis Order Deletions to the CC
Exclusion List; Table 6I.—Complete MCC
List; Table 6I.1.—Additions to the MCC List;
Table 6J.—Complete CC List; Table 6I.2.—
Deletions to the MCC List; Table 6J.1.—
Additions to the CC List; Table 6J.2—
Deletions to the CC List; Table 6K.—
Complete List of CC Exclusions; Table 6L.—
Principal Diagnosis Is Its Own MCC List—FY
2018; Table 6M.—Principal Diagnosis Is Its
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Own CC List—FY 2018; and Table 6P.—ICD–
10–CM and ICD–10–PCS Code Designations,
MCE and MS–DRG Changes. Table 6P
contains multiple tables, 6P.1a through
6P.4p, that include the ICD–10–CM and ICD–
10–PCS code lists relating to specific MCE
and MS–DRG changes. In addition, under the
HAC Reduction Program established by
section 3008 of the Affordable Care Act, a
hospital’s total payment may be reduced by
1 percent if it is in the lowest HAC
performance quartile. However, as discussed
in section V.I. of the preamble of this final
rule, we are not providing the hospital-level
data as a table associated with this final rule.
The hospital-level data for the FY 2018 HAC
Reduction Program will be made publicly
available once it has undergone the review
and corrections process.
Finally, Table 18 associated with this final
rule contains the Factor 3 for purposes of
determining the FY 2018 uncompensated
care payment for all hospitals and identifies
whether or not a hospital is projected to
receive Medicare DSH payments and,
therefore, eligible to receive the additional
payment for uncompensated care for FY
2018. A hospital’s Factor 3 determines the
proportion of the aggregate amount available
for uncompensated care payments that a
Medicare DSH eligible hospital will receive
under section 3133 of the Affordable Care
Act.
Readers who experience any problems
accessing any of the tables that are posted on
the CMS Web sites identified below should
contact Michael Treitel at (410) 786–4552.
The following IPPS tables for this FY 2018
final rule are available only through the
Internet on the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Fee-forService-Payment/AcuteInpatientPPS/
index.html. Click on the link on the left side
of the screen titled, ‘‘FY 2018 IPPS Final Rule
Home Page’’ or ‘‘Acute Inpatient—Files for
Download.’’
Table 2.—Case-Mix Index and Wage Index
Table by CCN—FY 2018
Table 3.—Wage Index Table by CBSA—FY
2018
Table 5.—List of Medicare Severity
Diagnosis-Related Groups (MS–DRGs),
Relative Weighting Factors, and Geometric
and Arithmetic Mean Length of Stay—FY
2018
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=
=
+
=
=
$41,430.56
× 0.662
$27,427.03
× 1.0547
$28,927.29
$14,003.53
$42,930.82
× 0.9655
$41,449.71
Table 6A.—New Diagnosis Codes—FY 2018
Table 6B.—New Procedure Codes—FY 2018
Table 6C.—Invalid Diagnosis Codes—FY
2018
Table 6D.—Invalid Procedure Codes—FY
2018
Table 6E.—Revised Diagnosis Code Titles—
FY 2018
Table 6F.—Revised Procedure Code Titles—
FY 2018
Table 6G.1.—Secondary Diagnosis Order
Additions to the CC Exclusions List—FY
2018
Table 6G.2.—Principal Diagnosis Order
Additions to the CC Exclusions List—FY
2018
Table 6H.1.—Secondary Diagnosis Order
Deletions to the CC Exclusions List—FY
2018
Table 6H.2.—Principal Diagnosis Order
Deletions to the CC Exclusions List—FY
2018
Table 6I.—Complete MCC List—FY 2018
Table 6I.1.—Additions to the MCC List—FY
2018
Table 6I.2.—Deletions to the MCC List—FY
2018
Table 6J.—Complete CC List—FY 2018
Table 6J.1.—Additions to the CC List—FY
2018
Table 6J.2.—Deletions to the CC List—FY
2018
Table 6K.—Complete List of CC Exclusions—
FY 2018
Table 6L.—Principal Diagnosis Is Its Own
MCC List—FY 2018
Table 6M.—Principal Diagnosis Is Its Own
CC List—FY 2018
Table 6P.—ICD–10–CM and ICD–10–PCS
Code Designations, MCE and MS–DRG
Changes—FY 2018
Table 7A.—Medicare Prospective Payment
System Selected Percentile Lengths of Stay:
FY 2016 MedPAR Update—March 2017
GROUPER V34.0 MS–DRGs
Table 7B.—Medicare Prospective Payment
System Selected Percentile Lengths of Stay:
FY 2016 MedPAR Update—March 2017
GROUPER V35.0 MS–DRGs
Table 8A.—FY 2018 Statewide Average
Operating Cost-to-Charge Ratios (CCRs) for
Acute Care Hospitals (Urban and Rural)
Table 8B.—FY 2018 Statewide Average
Capital Cost-to-Charge Ratios (CCRs) for
Acute Care Hospitals
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Table 10.—New Technology Add-On
Payment Thresholds for Applications for
FY 2019
Table 15.—FY 2018 Readmissions
Adjustment Factors
Table 16A.—Proxy Hospital Value-Based
Purchasing (VBP) Program Adjustment
Factors for FY 2018
Table 18.—FY 2018 Uncompensated Care
Payment Factor 3
The following LTCH PPS tables for this FY
2018 final rule are available only through the
Internet on the CMS Web site at: https://
www.cms.gov/Medicare/Medicare-Fee-forService-Payment/LongTermCareHospitalPPS/
index.html under the list item for Regulation
Number CMS–1677–F:
Table 8C.—FY 2018 Statewide Average Total
Cost-to-Charge Ratios (CCRs) for LTCHs
(Urban and Rural)
Table 11.—MS–LTC–DRGs, Relative Weights,
Geometric Average Length of Stay, and
Short-Stay Outlier (SSO) Threshold for
LTCH PPS Discharges Occurring from
October 1, 2017 through September 30,
2018
Table 12A.—LTCH PPS Wage Index for
Urban Areas for Discharges Occurring from
October 1, 2017 through September 30,
2018
Table 12B.—LTCH PPS Wage Index for Rural
Areas for Discharges Occurring from
October 1, 2017 through September 30,
2018
Table 13A.—Composition of Low Volume
Quintiles for MS–LTC–DRGs—FY 2018
Table 13B.—No Volume MS LTC–DRG
Crosswalk for FY 2018
TABLE 1A—NATIONAL ADJUSTED OPERATING STANDARDIZED AMOUNTS, LABOR/NONLABOR
[(68.3 percent labor share/31.7 percent nonlabor share if wage index is greater than 1)—FY 2018]
Hospital submitted quality data
and is a meaningful EHR user
(update = 1.35 percent)
Hospital submitted quality data
and is NOT a meaningful EHR
user
(update = ¥0.675 percent)
Hospital did NOT submit quality
data and is a meaningful EHR
User
(update = 0.675 percent)
Hospital did NOT submit quality
data and is NOT a meaningful
EHR user
(update = ¥1.35 percent)
Labor
Nonlabor
Labor
Nonlabor
Labor
Nonlabor
Labor
Nonlabor
$3,807.12
$1,766.99
$3,731.05
$1,731.69
$3,781.76
$1,755.22
$3,705.70
$1,719.92
TABLE 1B—NATIONAL ADJUSTED OPERATING STANDARDIZED AMOUNTS, LABOR/NONLABOR
[(62 percent labor share/38 percent nonlabor share if wage index is less than or equal to 1)—FY 2018]
Hospital submitted quality data
and is a meaningful EHR user
(update = 1.35 percent)
Hospital submitted quality data
and is NOT a meaningful EHR
user
(update = ¥0.675 percent)
Hospital did NOT submit quality
data and is a meaningful EHR
User
(update = 0.675 percent)
Hospital did NOT submit quality
data and is NOT a meaningful
EHR user
(update = ¥1.35 percent)
Labor
Nonlabor
Labor
Nonlabor
Labor
Nonlabor
Labor
Nonlabor
$3,455.95
$2,118.16
$3,386.90
$2,075.84
$3,432.93
$2,104.05
$3,363.88
$2,061.74
TABLE 1C—ADJUSTED OPERATING STANDARDIZED AMOUNTS FOR HOSPITALS IN PUERTO RICO, LABOR/NONLABOR
[(National: 62 percent labor share/38 percent nonlabor share because wage index is less than or equal to 1);—FY 2018]
Rates if wage index is
greater than 1
Standardized amount
Rates if wage index is less
than or equal to 1
Labor
National 1 ........................................
1 For
Nonlabor
Not Applicable ..............................
Not Applicable ..................................
$3,455.95
Nonlabor
$2,118.16
FY 2018, there are no CBSAs in Puerto Rico with a national wage index greater than 1.
TABLE 1D—CAPITAL STANDARD
FEDERAL PAYMENT RATE
TABLE 1E—LTCH PPS STANDARD
FEDERAL PAYMENT RATE
[FY 2018]
[FY 2018]
Full update
(1 percent)
Reduced
update *
(¥1.0
percent)
$41,430.56
$40,610.16
Rate
National .................................
$453.97
Standard Federal
Rate ...................
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Labor
* For LTCHs that fail to submit quality reporting data for FY 2018 in accordance with
the LTCH Quality Reporting Program (LTCH
QRP), the annual update is reduced by 2.0
percentage points as required by section
1886(m)(5) of the Act.
Appendix A: Economic Analyses
I. Regulatory Impact Analysis
A. Introduction
We have examined the impacts of this final
rule as required by Executive Order 12866 on
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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), the Congressional Review
Act (5 U.S.C. 804(2), and Executive Order
13771 on Reducing Regulation and
Controlling Regulatory Costs (January 30,
2017).
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).
Section 3(f) of Executive Order 12866 defines
a ‘‘significant regulatory action’’ as an action
that is likely to result in a rule: (1) (Having
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an annual effect on the economy of $100
million or more in any 1 year, or adversely
and materially affecting a sector of the
economy, productivity, competition, jobs, the
environment, public health or safety, or state,
local or tribal governments or communities
(also referred to as ‘‘economically
significant’’); (2) creating a serious
inconsistency or otherwise interfering with
an action taken or planned by another
agency; (3) materially altering the budgetary
impacts of entitlement grants, user fees, or
loan programs or the rights and obligations
of recipients thereof; or (4) raising novel legal
or policy issues arising out of legal mandates,
the President’s priorities, or the principles set
forth in the Executive Order.
We have determined that this final rule is
a major rule as defined in 5 U.S.C. 804(2). We
estimate that the changes for FY 2018 acute
care hospital operating and capital payments
will redistribute amounts in excess of $100
million to acute care hospitals. The
applicable percentage increase to the IPPS
rates required by the statute, in conjunction
with other payment changes in this final rule,
will result in an estimated $2.4 billion
increase in FY 2018 payments, including a
$1.7 billion increase in FY 2018 operating
payments, a $0.8 billion increase in
uncompensated care payments, a $0.2 billion
increase in FY 2018 capital payments, and a
$0.3 billion decrease in low volume
payments. These changes are relative to
payments made in FY 2017. The impact
analysis of the capital payments can be found
in section I.I. of this Appendix. In addition,
as described in section I.J. of this Appendix,
LTCHs are expected to experience a decrease
in payments by $110 million in FY 2018
relative to FY 2017.
Our operating impact estimate includes the
0.4588 percent adjustment required under
section 15005 of the 21st Century Cures Act
(Pub. L. 114–255) applied to the IPPS
standardized amount, as discussed in section
II.D. of the preamble of this final rule. In
addition, our operating payment impact
estimate includes the 1.35 percent hospital
update to the standardized amount (which
includes the estimated 2.7 percent market
basket update less 0.6 percentage point for
the multifactor productivity adjustment and
less 0.75 percentage point required under the
Affordable Care Act). Our operating payment
impact estimate also includes an adjustment
factor of (1/1.006) to the FY 2018 rates to
remove the 1.006 temporary one-time
adjustment made in FY 2017 to address the
effects of the 0.2 percent reduction in effect
for FYs 2014 through 2016 as a result of the
2-midnight policy (we refer readers to section
V.M. of the preamble of this final rule for an
explanation of this adjustment). The
estimates of IPPS operating payments to
acute care hospitals do not reflect any
changes in hospital admissions or real casemix intensity, which will also affect overall
payment changes.
The analysis in this Appendix, in
conjunction with the remainder of this
document, demonstrates that this final rule is
consistent with the regulatory philosophy
and principles identified in Executive Orders
12866 and 13563, the RFA, and section
1102(b) of the Act. This final rule will affect
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payments to a substantial number of small
rural hospitals, as well as other classes of
hospitals, and the effects on some hospitals
may be significant. Finally, in accordance
with the provisions of Executive Order
12866, the Executive Office of Management
and Budget has reviewed this final rule.
B. Statement of Need
This final rule is necessary in order to
make payment and policy changes under the
Medicare IPPS for Medicare acute care
hospital inpatient services for operating and
capital-related costs as well as for certain
hospitals and hospital units excluded from
the IPPS. This final rule also is necessary to
make payment and policy changes for
Medicare hospitals under the LTCH PPS.
C. Objectives of the IPPS and the LTCH PPS
The primary objective of the IPPS and the
LTCH PPS is to create incentives for
hospitals to operate efficiently and minimize
unnecessary costs while at the same time
ensuring that payments are sufficient to
adequately compensate hospitals for their
legitimate costs in delivering necessary care
to Medicare beneficiaries. In addition, we
share national goals of preserving the
Medicare Hospital Insurance Trust Fund.
We believe that the changes in this final
rule will further each of these goals while
maintaining the financial viability of the
hospital industry and ensuring access to high
quality health care for Medicare
beneficiaries. We expect that these changes
will ensure that the outcomes of the
prospective payment systems are reasonable
and equitable while avoiding or minimizing
unintended adverse consequences.
Because this final rule contains a range of
policies, we refer readers to the section of the
final rule where each policy is discussed.
These sections include the rational for our
decisions, including the need for the policy.
D. Limitations of Our Analysis
The following quantitative analysis
presents the projected effects of our policy
changes, as well as statutory changes
effective for FY 2018, on various hospital
groups. We estimate the effects of individual
policy changes by estimating payments per
case while holding all other payment policies
constant. We use the best data available, but,
generally, we do not attempt to make
adjustments for future changes in such
variables as admissions, lengths of stay, or
case-mix. In addition, we discuss limitations
of our analysis for specific policies in the
discussion of those policies as needed.
E. Hospitals Included in and Excluded From
the IPPS
The prospective payment systems for
hospital inpatient operating and capitalrelated costs of acute care hospitals
encompass most general short-term, acute
care hospitals that participate in the
Medicare program. There were 31 Indian
Health Service hospitals in our database,
which we excluded from the analysis due to
the special characteristics of the prospective
payment methodology for these hospitals.
Among other short-term, acute care hospitals,
hospitals in Maryland are paid in accordance
with the Maryland All-Payer Model, and
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hospitals located outside the 50 States, the
District of Columbia, and Puerto Rico (that is,
5 short-term acute care hospitals located in
the U.S. Virgin Islands, Guam, the Northern
Mariana Islands, and American Samoa)
receive payment for inpatient hospital
services they furnish on the basis of
reasonable costs, subject to a rate-of-increase
ceiling.
As of July 2017, there were 3,292 IPPS
acute care hospitals included in our analysis.
This represents approximately 55 percent of
all Medicare-participating hospitals. The
majority of this impact analysis focuses on
this set of hospitals. There also are
approximately 1,387 CAHs. These small,
limited service hospitals are paid on the basis
of reasonable costs rather than under the
IPPS. IPPS-excluded hospitals and units,
which are paid under separate payment
systems, include IPFs, IRFs, LTCHs, RNHCIs,
children’s hospitals, 11 cancer hospitals,
extended neoplastic disease care hospitals,
and 5 short-term acute care hospitals located
in the Virgin Islands, Guam, the Northern
Mariana Islands, and American Samoa. With
the exception of the IPFQR provisions
presented in section IX.D. of the preamble of
this final rule, changes in the prospective
payment systems for IPFs and IRFs are made
through separate rulemaking. Payment
impacts of changes to the prospective
payment systems for these IPPS-excluded
hospitals and units are not included in this
final rule. The impact of the update and
policy changes to the LTCH PPS for FY 2018
is discussed in section I.J. of this Appendix.
F. Effects on Hospitals and Hospital Units
Excluded From the IPPS
As of July 2017, there were 98 children’s
hospitals, 11 cancer hospitals, 5 short-term
acute care hospitals located in the Virgin
Islands, Guam, the Northern Mariana Islands
and American Samoa, 1 extended neoplastic
disease care hospital, and 18 RNHCIs being
paid on a reasonable cost basis subject to the
rate-of-increase ceiling under § 413.40. (In
accordance with § 403.752(a) of the
regulation, RNHCIs are paid under § 413.40.)
Among the remaining providers, 276
rehabilitation hospitals and 864
rehabilitation units, and approximately 419
LTCHs, are paid the Federal prospective per
discharge rate under the IRF PPS and the
LTCH PPS, respectively, and 517 psychiatric
hospitals and 1,104 psychiatric units are paid
the Federal per diem amount under the IPF
PPS. As stated previously, IRFs and IPFs are
not affected by the rate updates discussed in
this final rule. The impacts of the changes on
LTCHs are discussed in section I.J. of this
Appendix. For children’s hospitals, the 11
cancer hospitals, the 5 short-term acute care
hospitals located in the Virgin Islands, Guam,
the Northern Mariana Islands, and American
Samoa, extended neoplastic disease care
hospitals, and RNHCIs, the update of the
rate-of-increase limit (or target amount) is the
estimated FY 2018 percentage increase in the
2014-based IPPS operating market basket,
consistent with section 1886(b)(3)(B)(ii) of
the Act, and §§ 403.752(a) and 413.40 of the
regulations. As discussed in section IV. of the
preamble of this final rule, we are rebasing
and revising the IPPS operating market
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basket to a 2014 base year. Therefore, we
used the percentage increase in the 2014based IPPS operating market basket to update
the target amounts for FY 2018 and
subsequent years for children’s hospitals, the
11 cancer hospitals, the 5 short-term acute
care hospitals located in the U.S. Virgin
Islands, Guam, the Northern Mariana Islands,
and American Samoa, extended neoplastic
disease care hospitals, and RNHCs that are
paid based on reasonable costs subjects to the
rate-of-increase limits. Consistent with
current law, based on IGI’s 2017 second
quarter forecast of the 2014-based IPPS
market basket increase, we are estimating the
FY 2018 update to be 2.7 percent (that is, the
estimate of the market basket rate-ofincrease). We used the most recent data
available for this final rule to calculate the
IPPS operating market basket update for FY
2018. However, the Affordable Care Act
requires an adjustment for multifactor
productivity (currently 0.6 percentage point
for FY 2018) and a 0.75 percentage point
reduction to the market basket update,
resulting in a 1.35 percent applicable
percentage increase for IPPS hospitals that
submit quality data and are meaningful EHR
users, as discussed in section V.B. of the
preamble of this final rule. Children’s
hospitals, the 11 cancer hospitals, the 5
short-term acute care hospitals located in the
Virgin Islands, Guam, the Northern Mariana
Islands, and American Samoa, extended
neoplastic disease care hospitals, and
RNHCIs that continue to be paid based on
reasonable costs subject to rate-of-increase
limits under § 413.40 of the regulations are
not subject to the reductions in the
applicable percentage increase required
under the Affordable Care Act. Therefore, for
those hospitals paid under § 413.40 of the
regulations, the update is the percentage
increase in the 2014-based IPPS operating
market basket for FY 2018, estimated at 2.7
percent, without the reductions described
previously under the Affordable Care Act.
The impact of the update in the rate-ofincrease limit on those excluded hospitals
depends on the cumulative cost increases
experienced by each excluded hospital since
its applicable base period. For excluded
hospitals that have maintained their cost
increases at a level below the rate-of-increase
limits since their base period, the major effect
is on the level of incentive payments these
excluded hospitals receive. Conversely, for
excluded hospitals with cost increases above
the cumulative update in their rate-ofincrease limits, the major effect is the amount
of excess costs that would not be paid.
We note that, under § 413.40(d)(3), an
excluded hospital that continues to be paid
under the TEFRA system and whose costs
exceed 110 percent of its rate-of-increase
limit receives its rate-of-increase limit plus
the lesser of: (1) 50 percent of its reasonable
costs in excess of 110 percent of the limit; or
(2) 10 percent of its limit. In addition, under
the various provisions set forth in § 413.40,
hospitals can obtain payment adjustments for
justifiable increases in operating costs that
exceed the limit.
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G. Quantitative Effects of the Policy Changes
Under the IPPS for Operating Costs
1. Basis and Methodology of Estimates
In this final rule, we are announcing policy
changes and payment rate updates for the
IPPS for FY 2018 for operating costs of acute
care hospitals. The FY 2018 updates to the
capital payments to acute care hospitals are
discussed in section I.I. of this Appendix.
Based on the overall percentage change in
payments per case estimated using our
payment simulation model, we estimate that
total FY 2018 operating payments will
increase by 1.3 percent compared to FY 2017.
In addition to the applicable percentage
increase, this amount reflects the FY 2018
adjustment required under section 15005 of
the 21st Century Cures Act described in
section II.D. of the preamble of this final rule
of 0.4588 percent to the IPPS national
standardized amounts. This amount also
reflects the adjustment factor of (1/1.006) to
remove the 1.006 temporary one-time
adjustment made in FY 2017 to address the
effects of the 0.2 percent reduction in effect
for FYs 2014 through 2016 related to the 2midnight policy, which is discussed in
section V.M. of the preamble of this final
rule. The impacts do not reflect changes in
the number of hospital admissions or real
case-mix intensity, which will also affect
overall payment changes. We have prepared
separate impact analyses of the changes to
each system. This section deals with the
changes to the operating inpatient
prospective payment system for acute care
hospitals. Our payment simulation model
relies on the most recent available data to
enable us to estimate the impacts on
payments per case of certain changes in this
final rule. However, there are other changes
for which we do not have data available that
would allow us to estimate the payment
impacts using this model. For those changes,
we have attempted to predict the payment
impacts based upon our experience and other
more limited data.
The data used in developing the
quantitative analyses of changes in payments
per case presented in this section are taken
from the FY 2016 MedPAR file and the most
current Provider-Specific File (PSF) that is
used for payment purposes. Although the
analyses of the changes to the operating PPS
do not incorporate cost data, data from the
most recently available hospital cost reports
were used to categorize hospitals. Our
analysis has several qualifications. First, in
this analysis, we do not make adjustments for
future changes in such variables as
admissions, lengths of stay, or underlying
growth in real case-mix. Second, due to the
interdependent nature of the IPPS payment
components, it is very difficult to precisely
quantify the impact associated with each
change. Third, we use various data sources
to categorize hospitals in the tables. In some
cases, particularly the number of beds, there
is a fair degree of variation in the data from
the different sources. We have attempted to
construct these variables with the best
available source overall. However, for
individual hospitals, some
miscategorizations are possible.
Using cases from the FY 2016 MedPAR
file, we simulate payments under the
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operating IPPS given various combinations of
payment parameters. As described
previously, Indian Health Service hospitals
and hospitals in Maryland were excluded
from the simulations. The impact of
payments under the capital IPPS, and the
impact of payments for costs other than
inpatient operating costs, are not analyzed in
this section. Estimated payment impacts of
the capital IPPS for FY 2018 are discussed in
section I.I. of this Appendix.
We discuss the following changes:
• The effects of the application of the
adjustment required under section 15005 of
the 21st Century Cures Act and the
applicable percentage increase (including the
market basket update, the multifactor
productivity adjustment, and the applicable
percentage reduction in accordance with the
Affordable Care Act) to the standardized
amount and hospital-specific rates.
• The effects of the adjustment of (1/1.006)
to remove the 1.006 temporary one-time
adjustment made in FY 2017 to address the
effects of the 0.2 percent reduction in effect
for FYs 2014 through 2016 related to the 2midnight policy, as discussed in section V.M.
of the preamble of this final rule.
• The effects of the changes to the relative
weights and MS–DRG GROUPER.
• The effects of the changes in hospitals’
wage index values reflecting updated wage
data from hospitals’ cost reporting periods
beginning during FY 2014, compared to the
FY 2013 wage data, to calculate the FY 2018
wage index.
• The effects of the geographic
reclassifications by the MGCRB (as of
publication of this final rule) that will be
effective for FY 2018.
• The effects of the rural floor and imputed
floor with the application of the national
budget neutrality factor to the wage index.
• The effects of the frontier State wage
index adjustment under the statutory
provision that requires hospitals located in
States that qualify as frontier States to not
have a wage index less than 1.0. This
provision is not budget neutral.
• The effects of the implementation of
section 1886(d)(13) of the Act, as added by
section 505 of Public Law 108–173, which
provides for an increase in a hospital’s wage
index if a threshold percentage of residents
of the county where the hospital is located
commute to work at hospitals in counties
with higher wage indexes. This provision is
not budget neutral.
• The effects of the expiration of the
special payment status for MDHs at the end
of FY 2017 under current law as a result of
which MDHs that currently receive the
higher of payments made based on the
Federal rate or the payments made based on
the Federal rate plus 75 percent of the
difference between payments based on the
Federal rate and the hospital-specific rate
will be paid based on the Federal rate starting
in FY 2018.
• The total estimated change in payments
based on the FY 2018 policies relative to
payments based on FY 2017 policies that
include the applicable percentage increase of
1.35 percent (or 2.7 percent market basket
update with a reduction of 0.6 percentage
point for the multifactor productivity
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adjustment, and a 0.75 percentage point
reduction, as required under the Affordable
Care Act).
To illustrate the impact of the FY 2018
changes, our analysis begins with a FY 2017
baseline simulation model using: The FY
2017 applicable percentage increase of 1.65
percent and the documentation and coding
adjustment of ¥1.5 percent to the Federal
standardized amount; the adjustment of (1/
0.998) to permanently remove the ¥0.2
percent reduction to the rate put in place in
FY 2014 to offset the estimated increase in
IPPS expenditures as a result of the 2midnight policy; the 1.006 temporary
adjustment to address the effects of the 0.2
percent reduction in effect for FYs 2014
through 2016 related to the 2-midnight
policy; the FY 2017 MS–DRG GROUPER
(Version 34); the FY 2017 CBSA designations
for hospitals based on the OMB definitions
from the 2010 Census; the FY 2017 wage
index; and no MGCRB reclassifications.
Outlier payments are set at 5.1 percent of
total operating MS–DRG and outlier
payments for modeling purposes.
Section 1886(b)(3)(B)(viii) of the Act, as
added by section 5001(a) of Public Law 109–
171, as amended by section 4102(b)(1)(A) of
the ARRA (Pub. L. 111–5) and by section
3401(a)(2) of the Affordable Care Act (Pub. L.
111–148), provides that, for FY 2007 and
each subsequent year through FY 2014, the
update factor will include a reduction of 2.0
percentage points for any subsection (d)
hospital that does not submit data on
measures in a form and manner and at a time
specified by the Secretary. Beginning in FY
2015, the reduction is one-quarter of such
applicable percentage increase determined
without regard to section 1886(b)(3)(B)(ix),
(xi), or (xii) of the Act, or one-quarter of the
market basket update. Therefore, for FY 2018,
hospitals that do not submit quality
information under rules established by the
Secretary and that are meaningful EHR users
under section 1886(b)(3)(B)(ix) of the Act will
receive an applicable percentage increase of
0.675 percent. At the time that this impact
was prepared, 82 hospitals are estimated to
not receive the full market basket rate-ofincrease for FY 2018 because they failed the
quality data submission process or did not
choose to participate but are meaningful EHR
users. For purposes of the simulations shown
later in this section, we modeled the payment
changes for FY 2018 using a reduced update
for these hospitals.
For FY 2018, in accordance with section
1886(b)(3)(B)(ix) of the Act, a hospital that
has been identified as not a meaningful EHR
user will be subject to a reduction of threequarters of such applicable percentage
increase determined without regard to
section 1886(b)(3)(B)(ix), (xi), or (xii) of the
Act. Therefore, for FY 2018, hospitals that are
identified as not meaningful EHR users and
do submit quality information under section
1886(b)(3)(B)(viii) of the Act will receive an
applicable percentage increase of ¥0.675
percent. At the time that this impact analysis
was prepared, 103 hospitals are estimated to
not receive the full market basket rate-ofincrease for FY 2018 because they are
identified as not meaningful EHR users that
do submit quality information under section
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1886(b)(3)(B)(viii) of the Act. For purposes of
the simulations shown in this section, we
modeled the payment changes for FY 2018
using a reduced update for these hospitals.
Hospitals that are identified as not
meaningful EHR users under section
1886(b)(3)(B)(ix) of the Act and also do not
submit quality data under section
1886(b)(3)(B)(viii) of the Act will receive an
applicable percentage increase of ¥1.35
percent, which reflects a one-quarter
reduction of the market basket update for
failure to submit quality data and a threequarter reduction of the market basket update
for being identified as not a meaningful EHR
user. At the time that this impact was
prepared, 21 hospitals are estimated to not
receive the full market basket rate-of-increase
for FY 2018 because they are identified as not
meaningful EHR users that do not submit
quality data under section 1886(b)(3)(B)(viii)
of the Act.
Each policy change, statutory or otherwise,
is then added incrementally to this baseline,
finally arriving at an FY 2018 model
incorporating all of the changes. This
simulation allows us to isolate the effects of
each change.
Our final comparison illustrates the
percent change in payments per case from FY
2017 to FY 2018. Two factors not discussed
separately have significant impacts here. The
first factor is the update to the standardized
amount. In accordance with section
1886(b)(3)(B)(i) of the Act, we are updating
the standardized amounts for FY 2018 using
an applicable percentage increase of 1.35
percent. This includes our forecasted IPPS
operating hospital market basket increase of
2.7 percent with a 0.6 percentage point
reduction for the multifactor productivity
adjustment and a 0.75 percentage point
reduction as required under the Affordable
Care Act. Hospitals that fail to comply with
the quality data submission requirements and
are meaningful EHR users will receive an
update of 0.675 percent. This update
includes a reduction of one-quarter of the
market basket update for failure to submit
these data. Hospitals that do comply with the
quality data submission requirements but are
not meaningful EHR users will receive an
update of ¥0.675 percent, which includes a
reduction of three-quarters of the market
basket update. Furthermore, hospitals that do
not comply with the quality data submission
requirements and also are not meaningful
EHR users will receive an update of ¥1.35
percent. Under section 1886(b)(3)(B)(iv) of
the Act, the update to the hospital-specific
amounts for SCHs is also equal to the
applicable percentage increase, or 1.35
percent if the hospital submits quality data
and is a meaningful EHR user.
A second significant factor that affects the
changes in hospitals’ payments per case from
FY 2017 to FY 2018 is the change in
hospitals’ geographic reclassification status
from one year to the next. That is, payments
may be reduced for hospitals reclassified in
FY 2017 that are no longer reclassified in FY
2018. Conversely, payments may increase for
hospitals not reclassified in FY 2017 that are
reclassified in FY 2018.
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2. Analysis of Table I
Table I displays the results of our analysis
of the changes for FY 2018. The table
categorizes hospitals by various geographic
and special payment consideration groups to
illustrate the varying impacts on different
types of hospitals. The top row of the table
shows the overall impact on the 3,292 acute
care hospitals included in the analysis.
The next four rows of Table I contain
hospitals categorized according to their
geographic location: All urban, which is
further divided into large urban and other
urban; and rural. There are 2,492 hospitals
located in urban areas included in our
analysis. Among these, there are 1,340
hospitals located in large urban areas
(populations over 1 million), and 1,152
hospitals in other urban areas (populations of
1 million or fewer). In addition, there are 800
hospitals in rural areas. The next two
groupings are by bed-size categories, shown
separately for urban and rural hospitals. The
final groupings by geographic location are by
census divisions, also shown separately for
urban and rural hospitals.
The second part of Table I shows hospital
groups based on hospitals’ FY 2018 payment
classifications, including any
reclassifications under section 1886(d)(10) of
the Act. For example, the rows labeled urban,
large urban, other urban, and rural show that
the numbers of hospitals paid based on these
categorizations after consideration of
geographic reclassifications (including
reclassifications under sections 1886(d)(8)(B)
and 1886(d)(8)(E) of the Act that have
implications for capital payments) are 2,373,
1,354, 1,019, and 919, respectively.
The next three groupings examine the
impacts of the changes on hospitals grouped
by whether or not they have GME residency
programs (teaching hospitals that receive an
IME adjustment) or receive Medicare DSH
payments, or some combination of these two
adjustments. There are 2,204 nonteaching
hospitals in our analysis, 839 teaching
hospitals with fewer than 100 residents, and
249 teaching hospitals with 100 or more
residents.
In the DSH categories, hospitals are
grouped according to their DSH payment
status, and whether they are considered
urban or rural for DSH purposes. The next
category groups together hospitals considered
urban or rural, in terms of whether they
receive the IME adjustment, the DSH
adjustment, both, or neither.
The next three rows examine the impacts
of the changes on rural hospitals by special
payment groups (SCHs, and RRCs). There
were 263 RRCs, 316 SCHs, and 131 hospitals
that are both SCHs and RRCs.
The next series of groupings are based on
the type of ownership and the hospital’s
Medicare utilization expressed as a percent
of total patient days. These data were taken
from the FY 2015 or FY 2014 Medicare cost
reports.
The next two groupings concern the
geographic reclassification status of
hospitals. The first grouping displays all
urban hospitals that were reclassified by the
MGCRB for FY 2018. The second grouping
shows the MGCRB rural reclassifications.
BILLING CODE 4120–01–P
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14AUR2
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Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
TABLE I.-IMPACT ANALYSIS OF CHANGES TO THE IPPS FOR OPERATING COSTS
FORFY2018
VerDate Sep<11>2014
FY2018
Wage Data
with
Application
of Wage
Budget
Neutrality
(3) 4
0
2,492
1,340
1,152
800
1.2
1.2
1.2
0.9
0
0
0
0.2
648
763
441
426
214
1.1
1.2
1.2
1.2
1.2
0.9
0
Rural and
Imputed
Floor with
Application of
National
Budget
Neutrality
(5) 6
0
Application of the
Frontier
Wage
Index and
OutMigration
Adjustment
(6)"
0.1
0
-0.1
0.1
0
-0.1
-0.5
0.3
1.4
0
-0.1
0.2
-0.2
0.4
0.2
0.1
0
-0.2
0.1
0.1
0
-0.1
0
-0.6
0
0.1
-0.1
-0.2
0.8
0.9
0.9
0.3
0.2
0.1
0.1
0
0
0
-0.1
0
0.2
114
315
404
385
147
160
378
162
375
52
1.2
1.2
1.2
1.2
1.2
1.1
1.2
1.1
1.1
1.2
0
0
0
0.1
0
-0.1
0
0
-0.1
-0.5
20
53
125
115
154
97
154
58
24
1
0.8
1
0.9
1.1
0.6
0.9
0.6
0.6
0.1
0.2
0.2
0.1
0.3
-0.1
0.3
0.2
0
318
282
117
44
39
23:27 Aug 11, 2017
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0.9
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FY2018
MGCRB
Reclassifications
Expiration of
MDH
Status
0.1
0
0.2
0.2
0
0
-0.1
-0.9
1.4
1.4
1.5
0.2
0.1
0.3
0.1
0
-0.2
0.2
0.2
0.1
0.1
0.1
-0.7
-0.1
0
0
0
0.9
0.5
0.6
1.1
2.2
2.9
-0.2
-0.1
-0.2
-0.2
-0.2
0.3
0.4
0.1
0.1
0
-1.6
-2.2
-0.1
0
0
-0.4
-1.4
0.8
1.3
1.6
-0.5
-0.1
0.1
0.1
-0.2
0.7
0.5
-0.2
-0.4
1.4
1.2
0.6
-0.4
-0.2
-0.3
-0.9
-0.5
0
-0.2
-1
1.4
-0.3
-0.2
-0.4
-0.3
-0.3
-0.3
0.1
0.9
0.2
0.1
0.1
0
0
0
0.7
0
0.3
0.1
0.1
-0.2
0
-0.1
0
0
-0.1
-0.1
0
0
0
1.4
1.1
1.5
1.7
1.3
1.8
1.7
0.6
1.5
1.1
1.1
0
-0.1
-0.3
0.1
0
0
-0.1
-0.1
Fmt 4701
-0.1
All
FY2018
Changes
(8)9
1.3
2.1
0.8
1.8
1.2
2.4
0.3
1.5
0.2
1.2
-0.3
-0.2
-0.2
-0.1
-0.3
0
-0.2
-0.1
-0.1
0.2
0.2
0.2
0.1
0.1
0.3
0.2
0.3
0
-2.2
-1.7
-0.8
-1.7
-0.3
-0.3
-0.7
0
0
0.6
-0.9
-0.1
-0.9
1.1
0.6
0.6
Sfmt 4725
(4)5
E:\FR\FM\14AUR2.SGM
14AUR2
(7)"
1.5
1.5
1.4
1.5
0.9
0.4
ER14AU17.023
sradovich on DSK3GMQ082PROD with RULES2
All Hospitals
By Geographic
Location:
Urban hospitals
Large urban areas
Other urban areas
Rural hospitals
Bed Size (Urban):
0-99 beds
100-199 beds
200-299 beds
300-499 beds
500 or more beds
Bed Size (Rural):
0-49 beds
50-99 beds
100-149 beds
150-199 beds
200 or more beds
Urban by Re2ion:
New England
Middle Atlantic
South Atlantic
East North Central
East South Central
West North Central
West South Central
Mountain
Pacific
Puerto Rico
Rural by Region:
New England
Middle Atlantic
South Atlantic
East North Central
East South Central
West North Central
West South Central
Mountain
Pacific
Number of
Hospitals 1
3,292
Hospital
Rate Update
and
Adjustments
(1)2
1.2
FY2018
Weights
andDRG
Changes
with
Application
of
Recalibration Budget
Neutrality
(2)3
0
38553
Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
Hospital
Rate Update
and
Adjustments
Number of
Hospitals 1
VerDate Sep<11>2014
FY2018
Wage Data
with
Application
of Wage
Budget
Neutrality
(3) 4
FY2018
MGCRB
Reclassifications
(4)5
Rural and
Imputed
Floor with
Application of
National
Budget
Neutrality
Application of the
Frontier
Wage
Index and
OutMigration
Adjustment
(5) 6
(6)7
Expiration of
MDH
Status
All
FY2018
Changes
(8).
m•
2,373
1,354
1,019
919
1.2
1.2
1.2
1
0
0
0
0.1
0
-0.1
0.1
0.1
-0.3
-0.5
-0.1
1.6
0
-0.1
0.2
-0.1
0.1
0
0.2
0.2
0
0
0
-0.7
1.4
1.4
1.5
0.8
2,204
839
1.1
1.2
0.2
0.1
0
0
0.2
-0.1
0.2
0
0.1
0.2
-0.3
0
1.2
1.4
249
1.2
-0.2
-0.1
-0.1
-0.1
0
0
1.4
551
1,543
370
1.2
1.2
1.1
0
0
0.3
0
0
0
-0.2
-0.3
-0.2
-0.1
0
0.1
0.2
0.1
0.2
-0.3
0
-0.1
0.9
1.4
1.6
257
293
34
244
0.6
I
1.2
1.1
0
0
0.2
0.5
0
0.1
0
0
-0.1
2.1
1.8
0.5
0
-0.1
-0.2
-0.3
0
0.2
0.1
0.7
0
-0.3
-0.1
-4.8
0.6
1.6
0.4
-3.8
863
1.2
-0.1
0
-0.4
-0.1
0.1
0
1.4
92
1.2
0
-0.1
-0.2
-0.2
0.1
0
1
1,050
1.2
0.2
0
-0.2
0.3
0.1
0
1.5
368
1.2
0.1
0.1
-0.4
-0.1
0.2
0
1.5
263
316
131
1.2
0.7
0.7
0.1
-0.2
-0.1
0.1
0.3
0.1
2.5
-0.2
0.3
-0.1
-0.1
0
0.3
0
0
-0.4
0
0
1.8
0.8
0.9
1,914
863
513
1.2
1.2
1.1
0
0.2
0
0
0.1
-0.1
0
0
-0.2
0
0
0.1
0.1
0.1
0.1
-0.1
-0.1
-0.1
1.3
1.6
1.3
554
2,149
485
103
1.2
1.2
1.1
1
0
0
0.1
0.6
0
0
0.1
0.3
-0.3
0
0.6
-0.9
0.1
-0.1
0.2
-0.2
0.1
0.1
0.2
0.3
0
-0.1
-0.6
-4
1.4
1.4
0.8
-1.9
23:27 Aug 11, 2017
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14AUR2
ER14AU17.024
sradovich on DSK3GMQ082PROD with RULES2
By Payment
Classification:
Urban hospitals
Large urban areas
Other urban areas
Rural areas
Teachin2 Status:
Nonteaching
Fewer than 100
residents
100 or more
residents
UrbanDSH:
Non-DSH
100 or more beds
Less than I 00 beds
RuralDSH:
SCH
RRC
100 or more beds
Less than 100 beds
Urban teaching and
DSH:
Both teaching and
DSH
Teaching and no
DSH
No teaching and
DSH
No teaching and no
DSH
Special Hospital
Types:
RRC
SCH
SCHandRRC
Type of Ownership:
Voluntary
Proprietary
Government
Medicare
Utilization as a
Percent of Inpatient
Days:
0-25
25-50
50-65
Over 65
(1)2
FY2018
Weights
andDRG
Changes
with
Application
of
Recalibration Budget
Neutrality
(2)3
38554
Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
Number of
Hospitals'
FY2018
Reclassifications by
the Medicare
Geographic
Classification
Review Board:
All Reclassified
Hospitals
Non-Reclassified
Hospitals
Urban Hospitals
Reclassified
Urban
Nonreclassified
Hospitals
Rural Hospitals
Reclassified
Rural
Nonreclassified
Hospitals
All Section 401
Reclassified
Hospitals:
Other Reclassified
Hospitals (Section
1886(d)(8)(B))
Hospital
Rate Update
and
Adjustments
(1)2
FY2018
Weights
andDRG
Changes
with
Application
of
Recalibration Budget
Neutrality
(2)'
FY2018
Wage Data
with
Application
of Wage
Budget
Neutrality
(3) 4
858
1.1
0.1
0.1
2.2
-0.1
0
-0.2
1.5
2,434
1.2
0
0
-0.9
0
0.2
-0.1
1.3
590
1.2
0.1
0.1
2.2
-0.1
0
-0.1
1.6
1,858
1.2
0
0
-0.9
0
0.1
0
1.4
268
0.9
0.1
0
2.3
-0.2
0
-0.5
0.6
485
0.9
0.2
0
-0.3
-0.1
0.4
-1.4
-0.5
166
1.1
0
0.1
1.9
0
0.3
-0.5
1.4
47
1.1
0.5
0.3
3.4
-0.3
0
-1.2
0.6
Rural and
Imputed
Floor with
Application of
National
Budget
Neutrality
(5) 6
FY2018
MGCRB
Reclassifications
(4)'
Application of the
Frontier
Wage
Index and
OutMigration
Adjustment
(6)'
Expiration of
MDH
Status
(7)"
All
FY2018
Changes
(8)'
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14AUR2
ER14AU17.025
sradovich on DSK3GMQ082PROD with RULES2
Because data necessary to classrty some hospitals by category were m1ssmg, the total number of hospitals m each category may not equal the natiOnal
total. Discharge data are from FY 2016, and hospital cost report data are from reporting periods beginning in FY 2014 and FY 2015.
2 This column displays the payment impact of the hospital rate update and other adjustments, including the 1.35 percent adjustment to the national
standardized amount and the hospital-specific rate (the estimated 2.7 percent market basket update reduced by 0.6 percentage point for the multifactor
productivity adjustment and the 0.75 percentage point reduction under the Affordable Care Act), the 0.4588 percent adjustment to the national
standardized amount required under section 15005 of the 21st Century Cures Act and a factor of (111.006) to remove the 1.006 temporary one-time
adjustment made in FY 2017 to address the effects of the 0.2 percent reduction in effect for FYs 2014 through 2016 related to the 2-midnight policy.
3 This column displays the payment impact of the changes to the Version 35 GROUPER, the changes to the relative weights and the recalibration of the
MS-DRG weights based on FY 2016 MedPAR data in accordance with section 1886(d)(4)(C)(iii) of the Act. This column displays the application of the
recalibration budget neutrality factor of0.997432 in accordance with section 1886(d)(4)(C)(iii) of the Act.
4 This column displays the payment impact of the update to wage index data using FY 2014 and 2013 cost report data and the OMB labor market area
delineations based on 2010 Decennial Census data. This column displays the payment impact of the application of the wage budget neutrality factor,
which is calculated separately from the recalibration budget neutrality factor, and is calculated in accordance with section 1886(d)(3)(E)(i) of the Act.
The wage budget neutrality factor is 1.001148.
5 Shown here are the effects of geographic reclassifications by the Medicare Geographic Classification Review Board (MGCRB. The effects
demonstrate the FY 2018 payment impact of going from no reclassifications to the reclassifications scheduled to be in effect for FY 2018.
Reclassification for prior years has no bearing on the payment impacts shown here. This column reflects the geographic budget neutrality factor of
0.988008.
6 This column displays the effects of the rural floor and imputed floor. The Affordable Care Act requires the rural floor budget neutrality adjustment to be
100 percent national level adjustment. The rural floor budget neutrality factor (which includes the imputed floor) applied to the wage index is 0.993348.
7 This column shows the combined impact of the policy required under section 10324 of the Affordable Care Act that hospitals located in frontier States
have a wage index no less than 1.0 and of section 1886(d)(13) of the Act, as added by section 505 of Pub. L. 108-173, which provides for an increase in a
hospital's wage index if a threshold percentage of residents of the county where the hospital is located commute to work at hospitals in counties with
higher wage indexes. These are not budget neutral policies.
8 This column displays the impact of the expiration ofMDH status for FY 2018, a non-budget neutral payment provision.
9 This column shows the estimated change in payments from FY 2017 to FY 2018.
Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
sradovich on DSK3GMQ082PROD with RULES2
BILLING CODE 4120–01–C
a. Effects of the Hospital Update, Adjustment
Required Under Section 15005 of the 21st
Century Cures Act, and Other Adjustments
(Column 1)
As discussed in section V.B. of the
preamble of this final rule, this column
includes the hospital update, including the
2.7 percent market basket update, the
reduction of 0.6 percentage point for the
multifactor productivity adjustment, and the
0.75 percentage point reduction in
accordance with the Affordable Care Act. In
addition, as discussed in section II.D. of the
preamble of this final rule, this column
includes the FY 2018 adjustment of 0.4588
percent on the national standardized amount
required under section 15005 of the 21st
Century Cures Act and, as discussed in
section V.M. of the preamble of this final
rule, the adjustment factor of (1/1.006) to
remove the 1.006 temporary one-time
adjustment made in FY 2017 to address the
effects of the 0.2 percent reduction in effect
for FYs 2014 through 2016 related to the 2midnight policy. As a result, we are making
a 1.2 percent update to the national
standardized amount. This column also
includes the update to the hospital-specific
rates which includes the 2.7 percent market
basket update, the reduction of 0.6
percentage point for the multifactor
productivity adjustment, and the 0.75
percentage point reduction in accordance
with the Affordable Care Act and, as
discussed in section V.M. of the preamble of
this final rule, the adjustment factor of (1/
1.006) to remove the 1.006 temporary onetime adjustment made in FY 2017 to address
the effects of the 0.2 percent reduction in
effect for FYs 2014 through 2016 related to
the 2-midnight policy. As a result, we are
making a 0.75 percent update to the hospitalspecific rates.
Overall, hospitals will experience a 1.2
percent increase in payments primarily due
to the combined effects of the hospital update
and the 0.4588 percent adjustment on the
national standardized amount and the
hospital update to the hospital-specific rate
as well as the adjustment factor of (1/1.006)
to remove the 1.006 temporary one-time
adjustment made in FY 2017 to address the
effects of the 0.2 percent reduction in effect
for FYs 2014 through 2016 related to the 2midnight policy to both the national
standardized amount and the hospitalspecific rate. Hospitals that are paid under
the hospital-specific rate will experience a
0.75 percent increase in payments; therefore,
hospital categories containing hospitals paid
under the hospital-specific rate will
experience a lower than average increase in
payments.
b. Effects of the Changes to the MS–DRG
Reclassifications and Relative Cost-Based
Weights With Recalibration Budget
Neutrality (Column 2)
Column 2 shows the effects of the changes
to the MS–DRGs and relative weights with
the application of the recalibration budget
neutrality factor to the standardized amounts.
Section 1886(d)(4)(C)(i) of the Act requires us
annually to make appropriate classification
changes in order to reflect changes in
VerDate Sep<11>2014
23:27 Aug 11, 2017
Jkt 241001
treatment patterns, technology, and any other
factors that may change the relative use of
hospital resources. Consistent with section
1886(d)(4)(C)(iii) of the Act, we calculated a
recalibration budget neutrality factor to
account for the changes in MS–DRGs and
relative weights to ensure that the overall
payment impact is budget neutral.
As discussed in section II.E. of the
preamble of this final rule, the FY 2018 MS–
DRG relative weights will be 100 percent
cost-based and 100 percent MS–DRGs. For
FY 2018, the MS–DRGs are calculated using
the FY 2016 MedPAR data grouped to the
Version 35 (FY 2018) MS–DRGs. The
methodology to calculate the relative weights
and the reclassification changes to the
GROUPER are described in more detail in
section II.G. of the preamble of this final rule.
The ‘‘All Hospitals’’ line in Column 2
indicates that changes due to the MS–DRGs
and relative weights will result in a 0.0
percent change in payments with the
application of the recalibration budget
neutrality factor of 0.997432 to the
standardized amount. Hospital categories
that generally treat more surgical cases than
medical cases will experience a decrease in
their payments under the relative weights for
reasons that include the policies regarding
operating room procedures described in
section II.G. of the preamble of this final rule.
Rural hospitals will experience a 0.2 percent
increase in payments in part because rural
hospitals tend to treat fewer surgical cases
than medical cases, while teaching hospitals
with more than 100 residents will experience
a ¥0.2 percent decrease in payments in part
because those hospitals treat more surgical
cases than medical cases.
c. Effects of the Wage Index Changes
(Column 3)
Column 3 shows the impact of updated
wage data using FY 2014 cost report data,
with the application of the wage budget
neutrality factor. The wage index is
calculated and assigned to hospitals on the
basis of the labor market area in which the
hospital is located. Under section
1886(d)(3)(E) of the Act, beginning with FY
2005, we delineate hospital labor market
areas based on the Core Based Statistical
Areas (CBSAs) established by OMB. The
current statistical standards used in FY 2018
are based on OMB standards published on
February 28, 2013 (75 FR 37246 and 37252),
and 2010 Decennial Census data (OMB
Bulletin No. 13–01), as updated in OMB
Bulletin No. 15–01. (We refer readers to the
FY 2015 IPPS/LTCH PPS final rule (79 FR
49951 through 49963) for a full discussion on
our adoption of the OMB labor market area
delineations based on the 2010 Decennial
Census data, effective beginning with the FY
2015 IPPS wage index, and to section III.A.2.
of the preamble of the FY 2017 IPPS/LTCH
PPS final rule (81 FR 56913) for a discussion
of our adoption of the CBSA updates in OMB
Bulletin No. 15–01, which were effective
beginning with the FY 2017 wage index.)
Section 1886(d)(3)(E) of the Act requires
that, beginning October 1, 1993, we annually
update the wage data used to calculate the
wage index. In accordance with this
requirement, the wage index for acute care
hospitals for FY 2018 is based on data
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38555
submitted for hospital cost reporting periods
beginning on or after October 1, 2013 and
before October 1, 2014. The estimated impact
of the updated wage data using the FY 2014
cost report data and the OMB labor market
area delineations on hospital payments is
isolated in Column 3 by holding the other
payment parameters constant in this
simulation. That is, Column 3 shows the
percentage change in payments when going
from a model using the FY 2017 wage index,
based on FY 2013 wage data, the laborrelated share of 69.6 percent, under the OMB
delineations and having a 100-percent
occupational mix adjustment applied, to a
model using the FY 2018 pre-reclassification
wage index based on FY 2014 wage data with
the labor-related share of 68.3 percent, under
the OMB delineations, also having a 100percent occupational mix adjustment
applied, while holding other payment
parameters such as use of the Version 35
MS–DRG GROUPER constant. The FY 2018
occupational mix adjustment is based on the
CY 2013 occupational mix survey.
In addition, the column shows the impact
of the application of the wage budget
neutrality to the national standardized
amount. In FY 2010, we began calculating
separate wage budget neutrality and
recalibration budget neutrality factors, in
accordance with section 1886(d)(3)(E) of the
Act, which specifies that budget neutrality to
account for wage index changes or updates
made under that subparagraph must be made
without regard to the 62 percent labor-related
share guaranteed under section
1886(d)(3)(E)(ii) of the Act. Therefore, for FY
2018, we calculated the wage budget
neutrality factor to ensure that payments
under updated wage data and the laborrelated share of 68.3 percent are budget
neutral without regard to the lower laborrelated share of 62 percent applied to
hospitals with a wage index less than or
equal to 1.0. In other words, the wage budget
neutrality is calculated under the assumption
that all hospitals receive the higher laborrelated share of the standardized amount.
The FY 2018 wage budget neutrality factor is
1.001148, and the overall payment change is
0.0 percent.
Column 3 shows the impacts of updating
the wage data using FY 2014 cost reports.
Overall, the new wage data and the laborrelated share, combined with the wage
budget neutrality adjustment, will lead to no
change for all hospitals as shown in Column
3.
In looking at the wage data itself, the
national average hourly wage will increase
1.02 percent compared to FY 2017.
Therefore, the only manner in which to
maintain or exceed the previous year’s wage
index was to match or exceed the 1.02
percent increase in the national average
hourly wage. Of the 3,298 hospitals with
wage data for both FYs 2017 and 2018, 1,612
or 51.1 percent will experience an average
hourly wage increase of 1.02 percent or more.
The following chart compares the shifts in
wage index values for hospitals due to
changes in the average hourly wage data for
FY 2018 relative to FY 2017. Among urban
hospitals, 4 will experience a decrease of 10
percent or more, and 4 urban hospitals will
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experience an increase of 10 percent or more.
Ninety-nine urban hospitals will experience
an increase or decrease of at least 5 percent
or more but less than 10 percent. Among
rural hospitals, none will experience an
increase of at least 5 percent or more, but 2
rural hospitals will experience a decrease of
greater than or equal to 5 percent but less
than 10 percent. Three rural hospitals will
experience decreases of 10 percent or more.
However, 787 rural hospitals will experience
increases or decreases of less than 5 percent,
while 2,390 urban hospitals will experience
increases or decreases of less than 5 percent.
Nine urban hospitals and no rural hospitals
experience no change to their wage index.
These figures reflect changes in the ‘‘prereclassified, occupational mix-adjusted wage
index,’’ that is, the wage index before the
application of geographic reclassification, the
rural and imputed floors, the out-migration
adjustment, and other wage index exceptions
and adjustments. (We refer readers to
sections III.G. through III.L. of the preamble
of this final rule for a complete discussion of
the exceptions and adjustments to the wage
index.) We note that the ‘‘post-reclassified
wage index’’ or ‘‘payment wage index,’’
which is the wage index that includes all
such exceptions and adjustments (as
reflected in Tables 2 and 3 associated with
this final rule, which are available via the
Internet on the CMS Web site) is used to
adjust the labor-related share of a hospital’s
standardized amount, either 68.3 percent or
62 percent, depending upon whether a
hospital’s wage index is greater than 1.0 or
less than or equal to 1.0. Therefore, the prereclassified wage index figures in the
following chart may illustrate a somewhat
larger or smaller change than will occur in
a hospital’s payment wage index and total
payment.
The following chart shows the projected
impact of changes in the area wage index
values for urban and rural hospitals.
Number of hospitals
FY 2018 percentage change in area wage index values
Urban
sradovich on DSK3GMQ082PROD with RULES2
Increase 10 percent or more ...................................................................................................................................
Increase greater than or equal to 5 percent and less than 10 percent ..................................................................
Increase or decrease less than 5 percent ...............................................................................................................
Decrease greater than or equal to 5 percent and less than 10 percent ................................................................
Decrease 10 percent or more .................................................................................................................................
Unchanged ...............................................................................................................................................................
d. Effects of MGCRB Reclassifications
(Column 4)
Our impact analysis to this point has
assumed acute care hospitals are paid on the
basis of their actual geographic location (with
the exception of ongoing policies that
provide that certain hospitals receive
payments on bases other than where they are
geographically located). The changes in
Column 4 reflect the per case payment
impact of moving from this baseline to a
simulation incorporating the MGCRB
decisions for FY 2018.
By spring of each year, the MGCRB makes
reclassification determinations that will be
effective for the next fiscal year, which
begins on October 1. The MGCRB may
approve a hospital’s reclassification request
for the purpose of using another area’s wage
index value. Hospitals may appeal denials of
MGCRB decisions to the CMS Administrator.
Further, hospitals have 45 days from the date
the IPPS proposed rule is issued in the
Federal Register to decide whether to
withdraw or terminate an approved
geographic reclassification for the following
year (we refer readers to the discussion of our
clarification of this policy in section III.I.2. of
the preamble to this final rule).
The overall effect of geographic
reclassification is required by section
1886(d)(8)(D) of the Act to be budget neutral.
Therefore, for purposes of this impact
analysis, we are applying an adjustment of
0.988008 to ensure that the effects of the
reclassifications under section 1886(d)(10) of
the Act are budget neutral (section II.A. of the
Addendum to this final rule). Geographic
reclassification generally benefits hospitals in
rural areas. We estimate that the geographic
reclassification will increase payments to
rural hospitals by an average of 1.4 percent.
By region, all the rural hospital categories
will experience increases in payments due to
MGCRB reclassifications.
Table 2 listed in section VI. of the
Addendum to this final rule and available via
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the Internet on the CMS Web site reflects the
reclassifications for FY 2018.
e. Effects of the Rural Floor and Imputed
Floor, Including Application of National
Budget Neutrality (Column 5)
As discussed in section III.B. of the
preamble of the FY 2009 IPPS final rule, the
FY 2010 IPPS/RY 2010 LTCH PPS final rule,
the FYs 2011, 2012, 2013, 2014, 2015, 2016,
and 2017 IPPS/LTCH PPS final rules, and
this FY 2018 final rule, section 4410 of Pub.
L. 105–33 established the rural floor by
requiring that the wage index for a hospital
in any urban area cannot be less than the
wage index received by rural hospitals in the
same State. We would apply a uniform
budget neutrality adjustment to the wage
index.
The imputed floor, which is also included
in the calculation of the budget neutrality
adjustment to the wage index, was extended
in FY 2012 for 2 additional years and in FY
2014 and FY 2015 for 1 additional year. Prior
to FY 2013, only urban hospitals in New
Jersey received the imputed floor. As
discussed in the FY 2013 IPPS/LTCH PPS
final rule (77 FR 53369), we established an
alternative temporary methodology for the
imputed floor, which resulted in an imputed
floor for Rhode Island for FY 2013. For FY
2014 and FY 2015, we extended the imputed
rural floor, as calculated under the original
methodology and the alternative
methodology. Due to the adoption of the new
OMB labor market area delineations in FY
2015, the State of Delaware also became an
all-urban State and thus eligible for an
imputed floor. For FY 2016 and FY 2017, we
extended the imputed floor for 1 year, as
calculated under the original methodology
and the alternative methodology, through
September 30, 2016 and September 30, 2017,
respectively. For FY 2018, we are extending
the imputed rural floor for 1 year, as
calculated under the original methodology
and the alternative methodology, through
September 30, 2018. As a result, New Jersey,
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4
50
2,390
49
4
9
Rural
0
0
787
2
3
0
Rhode Island, and Delaware will be able to
receive an imputed floor through September
30, 2018. In New Jersey, 17 out of 64
hospitals will receive the imputed floor for
FY 2018, 10 out of 11 hospitals in Rhode
Island, and 6 out of 6 hospitals in Delaware.
The Affordable Care Act requires that we
apply one rural floor budget neutrality factor
to the wage index nationally, and we include
the imputed floor in the calculation of this
budget neutrality factor. We have calculated
an FY 2018 rural floor and imputed floor
budget neutrality factor to be applied to the
wage index of 0.993348, which reduces wage
indexes by 0.67 percent.
Column 5 shows the projected impact of
the rural floor and imputed floor with the
national rural floor and imputed floor budget
neutrality factor applied to the wage index
based on the OMB labor market area
delineations. The column compares the postreclassification FY 2018 wage index of
providers before the rural floor and imputed
floor adjustment and the post-reclassification
FY 2018 wage index of providers with the
rural floor and imputed floor adjustment
based on the OMB labor market area
delineations. Only urban hospitals can
benefit from the rural and imputed floors.
Because the provision is budget neutral, all
other hospitals (that is, all rural hospitals and
those urban hospitals to which the
adjustment is not made) will experience a
decrease in payments due to the budget
neutrality adjustment that is applied
nationally to their wage index.
We estimate that 400 hospitals will receive
the rural and imputed floors in FY 2018. All
IPPS hospitals in our model will have their
wage index reduced by the rural floor budget
neutrality adjustment of 0.993348. We project
that, in aggregate, rural hospitals will
experience a 0.67 percent decrease in
payments as a result of the application of the
rural floor budget neutrality because the rural
hospitals do not benefit from the rural floor,
but have their wage indexes downwardly
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adjusted to ensure that the application of the
rural floor is budget neutral overall. We
project hospitals located in urban areas will
experience no change in payments because
increases in payments by hospitals
benefitting from the rural floor offset
decreases in payments by nonrural floor
urban hospitals whose wage index is
downwardly adjusted by the rural floor
budget neutrality factor. Urban hospitals in
the New England region will experience a 1.4
percent increase in payments primarily due
to the application of the rural floor in
Massachusetts and the imputed floor in
Rhode Island. Thirty-six urban providers in
Massachusetts are expected to receive the
rural floor wage index value, including the
rural floor budget neutrality adjustment,
increasing payments overall to Massachusetts
by an estimated $44 million. We estimate
that Massachusetts hospitals will receive
approximately a 1.3 percent increase in IPPS
payments due to the application of the rural
floor in FY 2018.
Urban Puerto Rico hospitals are expected
to experience a 0.2 percent increase in
payments as a result of the application of the
rural floor.
There are 17 hospitals out of the 64
hospitals in New Jersey that will benefit from
the extension of the imputed floor and will
receive the imputed floor wage index value
under the OMB labor market area
delineations. Overall, New Jersey will receive
a net decrease of $4 million in payments (to
the nearest million) taking into account the
17 hospitals that will benefit from the
imputed floor and the application of the
national rural floor and imputed floor budget
neutrality adjustment to all hospitals in the
state. There are 10 hospitals out of the 11
hospitals in Rhode Island that will benefit
from the extension of the imputed floor and
will receive the imputed floor wage index
value. Overall, Rhode Island will receive a
net increase of $19 million in payments (to
the nearest million) taking into account the
10 hospitals that will benefit from the
imputed floor and the application of the
national rural floor and imputed floor budget
neutrality adjustment to all hospitals in the
State. All 6 hospitals in Delaware will benefit
from the extension of the imputed floor and
will receive the imputed floor wage index
value. Overall, Delaware will receive a net
increase of $8 million in payments (to the
nearest million) taking into account the 6
38557
hospitals that will benefit from the imputed
floor and the application of the national rural
floor and imputed floor budget neutrality
adjustment to all hospitals in the State.
In response to a public comment addressed
in the FY 2012 IPPS/LTCH PPS final rule (76
FR 51593), we are providing the payment
impact of the rural floor and imputed floor
with budget neutrality at the State level.
Column 1 of the following table displays the
number of IPPS hospitals located in each
State. Column 2 displays the number of
hospitals in each State that will receive the
rural or imputed floor wage index for FY
2018. Column 3 displays the percentage of
total payments each State will receive or
contribute to fund the rural floor and
imputed floor with national budget
neutrality. The column compares the postreclassification FY 2018 wage index of
providers before the rural floor and imputed
floor adjustment and the post-reclassification
FY 2018 wage index of providers with the
rural and imputed floor adjustment. Column
4 displays the estimated payment amount
that each State will gain or lose due to the
application of the rural floor and imputed
floor with national budget neutrality.
FY 2018 IPPS ESTIMATED PAYMENTS DUE TO RURAL AND IMPUTED FLOOR WITH NATIONAL BUDGET NEUTRALITY
Number of
hospitals
(1)
sradovich on DSK3GMQ082PROD with RULES2
State
Number of
hospitals that
will receive
the rural or
imputed floor
Percent
change in
payments due
to application
of rural floor
and imputed
floor with
budget
neutrality
(2)
(3)
Alabama ...........................................................................................................
Alaska ..............................................................................................................
Arizona .............................................................................................................
Arkansas ..........................................................................................................
California ..........................................................................................................
Colorado ..........................................................................................................
Connecticut ......................................................................................................
Delaware ..........................................................................................................
Washington, D.C. .............................................................................................
Florida ..............................................................................................................
Georgia ............................................................................................................
Hawaii ..............................................................................................................
Idaho ................................................................................................................
Illinois ...............................................................................................................
Indiana .............................................................................................................
Iowa .................................................................................................................
Kansas .............................................................................................................
Kentucky ..........................................................................................................
Louisiana ..........................................................................................................
Maine ...............................................................................................................
Massachusetts .................................................................................................
Michigan ...........................................................................................................
Minnesota ........................................................................................................
Mississippi ........................................................................................................
Missouri ............................................................................................................
Montana ...........................................................................................................
Nebraska ..........................................................................................................
Nevada .............................................................................................................
New Hampshire ...............................................................................................
New Jersey ......................................................................................................
New Mexico .....................................................................................................
New York .........................................................................................................
North Carolina ..................................................................................................
North Dakota ....................................................................................................
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6
57
44
299
47
30
6
7
171
103
12
14
127
85
34
53
66
94
17
57
94
49
60
74
13
24
23
13
64
25
154
84
6
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3
4
38
1
177
4
7
6
0
17
0
0
0
3
0
0
0
0
2
0
36
0
0
0
0
4
0
0
9
17
0
11
0
0
14AUR2
(4)
¥0.3
1.4
0.4
¥0.3
1.2
0.4
0.1
1.8
¥0.4
¥0.2
¥0.3
¥0.3
¥0.2
¥0.4
¥0.3
¥0.3
¥0.3
¥0.3
¥0.3
¥0.4
1.3
¥0.3
¥0.4
¥0.3
¥0.2
0
¥0.3
¥0.4
3.7
¥0.1
¥0.2
¥0.3
¥0.3
¥0.2
Difference
(in $ millions)
¥5
3
7
¥4
134
5
2
8
¥2
¥15
¥9
¥1
¥1
¥17
¥8
¥3
¥3
¥5
¥5
¥2
44
¥14
¥8
¥4
¥6
0
¥2
¥3
20
¥4
¥1
¥23
¥10
¥1
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FY 2018 IPPS ESTIMATED PAYMENTS DUE TO RURAL AND IMPUTED FLOOR WITH NATIONAL BUDGET NEUTRALITY—
Continued
Number of
hospitals
(1)
State
Number of
hospitals that
will receive
the rural or
imputed floor
Percent
change in
payments due
to application
of rural floor
and imputed
floor with
budget
neutrality
(2)
(3)
sradovich on DSK3GMQ082PROD with RULES2
Ohio .................................................................................................................
Oklahoma .........................................................................................................
Oregon .............................................................................................................
Pennsylvania ....................................................................................................
Puerto Rico ......................................................................................................
Rhode Island ....................................................................................................
South Carolina .................................................................................................
South Dakota ...................................................................................................
Tennessee .......................................................................................................
Texas ...............................................................................................................
Utah .................................................................................................................
Vermont ...........................................................................................................
Virginia .............................................................................................................
Washington ......................................................................................................
West Virginia ....................................................................................................
Wisconsin .........................................................................................................
Wyoming ..........................................................................................................
f. Effects of the Application of the Frontier
State Wage Index and Out-Migration
Adjustment (Column 6)
This column shows the combined effects of
the application of section 10324(a) of the
Affordable Care Act, which requires that we
establish a minimum post-reclassified wageindex of 1.00 for all hospitals located in
‘‘frontier States,’’ and the effects of section
1886(d)(13) of the Act, as added by section
505 of Public Law 108–173, which provides
for an increase in the wage index for
hospitals located in certain counties that
have a relatively high percentage of hospital
employees who reside in the county, but
work in a different area with a higher wage
index. These two wage index provisions are
not budget neutral and increase payments
overall by 0.1 percent compared to the
provisions not being in effect.
The term ‘‘frontier States’’ is defined in the
statute as States in which at least 50 percent
of counties have a population density less
than 6 persons per square mile. Based on
these criteria, 5 States (Montana, Nevada,
North Dakota, South Dakota, and Wyoming)
are considered frontier States and 49
hospitals located in those States will receive
a frontier wage index of 1.0000. Overall, this
provision is not budget neutral and is
estimated to increase IPPS operating
payments by approximately $65 million.
Rural and urban hospitals located in the West
North Central region will experience an
increase in payments by 0.3 and 0.7 percent,
respectively, because many of the hospitals
located in this region are frontier State
hospitals.
In addition, section 1886(d)(13) of the Act,
as added by section 505 of Public Law 108–
173, provides for an increase in the wage
index for hospitals located in certain
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84
34
150
52
11
56
17
91
310
31
6
73
48
29
66
10
counties that have a relatively high
percentage of hospital employees who reside
in the county, but work in a different area
with a higher wage index. Hospitals located
in counties that qualify for the payment
adjustment are to receive an increase in the
wage index that is equal to a weighted
average of the difference between the wage
index of the resident county, postreclassification and the higher wage index
work area(s), weighted by the overall
percentage of workers who are employed in
an area with a higher wage index. There are
an estimated 267 providers that will receive
the out-migration wage adjustment in FY
2018. Rural hospitals generally qualify for the
adjustment, resulting in a 0.2 percent
increase in payments. This provision appears
to benefit section 401 hospitals and RRCs in
that they will each experience a 0.3 percent
increase in payments. This out-migration
wage adjustment also is not budget neutral,
and we estimate the impact of these
providers receiving the out-migration
increase will be approximately $42 million.
g. Effects of the Expiration of MDH Special
Payment Status (Column 7)
Column 7 shows our estimate of the
changes in payments due to the expiration of
MDH status, a nonbudget neutral payment
provision. Section 205 of the Medicare
Access and CHIP Reauthorization Act of 2015
(MACRA) (Pub. L. 114–10, enacted on April
16, 2015) extended the MDH program
(which, under previous law, was to be in
effect for discharges on or before March 31,
2015 only) for discharges occurring on or
after April 1, 2015, through FY 2017 (that is,
for discharges occurring on or before
September 30, 2017). Therefore, under
current law, the MDH program will expire at
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4
5
3
10
10
0
0
3
4
1
0
1
3
3
8
0
(4)
¥0.3
¥0.2
¥0.3
¥0.4
0.2
5
¥0.3
¥0.2
¥0.3
¥0.3
¥0.3
¥0.2
¥0.3
¥0.2
¥0.1
¥0.2
¥0.1
Difference
(in $ millions)
¥12
¥3
¥3
¥17
0
19
¥5
¥1
¥8
¥21
¥2
0
¥7
¥5
¥1
¥3
0
the end of FY 2017. Hospitals that qualified
to be MDHs receive the higher of payments
made based on the Federal rate or the
payments made based on the Federal rate
amount plus 75 percent of the difference
between payments based the Federal rate and
payments based the hospital-specific rate (a
hospital-specific cost-based rate). Because
this provision was not budget neutral, the
expiration of this payment provision results
in a 0.1 percent decrease in payments overall.
There are currently 159 MDHs, of which we
estimate 96 would have been paid under the
blended payment based on the Federal rate
and hospital-specific rate if the MDH
program had not expired. Because those 96
MDHs will no longer receive the blended
payment and will be paid only under the
Federal rate in FY 2018, it is estimated that
those hospitals will experience an overall
decrease in payments of approximately $119
million.
MDHs were generally rural hospitals, so
the expiration of the MDH program will
result in an overall decrease in payments to
rural hospitals of 0.9 percent. Rural New
England hospitals can expect a decrease in
payments of 2.2 percent because 6 out of the
23 rural New England hospitals are MDHs
that will lose this special payment status
under the expiration of the program at the
end of FY 2017. MDHs that would have been
paid under the blended payment based on
the Federal rate and hospital-specific rate can
expect a decrease in payments of 12 percent.
h. Effects of All FY 2018 Changes (Column
8)
Column 8 shows our estimate of the
changes in payments per discharge from FY
2017 and FY 2018, resulting from all changes
reflected in this final rule for FY 2018. It
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includes combined effects of the year to year
change of the previous columns in the table.
The average increase in payments under
the IPPS for all hospitals is approximately 1.3
percent for FY 2018 relative to FY 2017 and
for this row is primarily driven by the
changes reflected in Column 1. Column 8
includes the annual hospital update of 1.35
percent to the national standardized amount.
This annual hospital update includes the 2.7
percent market basket update, the 0.6
percentage point reduction for the
multifactor productivity adjustment, and the
0.75 percentage point reduction under
section 3401 of the Affordable Care Act. As
discussed in section II.D. of the preamble of
this final rule, this column also includes the
FY 2018 adjustment of 0.4588 percent on the
national standardized amount. In addition,
this column includes the adjustment factor of
(1/1.006) to remove the 1.006 temporary onetime adjustment made in FY 2017 to address
the effects of the 0.2 percent reduction in
effect for FYs 2014 through 2016 related to
the 2-midnight policy, which is discussed in
section V.M. of the preamble of this final
rule. Hospitals paid under the hospitalspecific rate will receive a 0.75 percent
hospital update. As described in Column 1,
the annual hospital update with the
adjustment of 0.4588 percent for hospitals
paid under the national standardized
amount, the adjustment of (1/1.006) to
remove the 1.006 temporary one-time
adjustment made in FY 2017 to address the
effects of the 0.2 percent reduction in effect
for FYs 2014 through 2016, which is
discussed in section V.M. of the preamble of
this final rule, combined with the annual
hospital update for hospitals paid under the
hospital-specific rates will result in a 1.3
percent increase in payments in FY 2018
relative to FY 2017. There are also interactive
effects among the various factors comprising
the payment system that we are not able to
isolate which contribute to our estimate of
the changes in payments per discharge from
FY 2017 and FY 2018 in Column 8.
Overall payments to hospitals paid under
the IPPS due to the applicable percentage
increase and changes to policies related to
MS–DRGs, geographic adjustments, and
38559
outliers are estimated to increase by 1.3
percent for FY 2018. Hospitals in urban areas
will experience a 1.4 percent increase in
payments per discharge in FY 2018
compared to FY 2017. Hospital payments per
discharge in rural areas are estimated to
increase by 0.2 percent in FY 2018.
3. Impact Analysis of Table II
Table II presents the projected impact of
the changes for FY 2018 for urban and rural
hospitals and for the different categories of
hospitals shown in Table I. It compares the
estimated average payments per discharge for
FY 2017 with the estimated average
payments per discharge for FY 2018, as
calculated under our models. Therefore, this
table presents, in terms of the average dollar
amounts paid per discharge, the combined
effects of the changes presented in Table I.
The estimated percentage changes shown in
the last column of Table II equal the
estimated percentage changes in average
payments per discharge from Column 8 of
Table I.
TABLE II—IMPACT ANALYSIS OF CHANGES FOR FY 2018 ACUTE CARE HOSPITAL OPERATING PROSPECTIVE PAYMENT
SYSTEM
[Payments per Discharge]
Estimated
average
FY 2017
payment per
discharge
Estimated
average
FY 2018
payment per
discharge
FY 2018
changes
(1)
sradovich on DSK3GMQ082PROD with RULES2
Number of
hospitals
(2)
(3)
(4)
All Hospitals .....................................................................................................
By Geographic Location:
Urban hospitals .........................................................................................
Large urban areas ....................................................................................
Other urban areas ....................................................................................
Rural hospitals ..........................................................................................
Bed Size (Urban):
0–99 beds .................................................................................................
100–199 beds ...........................................................................................
200–299 beds ...........................................................................................
300–499 beds ...........................................................................................
500 or more beds .....................................................................................
Bed Size (Rural):
0–49 beds .................................................................................................
50–99 beds ...............................................................................................
100–149 beds ...........................................................................................
150–199 beds ...........................................................................................
200 or more beds .....................................................................................
Urban by Region:
New England ............................................................................................
Middle Atlantic ..........................................................................................
South Atlantic ...........................................................................................
East North Central ....................................................................................
East South Central ...................................................................................
West North Central ...................................................................................
West South Central ..................................................................................
Mountain ...................................................................................................
Pacific .......................................................................................................
Puerto Rico ...............................................................................................
Rural by Region:
New England ............................................................................................
Middle Atlantic ..........................................................................................
South Atlantic ...........................................................................................
East North Central ....................................................................................
East South Central ...................................................................................
West North Central ...................................................................................
West South Central ..................................................................................
Mountain ...................................................................................................
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3,292
11,867
12,024
1.3
2,492
1,340
1,152
800
12,207
12,881
11,477
8,911
12,380
13,059
11,644
8,931
1.4
1.4
1.5
0.2
648
763
441
426
214
9,730
10,248
11,079
12,366
15,011
9,814
10,404
11,244
12,536
15,228
0.9
1.5
1.5
1.4
1.5
318
282
117
44
39
7,523
8,487
8,896
9,292
10,514
7,490
8,373
8,966
9,410
10,678
¥0.4
¥1.4
0.8
1.3
1.6
114
315
404
385
147
160
378
162
375
52
13,125
13,819
10,783
11,537
10,245
11,915
10,948
12,824
15,634
8,851
13,302
13,965
10,949
11,727
10,374
12,131
11,133
12,896
15,863
8,947
1.4
1.1
1.5
1.7
1.3
1.8
1.7
0.6
1.5
1.1
20
53
125
115
154
97
154
58
12,091
8,891
8,274
9,224
7,900
9,736
7,539
10,620
12,164
8,812
8,269
9,144
7,987
9,798
7,588
10,719
0.6
¥0.9
¥0.1
¥0.9
1.1
0.6
0.6
0.9
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TABLE II—IMPACT ANALYSIS OF CHANGES FOR FY 2018 ACUTE CARE HOSPITAL OPERATING PROSPECTIVE PAYMENT
SYSTEM—Continued
[Payments per Discharge]
Number of
hospitals
Estimated
average
FY 2017
payment per
discharge
Estimated
average
FY 2018
payment per
discharge
FY 2018
changes
(1)
(2)
(3)
(4)
Pacific .......................................................................................................
By Payment Classification:
Urban hospitals .........................................................................................
Large urban areas ....................................................................................
Other urban areas ....................................................................................
Rural areas ...............................................................................................
Teaching Status:
Nonteaching ..............................................................................................
Fewer than 100 residents .........................................................................
100 or more residents ..............................................................................
Urban DSH:
Non-DSH ..................................................................................................
100 or more beds .....................................................................................
Less than 100 beds ..................................................................................
Rural DSH:
SCH ..........................................................................................................
RRC ..........................................................................................................
100 or more beds .....................................................................................
Less than 100 beds ..................................................................................
Urban teaching and DSH:
Both teaching and DSH ............................................................................
Teaching and no DSH ..............................................................................
No teaching and DSH ..............................................................................
No teaching and no DSH .........................................................................
Special Hospital Types:
RRC ..........................................................................................................
SCH ..........................................................................................................
SCH and RRC ..........................................................................................
Type of Ownership:
Voluntary ...................................................................................................
Proprietary ................................................................................................
Government ..............................................................................................
Medicare Utilization as a Percent of Inpatient Days:
0–25 ..........................................................................................................
25–50 ........................................................................................................
50–65 ........................................................................................................
Over 65 .....................................................................................................
FY 2018 Reclassifications by the Medicare Geographic Classification Review Board:
All Reclassified Hospitals .........................................................................
Non-Reclassified Hospitals .......................................................................
Urban Hospitals Reclassified ....................................................................
Urban Nonreclassified Hospitals ..............................................................
Rural Hospitals Reclassified .....................................................................
Rural Nonreclassified Hospitals ................................................................
All Section 401 Reclassified Hospitals: ....................................................
Other Reclassified Hospitals (Section 1886(d)(8)(B)) ..............................
sradovich on DSK3GMQ082PROD with RULES2
H. Effects of Other Policy Changes
In addition to those policy changes
discussed previously that we are able to
model using our IPPS payment simulation
model, we are making various other changes
in this final rule. Generally, we have limited
or no specific data available with which to
estimate the impacts of these changes. Our
estimates of the likely impacts associated
with these other changes are discussed in
this section.
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24
12,466
12,516
0.4
2,373
1,354
1,019
919
12,148
12,867
11,200
10,568
12,320
13,046
11,364
10,657
1.4
1.4
1.5
0.8
2,204
839
249
9,850
11,372
17,228
9,967
11,534
17,465
1.2
1.4
1.4
551
1,543
370
10,357
12,512
8,960
10,454
12,690
9,107
0.9
1.4
1.6
257
293
34
244
9,526
11,384
10,297
7,035
9,579
11,569
10,338
6,765
0.6
1.6
0.4
¥3.8
863
92
1,050
368
13,579
11,410
10,217
9,854
13,767
11,520
10,373
9,999
1.4
1
1.5
1.5
263
316
131
11,165
10,774
11,265
11,361
10,861
11,362
1.8
0.8
0.9
1,914
863
513
12,058
10,392
12,810
12,213
10,553
12,978
1.3
1.6
1.3
554
2,149
485
103
14,910
11,728
9,617
7,591
15,113
11,891
9,695
7,444
1.4
1.4
0.8
¥1.9
858
2,434
590
1,858
268
485
166
47
11,661
11,956
12,202
12,210
9,339
8,422
12,504
8,122
11,830
12,108
12,396
12,382
9,399
8,380
12,679
8,173
1.5
1.3
1.6
1.4
0.6
¥0.5
1.4
0.6
1. Effects of Policy Relating to New Medical
Service and Technology Add-On Payments
In section II.H. of the preamble to this final
rule, we discuss three technologies for which
we received applications for add-on
payments for new medical services and
technologies for FY 2018. We note that three
applicants withdrew their applications prior
to the issuance of the proposed rule, one
applicant withdrew its application prior to
the issuance of this final rule, and two
applicants did not receive FDA approval for
their technologies by the July 1 deadline. We
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also discuss the status of the new
technologies that were approved to receive
new technology add-on payments in FY
2017. As explained in the preamble to this
final rule, add-on payments for new medical
services and technologies under section
1886(d)(5)(K) of the Act are not required to
be budget neutral.
As discussed in section II.H.6. of the
preamble of this final rule, we are approving
three applications (Bezlotoxumab
(ZinplavaTM), EDWARDS INTUITY EliteTM
Valve System (INTUITY) and Liva Nova
Perceval Valve (Perceval), and Ustekinumab
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(Stelara®)) for new technology add on
payments for FY 2018. In addition, as we
proposed, in this final rule, we are
continuing to make new technology add-on
payments for Defitelio® (Defibrotide), GORE®
EXCLUDER® Iliac Branch Endoprosthesis
(IBE), Idarucizumab and VistogardTM
(Uridine Triacetate) in FY 2018 because these
four technologies are still considered new.
We note that new technology add-on
payments for each case are limited to the
lesser of (1) 50 percent of the costs of the new
technology or (2) 50 percent of the amount
by which the costs of the case exceed the
standard MS–DRG payment for the case.
Because it is difficult to predict the actual
new technology add-on payment for each
case, our estimates below are based on the
increase in new technology add-on payments
for FY 2018 as if every claim that would
qualify for a new technology add-on payment
would receive the maximum add-on
payment. The following are estimates for FY
2018 for the four technologies that we are
continuing to make new technology add-on
payments in FY 2018.
• Based on the applicant’s estimate from
FY 2017, we currently estimate that new
technology add-on payments for the
Defitelio® will increase overall FY 2018
payments by $5,161,200 (maximum add-on
payment of $75,900 * 68 patients).
• Based on the applicant’s estimate for FY
2017, we currently estimate that new
technology add-on payments for the GORE®
EXCLUDER® IBE will increase overall FY
2018 payments by $5,685,750 (maximum
add-on payment of $5,250 * 1,083 patients).
• Based on the applicant’s estimate for FY
2017, we currently estimate that new
technology add-on payments for
Idarucizumab will increase overall FY 2018
payments by $14,766,500 (maximum add-on
payment of $1,750 * 8,438 patients).
• Based on the applicant’s estimate for FY
2017, we currently estimate that new
technology add-on payments for VistogardTM
will increase overall FY 2018 payments by
$3,009,750 (maximum add-on payment of
$40,130 * 75 patients).
The following are estimates for FY 2018 for
the three technologies that we are approving
for new technology add-on payments
beginning with FY 2018.
• Based on the applicant’s estimate for FY
2018, we currently estimate that new
technology add-on payments for ZinplavaTM
will increase overall FY 2018 payments by
$2,857,600 (maximum add-on payment of
$1,900 * 1,504 patients).
• Based on the estimates for INTUITY and
Perceval for FY 2018 and using a weighted
average, we currently estimate that new
technology add-on payments for INTUITY
and Perceval will increase overall FY 2018
payments by $14,841,749 (maximum add-on
payment of $6,110.23 * 2,429 patients).
• Based on the applicant’s estimate for FY
2018, we currently estimate that new
technology add-on payments for Stelara® will
increase overall FY 2018 payments by
$400,800 (maximum add-on payment of
$2,400 * 167 patients).
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2. Effects of Changes to MS–DRGs Subject to
the Postacute Care Transfer Policy and the
MS–DRG Special Payment Policy
In section V.A. of the preamble of this final
rule, we discuss our changes to the list of
MS–DRGs subject to the postacute care
transfer policy and the MS–DRG special
payment policy. As reflected in Table 5 listed
in section VI. of the Addendum to this final
rule (which is available via the Internet on
the CMS Web site), using criteria set forth in
regulations at 42 CFR 412.4, we evaluated
MS–DRG charge, discharge, and transfer data
to determine which MS–DRGs qualify for the
postacute care transfer and MS–DRG special
payment policies. We note that we did not
propose to make any changes in these
payment policies in the FY 2018 IPPS/LTCH
PPS proposed rule. As a result of finalization
of our proposals to revise the MS–DRG
classifications for FY 2018, which are
discussed in section II.F. of the preamble of
this final rule, we are adding three MS–DRGs
to the list of MS–DRGs subject to the MS–
DRG special payment policy. Column 4 of
Table I in this Appendix A shows the effects
of the changes to the MS–DRGs and the
relative payment weights and the application
of the recalibration budget neutrality factor to
the standardized amounts. Section
1886(d)(4)(C)(i) of the Act requires us
annually to make appropriate DRG
classification changes in order to reflect
changes in treatment patterns, technology,
and any other factors that may change the
relative use of hospital resources. The
analysis and methods for determining the
changes due to the MS–DRGs and relative
payment weights account for and include
changes as a result of the changes to the MS–
DRGs subject to the MS–DRG postacute care
transfer and MS–DRG special payment
policies. We refer readers to section I.G. of
this Appendix A for a detailed discussion of
payment impacts due to the MS–DRG
reclassification policies for FY 2018.
3. Effects of the Changes to the Volume
Decrease Adjustment for Sole Community
Hospitals (SCHs)
In section V.C. of the preamble of this final
rule, we discuss our proposed and finalized
policies to modify the methodology used to
calculate volume decrease adjustments for
SCHs. We are prospectively requiring that the
MACs compare Medicare revenue allocable
to fixed costs from the cost reporting period
when the hospital experienced the volume
decrease to the hospital’s fixed costs from
that same cost reporting period when
calculating a volume decrease adjustment.
We also are providing that the cap will no
longer be applied to the volume decrease
adjustment calculation methodology in
future periods. In addition, we are
prospectively modifying the volume decrease
adjustment process to no longer require that
a hospital explicitly demonstrate that it
appropriately adjusted the number of staff in
inpatient areas of the hospital based on the
decrease in the number of inpatient days and
to no longer require the MACs to adjust the
volume decrease adjustment payment
amount for excess staffing. We estimate that
these changes to the volume decrease
adjustment will increase aggregate volume
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38561
decrease adjustment payments by a total of
approximately $15 million for cost reporting
periods beginning in FY 2018. Given that the
volume decrease adjustment is only available
to SCHs and is predicated on the
unanticipated nature of the volume decrease,
it is difficult to predict how many hospitals
will qualify for the adjustment in FY 2018.
We assumed 20 hospitals will qualify for the
adjustment in FY 2018 and that the
additional amount of the volume decrease
adjustment payment based on our
methodology will be $750,000 per hospital.
4. Effects of Changes to Low-Volume Hospital
Payment Adjustment Policy
In section V.E. of the preamble of this final
rule, we discuss the expiration of the
temporary changes to the low-volume
hospital payment policy originally provided
for by the Affordable Care Act and extended
through FY 2017 by subsequent legislation.
Effective for FY 2018 and subsequent years,
qualifying hospitals must have less than 200
combined Medicare and non-Medicare
discharges (instead of 1,600 Medicare
discharges) and must be located more than 25
road miles from another subsection (d)
hospital (instead of 15 road miles from
another subsection (d) hospital). In this same
section, we discuss our proposed and
finalized parallel low-volume hospital
payment adjustment regarding hospitals
operated by the IHS or a Tribe. Under this
finalized policy, an IHS hospital will be able
to qualify for a low-volume hospital
adjustment based on its distance to the
nearest IHS hospital, and a non-IHS hospital
will be able to qualify to receive a lowvolume hospital adjustment based on its
distance to the nearest non-IHS hospital.
Based upon the best available data at this
time, we estimate the expiration of the
temporary changes to the low-volume
hospital payment and the change to the lowvolume payment adjustments will decrease
aggregate low-volume payment adjustments
from $316 million in FY 2017 to $4 million
in FY 2018. This $312 million decrease in FY
2018 is based on an estimated $315 million
decrease in payments from the expiration of
the temporary changes to the low-volume
hospital definition and payment adjustment
methodology together with an estimated
increase of $3 million in payments made to
hospitals that are expected to qualify under
our parallel low-volume hospital payment
adjustment. These payment estimates were
determined by identifying providers that,
based on the best available data, are expected
to qualify under the criteria that will apply
in FY 2018 (that is, are located at least 25
miles from the nearest subsection (d) hospital
and have less than 200 total discharges), and
were determined from the same data used in
developing the quantitative analyses of
changes in payments per case discussed
previously in section I.G. of this Appendix A.
5. Effects of the Changes to Medicare DSH
and Uncompensated Care Payments for FY
2018
As discussed in section V.G. of the
preamble of this final rule, under section
3133 of the Affordable Care Act, hospitals
that are eligible to receive Medicare DSH
payments will receive 25 percent of the
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sradovich on DSK3GMQ082PROD with RULES2
amount they previously would have received
under the statutory formula for Medicare
DSH payments under section 1886(d)(5)(F) of
the Act. The remainder, equal to an estimate
of 75 percent of what formerly would have
been paid as Medicare DSH payments (Factor
1), reduced to reflect changes in the
percentage of uninsured individuals and
additional statutory adjustments (Factor 2), is
available to make additional payments to
each hospital that qualifies for Medicare DSH
payments and that has uncompensated care.
Each hospital eligible for Medicare DSH
payments will receive an additional payment
based on its estimated share of the total
amount of uncompensated care for all
hospitals eligible for Medicare DSH
payments. The uncompensated care payment
methodology has redistributive effects based
on the proportion of a hospital’s
uncompensated care relative to the
uncompensated care for all hospitals eligible
for Medicare DSH payments (Factor 3).
For FY 2018, we are establishing a Factor
2 of 58.01 percent determined using the
uninsured estimates produced by CMS’
Office of the Actuary (OACT) as part of the
development of the National Health
Expenditure Accounts (NHEA). Although we
are continuing to use low-income insured
patient days as a proxy for uncompensated
care, for the first time, we are using these
data in combination with data on
uncompensated care costs from Worksheet
S–10 in the calculation of Factor 3. The
uncompensated care payment methodology
has redistributive effects based on the
proportion of a hospital’s uncompensated
care relative to the total uncompensated care
for all hospitals eligible for Medicare DSH
payments. The change to Medicare DSH
payments under section 3133 of the
Affordable Care Act is not budget neutral.
In this final rule, we are establishing the
amount to be distributed as uncompensated
care payments to DSH eligible hospitals,
which for FY 2018 is $6,766,695,163.56. This
figure represents 75 percent of the amount
that otherwise would have been paid for
Medicare DSH payment adjustments adjusted
by a Factor 2 of 58.01 percent. For FY 2017,
the amount available to be distributed for
uncompensated care was $5,977,483,146.86,
or 75 percent of the amount that otherwise
would have been paid for Medicare DSH
payment adjustments adjusted by a Factor 2
of 55.36 percent. To calculate Factor 3 for FY
2018, we used an average of data computed
using Medicaid days from hospitals’ 2012
and 2013 cost reports from the March 2017
update of the HCRIS database,
uncompensated care costs from hospitals’
2014 cost reports from the same extract of
HCRIS, Medicaid days from 2012 cost report
data submitted to CMS by IHS hospitals, and
SSI days from the FY 2014 and FY 2015 SSI
ratios. For each eligible hospital, we
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calculated an individual Factor 3 for cost
reporting years FYs 2012, 2013, and 2014.
We then added the individual amounts and
divided the sum by the number of cost
reporting periods with data to calculate an
average Factor 3 for FY 2018. For purposes
of this final rule, as we proposed, we used
the most recent data from the March 2017
update of the HCRIS database for the
Medicaid days component of the Factor 3
calculation as well as for the Worksheet S–
10 uncompensated care cost component.
The FY 2018 policy of using data from
hospitals’ FY 2012, FY 2013, and FY 2014
cost reporting years to determine Factor 3 is
based on our FY 2017 final policy (81 FR
56943 through 56973), which is in contrast
to the methodology used in FY 2016, when
we used Medicaid days from the more recent
of a hospital’s full year 2012 or 2011 cost
report from the March 2015 update of the
HCRIS database, Medicaid days from 2012
cost report data submitted to CMS by IHS
hospitals, and SSI days from the FY 2013 SSI
ratios to calculate Factor 3. In addition, as
explained in section V.G.4.c. of the preamble
of this final rule, we are making several
additional modifications to the Factor 3
methodology: (1) To annualize Medicaid data
and uncompensated care data if a hospital’s
cost report does not equal 12 months of data;
(2) to apply a scaling factor to the
uncompensated care payment amount
calculated for each DSH eligible hospital so
that total uncompensated care payments are
consistent with the estimated amount
available to make uncompensated care
payments for FY 2018; (3) to apply statistical
trims to the CCRs on Worksheet S–10 that are
considered anomalies to ensure reasonable
CCRs are used to convert charges to costs for
purposes of determining uncompensated care
costs; (4) to calculate Factor 3 for Puerto Rico
hospitals, all-inclusive rate providers, and
Indian Health Service and Tribal hospitals by
substituting data regarding low-income
insured days for FY 2013 for the Worksheet
S–10 data on uncompensated care costs from
FY 2014 cost reports, and (5) to determine
the ratio of uncompensated care costs relative
to total operating costs on the hospital’s 2014
cost report (as of March 2017), and in cases
where the ratio of uncompensated care costs
relative to total operating costs exceeds 50
percent, to determine the ratio of
uncompensated care costs to total operating
costs from the hospital’s 2015 cost report (as
of March 2017) and apply that ratio to the
hospital’s total operating costs from its 2014
cost report to determine uncompensated cast
costs for FY 2014.
We also are continuing the policies that
were finalized in the FY 2015 IPPS/LTCH
PPS final rule (79 FR 50020 through 50022)
to address several specific issues concerning
the process and data to be employed in
determining Factor 3 in the case of hospital
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mergers for FY 2018 and subsequent years, as
well as continuing the policies finalized in
the FY 2017 IPPS/LTCH PPS final rule
concerning the methodology for calculating
each hospital’s relative share of
uncompensated care, such as combining data
from multiple cost reports beginning in the
same fiscal year and calculating Factor 3
based on an average of the three individual
Factor 3s for FYs 2012, 2013, and 2014,
determined by adding the Factor 3 values for
these years, and dividing by the number of
cost reporting periods with data.
To estimate the impact of the combined
effect of changes in Factors 1 and 2, as well
as the changes to the data used in
determining Factor 3, on the calculation of
Medicare DSH payments, including both
empirically justified Medicare DSH payments
and uncompensated care payments, we
compared total DSH payments estimated in
the FY 2017 IPPS/LTCH PPS final rule to
total DSH payments estimated in this FY
2018 IPPS/LTCH PPS final rule. For FY 2017,
for each hospital, we calculated the sum of:
(1) 25 percent of the estimated amount of
what would have been paid as Medicare DSH
in FY 2017 in the absence of section 3133 of
the Affordable Care Act; and (2) 75 percent
of the estimated amount of what would have
been paid as Medicare DSH payments in the
absence of section 3133 of the Affordable
Care Act, adjusted by a Factor 2 of 55.36
percent and multiplied by a Factor 3
calculated as described in the FY 2017 IPPS/
LTCH PPS final rule. For FY 2018, we
calculated the sum of: (1) 25 percent of the
estimated amount of what would be paid as
Medicare DSH payments in FY 2018 absent
section 3133 of the Affordable Care Act; and
(2) 75 percent of the estimated amount of
what would be paid as Medicare DSH
payments absent section 3133 of the
Affordable Care Act, adjusted by a Factor 2
of 58.01 percent and multiplied by a Factor
3 calculated using the methodology
described above.
Our analysis included 2,427 hospitals that
are projected to be eligible for DSH in FY
2018. It did not include hospitals that had
terminated their participation in the
Medicare program as of July 1, 2017,
Maryland hospitals, and SCHs that are
expected to be paid based on their hospitalspecific rates. In addition, data from merged
or acquired hospitals were combined under
the surviving hospital’s CCN, and the
nonsurviving CCN was excluded from the
analysis. The estimated impact of the
changes to Factors 1, 2, and 3 across all
hospitals projected to be eligible for DSH
payments in FY 2018, by hospital
characteristic, is presented in the following
table.
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MODELED DISPROPORTIONATE SHARE HOSPITAL PAYMENTS FOR ESTIMATED FY 2018 DSHS BY HOSPITAL TYPE:
MODEL DSH $ (IN MILLIONS) FROM FY 2017 TO FY 2018
Number of
estimated
DSHs
sradovich on DSK3GMQ082PROD with RULES2
FY 2018 final
rule estimated
DSH $
(in millions)
Dollar difference: FY
2017–FY 2018
(in millions)
Percent
change **
(1)
Total .....................................................................................
By Geographic Location:
Urban Hospitals ............................................................
Large Urban Areas .......................................................
Other Urban Areas .......................................................
Rural Hospitals .............................................................
Bed Size (Urban):
0 to 99 Beds .................................................................
100 to 249 Beds ...........................................................
250+ Beds ....................................................................
Bed Size (Rural):
0 to 99 Beds .................................................................
100 to 249 Beds ...........................................................
250+ Beds ....................................................................
Urban by Region:
New England ................................................................
Middle Atlantic ..............................................................
South Atlantic ................................................................
East North Central ........................................................
East South Central .......................................................
West North Central .......................................................
West South Central ......................................................
Mountain .......................................................................
Pacific ...........................................................................
Puerto Rico ...................................................................
Rural by Region:
New England ................................................................
Middle Atlantic ..............................................................
South Atlantic ................................................................
East North Central ........................................................
East South Central .......................................................
West North Central .......................................................
West South Central ......................................................
Mountain .......................................................................
Pacific ...........................................................................
By Payment Classification:
Urban Hospitals ............................................................
Large Urban Areas .......................................................
Other Urban Areas .......................................................
Rural Hospitals .............................................................
Teaching Status:
Nonteaching ..................................................................
Fewer than 100 residents .............................................
100 or more residents ..................................................
Type of Ownership:
Voluntary .......................................................................
Proprietary ....................................................................
Government ..................................................................
Medicare Utilization Percent:
Missing or Unknown .....................................................
0 to 25 ...........................................................................
25 to 50 .........................................................................
50 to 65 .........................................................................
Greater than 65 ............................................................
FY 2017 final
rule estimated
DSH $
(in millions)
(2)
(3)
(4)
(5)
2,427
$9,553
$10,626
$1,073
11.2
1,930
1,036
894
497
9,113
5,717
3,396
439
10,111
6,371
3,739
516
997
654
343
76
10.9
11.4
10.1
17.3
336
841
753
185
2,154
6,775
236
2,387
7,487
51
234
712
27.7
10.8
10.5
369
114
14
190
193
56
235
220
60
44
27
5
23.3
14.1
8.4
91
241
314
322
130
104
253
121
314
40
387
1,570
1,724
1,252
566
439
1,165
448
1,448
116
411
1,644
2,030
1,374
618
495
1,448
498
1,463
129
24
74
307
123
52
56
283
50
16
13
6.2
4.7
17.8
9.8
9.3
12.7
24.3
11.2
1.1
11.1
12
25
85
68
135
30
110
27
5
16
33
92
44
141
19
72
15
7
21
32
114
58
149
23
92
21
6
5
¥1
23
13
8
4
20
5
¥1
32.2
¥3.8
24.9
30.2
5.5
22.4
27.4
32.5
¥11.2
1,920
1,036
884
507
9,106
5,717
3,389
447
10,101
6,371
3,730
525
995
654
341
78
10.9
11.4
10.1
17.5
1,516
667
244
2,955
3,213
3,384
3,270
3,496
3,860
315
282
476
10.7
8.8
14.1
1,431
547
449
5,971
1,650
1,932
6,543
1,653
2,430
573
3
498
9.6
0.2
25.8
4
425
1,642
310
46
1
2,972
6,218
352
11
1
3,369
6,834
409
13
1
397
616
57
2
88.5
13.4
9.9
16.3
17.7
Source: Dobson|DaVanzo analysis of 2012–2014 Hospital Cost Reports.
* Dollar DSH calculated by [0.25 * estimated section 1886(d)(5)(F) payments] + [0.75 * estimated section 1886(d)(5)(F) payments * Factor 2 *
Factor 3]. When summed across all hospitals projected to receive DSH payments, DSH payments are estimated to be $9,553 million in FY 2017
and $10,626 million in FY 2018.
** Percentage change is determined as the difference between Medicare DSH payments modeled for the FY 2018 IPPS/LTCH PPS final rule
(column 3) and Medicare DSH payments modeled for the FY 2017 IPPS/LTCH PPS final rule (column 2) divided by Medicare DSH payments
modeled for the FY 2017 final rule (column 2) 1 times 100 percent.
Changes in projected FY 2018 DSH
payments from DSH payments in FY 2017 are
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primarily driven by (1) changes to Factor 1,
which increased from $10.797 billion to
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$11.665 billion; (2) changes to Factor 2,
which increased from 55.36 percent to 58.01
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percent; (3) changes to the data used to
determine Factor 3; and (4) changes to the
number of DSH-eligible hospitals within a
given hospital type. The impact analysis
found that, across all projected DSH eligible
hospitals, FY 2018 DSH payments are
estimated at approximately $10.626 billion,
or an increase of approximately 11.2 percent
from FY 2017 DSH payments (approximately
$9.553 billion). While these changes result in
a net increase in the amount available to be
distributed in uncompensated care payments,
DSH payments to select hospital types are
expected to decrease. This redistribution of
DSH payments is caused by changes in the
data used to determine Factor 3 and changes
in the number of DSH-eligible hospitals
within a given hospital type.
As seen in the above table, percent changes
in DSH payments of less than 11.2 percent
indicate that hospitals within the specified
category are projected to experience a smaller
increase in DSH payments, on average,
compared to the universe of projected FY
2018 DSH hospitals. Conversely, percent
changes in DSH payments that are greater
than 11.2 percent indicate a hospital type is
projected to have a larger increase than the
overall percent change on average. The
variation in the distribution of DSH
payments by hospital characteristic is largely
dependent on the change in a given
hospital’s number of Medicaid days and SSI
days for purposes of the low-income insured
days proxy between FY 2017 and FY 2018,
as well as on its uncompensated care costs
as reported on its FY 2014 Worksheet S–10.
Many rural hospitals, grouped by
geographic location, payment classification,
and bed size, are projected to experience a
larger increase in DSH payments than their
urban counterparts. Overall, urban hospitals
are projected to receive a 10.9 percent
increase in DSH payments, and rural
hospitals are projected to receive a 17.3
percent increase in DSH payments. However,
only smaller and medium-sized rural
hospitals are projected to receive increases in
DSH payments that are, on average, higher
than the 11.2 percent change across all
hospitals that are projected to be eligible for
DSH in FY 2018, with rural hospitals that
have 0–99 beds projected to experience a
23.3 percent payment increase, those with
100–249 beds projected to receive a 14.1
percent increase, and larger rural hospitals
with 250+ beds projected to experience an
8.4 percent payment increase. This trend is
somewhat consistent with urban hospitals, in
which the smallest urban hospitals (0– 99
beds) are projected to receive an increase in
DSH payments of 27.7 percent. Mediumsized hospitals (100–250 beds) and larger
hospitals (250+ beds) are projected to receive
increases of 10.8 and 10.5 percent in DSH
payments, respectively, which are relatively
consistent with the overall average.
By region, projected DSH payment
increases for urban hospitals are smallest in
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the New England, Middle Atlantic, East
North Central, and East South Central, and
Pacific regions. The South Atlantic, West
North Central, and West South Central region
hospitals are projected to receive increases in
DSH payments that are, on average, larger
than the 11.2 percent change across all
hospitals projected to be eligible for DSH in
FY 2018. Increases in remaining urban
hospital regions are generally consistent with
the overall average percent increase of 11.2
percent. Regionally, rural hospitals are
projected to receive a wider range of
increases. Rural hospitals in the Middle
Atlantic and Pacific regions are expected to
receive a decrease in DSH payments, while
increases that are, on average, smaller than
the 11.2 overall percent change are projected
for the East South Central region. Increases
are projected to be substantially larger than
the overall average in many regions,
including New England, South Atlantic, East
North Central, West North Central, West
South Central, and Mountain.
Teaching hospitals with 100 or more
residents are projected to receive, on average,
larger increases than the overall percent
change of 11.2 percent, with a projected
increase of 14.1 percent. Conversely, smaller
teaching hospitals with fewer than 100
residents are projected to receive a smaller
increase than the overall average, at 8.8
percent. Government hospitals are projected
to receive a larger than average 25.8 percent
increase, while voluntary hospitals are
expected to receive increases somewhat
smaller than the overall average (9.6 percent).
Proprietary hospitals are expected to receive
almost no change in DSH payments.
Hospitals with 25 to 50 percent Medicare
utilization are projected to receive increases
in DSH payments slightly below the overall
average at 9.9 percent, while all other
hospitals are projected to receive larger
increases.
6. Effects of Reduction Under the Hospital
Readmissions Reduction Program
In section V.I. of the preamble of this final
rule, we discuss our finalized proposals for
the FY 2018 Hospital Readmissions
Reduction Program (established under
section 3025 of the Affordable Care Act),
which requires a reduction to a hospital’s
base operating MS–DRG payments to account
for excess readmissions. In this final rule, we
estimate that 2,577 hospitals would have
their base operating MS–DRG payments
reduced by their proposed proxy FY 2018
hospital-specific readmissions adjustment.
As a result, we estimate that the Hospital
Readmissions Reduction Program would save
approximately $556 million in FY 2018, an
increase of $24 million over the estimated FY
2017 savings. This estimate is based on the
same data used in developing the
quantitative analyses of proposed changes in
payments per case discussed previously in
section I.G. of this Regulatory Impact
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Analysis, in conjunction with the FY 2017
hospital-specific readmissions adjustment
factors and the proxy FY 2018 hospitalspecific readmissions adjustment factors
found in Table 15 of this final rule (available
only through the Internet as described in
section VI. of the Addendum to this final
rule).
The table and analysis below illustrate the
estimate of the financial impact of the
implementation methodology for the
provisions of the 21st Century Cures Act, as
outlined in this final rule. We are presenting
the estimated impact of the finalized
methodology on hospitals by hospital
characteristic.
The table presents results of hospitals
stratified into quintiles based on the
proportion of dual-eligible beneficiaries
among Medicare FFS and managed care
patients discharged between July 1, 2013 and
June 30, 2016. Hospital excess readmission
ratios (ERRs) are assessed relative to their
peer group median and a neutrality modifier
is applied to the payment reduction to
maintain budget neutrality. The table
includes three penalty metrics: Average
payment reduction, total Medicare savings,
and share of payment adjustments as a
percentage of total payments. The average
payment reduction is the average reduction
in Medicare DRG payments of hospitals with
a specified characteristic. The total Medicare
savings column shows the total estimated
penalties borne by hospitals with that
characteristic. The share of payment
adjustments is total Medicare savings for all
hospitals with that characteristic as a
percentage of all DRG payments for FY 2016
(October 1, 2015 to September 30, 2016).
Because the payment reduction is applied to
hospitals’ base DRG payments, hospitals with
more discharges will contribute a larger
amount of Medicare savings to the group
total of Medicare savings. For example, under
the finalized methodology, the share of
payment adjustments as a percentage of all
DRG payments for urban hospitals is 0.63
percent. This means that total penalties for
all urban hospitals are 0.63 percent of total
payments for urban hospitals (that is, the
ratio of total penalties to total DRG payments
is 0.63 percent). The metric allows us to
compare the financial impact of the method
for assessing penalties between hospitals
with different numbers of beds even though
larger hospitals tend to generate higher total
Medicare savings since their payment
reduction is applied to more DRG payments.
Measuring the financial impact on hospitals
as a proportion of total DRG payments allows
us to account for differences in the amount
of DRG payments for hospitals within the
group when comparing the financial impact
of the program on different groups of
hospitals.
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38565
THE IMPACT OF THE FINALIZED CHANGES TO THE HOSPITAL READMISSIONS REDUCTION PROGRAM PAYMENT ADJUSTMENT
FORMULA BY HOSPITAL CHARACTERISTIC
Number of
hospitals
Hospital characteristic
sradovich on DSK3GMQ082PROD with RULES2
All Hospitals .....................................................................................................
By Geographic Location:
Urban ........................................................................................................
Rural .........................................................................................................
By Bed Size:
1–99 beds .................................................................................................
100–199 beds ...........................................................................................
200–299 beds ...........................................................................................
300–399 beds ...........................................................................................
400–499 beds ...........................................................................................
500 or more beds .....................................................................................
By Teaching Status:
Non-teaching ............................................................................................
Teaching ...................................................................................................
Fewer than 100 residents ..................................................................
100 or more residents .......................................................................
By Ownership Type:
Government ..............................................................................................
Proprietary ................................................................................................
Voluntary ...................................................................................................
By Safety-net Status:
Safety net hospitals ..................................................................................
Non-safety net hospitals ...........................................................................
By DSH Payment Eligibility:
Not eligible ................................................................................................
DSH payment eligible ...............................................................................
By DSH Patient Percentage Quintile:
First Quintile .............................................................................................
Second Quintile ........................................................................................
Third Quintile ............................................................................................
Fourth Quintile ..........................................................................................
Fifth Quintile .............................................................................................
By Medicare Cost Report (MCR) Percent:
0–24 ..........................................................................................................
25–49 ........................................................................................................
50 and over ..............................................................................................
By Region:
New England ............................................................................................
Middle Atlantic ..........................................................................................
South Atlantic ...........................................................................................
East North Central ....................................................................................
East South Central ...................................................................................
West North Central ...................................................................................
West South Central ..................................................................................
Mountain ...................................................................................................
Pacific .......................................................................................................
Penalty
reduction
(%)
Total medicare
savings
Share of
payment
adjustments
as a
percentage
of all base
operating DRG
payments
(%)
3,074
0.60
$565,847,690
0.63
2,295
779
0.63
0.53
523,183,133
42,664,557
0.63
0.61
1,099
881
452
279
152
211
0.51
0.68
0.71
0.61
0.53
0.55
40,264,581
123,751,723
122,943,199
89,688,666
54,484,491
134,715,029
0.58
0.71
0.71
0.63
0.53
0.57
2,038
1,036
787
249
0.60
0.60
0.62
0.51
246,681,611
319,166,078
208,876,515
110,289,563
0.70
0.59
0.63
0.51
482
751
1,820
0.49
0.72
0.59
58,536,682
122,880,821
384,262,881
0.54
0.87
0.59
621
2,453
0.49
0.63
94,429,377
471,418,312
0.54
0.65
460
2,614
0.64
0.60
59,681,863
506,165,827
0.65
0.63
560
632
633
628
621
0.64
0.66
0.60
0.63
0.49
79,746,089
132,231,066
126,404,719
133,036,439
94,429,377
0.65
0.72
0.62
0.63
0.54
401
2,071
592
0.38
0.62
0.69
45,026,649
433,616,692
87,133,066
0.42
0.64
0.80
129
352
511
480
288
250
481
219
364
0.63
0.78
0.78
0.58
0.74
0.44
0.55
0.47
0.35
41,123,715
108,046,217
132,626,599
85,657,162
52,465,078
26,564,022
54,135,151
22,147,627
43,082,119
0.74
0.81
0.78
0.60
0.84
0.39
0.57
0.44
0.36
Notes: Results based on July 1, 2013 through June 30, 2016 discharges among subsection (d) and Maryland hospitals only. Although data
from all subsection (d) and Maryland hospitals are used in calculations of each hospital’s ERR, this table does not include results for Maryland
hospitals. This table only includes results for hospitals who are eligible for a penalty under the program on the basis of having at least 25 eligible
discharges for at least one measure. Hospitals are stratified into quintiles based on the proportion of dual-eligible beneficiaries for the 3-year FY
2018 performance period. Hospital penalties are scaled by a neutrality modifier of 0.9481 to maintain budget neutrality. To calculate the payment
adjustment as a proportion of total base operating DRG payments this analysis used MedPAR data to calculate the total base operating DRG
payments from October 1, 2015 through September 30, 2016 (FY 2016). The group average share of payment adjustments as a percentage of
all DRG payments is calculated as the sum of all Medicare savings for the group of hospitals divided by total FY 2016 base operating DRG payments for all hospitals in that group. Hospital characteristics from the FY 2018 Hospital Inpatient Prospective Payment System (IPPS) proposed
rule impact file. Data on SSI ratio comes from FY 2014 SSI data file. The total number of hospitals with hospital characteristics data do not add
up to the total number of hospitals included in the FY 2018 Hospital Readmissions Reduction Program because not all hospitals have data for all
characteristics. A hospital is considered a teaching hospital if it has an IME adjustment factor for Operation PPS (TCHOP) greater than zero and
is considered a DSH hospital if it has a DSH patient percentage greater than zero. A hospital is a safety-net hospital if they are in the top DSH
quintile. MCR percent is the percentage of total inpatient stays from Medicare patients.
The estimated impact of the finalized
stratified methodology for the FY 2019
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Hospital Readmissions Reduction Program
compared to the current methodology
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according to this metric is shown in the table
below. The table is based on results when
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hospitals are stratified into quintiles based on
the proportion of dual-eligible beneficiaries
among Medicare fee-for-service and managed
care patients discharged between July 1, 2013
through June 30, 2016. The table shows the
share of payment adjustments as a percentage
of all DRG payments for each group of
hospitals. The group share is calculated as
the sum of penalties for all hospitals with
that characteristic over the sum of all DRG
payments for those hospitals between
October 1, 2015 and September 30, 2016 (FY
2016).
PENALTY AS SHARE OF PAYMENT WHEN HOSPITALS ARE STRATIFIED INTO QUINTILES USING THE 3-YEAR DUAL PROPORTION AMONG FFS AND MANAGED CARE PATIENTS, BY HOSPITAL CHARACTERISTIC FOR THE CURRENT AND FINALIZED
PAYMENT ADJUSTMENT FACTOR METHODOLOGIES
Current
methodology:
FY 2018
hospital
readmissions
reduction
program
(%)
sradovich on DSK3GMQ082PROD with RULES2
Hospital characteristic
All Hospitals .............................................................................................................................................................
Urban Status:
Urban ................................................................................................................................................................
Rural .................................................................................................................................................................
Bed Size:
1–99 beds .........................................................................................................................................................
100–199 beds ...................................................................................................................................................
200–299 beds ...................................................................................................................................................
300–399 beds ...................................................................................................................................................
400–499 beds ...................................................................................................................................................
500 or more beds .............................................................................................................................................
Teaching Status:
Non-teaching ....................................................................................................................................................
Teaching ...........................................................................................................................................................
Fewer than 100 residents .........................................................................................................................
100 or more residents ...............................................................................................................................
Ownership:
Government ......................................................................................................................................................
Proprietary ........................................................................................................................................................
Voluntary ...........................................................................................................................................................
Safety-net Status:
Safety-net hospitals ..........................................................................................................................................
Nonsafety-net hospitals ....................................................................................................................................
DSH Payment Eligible:
Not eligible ........................................................................................................................................................
DSH payment eligible .......................................................................................................................................
DSH Patient Percentage Quintile:
First Quintile .....................................................................................................................................................
Second Quintile ................................................................................................................................................
Third Quintile ....................................................................................................................................................
Fourth Quintile ..................................................................................................................................................
Fifth Quintile .....................................................................................................................................................
MCR percentage:
0–24 ..................................................................................................................................................................
25–49 ................................................................................................................................................................
50 or more ........................................................................................................................................................
Region:
New England ....................................................................................................................................................
Middle Atlantic ..................................................................................................................................................
South Atlantic ...................................................................................................................................................
East North Central ............................................................................................................................................
East South Central ...........................................................................................................................................
West North Central ...........................................................................................................................................
West South Central ..........................................................................................................................................
Mountain ...........................................................................................................................................................
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Finalized
FY 2019
methodology:
median plus
neutrality
modifier
(NM = 0.9481)
(%)
0.63
0.63
0.63
0.64
0.63
0.61
0.57
0.72
0.71
0.64
0.52
0.57
0.58
0.71
0.71
0.63
0.53
0.57
0.69
0.59
0.62
0.54
0.70
0.59
0.63
0.51
0.55
0.88
0.59
0.54
0.87
0.59
0.63
0.63
0.54
0.65
0.59
0.63
0.65
0.63
0.59
0.68
0.61
0.64
0.63
0.65
0.72
0.62
0.63
0.54
0.45
0.63
0.79
0.42
0.64
0.80
0.76
0.84
0.76
0.60
0.81
0.37
0.55
0.41
0.74
0.81
0.78
0.60
0.84
0.39
0.57
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38567
PENALTY AS SHARE OF PAYMENT WHEN HOSPITALS ARE STRATIFIED INTO QUINTILES USING THE 3-YEAR DUAL PROPORTION AMONG FFS AND MANAGED CARE PATIENTS, BY HOSPITAL CHARACTERISTIC FOR THE CURRENT AND FINALIZED
PAYMENT ADJUSTMENT FACTOR METHODOLOGIES—Continued
Current
methodology:
FY 2018
hospital
readmissions
reduction
program
(%)
Hospital characteristic
Pacific ...............................................................................................................................................................
0.41
Finalized
FY 2019
methodology:
median plus
neutrality
modifier
(NM = 0.9481)
(%)
0.36
Notes: Results based on July 1, 2013 through June 30, 2016 discharges among subsection (d) and Maryland hospitals only. Although data
from all subsection (d) and Maryland hospitals are used in calculations of each hospital’s ERR, this table does not include results for Maryland
hospitals. This table only includes results for hospitals who are eligible for a penalty under the program on the basis of having at least 25 eligible
discharges for at least one measure. Under the finalized methodology, hospitals are stratified into quintiles based on the proportion of FFS and
managed care dual-eligible beneficiaries for the 3-year FY 2018 performance period. To calculate the payment adjustment as a proportion of
total FY 2016 base operating DRG payments this analysis used MedPAR data to calculate the total base operating DRG payments from October
1, 2015 through September 30, 2016 (FY 2016). The group average share of payment adjustments as a percentage of all DRG payments is calculated as the sum of all Medicare savings for the group of hospitals divided by total base operating DRG payments for all hospitals in that
group. Hospital characteristics from the FY 2018 Hospital Inpatient Prospective Payment System (IPPS) proposed rule impact file. Data on SSI
ratio comes from FY 2014 SSI data file. The total number of hospitals with hospital characteristics data do not add up to the total number of hospitals included in the FY 2018 Hospital Readmissions Reduction Program because not all hospitals have data for all characteristics. A hospital is
considered a teaching hospital if it has an IME adjustment factor for Operation PPS (TCHOP) greater than zero and is considered a DSH hospital if it has a DSH patient percentage greater than zero. A hospital is a safety-net hospitals if they are in the top DSH quintile. MCR percent is
the percentage of total inpatient stays from Medicare patients.
7. Effects of Changes Under the FY 2018
Hospital Value-Based Purchasing (VBP)
Program
In section V.J. of the preamble of this final
rule, we discuss the Hospital VBP Program
under which the Secretary makes valuebased incentive payments to hospitals based
on their performance on measures during the
performance period with respect to a fiscal
year. These incentive payments will be
funded for FY 2018 through a reduction to
the FY 2018 base operating DRG payment
amounts for all discharges for participating
hospitals for such fiscal year, as required by
section 1886(o)(7)(B) of the Act. The
applicable percentage for FY 2018 and
subsequent years is 2 percent. The total
amount available for value-based incentive
payments must be equal to the total amount
of reduced payments for all hospitals for the
fiscal year, as estimated by the Secretary.
In section V.J.1.b. of the preamble of this
final rule, we estimate the available pool of
funds for value-based incentive payments in
the FY 2018 program year, which, in
accordance with section 1886(o)(7)(C)(v) of
the Act, will be 2.00 percent of base
operating DRG payments, or a total of
approximately $1.9 billion. This estimated
available pool for FY 2018 is based on the
historical pool of hospitals that were eligible
to participate in the FY 2017 program year
and the payment information from the March
2017 update of the FY 2016 MedPAR file.
The estimated impacts of the FY 2018
program year by hospital characteristic,
found in the table below, are based on
historical TPSs. We used the FY 2017
program year’s TPSs to calculate the proxy
adjustment factors used for this impact
analysis. These are the most recently
available scores that hospitals were given an
opportunity to review and correct. The proxy
adjustment factors use estimated annual base
operating DRG payment amounts derived
from the March 2017 update to the FY 2016
MedPAR file. The proxy adjustment factors
can be found in Table 16A associated with
this final rule (available via the Internet on
the CMS Web site at: https://www.cms.gov/
Medicare/Medicare-Fee-For-ServicePayment/AcuteInpatientPPS/).
The impact analysis shows that, for the FY
2018 program year, the number of hospitals
that would receive an increase in their base
operating DRG payment amounts is higher
than the number of hospitals that would
receive a decrease. Among urban hospitals,
those in the New England, South Atlantic,
East North Central, East South Central, West
North Central, West South Central,
Mountain, and Pacific regions would have an
increase, on average, in their base operating
DRG payment amounts. Urban hospitals in
the Middle Atlantic region would receive an
average decrease in their base operating DRG
payment amounts. Among rural hospitals,
those in all geographic regions would have
an increase, on average, in their base
operating DRG payment amounts.
On average, hospitals that receive a higher
(over 65) percent of DSH payments would
receive decreases in base operating DRG
payment amounts. With respect to hospitals’
Medicare utilization as a percent of inpatient
days (MCR), those hospitals with an MCR
above 65 percent would have the largest
average increase in base operating DRG
payment amounts.
Non-teaching hospitals would have an
average increase, and teaching hospitals
would experience an average decrease in
base operating DRG payment amounts.
IMPACT ANALYSIS OF BASE OPERATING DRG PAYMENT AMOUNT CHANGES RESULTING FROM THE FY 2018 HOSPITAL
VBP PROGRAM
sradovich on DSK3GMQ082PROD with RULES2
Number of
hospitals
By Geographic Location:
All Hospitals ......................................................................................................................................................
Large Urban ......................................................................................................................................................
Other Urban ......................................................................................................................................................
Rural Area ........................................................................................................................................................
Urban hospitals .................................................................................................................................................
0–99 beds ..................................................................................................................................................
100–199 beds ............................................................................................................................................
200–299 beds ............................................................................................................................................
300–499 beds ............................................................................................................................................
500 or more beds ......................................................................................................................................
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E:\FR\FM\14AUR2.SGM
14AUR2
2,955
1,215
1,060
680
2,275
487
720
434
423
211
Average
percentage
change
0.183
0.092
0.154
0.392
0.121
0.689
0.079
¥0.038
¥0.160
¥0.160
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IMPACT ANALYSIS OF BASE OPERATING DRG PAYMENT AMOUNT CHANGES RESULTING FROM THE FY 2018 HOSPITAL
VBP PROGRAM—Continued
Number of
hospitals
By
By
By
By
Rural hospitals ..................................................................................................................................................
0–49 beds ..................................................................................................................................................
50–99 beds ................................................................................................................................................
100–149 beds ............................................................................................................................................
150–199 beds ............................................................................................................................................
200 or more beds ......................................................................................................................................
Region:
Urban By Region ..............................................................................................................................................
New England .............................................................................................................................................
Middle Atlantic ...........................................................................................................................................
South Atlantic ............................................................................................................................................
East North Central .....................................................................................................................................
East South Central ....................................................................................................................................
West North Central ....................................................................................................................................
West South Central ...................................................................................................................................
Mountain ....................................................................................................................................................
Pacific ........................................................................................................................................................
Rural By Region ...............................................................................................................................................
New England .............................................................................................................................................
Middle Atlantic ...........................................................................................................................................
South Atlantic ............................................................................................................................................
East North Central .....................................................................................................................................
East South Central ....................................................................................................................................
West North Central ....................................................................................................................................
West South Central ...................................................................................................................................
Mountain ....................................................................................................................................................
Pacific ........................................................................................................................................................
MCR Percent:
0–25 ..................................................................................................................................................................
25–50 ................................................................................................................................................................
50–65 ................................................................................................................................................................
Over 65 .............................................................................................................................................................
Missing ..............................................................................................................................................................
DSH Percent:
0–25 ..................................................................................................................................................................
25–50 ................................................................................................................................................................
50–65 ................................................................................................................................................................
Over 65 .............................................................................................................................................................
Teaching Status:
Non-Teaching ...................................................................................................................................................
Teaching ...........................................................................................................................................................
Actual FY 2018 program year’s TPSs will
not be reviewed and corrected by hospitals
until after the FY 2018 IPPS/LTCH PPS final
rule has been published. Therefore, the same
historical universe of eligible hospitals and
corresponding TPSs from the FY 2017
program year are used for the updated impact
analysis in this final rule.
sradovich on DSK3GMQ082PROD with RULES2
8. Effects of Proposed Changes to the HAC
Reduction Program for FY 2018
The table and analysis below illustrate the
estimated cumulative effect of the measures
and scoring system for the Hospital-Acquired
Condition (HAC) Reduction Program, as
outlined in section V.K. of the preamble of
this FY 2018 IPPS/LTCH PPS final rule. We
are presenting the estimated impact of the FY
2018 HAC Reduction Program on hospitals
by hospital characteristic.
These FY 2018 HAC Reduction Program
results were calculated using the Winsorized
z-score methodology finalized in the FY 2017
IPPS/LTCH PPS final rule (80 FR 57022
through 57025). Each hospital’s Total HAC
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Score was calculated as the weighted average
of the hospital’s Domain 1 score (15 percent)
and Domain 2 score (85 percent). NonMaryland hospitals with a Total HAC Score
above the 75th percentile Total HAC Score
were identified as being in the worstperforming quartile. The table below presents
the estimated proportion of hospitals in the
worst-performing quartile of the Total HAC
Scores by hospital characteristic. We are not
providing hospital-level data or payment
impact in conjunction with this final rule
because scores will undergo a 30-day review
and correction period that will not conclude
until after the publication of this final rule.
We used the modified Recalibrated Patient
Safety Indicator (PSI) 90 Composite measure
results based on Medicare fee-for-service
(FFS) discharges from July 1, 2014 through
September 30, 2015 and recalibrated version
6.0.2 of the PSI software to estimate the
impact of the FY 2018 HAC Reduction
Program. For the CDC Central LineAssociated Bloodstream Infection (CLABSI),
Catheter-Associated Urinary Tract Infection
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Average
percentage
change
680
209
275
112
45
39
0.392
0.608
0.400
0.243
0.054
¥0.009
2,275
110
297
387
364
135
152
320
156
354
680
19
52
111
106
126
85
107
52
22
0.121
0.072
¥0.119
0.026
0.217
0.010
0.451
0.194
0.058
0.203
0.392
0.539
0.196
0.540
0.420
0.172
0.502
0.257
0.740
0.504
420
2,022
468
41
4
0.121
0.167
0.279
0.440
0.789
1,221
1,389
189
156
0.359
0.083
0.025
¥0.118
1,905
1,050
0.316
¥0.059
(CAUTI), Colon and Abdominal
Hysterectomy Surgical Site Infection (SSI),
Methicillin-resistant Staphylococcus aureus
(MRSA) bacteremia, and Clostridium difficile
Infection (CDI) measure results, we used
standardized infection ratios (SIRs)
calculated with hospital surveillance data
reported to the National Healthcare Safety
Network (NHSN) for infections occurring
between January 1, 2015 and December 31,
2016.
To analyze the results by hospital
characteristic, we used the FY 2018 Proposed
Rule Impact File. This table includes 3,233
non-Maryland hospitals with a FY 2018 Total
HAC Score. Of these, 3,215 hospitals had
information for geographic location, region,
bed size, disproportionate share hospital
(DSH) percent, and teaching status; 3,184 had
information for ownership; and 3,190 had
information for Medicare utilization as a
percent of inpatient days, which is also
known as the Medicare Cost Report (MCR)
percent. Maryland hospitals and hospitals
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without a Total HAC Score are not included
in the table below.
The second column in the table indicates
the total number of non-Maryland hospitals
with available data for each characteristic
that have a Total HAC Score for the FY 2018
HAC Reduction Program. For example, with
regard to teaching status, 2,151 hospitals are
characterized as non-teaching hospitals, 815
are characterized as teaching hospitals with
fewer than 100 residents, and 249 are
characterized as teaching hospitals with at
least 100 residents. This only represents a
total of 3,215 hospitals because the other 18
hospitals have missing data for teaching
status.
The third column in the table indicates the
number of hospitals for each characteristic
that would be in the worst-performing
quartile of Total HAC Scores. These hospitals
would receive a payment reduction under the
FY 2018 HAC Reduction Program. For
example, with regard to teaching status, 500
hospitals out of 2,151 hospitals characterized
as non-teaching hospitals would be subject to
a payment reduction. Among teaching
hospitals, 189 out of 815 hospitals with fewer
than 100 residents and 103 out of 249
38569
hospitals with 100 or more residents would
be subject to a payment reduction.
The fourth column in the table indicates
the proportion of hospitals for each
characteristic that would be in the worstperforming quartile of Total HAC Scores and
would receive a payment reduction under the
FY 2018 HAC Reduction Program. For
example, 23.2 percent of the 2,151 hospitals
characterized as non-teaching hospitals, 23.2
percent of the 815 teaching hospitals with
fewer than 100 residents, and 41.4 percent of
the 249 teaching hospitals with 100 or more
residents would be subject to a payment
reduction.
ESTIMATED PROPORTION OF HOSPITALS IN THE WORST-PERFORMING QUARTILE (>75TH PERCENTILE) OF THE TOTAL HAC
SCORES FOR THE FY 2018 HAC REDUCTION PROGRAM (BY HOSPITAL CHARACTERISTIC)
Number of
hospitals
sradovich on DSK3GMQ082PROD with RULES2
Hospital characteristic
Total c ...........................................................................................................................................
By Geographic Location: (n = 3,215) d
Urban hospitals ............................................................................................................................
1–99 beds .............................................................................................................................
100–199 beds .......................................................................................................................
200–299 beds .......................................................................................................................
300–399 beds .......................................................................................................................
400–499 beds .......................................................................................................................
500 or more beds .................................................................................................................
Rural hospitals .............................................................................................................................
1–49 beds .............................................................................................................................
50–99 beds ...........................................................................................................................
100–149 beds .......................................................................................................................
150–199 beds .......................................................................................................................
200 or more beds .................................................................................................................
By Region:
New England ........................................................................................................................
Mid-Atlantic ...........................................................................................................................
South Atlantic .......................................................................................................................
East North Central ................................................................................................................
East South Central ...............................................................................................................
West North Central ...............................................................................................................
West South Central ..............................................................................................................
Mountain ...............................................................................................................................
Pacific ...................................................................................................................................
By DSH Percent e (n = 3,215):
0–24 ......................................................................................................................................
25–49 ....................................................................................................................................
50–64 ....................................................................................................................................
65 and over ..........................................................................................................................
By Teaching Status f (n = 3,215):
Non-teaching ........................................................................................................................
Fewer than 100 ....................................................................................................................
Residents ..............................................................................................................................
100 or more residents ..........................................................................................................
By Ownership g (n = 3,184):
Voluntary ...............................................................................................................................
Proprietary ............................................................................................................................
Government ..........................................................................................................................
By MCR Percent h (n =3,190):
0–24 ......................................................................................................................................
25–49 ....................................................................................................................................
50–64 ....................................................................................................................................
65 and over ..........................................................................................................................
Number of
hospitals in
the worstperforming
quartile a
Percent of
hospitals in
the worstperforming
quartile b
3,233
808
25.0
2,417
612
732
435
276
151
211
798
309
287
116
46
40
618
156
175
98
74
48
67
174
69
59
26
11
9
25.6
25.5
23.9
22.5
26.8
31.8
31.8
21.8
22.3
20.6
22.4
23.9
22.5
133
362
519
497
299
260
517
229
399
35
122
142
97
80
45
109
56
106
26.3
33.7
27.4
19.5
26.8
17.3
21.1
24.5
26.6
1,362
1,465
207
181
315
342
66
69
23.1
23.3
31.9
38.1
2,151
500
23.2
815
249
189
103
23.2
41.4
1,875
811
498
446
191
145
23.8
23.6
29.1
475
2,103
524
88
139
482
138
19
29.3
22.9
26.3
21.6
Source: FY 2018 HAC Reduction Program Final Rule Results are based on Recalibrated PSI 90 Composite data from July 2014 through September 2015 and CDC CLABSI, CAUTI, SSI, CDI, and MRSA results from January 2015 through December 2016. Hospital Characteristics are
based on the FY 2018 Proposed Rule Impact File.
a This column is the number of non-Maryland hospitals with a Total HAC Score within the corresponding characteristic that are estimated to be
in the worst-performing quartile.
b This column is the percent of non-Maryland hospitals within each characteristic that are estimated to be in the worst-performing quartile. The
percentages are calculated by dividing the number of non-Maryland hospitals with a Total HAC Score in the worst-performing quartile by the total
number of non-Maryland hospitals with a Total HAC Score within that characteristic.
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c The number of non-Maryland hospitals with a FY 2018 Total HAC Score (N = 3,233). Note that not all hospitals have data for all hospital
characteristics.
d The number of hospitals that had information for: geographic location including urban/rural, bed size, and region; Disproportionate Share
Hospital (DSH); and teaching status (n = 3,215).
e A hospital is considered a DSH hospital if it has a DSH patient percentage greater than zero.
f A hospital is considered a teaching hospital if it has an IME adjustment factor for Operation PPS (TCHOP) greater than zero.
g Not all hospitals had data for type of ownership (n = 3,184).
h Not all hospitals had data for MCR percent (n = 3,190).
9. Effects of Implementation of the
Additional 5-Year Extension of the Rural
Community Hospital Demonstration Program
In section V.L. of the preamble of this final
rule, we discuss our implementation of
section 410A of Public Law 108–173, as
amended by sections 3123 and 10313 of
Public Law 111–148, and more recently, by
section 15003 of Public Law 114–255, which
requires the Secretary to conduct a
demonstration that tests the feasibility and
advisability of establishing ‘‘rural
community’’ hospitals to furnish covered
inpatient hospital services to Medicare
beneficiaries. The demonstration makes
payments under a reasonable cost
methodology for covered inpatient hospital
services furnished to Medicare beneficiaries
by up to 30 rural hospitals. Section 15003 of
Public Law 114–255, enacted December 13,
2016, requires a 10-year extension period (in
place of the 5-year extension required by
Public Law 111–148) for the demonstration.
Therefore, the Secretary is required to
conduct the demonstration for an additional
5-year period. Section 15003 of Public Law
114–255 also requires that, no later than 120
days after enactment of Public Law 114–255,
the Secretary issue a solicitation for
applications to select additional hospitals to
participate in the demonstration program for
the second 5 years of the 10-year extension
period so long as the maximum number of 30
hospitals stipulated by Public Law 111–148
is not exceeded. Section 410A(c)(2) of Public
Law 108–173 requires that, in conducting the
demonstration program under this section,
the Secretary shall ensure that the aggregate
payments made by the Secretary do not
exceed the amount which the Secretary
would have paid if the demonstration
program under this section was not
implemented (budget neutrality).
In this FY 2018 IPPS/LTCH PPS final rule,
we describe our proposed and finalized
policies for implementation of the extension
under section 15003 of Public Law 114–255,
the budget neutrality methodology for the
extension period authorized by the
legislation, and the reconciliation of actual
and estimated costs of the demonstration for
previous years (2011, 2012, and 2013). Our
proposal and final policy for budget
neutrality adopted the general methodology
used in previous years for the demonstration.
As discussed in section V.L. of the preamble
of the proposed rule, in the IPPS final rules
from FYs 2005 through 2016, we estimated
the additional payments made by the
program for each of the participating
hospitals as a result of the demonstration. In
order to achieve budget neutrality, we
adjusted the national IPPS rates by an
amount sufficient to account for the added
costs of this demonstration. In other words,
we have applied budget neutrality across the
payment system as a whole rather than across
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the participants of this demonstration. The
language of the statutory budget neutrality
requirement permits the agency to implement
the budget neutrality provision in this
manner. The statutory language requires that
aggregate payments made by the Secretary do
not exceed the amount which the Secretary
would have paid if the demonstration was
not implemented, but does not identify the
range across which aggregate payments must
be held equal.
Section 15003 of Public Law 114–255
requires the Secretary to conduct the Rural
Community Hospital Demonstration for a 10year extension period (in place of the 5-year
extension period required by the Affordable
Care Act), beginning on the date immediately
following the last day of the initial 5-year
period under section 410A(a)(5) of Public
Law 108–173. Specifically, section 15003 of
Public Law 114–255 amended section
410A(g)(4) of Public Law 108–173 to require
that, for hospitals participating in the
demonstration as of the last day of the initial
5-year period, the Secretary shall provide for
continued participation of such rural
community hospitals in the demonstration
during the 10-year extension period, unless
the hospital makes an election to discontinue
participation. Furthermore, section 15003 of
Public Law 114–255 requires that, during the
second 5 years of the 10-year extension
period, the Secretary shall provide for
participation under the demonstration during
the second 5 years of the 10 year extension
period for hospitals that are not described in
subsection 410A(g)(4).
In the FY 2018 IPPS/LTCH PPS proposed
rule, we proposed to implement the second
5 years of the 10-year extension period in a
way that recognizes a gap in participation for
the previously participating hospitals
between the end of the first 5 years and the
start of the second 5 years of the extension
period, and that provides for alignment of the
periods of performance under the extension
among all participating hospitals. Thus, for
each previously participating hospital that
decides to participate in the second 5 years
of the 10-year extension period, we proposed
that the start date for the period of
performance under the second 5-year
extension period would be the start of the
first cost reporting period on or after October
1, 2017 following upon the announcement of
the selection of the additional hospitals for
the demonstration. Our goal was to finalize
this selection by June 2017, in time to
include in the FY 2018 IPPS final rule an
estimate of the costs of the demonstration
during FY 2018 and the resulting budget
neutrality offset amount for these newly
participating hospitals, as well as for those
hospitals among the previously participating
hospitals that decide to participate in the
extension period.
In the proposed rule, we proposed that if
the selection of the additional hospitals
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under the solicitation were not to be
announced by June 2017, we would include
the estimated costs of the demonstration for
all participating hospitals for FY 2018 in the
budget neutrality offset amount to be
calculated in the FY 2019 IPPS/LTCH PPS
proposed and final rules.
In the preamble in section V.L. of the
proposed rule, we also described an
alternative implementation approach,
according to which each previously
participating hospital would begin the
second 5 years of the 10-year extension
period on the date immediately after the date
the period of performance under the first 5year extension period ended. We also
described the methodology that we
considered for calculating the budget
neutrality offset amount under this
alternative approach.
In response to public comments that
indicated that our proposed implementation
approach would cause financial hardship for
some of the previously participating
hospitals, we are adopting this alternative
implementation approach in this FY 2018
IPPS/LTCH PPS final rule. We describe the
method for calculating budget neutrality
under this approach. Because we were
unable to announce the selections of
additional hospitals by June 2017, in time for
including the estimates of the cost of the
demonstration for both previously and newly
participated hospitals in FY 2018 in this FY
2018 final rule, we will include this estimate
in the FY 2019 IPPS/LTCH PPS proposed and
final rules. In addition, we will determine the
costs of the demonstration for the previously
participating hospitals for the period from
when their period of performance ended for
the first 5-year extension period and the start
of the cost report year in FY 2018 when
finalized cost reports for this period are
available. We will include these costs for the
demonstration in future rulemaking.
In previous years, we have incorporated a
second component into the budget neutrality
offset amounts identified in the final IPPS
rules. As finalized cost reports became
available, we determined the amount by
which the actual costs of the demonstration
for an earlier, given year differed from the
estimated costs for the demonstration set
forth in the final IPPS rule for the
corresponding fiscal year, and we
incorporated that amount into the budget
neutrality offset amount for the upcoming
fiscal year. We have calculated this
difference for FYs 2005 through 2010
between the actual costs of the demonstration
as determined from finalized cost reports
once available, and estimated costs of the
demonstration as identified in the applicable
IPPS final rules for these years.
With the extension of the demonstration
for another 5-year period, as authorized by
section 15003 of Public Law 114–255, we
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will continue this general procedure.
Specifically, when finalized cost reports for
FYs 2011, 2012, and 2013 are available, we
will include this difference for these years in
the budget neutrality offset adjustment to be
applied to the national IPPS rates in a future
final rule. We expect that this will occur in
FY 2019. Also, when finalized cost reports
for FYs 2014 through 2016 are available, we
will include the difference between the
actual costs as reflected on these cost reports
and the amounts included in the budget
neutrality offset amounts for these fiscal
years in a future final rule.
10. Effects of Changes Relating to ProviderBased Status of Indian Health Service and
Tribal Facilities and Organizations
In section V.N. of the preamble of this final
rule, we discuss our proposals and finalized
policies relating to provider-based status of
Indian Health Service (IHS) and tribal
facilities and organizations. Regulations at
§ 413.65(m) currently grandfather facilities
from provider-based regulations if they meet
certain criteria, including on or before April
7, 2000, having furnished only services that
were billed as if they had been furnished by
a department of a hospital operated by the
IHS or a Tribe. We have also issued
subregulatory guidance on circumstances
that would or would not result in a facility
or organization losing its grandfathered
status. After consideration of the special and
legally recognized relationship between
Indian Tribes and the U.S. Government, as
well as current IHS policies and procedures,
as we proposed, we remove the date
limitation in § 413.65(m) that restricted the
grandfathering provision to IHS or Tribal
facilities and organizations furnishing
services on or before April 7, 2000. We also
made a technical change to make the
regulation text more consistent with our
current rules that require these facilities to
comply with all applicable Medicare
conditions of participation that apply to the
main provider. We do not expect any
significant payment impact because these
finalized policies are in line with current
guidance, and we believe that IHS policies
and procedures regarding the planning,
operation, and funding of such facilities are
resulting in appropriate Medicare payments.
11. Effects of Changes Relating to Hospitalwithin-Hospital (HwH) Policy
In section VII.B. of the preamble of this
final rule, we discuss our proposal and
finalized policy to revise the regulations
applicable to HwHs so that the separateness
and control requirements would only apply
to IPPS-excluded HwHs that are co-located
with IPPS hospitals beginning in FY 2018.
This policy change is premised on the belief
that the policy concerns that underlie our
existing HwH regulations (that is,
inappropriate patient shifting and hospitals
acting as illegal de facto units) are
sufficiently moderated in situations where
IPPS-excluded hospitals are co-located with
each other but not IPPS hospitals, in large
part due to the payment system changes that
have occurred over the intervening years for
IPPS-excluded hospitals. In addition, we are
revising the HwH requirements to no longer
require the provisions that outline
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performance of basic hospital functions in
order to maintain IPPS-exclusion beginning
in FY 2018. This revision will not result in
a practical change to how HwHs are currently
operated because the performance of basic
hospital functions that are required under the
HwH regulations are currently addressed
under CMS’ interpretative guidelines for the
hospital conditions of participation. We do
not expect any significant payment impact
because these policies are primarily
administrative in nature or in line with
current guidance.
12. Effects of Continued Implementation of
the Frontier Community Health Integration
Project (FCHIP) Demonstration
In the FY 2017 IPPS/LTCH PPS final rule
(81 FR 57064 through 57065) we finalized,
and in section VII.D.2. of the preamble of this
final rule we discuss, the implementation of
the FCHIP demonstration, which allows
eligible entities to develop and test new
models for the delivery of health care
services in eligible counties in order to
improve access to and better integrate the
delivery of acute care, extended care, and
other health care services to Medicare
beneficiaries in no more than four States.
Budget neutrality estimates for CAHs
selected for the demonstration will be based
on the demonstration period, August 1, 2016
through July 31, 2019. The demonstration
includes three intervention prongs, under
which specific waivers of Medicare payment
rules will allow for enhanced payment:
telehealth, skilled nursing facility/nursing
facility, and ambulance services. These
waivers are being implemented with the goal
of increasing access to care with no net
increase in costs.
We have specified the payment
enhancements for the demonstration with the
goal of maintaining the budget neutrality of
the demonstration on its own terms (that is,
the demonstration will produce savings from
reduced transfers and admissions to other
health care providers, thus offsetting any
increase in payments resulting from the
demonstration). However, because of the
small size of this demonstration program and
uncertainty associated with projected
Medicare utilization and costs, we adopted a
contingency plan (81 FR 57064 through
57065) to ensure that the budget neutrality
requirement in section 123 of Public Law
110–275 is met. Accordingly, if analysis of
claims data for the Medicare beneficiaries
receiving services at each of the participating
CAHs, as well as of other data sources,
including cost reports, show that increases in
Medicare payments under the demonstration
during the 3-year period are not sufficiently
offset by reductions elsewhere, we will
recoup the additional expenditures
attributable to the demonstration through a
reduction in payments to all CAHs
nationwide. The demonstration is projected
to impact payments to participating CAHs
under both Medicare Part A and Part B. Thus,
in the event that we determine that aggregate
payments under the demonstration exceed
the payments that would otherwise have
been made, CMS will recoup payments
through reductions of Medicare payments to
all CAHs under both Medicare Part A and
Part B. Because of the small scale of the
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38571
demonstration, it would not be feasible to
implement budget neutrality by reducing
payments only to the participating CAH
providers. Therefore we will make the
reduction to payments to all CAHs, not just
those participating in the demonstration,
because the FCHIP program is specifically
designed to test innovations that affect
delivery of services by this provider category.
We explained our belief that the language of
the statutory budget neutrality requirement at
section 123(g)(1)(B) of the Act permits the
agency to implement the budget neutrality
provision in this manner. The statutory
language merely refers to ensuring that
aggregate payments made by the Secretary do
not exceed the amount which the Secretary
estimates would have been paid if the
demonstration project was not implemented,
and does not identify the range across which
aggregate payments must be held equal.
Given the 3-year period of performance of
the FCHIP demonstration and the time
needed to conduct the budget neutrality
analysis, in the event the demonstration is
found not to have been budget neutral, any
excess costs will be recouped over a period
of three cost reporting periods, beginning in
CY 2020. Therefore, this policy will have no
impact for any national payment system for
FY 2018.
I. Effects of Changes in the Capital IPPS
1. General Considerations
For the impact analysis presented below,
we used data from the March 2017 update of
the FY 2016 MedPAR file and the March
2017 update of the Provider-Specific File
(PSF) that is used for payment purposes.
Although the analyses of the changes to the
capital prospective payment system do not
incorporate cost data, we used the March
2017 update of the most recently available
hospital cost report data (FYs 2014 and 2015)
to categorize hospitals. Our analysis has
several qualifications. We use the best data
available and make assumptions about casemix and beneficiary enrollment as described
later in this section.
Due to the interdependent nature of the
IPPS, it is very difficult to precisely quantify
the impact associated with each change. In
addition, we draw upon various sources for
the data used to categorize hospitals in the
tables. In some cases (for instance, the
number of beds), there is a fair degree of
variation in the data from different sources.
We have attempted to construct these
variables with the best available sources
overall. However, it is possible that some
individual hospitals are placed in the wrong
category.
Using cases from the March 2017 update of
the FY 2016 MedPAR file, we simulated
payments under the capital IPPS for FY 2017
and payments for FY 2018 for a comparison
of total payments per case. Any short-term,
acute care hospitals not paid under the
general IPPS (for example, hospitals in
Maryland) are excluded from the
simulations.
The methodology for determining a capital
IPPS payment is set forth at § 412.312. The
basic methodology for calculating the capital
IPPS payments in FY 2018 is as follows:
(Standard Federal Rate) × (DRG weight) ×
(GAF) × (COLA for hospitals located in
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Alaska and Hawaii) × (1 + DSH Adjustment
Factor + IME adjustment factor, if
applicable).
In addition to the other adjustments,
hospitals may receive outlier payments for
those cases that qualify under the threshold
established for each fiscal year. We modeled
payments for each hospital by multiplying
the capital Federal rate by the GAF and the
hospital’s case-mix. We then added estimated
payments for indirect medical education,
disproportionate share, and outliers, if
applicable. For purposes of this impact
analysis, the model includes the following
assumptions:
• We estimate that the Medicare case-mix
index will increase by 0.5 percent in both
FYs 2017 and 2018.
• We estimate that Medicare discharges
will be approximately 11.0 million in FY
2017 and 11.1 million in FY 2018.
• The capital Federal rate was updated
beginning in FY 1996 by an analytical
framework that considers changes in the
prices associated with capital-related costs
and adjustments to account for forecast error,
changes in the case-mix index, allowable
changes in intensity, and other factors. As
discussed in section III.A.1.a. of the
Addendum to this rule, the update is 1.3
percent for FY 2018.
• In addition to the FY 2018 update factor,
the FY 2018 capital Federal rate was
calculated based on a GAF/DRG budget
neutrality adjustment factor of 0.9986, an
outlier adjustment factor of 0.9484, and an
adjustment to remove the one-time
prospective adjustment of 1.006 made in FY
2017 to address the effect of the 0.2 percent
reduction to the national capital Federal rates
in effect for FY 2014, FY 2015, and FY 2016
relating to the 2-midnight policy. The 2midnight adjustment that was finalized in the
FY 2017 IPPS/LTCH PPS final rule (81 FR
57294) is discussed in section V.C. of the
preamble of this final rule as it relates to the
capital Federal rate. As also discussed in
section V.C. of the preamble of this final rule,
we are not making an additional MS–DRG
documentation and coding adjustment to the
capital IPPS Federal rate for FY 2018.
2. Results
We used the actuarial model previously
described in section I.I. of Appendix A of this
final rule to estimate the potential impact of
our changes for FY 2018 on total capital
payments per case, using a universe of 3,292
hospitals. As previously described, the
individual hospital payment parameters are
taken from the best available data, including
the March 2017 update of the FY 2016
MedPAR file, the March 2017 update to the
PSF, and the most recent cost report data
from the March 2017 update of HCRIS. In
Table III, we present a comparison of
estimated total payments per case for FY
2017 and estimated total payments per case
for FY 2018 based on the FY 2018 payment
policies. Column 2 shows estimates of
payments per case under our model for FY
2017. Column 3 shows estimates of payments
per case under our model for FY 2018.
Column 4 shows the total percentage change
in payments from FY 2017 to FY 2018. The
change represented in Column 4 includes the
1.3 percent update to the capital Federal rate
and other changes in the adjustments to the
capital Federal rate. The comparisons are
provided by: (1) Geographic location; (2)
region; and (3) payment classification.
The simulation results show that, on
average, capital payments per case in FY
2018 are expected to increase as compared to
capital payments per case in FY 2017. This
expected increase overall is due to the
approximately 1.3 percent update to the
capital Federal rate for FY 2018, as well as
the outlier adjustment of 0.9484 which is a
1.04 percent change from the FY 2017 outlier
adjustment of 0.9386. The change in the
outlier adjustment is expected to increase
capital payments per case for most hospitals
to a lesser or greater extent. (For a discussion
of the determination of the capital Federal
rate and adjustments, we refer readers to
section III.A. of the Addendum to this final
rule.) Hospitals within both rural and urban
regions may experience an increase or a
decrease in capital payments per case due to
changes in the GAFs. These regional effects
of the changes to the GAFs on capital
payments are consistent with the projected
changes in payments due to changes in the
wage index (and policies affecting the wage
index) as shown in Table I in section I.G. of
this Appendix A.
The net impact of these changes is an
estimated 2.5 percent change in capital
payments per case from FY 2017 to FY 2018
for all hospitals (as shown in Table III).
The geographic comparison shows that, on
average, most hospitals in all classifications
(urban and rural) will experience an increase
in capital IPPS payments per case in FY 2018
as compared to FY 2017. Capital IPPS
payments per case for hospitals in large
urban areas as well as hospitals in rural
areas, would increase by an estimated 2.9
percent, from FY 2017 to FY 2018. Capital
IPPS payments per case for other urban
hospitals are estimated to increase 2.0
percent.
The comparisons by region show that the
estimated increases in capital payments per
case from FY 2017 to FY 2018 in urban areas
range from a 3.7 percent increase for the West
South Central urban region to a 0.8 percent
increase for the Mountain urban region. For
rural regions, the New England rural region
is projected to experience the largest increase
in capital IPPS payments per case of 5.2
percent, while the South Atlantic rural region
is projected to experience an increase in
capital IPPS payments per case of 1.9
percent.
Hospitals of all types of ownership (that is,
voluntary hospitals, government hospitals,
and proprietary hospitals) are expected to
experience an increase in capital payments
per case from FY 2017 to FY 2018. The
increase in capital payments for voluntary
hospitals is estimated to be 2.3 percent.
Government hospitals and proprietary
hospitals, are expected to experience an
increase in capital IPPS payments of 3.2
percent.
Section 1886(d)(10) of the Act established
the MGCRB. Hospitals may apply for
reclassification for purposes of the wage
index for FY 2018. Reclassification for wage
index purposes also affects the GAFs because
that factor is constructed from the hospital
wage index. To present the effects of the
hospitals being reclassified as of the
publication of this rule for FY 2018, we show
the average capital payments per case for
reclassified hospitals for FY 2018. Urban
reclassified hospitals are expected to
experience an increase in capital payments of
1.6 percent; urban nonreclassified hospitals
are expected to experience an increase in
capital payments of 2.9 percent. The
estimated percentage increase for rural
reclassified hospitals as well as for rural
nonreclassified hospitals is 2.8 percent.
Hospitals reclassified under section 401 are
among the few groups of hospitals not
expected to experience an increase in capital
payments—it is expected that these hospitals
would experience a decrease in capital
payments of 1.6 percent, while capital
payments for other reclassified hospitals are
expected to increase an estimated 6.6
percent.
TABLE III—COMPARISON OF TOTAL PAYMENTS PER CASE
[FY 2017 payments compared to FY 2018 payments]
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Number of
hospitals
By Geographic Location:
All hospitals ..............................................................................................
Large urban areas (populations over 1 million) .......................................
Other urban areas (populations of 1 million of fewer) .............................
Rural areas ...............................................................................................
Urban hospitals .........................................................................................
0–99 beds ..........................................................................................
100–199 beds ....................................................................................
200–299 beds ....................................................................................
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Average
FY 2017
payments/case
Average
FY 2018
payments/case
920
1,007
896
625
953
768
825
877
943
1,036
913
644
977
798
850
897
3,292
1,340
1,152
800
2,492
648
763
441
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2.5
2.9
2.0
2.9
2.5
3.9
3.0
2.2
Federal Register / Vol. 82, No. 155 / Monday, August 14, 2017 / Rules and Regulations
38573
TABLE III—COMPARISON OF TOTAL PAYMENTS PER CASE—Continued
[FY 2017 payments compared to FY 2018 payments]
Average
FY 2017
payments/case
Average
FY 2018
payments/case
426
214
800
318
282
117
44
39
965
1,142
625
523
584
625
663
749
988
1,168
644
544
599
642
687
771
2.4
2.3
2.9
3.9
2.5
2.7
3.6
2.9
2,492
114
315
404
385
147
160
378
162
375
52
800
20
53
125
115
154
97
154
58
24
953
1,038
1,054
849
918
800
933
863
1,005
1,209
437
625
860
603
584
645
574
667
555
695
805
977
1,056
1,074
869
941
815
964
896
1,013
1,249
451
644
905
616
595
661
591
690
574
716
836
2.5
1.8
1.9
2.3
2.5
1.8
3.3
3.7
0.8
3.3
3.1
2.9
5.2
2.2
1.9
2.5
3.0
3.4
3.4
3.1
3.7
3,292
1,354
1,019
919
920
1,005
883
768
943
1,035
908
771
2.5
2.9
2.9
0.3
2,204
839
249
779
890
1,283
802
910
1,315
2.9
2.3
2.5
1,543
370
975
697
1,003
727
2.9
4.2
257
293
622
833
632
834
1.6
0.1
34
244
820
511
791
522
¥3.5
2.2
863
92
1,050
368
1,043
921
823
832
1,073
937
847
863
2.8
1.8
3.0
3.7
2,580
263
316
131
946
861
716
763
973
862
743
782
2.8
0.2
3.7
2.5
590
1,858
268
485
166
41
948
956
660
580
937
604
964
985
679
596
922
644
1.6
2.9
2.8
2.8
¥1.6
6.6
1,914
938
959
2.3
sradovich on DSK3GMQ082PROD with RULES2
Number of
hospitals
300–499 beds ....................................................................................
500 or more beds ..............................................................................
Rural hospitals ..........................................................................................
0–49 beds ..........................................................................................
50–99 beds ........................................................................................
100–149 beds ....................................................................................
150–199 beds ....................................................................................
200 or more beds ..............................................................................
By Region:
Urban by Region ......................................................................................
New England .....................................................................................
Middle Atlantic ...................................................................................
South Atlantic ....................................................................................
East North Central .............................................................................
East South Central ............................................................................
West North Central ............................................................................
West South Central ...........................................................................
Mountain ............................................................................................
Pacific ................................................................................................
Puerto Rico ........................................................................................
Rural by Region ........................................................................................
New England .....................................................................................
Middle Atlantic ...................................................................................
South Atlantic ....................................................................................
East North Central .............................................................................
East South Central ............................................................................
West North Central ............................................................................
West South Central ...........................................................................
Mountain ............................................................................................
Pacific ................................................................................................
By Payment Classification:
All hospitals ..............................................................................................
Large urban areas (populations over 1 million) .......................................
Other urban areas (populations of 1 million of fewer) .............................
Rural areas ...............................................................................................
Teaching Status:
Non-teaching ............................................................................................
Fewer than 100 Residents .......................................................................
100 or more Residents .............................................................................
Urban DSH:
100 or more beds .....................................................................................
Less than 100 beds ..................................................................................
Rural DSH:
Sole Community (SCH/EACH) .................................................................
Referral Center (RRC/EACH) ...................................................................
Other Rural:
100 or more beds .....................................................................................
Less than 100 beds ..................................................................................
Urban teaching and DSH:
Both teaching and DSH ............................................................................
Teaching and no DSH ..............................................................................
No teaching and DSH ..............................................................................
No teaching and no DSH .........................................................................
Rural Hospital Types:
Nonspecial status hospitals ......................................................................
RRC/EACH ...............................................................................................
SCH/EACH ...............................................................................................
SCH, RRC and EACH ..............................................................................
Hospitals Reclassified by the Medicare Geographic Classification Review
Board:
FY2018 Reclassifications:.
All Urban Reclassified .......................................................................
All Urban Non-Reclassified ...............................................................
All Rural Reclassified ........................................................................
All Rural Non-Reclassified .................................................................
All Section 401 Reclassified Hospitals .....................................................
Other Reclassified Hospitals (Section 1886(d)(8)(B)) ..............................
Type of Ownership:
Voluntary ...................................................................................................
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TABLE III—COMPARISON OF TOTAL PAYMENTS PER CASE—Continued
[FY 2017 payments compared to FY 2018 payments]
Average
FY 2017
payments/case
Average
FY 2018
payments/case
863
513
823
952
850
982
3.2
3.2
554
2,149
485
103
1,072
921
754
589
1,100
944
774
656
2.6
2.5
2.7
11.4
Number of
hospitals
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Proprietary .............................................................................................
Government ..........................................................................................
Medicare Utilization as a Percent of Inpatient Days:
0–25 ..........................................................................................................
25–50 ........................................................................................................
50–65 ........................................................................................................
Over 65 .....................................................................................................
J. Effects of Payment Rate Changes and
Policy Changes Under the LTCH PPS
1. Introduction and General Considerations
In section VIII. of the preamble of this final
rule and section V. of the Addendum to this
final rule, we set forth the annual update to
the payment rates for the LTCH PPS for FY
2018. In the preamble of this final rule, we
specify the statutory authority for the
provisions that are presented, identify the
proposed and finalized policies, and present
rationales for our decisions as well as
alternatives that were considered. In this
section of Appendix A to this final rule, we
discuss the impact of the changes to the
payment rate, factors, and other payment rate
policies related to the LTCH PPS that are
presented in the preamble of this final rule
in terms of their estimated fiscal impact on
the Medicare budget and on LTCHs.
There are 415 LTCHs included in this
impacts analysis. We note that, although
there are currently approximately 428
LTCHs, for purposes of this impact analysis,
we excluded the data of all-inclusive rate
providers consistent with the development of
the FY 2018 MS–LTC–DRG relative weights
(discussed in section VIII.B.3.c. of the
preamble of this final rule. Moreover, in the
claims data use for this final rule, two of
these 415 LTCHs only have claims for site
neutral payment rate cases and are thus not
included in our impact analysis for LTCH
PPS standard Federal payment rate cases.) In
the impact analysis, we used the payment
rate, factors, and policies presented in this
final rule, which include the rolling end to
transition to the site neutral payment rate
required by section 1886(m)(6)(A) of the Act
(as described below), the 1.0 percent annual
update to the LTCH PPS standard Federal
payment rate required by section 411 of Pub.
L. 114–10, the update to the MS–LTC–DRG
classifications and relative weights, the
update to the wage index values and laborrelated share, the change to the SSO payment
methodology (discussed in VIII.E. of the
preamble of this final rule), our finalized
policy to adopt a 1-year regulatory delay of
the full implementation of the 25-percent
threshold policy for FY 2018, and our
finalized policies to implement certain
provisions of the 21st Century Cures Act, and
the best available claims and CCR data to
estimate the change in payments for FY 2018.
Under the dual rate LTCH PPS payment
structure, payment for LTCH discharges that
meet the criteria for exclusion from the site
neutral payment rate (that is, LTCH PPS
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standard Federal payment rate cases) is based
on the LTCH PPS standard Federal payment
rate. Consistent with the statute, the site
neutral payment rate is the lower of the IPPS
comparable per diem amount as determined
under § 412.529(d)(4), including any
applicable outlier payments as specified in
§ 412.525(a); or 100 percent of the estimated
cost of the case as determined under existing
§ 412.529(d)(2). In addition, there are two
separate HCO targets—one for LTCH PPS
standard Federal payment rate cases and one
for site neutral payment rate cases. The
statute also establishes a transitional
payment method for cases that are paid the
site neutral payment rate for LTCH
discharges occurring in cost reporting
periods beginning during FY 2016 and FY
2017. For FY 2018, the applicability of this
transitional payment method for site neutral
payment rate cases is dependent upon both
the discharge date and the start date of the
LTCH’s FY 2018 cost reporting period.
Specifically, the transitional payment
method only applies to those site neutral
payment rate cases that occur in cost
reporting periods that begin before October 1,
2017. The transitional payment amount for
site neutral payment rate cases is a blended
payment rate, which is calculated as 50
percent of the applicable site neutral
payment rate amount for the discharge as
determined under § 412.522(c)(1) and 50
percent of the applicable LTCH PPS standard
Federal payment rate for the discharge
determined under § 412.523, while site
neutral payment rate cases in cost reporting
periods beginning on or after October 1, 2017
are paid the site neutral payment rate amount
determined under § 412.522(c)(1).
Comment: Several commenters requested
that we extend the transition period to the
site neutral payment rate under the LTCH
PPS’ dual payment rate structure.
Response: Under Section
1886(m)(6)(B)(i)(II) of the Act, we are
required to pay for discharges that do not to
meet the statutory criteria for exclusion from
the site neutral payment rate at the site
neutral payment rate for discharges in cost
reporting periods beginning in FY 2018 or
later. The statute only provides for payments
at the blended payment rate for discharges
that do not to meet the statutory criteria for
exclusion from the site neutral payment rate
for those discharges that occur in cost
reporting periods beginning during FY 2016
or FY 2017. Therefore, under Section
1886(m)(6)(B)(i)(II) of the Act, we lack the
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statutory authority to do as these commenters
request.
Comment: Several commenters objected to
our expectation that the site neutral payment
rate would not affect access to or quality of
care for patients based on what they assert
are incorrect actuarial assumptions. In
support of this objection, some commenters
analyzed FY 2016 claims data which they
believe shows that site neutral payment rate
cases have not matched our actuarial
assumptions that the costs and resource use
for cases paid at the site neutral payment rate
will likely mirror the costs and resource use
for IPPS cases assigned to the same MS–DRG.
These commenters believe CMS’ statements
could mislead LTCHs and Medicare
beneficiaries about the projected impact of
the site neutral payment rate on access to or
quality of care.
Response: While we understand and share
commenters’ concerns about access to and
quality of care for Medicare beneficiaries, we
disagree that our stated expectation that the
site neutral payment rate will not affect these
is incorrect or misleading. To the extent that
the data from FY 2016 appears to rebut our
actuarial assumptions on the costs and
resource of site neutral payment rate cases,
we remind commenters that given the rolling
nature of the start of the transition to the site
neutral payment rate (discharges in cost
reporting periods beginning on or after
October 1, 2015), many LTCH claims from FY
2016 were not subject to the site neutral
payment rate at all as many LTCHs did not
begin their FY 2016 cost reporting period
until the fourth quarter of that fiscal year. In
addition, no LTCH is fully subject to the site
neutral payment rate until its cost reporting
period beginning in FY 2018 due to the 2year transition period provided by the statute
(meaning that all claims which were subject
to the site neutral payment rate in FY 2016
were paid under the blended payment rate
which included a payment based on 50
percent of the LTCH PPS standard Federal
payment rate). Therefore, the analysis
presented by commenters, based on FY 2016
data, does not invalidate our assumptions
about the costs and resource use for site
neutral payment rate cases as the FY 2016
claims appear to not yet reflect the expected
change in cost and resources once the
payment for site neutral payment rate cases
is fully based on the site neutral payment
rate. We will continue to monitor the data
and review the assumptions as appropriate.
However, we continue to believe that the
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assumptions underlying our conclusion that
the site neutral payment system will not
negatively impact access to or quality of care
are valid, as is the conclusion. As
demonstrated in areas where there is little or
no LTCH presence, general short-term acute
care hospitals are effectively providing
treatment for the same types of patients that
are treated in LTCHs in areas where there is
one or more LTCH present.
Based on the best available data for the 415
LTCHs in our database that were considered
in the analyses used for this final rule, we
estimate that overall LTCH PPS payments in
FY 2018 will decrease by approximately 4.2
percent (or approximately $195 million)
based on the rates and factors presented in
section VIII. of the preamble and section V.
of the Addendum to this final rule. (We note
that this estimate does not reflect our
finalized policy to adopt a 1-year regulatory
delay of the full implementation of the 25percent threshold policy for FY 2018 and,
with the exception of changes to the HCO
payment policy, does not reflect our finalized
policies regarding the implementation of
certain provisions of the 21st Century Cures
Act. As discussed in greater detail below, our
actuaries estimate these finalized policies
will increase spending by approximately $85
million in FY 2018.) This projection takes
into account estimated payments for LTCH
cases in our database that met or would have
met the patient-level criteria and been paid
the LTCH PPS standard Federal payment rate
if those criteria had been in effect at the time
of the discharge, and estimated payments for
LTCH cases that did not meet or would not
have met the patient-level criteria and been
paid under the site neutral payment rate if
that rate had been in effect at the time of the
discharge, as described in the following
paragraph.
The statutory transitional payment method
for cases that are paid the site neutral
payment rate for LTCH discharges occurring
in cost reporting periods beginning during
FY 2016 or FY 2017 uses a blended payment
rate, which is determined as 50 percent of the
site neutral payment rate amount for the
discharge and 50 percent of the standard
Federal prospective payment rate amount for
the discharge (§ 412.522(c)(3)). The
transitional blended payment rate uses the
same blend percentages (that is, 50 percent)
for both years of the 2-year transition period.
Therefore, when estimating FY 2017 LTCH
PPS payments for site neutral payment rate
cases for this impact analysis, the transitional
blended payment rate was applied to all such
cases because all discharges in FY 2017 are
either in the hospital’s cost reporting period
that began during FY 2016 or in the
hospital’s cost reporting period that will
begin during FY 2017. However, when
estimating FY 2018 LTCH PPS payments for
site neutral payment rate cases for this
impact analysis, because the statute specifies
that the site neutral payment rate effective
date (and 2-year transitional period) for a
given LTCH is based on the date that LTCH’s
cost reporting period begins during FY 2018,
we included an adjustment to account for
this rolling effective date, consistent with the
general approach used for the LTCH PPS
impact analysis presented in the FY 2016
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IPPS/LTCH PPS final rule (80 FR 49831).
This approach accounts for the fact that site
neutral payment rate cases in FY 2018 that
are in a LTCH’s cost reporting period that
begin before October 1, 2017 continue to be
paid under the transitional payment method
until the start of the LTCH’s first cost
reporting period beginning on or after
October 1, 2017. Site neutral payment rate
cases in a LTCH’s cost reporting period
beginning on or after October 1, 2017 will no
longer be paid under the transitional
payment method and will instead be paid the
site neutral payment rate amount as
determined by § 412.522(c)(1).
For purposes of this impact analysis, to
estimate total FY 2018 LTCH PPS payments
for site neutral payment rate cases, we used
the same general approach as was used in the
FY 2016 IPPS/LTCH PPS final rule with
modifications to account for the rolling end
date to the transitional site neutral payment
rate in FY 2018 instead of the rolling
effective date for implementation of the
transitional site neutral payment rate in FY
2016. In summary, under this approach, we
grouped LTCHs based on the quarter their
cost reporting periods will begin during FY
2018. For example, LTCHs with cost
reporting periods that begin during October
through December 2017 begin during the first
quarter of FY 2018. For LTCHs grouped in
each quarter of FY 2018, we modeled those
LTCHs’ estimated FY 2018 site neutral
payment rate payments under the transitional
blended payment rate based on the quarter in
which the LTCHs in each group would
continue to be paid the transitional payment
method for the site neutral payment rate
cases.
For purposes of this estimate, then, we
assume the cost reporting period is the same
for all LTCHs in each of the quarterly groups
and that this cost reporting period begins on
the first day of that quarter. (For example, our
first group consists of 42 LTCHs whose cost
reporting period will begin in the first quarter
of FY 2018 so that, for purposes of this
estimate, we assume all 42 LTCHs will begin
their FY 2018 cost reporting period on
October 1, 2017.) Second, we estimated the
proportion of FY 2018 site neutral payment
rate cases in each of the quarterly groups, and
we then assume this proportion is applicable
for all four quarters of FY 2018. (For
example, as discussed in more detail below,
we estimate the first quarter group will
discharge 6.6 percent of all FY 2018 site
neutral payment rate cases and therefore, we
estimate that group of LTCHs will discharge
6.6 percent of all FY 2018 site neutral
payment rate cases in each quarter of FY
2018.) Then, we modeled estimated FY 2018
payments on a quarterly basis under the
LTCH PPS standard Federal payment rate
based on the assumptions described above.
We continue to believe that this approach is
a reasonable means of taking the rolling
effective date into account when estimating
FY 2018 payments.
Based on the fiscal year begin date
information in the March 2017 update of the
PSF and the LTCH claims from the March
2017 update of the FY 2016 MedPAR files for
the 415 LTCHs in our database used for this
final rule, we found the following: 6.6
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38575
percent of site neutral payment rate cases are
from 42 LTCHs whose cost reporting periods
will begin during the first quarter of FY 2018;
21.2 percent of site neutral payment rate
cases are from 97 LTCHs whose cost
reporting periods will begin in the second
quarter of FY 2018; 10.2 percent of site
neutral payment rate cases are from 57
LTCHs whose cost reporting periods will
begin in the third quarter of FY 2018; and
62.1 percent of site neutral payment rate
cases are from 219 LTCHs whose cost
reporting periods will begin in the fourth
quarter of FY 2018. Therefore, the following
percentages apply in the approach described
above:
• First Quarter FY 2018: 6.6 percent of site
neutral payment rate cases (that is, the
percentage of discharges from LTCHs whose
FY 2018 cost reporting will begin in the first
quarter of FY 2018) are no longer eligible for
the transitional payment method, while the
remaining 93.4 percent of site neutral
payment rate discharges are eligible to be
paid under the transitional payment method.
• Second Quarter FY 2018: 27.7 percent of
site neutral payment rate second quarter
discharges (that is, the percentage of
discharges from LTCHs whose FY 2018 cost
reporting will begin in the first or second
quarter of FY 2018) are no longer eligible for
the transitional payment method while the
remaining 72.3 percent of site neutral
payment rate second quarter discharges are
eligible to be paid under the transitional
payment method.
• Third Quarter FY 2018: 37.9 percent of
site neutral payment rate third quarter
discharges (that is, the percentage of
discharges from LTCHs whose FY 2018 cost
reporting will begin in the first, second, or
third quarter of FY 2018) are no longer
eligible for the transitional payment method
while the remaining 62.1 percent of site
neutral payment rate third quarter discharges
are eligible to be paid under the transitional
payment method.
• Fourth Quarter FY 2018: 100.0 percent of
site neutral payment rate fourth quarter
discharges (that is, the percentage of
discharges from LTCHs whose FY 2018 cost
reporting will begin in the first, second,
third, or fourth quarter of FY 2018) are no
longer eligible for the transitional payment
method so that no site neutral payment rate
case discharges are eligible be paid under the
transitional payment method.
Based on the FY 2016 LTCH cases that
were used for the analyses in this final rule,
approximately 42 percent of those cases were
or would have been classified as site neutral
payment rate cases if the site neutral
payment rate had been in effect at the time
of the discharge (that is, 42 percent of LTCH
cases did not or would not have met the
patient-level criteria for exclusion from the
site neutral payment rate). Our Office of the
Actuary estimates that the percent of LTCH
PPS cases that will be paid at the site neutral
payment rate in FY 2018 will not change
significantly from the historical data. Taking
into account the transitional blended
payment rate and other changes that will
apply to the site neutral payment rate cases
in FY 2018, we estimate that aggregate LTCH
PPS payments for these site neutral payment
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rate cases will decrease by approximately 20
percent (or approximately $230 million).
Approximately 58 percent of LTCH cases
are expected to meet the patient-level criteria
for exclusion from the site neutral payment
rate in FY 2018, and will be paid based on
the LTCH PPS standard Federal payment rate
for the full year. We estimate that total LTCH
PPS payments for these LTCH PPS standard
Federal payment rate cases in FY 2018 will
increase approximately 1.0 percent (or
approximately $35 million). This estimated
increase in LTCH PPS payments for LTCH
PPS standard Federal payment rate cases in
FY 2018 is primarily due to the 1.0 percent
annual update to the LTCH PPS standard
Federal payment rate for FY 2018 required by
section 411 of Public Law 114–10 (discussed
in section V.A. of the Addendum to this final
rule). (We note that because our SSO
payment methodology discussed in VIII.E. of
the preamble of this final rule incorporates a
budget neutrality adjustment, this policy
does not increase or decrease aggregate
payments, and therefore does not factor into
the 1.0 percent increase in aggregate
payments.)
Based on the 415 LTCHs that were
represented in the FY 2016 LTCH cases that
were used for the analyses in this final rule
presented in this Appendix, we estimate that
aggregate FY 2018 LTCH PPS payments will
be approximately $4.418 billion, as compared
to estimated aggregate FY 2017 LTCH PPS
payments of approximately $4.612 billion,
resulting in an estimated overall decrease in
LTCH PPS payments of approximately $195
million. Furthermore, as discussed in more
detail below, our Office of the Actuary is
estimating an additional increase in aggregate
FY 2018 LTCH PPS payments of
approximately $85 million with $70 million
resulting from our finalized policy to delay
full implementation of the 25-percent
threshold policy for FY 2018 and another $15
million coming from our implementation of
certain provisions of the 21st Century Cures
Act. Therefore, in total, we project an overall
decrease in LTCH PPS payments of
approximately $110 million (¥$195 million
+ $85 million) or approximately a 2.4 percent
decrease in LTCH PPS payments in FY 2018
as compared to FY 2017. Because the
combined distributional effects and
estimated payment changes exceed $100
million, this final rule is a major economic
rule. We note that the estimated $195 million
decrease in LTCH PPS payments in FY 2018
(which includes estimated payments for
LTCH PPS standard Federal payment rate
cases and site neutral payment rate cases, but
does not include estimated payments for our
finalized policy to delay full implementation
of the 25-percent threshold policy for FY
2018 or the certain provisions of the 21st
Century Cures Act) does not reflect changes
in LTCH admissions or case-mix intensity,
which will also affect the overall payment
effects of the policies in this final rule.
The LTCH PPS standard Federal payment
rate for FY 2017 is $42,476.41. For FY 2018,
we are establishing an LTCH PPS standard
Federal payment rate of $41,430.56 which
reflects the 1.0 percent annual update to the
LTCH PPS standard Federal payment rate,
the area wage budget neutrality factor of
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1.0006434 to ensure that the changes in the
wage indexes and labor-related share do not
influence aggregate payments, and the budget
neutrality adjustment of 0.9651 to ensure that
our changes to the SSO payment
methodology (discussed in VIII.E. of the
preamble of this final rule) do not influence
aggregate payments. For LTCHs that fail to
submit data for the LTCH QRP, in accordance
with section 1886(m)(5)(C) of the Act, we are
establishing an LTCH PPS standard Federal
payment rate of $40,610.16. This reduced
LTCH PPS standard Federal payment rate
reflects the updates and factors previously
described as well as the required 2.0
percentage point reduction to the annual
update for failure to submit data under the
LTCH QRP. We note that the factors
previously described to determine the FY
2018 LTCH PPS standard Federal payment
rate are applied to the FY 2017 LTCH PPS
standard Federal rate set forth under
§ 412.523(c)(3)(xiv) (that is, $42,476.41).
Table IV shows the estimated impact for
LTCH PPS standard Federal payment rate
cases. The estimated change attributable
solely to the annual update of 1.0 percent to
the LTCH PPS standard Federal payment rate
is projected to result in an increase of 0.9
percent in payments per discharge for LTCH
PPS standard Federal payment rate cases
from FY 2017 to FY 2018, on average, for all
LTCHs (Column 6). In addition to the annual
update to the LTCH PPS standard Federal
payment rate for FY 2018, the estimated
increase of 0.9 percent shown in Column 6
of Table IV also includes estimated payments
for SSO cases that will be paid using special
methodologies that are not affected by the
annual update to the LTCH PPS standard
Federal payment rate (without incorporating
our SSO payment methodology as discussed
in discussed in VIII.E. of the preamble of this
final rule), as well as the reduction that is
applied to the annual update of LTCHs that
do not submit the required LTCH QRP data.
Therefore, for all hospital categories, the
projected increase in payments based on the
proposed LTCH PPS standard Federal
payment rate to LTCH PPS standard Federal
payment rate cases is somewhat less than the
1.0 percent annual update for FY 2018
required under section 411 of Pub. L. 114–
10.
For FY 2018, we are updating the wage
index values based on the most recent
available data, and we are continuing to use
labor market areas based on the OMB CBSA
delineations (as discussed in section V.B. of
the Addendum to this final rule). In addition,
we reduced the labor-related share from 66.5
percent to 66.2 percent under the LTCH PPS
for FY 2018, based on the most recent
available data on the relative importance of
the labor-related share of operating and
capital costs of the 2013-based LTCH market
basket. We also applied an area wage level
budget neutrality factor of 1.0006434 to
ensure that the changes to the wage data and
labor-related share do not result in a change
in estimated aggregate LTCH PPS payments
to LTCH PPS standard Federal payment rate
cases.
As we discuss in VIII.E. of the preamble of
this final rule, we are simplifying our SSO
payment methodology in order to alleviate
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potential incentives to improperly hold
patients beyond the SSO threshold. We also
note we do not believe aggregate payments to
LTCHs should increase or decrease as a result
of our policy, and thus, we applied a budget
neutrality factor of 0.9651 to ensure the
changes to the SSO payment methodology
does not result in a change in estimated
aggregate LTCH PPS payments to LTCH PPS
standard Federal payment rate cases.
We currently estimate total HCO payments
for LTCH PPS standard Federal payment rate
cases will decrease from FY 2017 to FY 2018.
Based on the FY 2016 LTCH cases that were
used for the analyses in this final rule, we
estimate that the FY 2017 HCO threshold of
$21,943 (as established in the FY 2017 IPPS/
LTCH PPS final rule) will result in estimated
HCO payments for LTCH PPS standard
Federal payment rate cases in FY 2017 that
are above the estimated 8 percent target.
Specifically, we currently estimate that HCO
payments for LTCH PPS standard Federal
payment rate cases will be approximately 8.1
percent of the estimated total LTCH PPS
standard Federal payment rate payments in
FY 2017. Combined with our estimate that
FY 2018 HCO payments for LTCH PPS
standard Federal payment rate cases will be
7.975 percent of estimated total LTCH PPS
standard Federal payment rate payments in
FY 2018 as required by section 15004 of the
21st Century Cures Act, this will result in the
estimated decrease in HCO payments of
approximately 0.1 percent between FY 2017
and FY 2018.
In calculating these estimated HCO
payments, we increased estimated costs by
our actuaries’ projected market basket
percentage increase factor. Without the
change to our SSO payment methodology,
this increase in estimated costs will result in
a projected increase in SSO payments in FY
2018 (because 100 percent of the estimated
cost of the case is an option in the SSO
payment formula (§ 412.529)). We estimate
that those increased SSO payments in FY
2018 will increase total payments for LTCH
PPS standard Federal payment rate cases by
approximately 0.2 percent.
Table IV shows the estimated impact of the
payment rate and policy changes on LTCH
PPS payments for LTCH PPS standard
Federal payment rate cases for FY 2018 by
comparing estimated FY 2017 LTCH PPS
payments to estimated FY 2018 LTCH PPS
payments. (As noted earlier, our analysis
does not reflect changes in LTCH admissions
or case-mix intensity.) The projected increase
in payments from FY 2017 to FY 2018 for
LTCH PPS standard Federal payment rate
cases of 1.0 percent is attributable to the
impacts of the change to the LTCH PPS
standard Federal payment rate (0.9 percent in
Column 6) and the effect of the estimated
decrease in HCO payments for LTCH PPS
standard Federal payment cases (0.1 percent),
and the estimated increase in payments for
SSO cases (0.2 percent) prior to incorporation
of our SSO payment methodology. We note
that these impacts do not include LTCH PPS
site neutral payment rate cases for the
reasons discussed in section I.J.4. of this
Appendix.
As we discuss in detail throughout this
final rule, based on the most recent available
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data, we believe that the provisions of this
final rule relating to the LTCH PPS, which
are projected to result in an overall decrease
in estimated aggregate LTCH PPS payments,
and the resulting LTCH PPS payment
amounts will result in appropriate Medicare
payments that are consistent with the statute.
2. Impact on Rural Hospitals
For purposes of section 1102(b) of the Act,
we define a small rural hospital as a hospital
that is located outside of an urban area and
has fewer than 100 beds. As shown in Table
IV, we are projecting a 0.1 percent decrease
in estimated payments for LTCH PPS
standard Federal payment rate cases. This
estimated impact is based on the FY 2016
data for the 21 rural LTCHs (out of 415
LTCHs) that were used for the impact
analyses shown in Table IV.
3. Impact of Other Changes Under the LTCH
PPS for FY 2018
Overall, our actuaries estimate the
provisions of the 21st Century Cures Act that
affect LTCH PPS payments will increase
aggregate spending to LTCHs by
approximately $15 million in FY 2018.
Specifically, they estimate the provisions in
section 15004, which provide for certain
exceptions to the moratorium on an increase
in beds in LTCH or LTCH satellite locations
(discussed in section VIII.H of the preamble
of this final rule) and a change in the
treatment of HCO payments to LTCH PPS
standard rate cases (discussed in section V.D.
of the Addendum of this final rule) to result
in an aggregate increase in Medicare
spending of $10 million. The remaining
estimated increase of $5 million in Medicare
spending comes from the temporary
exception to the site neutral payment rate for
certain spinal cord hospitals provided for
under section 15009 (as discussed in section
VIII.E. of the preamble of this final rule). Our
actuaries estimate the remaining provisions
of the 21st Century Cures Act applicable to
LTCHs (that is, sections 15007, 15008, and
15010, discussed in sections VIII.I., VIII.J.,
and VIII.F., respectively, of the preamble of
this final rule) will have negligible impact on
aggregate Medicare spending in FY 2018. (We
note that section 15006, which provides for
an additional delay in the full
implementation of the 25-percent threshold
policy (discussed in VIII.G. of the preamble
of this final rule), does not impact FY 2018
LTCH PPS payments.) In addition, our
actuaries estimate that our implementation of
a further delay the full implementation of the
25-percent threshold policy for FY 2018 will
increase aggregate Medicare spending by $70
million, up from our estimate of $50 million
in the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 20218). This increase is due to
updating the estimate for consistency with
the assumptions used to develop the
Midsession Review of the President’s Budget,
in addition to refinements in modeling LTCH
PPS payments under the new dual rate
payment system.
As discussed in section VIII.E. of the
preamble of this final rule, section 15009 of
the 21st Century Cures Act provides for a
temporary exception to the site neutral
payment rate for certain spinal cord specialty
hospitals for discharges occurring in cost
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reporting periods beginning during FY 2018
and FY 2019. To qualify for this temporary
exception, an LTCH must, among other
things, meet the ‘‘significant out-of-state
admissions criterion’’ at section
1886(m)(6)(F)(iii) of the Act. The statute
further provides authority for the Secretary to
implement the significant out-of-state
admissions criterion at section
1886(m)(6)(F)(iii) of the Act by program
instruction or otherwise, and exempts the
policy initiatives from any information
collection requirements under the Paperwork
Reduction Act. Although exempt from these
information collection requirements, we
estimate that each application will require
2.5 hours of work from each LTCH (to review
the billing addresses of the hospital’s
Medicare and non-Medicare inpatients). This
information will be collected on a one-time
basis. Based on the best information available
to CMS, we estimate that only two hospitals
meet the other requirements for this
exception. Therefore, we estimate that the
total number of hours associated with this
request will be 5 (2.5 hours per hospital for
2 hospitals). We estimate a current, average
salary of $29 per hour plus 100 percent for
fringe benefits ($58 per hour). Therefore, we
estimate the total costs associated with this
information collection will be $290 (5 hours
at $58 per hour).
4. Anticipated Effects of LTCH PPS Payment
Rate Changes and Policy Changes
a. Budgetary Impact
Section 123(a)(1) of the BBRA requires that
the PPS developed for LTCHs ‘‘maintain
budget neutrality.’’ We believe that the
statute’s mandate for budget neutrality
applies only to the first year of the
implementation of the LTCH PPS (that is, FY
2003). Therefore, in calculating the FY 2003
standard Federal payment rate under
§ 412.523(d)(2), we set total estimated
payments for FY 2003 under the LTCH PPS
so that estimated aggregate payments under
the LTCH PPS were estimated to equal the
amount that would have been paid if the
LTCH PPS had not been implemented.
Section 1886(m)(6)(A) of the Act
establishes a dual rate LTCH PPS payment
structure with two distinct payment rates for
LTCH discharges beginning in FY 2016.
Under this statutory change, LTCH
discharges that meet the patient-level criteria
for exclusion from the site neutral payment
rate (that is, LTCH PPS standard Federal
payment rate cases) are paid based on the
LTCH PPS standard Federal payment rate.
LTCH discharges paid at the site neutral
payment rate are generally paid the lower of
the IPPS comparable per diem amount,
including any applicable HCO payments, or
100 percent of the estimated cost of the case.
The statute also establishes a transitional
payment method for cases that are paid at the
site neutral payment rate for LTCH
discharges occurring in cost reporting
periods beginning during FY 2016 or FY
2017, under which the site neutral payment
rate cases are paid based on a blended
payment rate calculated as 50 percent of the
applicable site neutral payment rate amount
for the discharge and 50 percent of the
applicable LTCH PPS standard Federal
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38577
payment rate for the discharge. As discussed
in more detail in section I.J. of this
Appendix, some LTCH discharges in FY 2018
will still be eligible to be paid based on the
blended payment rate.
As discussed in section I.J. of this
Appendix, we project a decrease in aggregate
LTCH PPS payments in FY 2018 of
approximately $195 million. This estimated
decrease in payments reflects the projected
increase in payments to LTCH PPS standard
Federal payment rate cases of approximately
$35 million and the projected decrease in
payments to site neutral payment rate cases
of approximately $230 million under the
dual rate LTCH PPS payment rate structure
required by the statute beginning in FY 2016.
(As stated previously, this estimate does not
include the estimated increase in aggregate
FY 2018 LTCH PPS payments for our
finalized policy to delay full implementation
of the 25-percent threshold policy or certain
provisions of the 21st Century Cures Act,
which are discussed in section I.J.3. of this
Appendix.)
As discussed in section V.D. of the
Addendum of this final rule, our actuaries
project cost and resource changes for site
neutral payment rate cases due to the site
neutral payment rates required under the
statute. Specifically, our actuaries project
that the costs and resource use for cases paid
at the site neutral payment rate will likely be
lower, on average, than the costs and
resource use for cases paid at the LTCH PPS
standard Federal payment rate, and will
likely mirror the costs and resource use for
IPPS cases assigned to the same MS–DRG.
While we are able to incorporate this
projection at an aggregate level into our
payment modeling, because the historical
claims data that we are using in this final
rule to project estimated FY 2018 LTCH PPS
payments (that is, FY 2016 LTCH claims
data) do not reflect this actuarial projection,
we are unable to model the impact of the
change in LTCH PPS payments for site
neutral payment rate cases at the same level
of detail with which we are able to model the
impacts of the proposed changes to LTCH
PPS payments for LTCH PPS standard
Federal payment rate cases. Therefore, Table
IV only reflects changes in LTCH PPS
payments for LTCH PPS standard Federal
payment rate cases and, unless otherwise
noted, the remaining discussion in section
I.J.4. of this Appendix refers only to the
impact on LTCH PPS payments for LTCH
PPS standard Federal payment rate cases. In
the following section, we present our
provider impact analysis for the changes that
affect LTCH PPS payments for LTCH PPS
standard Federal payment rate cases.
b. Impact on Providers
Under the dual rate LTCH PPS payment
structure, there are two distinct payment
rates for LTCH discharges occurring in cost
reporting periods beginning on or after
October 1, 2016. Under that statute, any
discharges that occur on or after October 1,
2015, but prior to the start of the LTCH’s FY
2016 cost reporting period, will be paid at the
LTCH PPS standard Federal payment rate.
On or after the start of an LTCH’s FY 2017
cost reporting period, discharges are paid
based on whether or not the discharge meets
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the patient-level criteria to be excluded from
the site neutral payment rate. That is, LTCH
PPS standard Federal payment rate cases are
defined as LTCH discharges that meet the
patient-level criteria to be excluded from the
typically lower site neutral payment rate, and
site neutral payment rate cases are defined as
LTCH discharges that do not meet the
patient-level criteria and generally will be
paid the lower site neutral payment rate.
However, for discharges occurring in cost
reporting periods beginning in FY 2016 or
2017, the statute specifies that site neutral
payment rate cases are paid based on a
transitional payment method that is
calculated as 50 percent of the applicable site
neutral payment rate amount and 50 percent
of the applicable LTCH PPS standard Federal
payment rate (which, as discussed earlier,
will continue to apply to certain discharges
occurring during FY 2018).
The basic methodology for determining a
per discharge payment for LTCH PPS
standard Federal payment rate cases is
currently set forth under §§ 412.515 through
412.538. In addition to adjusting the LTCH
PPS standard Federal payment rate by the
MS–LTC–DRG relative weight, we make
adjustments to account for area wage levels
and SSOs (including our proposed SSO
payment methodology). LTCHs located in
Alaska and Hawaii also have their payments
adjusted by a COLA. Under our application
of the dual rate LTCH PPS payment structure,
the LTCH PPS standard Federal payment rate
is generally only used to determine payments
for LTCH PPS standard Federal payment rate
cases (that is, those LTCH PPS cases that
meet the statutory criteria to be excluded
from the site neutral payment rate). LTCH
discharges that do not meet the patient-level
criteria for exclusion are paid the site neutral
payment rate, which we are calculating as the
lower of the IPPS comparable per diem
amount as determined under § 412.529(d)(4),
including any applicable outlier payments, or
100 percent of the estimated cost of the case
as determined under existing § 412.529(d)(2).
In addition, when certain thresholds are met,
LTCHs also receive HCO payments for both
LTCH PPS standard Federal payment rate
cases and site neutral payment rate cases that
are paid at the IPPS comparable per diem
amount.
To understand the impact of the changes
to the LTCH PPS payments for LTCH PPS
standard Federal payment rate cases
presented in this final rule on different
categories of LTCHs for FY 2018, it is
necessary to estimate payments per discharge
for FY 2017 using the rates, factors, and the
policies established in the FY 2017 IPPS/
LTCH PPS final rule and estimate payments
per discharge for FY 2018 using the rates,
factors, and the policies in this FY 2018
IPPS/LTCH PPS final rule (as discussed in
section VIII. of the preamble of this final rule
and section V. of the Addendum to this final
rule). As discussed elsewhere in this final
rule, these estimates are based on the best
available LTCH claims data and other factors,
such as the application of inflation factors to
estimate costs for HCO cases in each year.
The resulting analyses can then be used to
compare how our policies applicable to
LTCH PPS standard Federal payment rate
cases affect different groups of LTCHs.
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For the following analysis, we group
hospitals based on characteristics provided
in the OSCAR data, cost report data in
HCRIS, and PSF data. Hospital groups
included the following:
• Location: large urban/other urban/rural.
• Participation date.
• Ownership control.
• Census region.
• Bed size.
c. Calculation of LTCH PPS Payments for
LTCH PPS Standard Federal Payment Rate
Cases
For purposes of this impact analysis, to
estimate the per discharge payment effects of
our finalized policies on payments for LTCH
PPS standard Federal payment rate cases, we
simulated FY 2017 and FY 2018 payments on
a case-by-case basis using historical LTCH
claims from the FY 2016 MedPAR files that
met or would have met the criteria to be paid
at the LTCH PPS standard Federal payment
rate if the statutory patient-level criteria had
been in effect at the time of discharge for all
cases in the FY 2016 MedPAR files. For
modeling FY 2017 LTCH PPS payments, we
used the FY 2017 standard Federal payment
rate of $42,476.41 (or $41,641.49 for LTCHs
that failed to submit quality data as required
under the requirements of the LTCH QRP).
Similarly, for modeling payments based on
the FY 2018 LTCH PPS standard Federal
payment rate, we used the FY 2018 standard
Federal payment rate of $41,430.56 (or
$40,610.16 for LTCHs that failed to submit
quality data as required under the
requirements of the LTCH QRP). In each case,
we applied the applicable adjustments for
area wage levels and the COLA for LTCHs
located in Alaska and Hawaii. Specifically,
for modeling FY 2017 LTCH PPS payments,
we used the current FY 2017 labor-related
share (66.5 percent); the wage index values
established in the Tables 12A and 12B listed
in the Addendum to the FY 2017 IPPS/LTCH
PPS final rule (which are available via the
Internet on the CMS Web site); the FY 2017
HCO fixed-loss amount for LTCH PPS
standard Federal payment rate cases of
$21,943 (as discussed in section V.D. of the
Addendum to that final rule) and the FY
2017 COLA factors (shown in the table in
section V.C. of the Addendum to that final
rule) to adjust the FY 2017 nonlabor-related
share (33.5 percent) for LTCHs located in
Alaska and Hawaii. Similarly, for modeling
FY 2018 LTCH PPS payments, we used the
FY 2018 LTCH PPS labor-related share (66.2
percent), the FY 2018 wage index values
from Tables 12A and 12B listed in section VI.
of the Addendum to this final rule (which are
available via the Internet on the CMS Web
site), the FY 2018 fixed-loss amount for
LTCH PPS standard Federal payment rate
cases of $27,382 (as discussed in section
V.D.3. of the Addendum to this final rule),
and the FY 2018 COLA factors (shown in the
table in section V.C. of the Addendum to this
final rule) to adjust the FY 2018 nonlaborrelated share (33.8 percent) for LTCHs
located in Alaska and Hawaii.
As previously discussed, our impact
analysis reflects an estimated change in
payments for SSO cases (including our
changes to the SSO payment methodology),
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as well as an estimated decrease in HCO
payments for LTCH PPS standard Federal
payment rate cases (as described previously
in section I.J.1. of this Appendix). In
modeling payments for SSO cases prior to
accounting for our SSO payment
methodology and for HCO cases for LTCH
PPS standard Federal payment rate cases, we
applied an inflation factor of 5.5 percent
(determined by the Office of the Actuary) to
update the 2016 costs of each case.
The impacts that follow reflect the
estimated ‘‘losses’’ or ‘‘gains’’ among the
various classifications of LTCHs from FY
2017 to FY 2018 based on the payment rates
and policy changes applicable to LTCH PPS
standard Federal payment rate cases
presented in this final rule. Table IV
illustrates the estimated aggregate impact of
the change in LTCH PPS payments for LTCH
PPS standard Federal payment rate cases
among various classifications of LTCHs. (As
discussed previously, these impacts do not
include LTCH PPS site neutral payment rate
cases.)
• The first column, LTCH Classification,
identifies the type of LTCH.
• The second column lists the number of
LTCHs of each classification type.
• The third column identifies the number
of LTCH cases expected to meet the LTCH
PPS standard Federal payment rate criteria.
• The fourth column shows the estimated
FY 2017 payment per discharge for LTCH
cases expected to meet the LTCH PPS
standard Federal payment rate criteria (as
described previously).
• The fifth column shows the estimated FY
2018 payment per discharge for LTCH cases
expected to meet the LTCH PPS standard
Federal payment rate criteria (as described
previously).
• The sixth column shows the percentage
change in estimated payments per discharge
for LTCH cases expected to meet the LTCH
PPS standard Federal payment rate criteria
from FY 2017 to FY 2018 due to the annual
update to the standard Federal rate (as
discussed in section V.A.2. of the Addendum
to this final rule).
• The seventh column shows the
percentage change in estimated payments per
discharge for LTCH PPS standard Federal
payment rate cases from FY 2017 to FY 2018
for changes to the area wage level adjustment
(that is, the wage indexes and the laborrelated share), including the application of
the area wage level budget neutrality factor
(as discussed in section V.B. of the
Addendum to this final rule).
• The eighth column shows the percentage
change in estimated payments per discharge
for LTCH PPS standard Federal payment rate
cases for changes resulting from our SSO
payment methodology and associated budget
neutral adjustment to the LTCH PPS standard
Federal payment rate (column 7).
• The ninth column shows the percentage
change in estimated payments per discharge
for LTCH PPS standard Federal payment rate
cases from FY 2017 (Column 4) to FY 2018
(Column 5) for all changes (and includes the
effect of estimated changes to HCO and SSO
payments).
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TABLE IV—IMPACT OF PAYMENT RATE AND POLICY CHANGES TO LTCH PPS PAYMENTS FOR STANDARD PAYMENT RATE
CASES FOR FY 2018
[Estimated FY 2017 payments compared to estimated FY 2018 payments]
Number of
LTCHS
(1)
(2)
Average FY
2018 LTCH
PPS
payment per
standard
payment
rate 1
Percent
change due
to change to
the annual
update to
the standard
federal
rate 2
Percent
change due
to changes
to area
wage
adjustment
with wage
budget
neutrality 3
Proposed
percent
change due
to change to
the short
stay outlier
payment
methodology
change 4
Percent
change due
to all
standard
payment
rate
changes 5
(4)
LTCH classification
Number of
LTCH PPS
standard
payment
rate cases
Average FY
2017 LTCH
PPS
payment per
standard
payment
rate
(5)
(6)
(7)
(8)
(9)
(3)
All Providers ......................................................
By Location:
Rural ...........................................................
Urban .........................................................
Large ...................................................
Other ...................................................
By Participation Date:
Before Oct. 1983 ........................................
Oct. 1983–Sept. 1993 ................................
Oct. 1993√Sept. 2002 ................................
After October 2002 ....................................
By Ownership Type:
Voluntary ....................................................
Proprietary ..................................................
Government ...............................................
By Region:
New England ..............................................
Middle Atlantic ............................................
South Atlantic .............................................
East North Central .....................................
East South Central .....................................
West North Central ....................................
West South Central ....................................
Mountain ....................................................
Pacific .........................................................
By Bed Size:
Beds: 0–24 .................................................
Beds: 25–49 ...............................................
Beds: 50–74 ...............................................
Beds: 75–124 .............................................
Beds: 125–199 ...........................................
Beds: 200+ .................................................
415
73,915
$46,637
$47,108
0.9
0.0
0.0
1.0
21
394
199
195
2,223
71,692
41,253
30,439
38,004
46,905
49,568
43,294
37,971
47,392
50,142
43,665
0.9
0.9
0.9
0.9
¥0.3
0.0
0.1
¥0.1
¥0.3
0.0
0.1
¥0.2
¥0.1
1.0
1.2
0.9
11
42
167
195
1,832
9,202
27,657
35,224
43,730
52,289
46,363
45,527
44,550
52,672
46,846
45,994
0.9
0.8
0.9
0.9
¥0.6
¥0.1
0.1
0.0
0.7
¥0.2
0.1
¥0.1
1.9
0.7
1.0
1.0
72
329
14
9,636
62,783
1,496
48,980
46,105
53,851
49,288
46,619
53,603
0.9
0.9
0.9
¥0.1
0.0
¥0.2
¥0.3
0.1
¥1.1
0.6
1.1
¥0.5
12
25
66
68
34
28
126
31
25
2,757
5,896
13,333
11,540
5,276
4,402
18,529
4,279
7,903
43,309
51,862
46,700
46,371
43,787
45,291
41,578
48,360
57,760
44,407
52,196
47,211
46,732
44,299
45,233
41,922
48,775
58,809
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.8
¥0.3
¥0.1
¥0.1
0.0
0.0
0.1
0.01
¥0.2
0.0
0.7
0.2
0.2
¥0.1
0.5
¥1.3
¥0.4
¥0.1
0.5
2.5
0.6
1.1
0.8
1.2
¥0.1
0.8
0.9
1.8
26
195
117
45
23
9
1,770
26,171
20,276
12,708
8,079
4,911
46,206
43,608
48,220
49,890
47,633
46,341
46,346
43,970
48,530
50,560
48,228
47,462
0.9
0.9
0.9
0.9
0.9
0.8
0.5
¥0.1
¥0.1
0.2
0.0
0.0
¥0.7
0.0
¥0.2
0.1
0.0
0.8
0.3
0.8
0.6
1.3
1.2
2.4
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1 Estimated FY 2018 LTCH PPS payments for LTCH PPS standard Federal payment rate criteria based on the payment rate and factor changes applicable to such
cases presented in the preamble of and the Addendum to this final rule.
2 Percent change in estimated payments per discharge for LTCH PPS standard Federal payment rate cases from FY 2017 to FY 2018 for the annual update to the
LTCH PPS standard Federal payment rate.
3 Percent change in estimated payments per discharge for LTCH PPS standard Federal payment rate cases from FY 2017 to FY 2018 for changes to the area
wage level adjustment under § 412.525(c) (as discussed in section V.B. of the Addendum to this final rule).
4 Percent change in estimated payments per discharge for LTCH PPS standard Federal payment rate cases from FY 2017 to FY 2018 for change to the SSO payment methodology.
5 Percent change in estimated payments per discharge for LTCH PPS standard Federal payment rate cases from FY 2017 (shown in Column 4) to FY 2018 (shown
in Column 5), including all of the changes to the rates and factors applicable to such cases presented in the preamble and the Addendum to this final rule. We note
that this column, which shows the percent change in estimated payments per discharge for all changes, does not equal the sum of the percent changes in estimated
payments per discharge for the annual update to the LTCH PPS standard Federal payment rate (Column 6) and the changes to the area wage level adjustment with
budget neutrality (Column 7) due to the effect of estimated changes in both estimated payments to SSO cases (prior to accounting for the change to the SSO payment methodology) and aggregate HCO payments for LTCH PPS standard Federal payment rate cases (as discussed in this impact analysis), as well as other interactive effects that cannot be isolated.
d. Results
Based on the FY 2016 LTCH cases (from
415 LTCHs) that were used for the analyses
in this final rule, we have prepared the
following summary of the impact (as shown
in Table IV) of the LTCH PPS payment rate
and policy changes for LTCH PPS standard
Federal payment rate cases presented in this
final rule. The impact analysis in Table IV
shows that estimated payments per discharge
for LTCH PPS standard Federal payment rate
cases are projected to increase 1.0 percent, on
average, for all LTCHs from FY 2017 to FY
2018 as a result of the payment rate and
policy changes applicable to LTCH PPS
standard Federal payment rate cases
presented in this final rule. This estimated
1.0 percent increase in LTCH PPS payments
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per discharge was determined by comparing
estimated FY 2018 LTCH PPS payments
(using the payment rates and factors
discussed in this final rule) to estimated FY
2017 LTCH PPS payments for LTCH
discharges which will be LTCH PPS standard
Federal payment rate cases if the dual rate
LTCH PPS payment structure was or had
been in effect at the time of the discharge (as
described in section I.J.4. of this Appendix).
As stated previously, we are updating the
LTCH PPS standard Federal payment rate for
FY 2018 by 1.0 percent as required by statute.
For LTCHs that fail to submit quality data
under the requirements of the LTCH QRP, as
required by section 1886(m)(5)(C) of the Act,
a 2.0 percentage point reduction is applied to
the annual update to the LTCH PPS standard
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Federal payment rate. Consistent with
§ 412.523(d)(4), we also are applying an area
wage level budget neutrality factor to the FY
2018 LTCH PPS standard Federal payment
rate of 1.0006434, based on the best available
data at this time, to ensure that any changes
to the area wage level adjustment (that is, the
annual update of the wage index values and
labor-related share) will not result in any
change (increase or decrease) in estimated
aggregate LTCH PPS standard Federal
payment rate payments. Finally, we are
making a budget neutrality adjustment of
0.9651 for our changes to the SSO payment
methodology (discussed in VIII.E.2.d. of the
preamble of this final rule). As we also
explained earlier in this section, for most
categories of LTCHs (as shown in Table IV,
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Column 6), the estimated payment increase
due to the 1.0 percent annual update to the
LTCH PPS standard Federal payment rate is
projected to result in approximately a 0.9
percent increase in estimated payments per
discharge for LTCH PPS standard Federal
payment rate cases for all LTCHs from FY
2017 to FY 2018. This is because our estimate
of the changes in payments due to the update
to the LTCH PPS standard Federal payment
rate also reflects estimated payments for SSO
cases that are paid using special
methodologies that are not affected by the
update to the LTCH PPS standard Federal
payment rate (prior to accounting for the
change to the SSO payment methodology).
Consequently, for certain hospital categories,
we estimate that payments to LTCH PPS
standard Federal payment rate cases may
increase by less than 1.0 percent due to the
annual update to the LTCH PPS standard
Federal payment rate for FY 2018.
(1) Location
Based on the most recent available data,
the vast majority of LTCHs are located in
urban areas. Only approximately 5 percent of
the LTCHs are identified as being located in
a rural area, and approximately 3 percent of
all LTCH PPS standard Federal payment rate
cases are expected to be treated in these rural
hospitals. The impact analysis presented in
Table IV shows that the overall average
percent increase in estimated payments per
discharge for LTCH PPS standard Federal
payment rate cases from FY 2017 to FY 2018
for all hospitals is 1.0 percent. However, for
rural LTCHs, the overall percent change for
LTCH PPS standard Federal payment rate
cases is estimated to be a 0.1 percent
decrease. This projected decrease is primarily
driven by a projected decrease resulting from
changes to the changes to the area wage
index adjustment. For urban LTCHs, we
estimate an increase of 1.0 percent from FY
2017 to FY 2018. Among the urban LTCHs,
large urban LTCHs are projected to
experience an increase of 1.2 percent in
estimated payments per discharge for LTCH
PPS standard Federal payment rate cases
from FY 2017 to FY 2018, and the remaining
urban LTCHs are projected to experience an
increase of 0.9 percent in estimated payments
per discharge for LTCH PPS standard Federal
payment rate cases from FY 2017 to FY 2018,
as shown in Table IV.
(2) Participation Date
LTCHs are grouped by participation date
into four categories: (1) Before October 1983;
(2) between October 1983 and September
1993; (3) between October 1993 and
September 2002; and (4) October 2002 and
after. Based on the most recent available data,
the categories of LTCHs with the largest
expected percentage of LTCH PPS standard
Federal payment rate cases (approximately
48 percent) are in LTCHs that began
participating in the Medicare program after
October 2002, and they are projected to
experience a 1.0 percent increase in
estimated payments per discharge for LTCH
PPS standard Federal payment rate cases
from FY 2017 to FY 2018, as shown in Table
IV.
Approximately 2.7 percent of LTCHs began
participating in the Medicare program before
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October 1983, and these LTCHs are projected
to experience an average percent increase of
1.9 percent in estimated payments per
discharge for LTCH PPS standard Federal
payment rate cases from FY 2017 to FY 2018,
as shown in Table IV with a large portion of
this increase among this small group of
LTCHs to be a projected 0.7 percent increase
resulting from our SSO payment
methodology. Approximately 10 percent of
LTCHs began participating in the Medicare
program between October 1983 and
September 1993, and these LTCHs are
projected to experience an increase of 0.7
percent in estimated payments for LTCH PPS
standard Federal payment rate cases from FY
2017 to FY 2018. LTCHs that began
participating in the Medicare program
between October 1993 and October 1, 2002,
which treat approximately 37 percent of all
LTCH PPS standard Federal payment rate
cases, are projected to experience a 1.0
percent increase in estimated payments from
FY 2017 to FY 2018.
(3) Ownership Control
LTCHs are grouped into four categories
based on ownership control type: voluntary,
proprietary, government and unknown.
Based on the most recent available data,
approximately 17 percent of LTCHs are
identified as voluntary (Table IV). The
majority (approximately 80 percent) of
LTCHs are identified as proprietary, while
government owned and operated LTCHs
represent approximately 3 percent of LTCHs.
Based on ownership type, voluntary LTCHs
are expected to experience a 0.6 percent
increase in payments to LTCH PPS standard
Federal payment rate cases, while proprietary
LTCHs are expected to experience an average
increase of 1.1 percent in payments to LTCH
PPS standard Federal payment rate cases.
Government owned and operated LTCHs,
meanwhile, are expected to experience a 0.5
percent decrease in payments to LTCH PPS
standard Federal payment rate cases from FY
2017 to FY 2018.
(4) Census Region
Estimated payments per discharge for
LTCH PPS standard Federal payment rate
cases for FY 2017 are projected to increase
across 8 of the 9 census regions. LTCHs
located in the West North Central region are
projected to experience a slight decrease of
0.1 percent, while LTCHs located in all other
regions are projected to experience an
increase in estimated payments per discharge
in comparison to FY 2017. Of the 9 census
regions, we project that the increase in
estimated payments per discharge to LTCH
PPS standard Federal payment rate cases will
have the largest positive impact on LTCHs in
the New England regions (2.5 percent, as
shown in Table IV), which is largely
attributable to changes to the SSO payment
methodology. In contrast, LTCHs located in
the Middle Atlantic region are projected to
experience the smallest increase in estimated
payments per discharge for LTCH PPS
standard Federal payment rate cases from FY
2017 to FY 2018 (0.6 percent).
(5) Bed Size
LTCHs are grouped into six categories
based on bed size: 0–24 beds; 25–49 beds;
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50–74 beds; 75–124 beds; 125–199 beds; and
greater than 200 beds. We project that LTCHs
with 0–24 beds will experience an increase
in payments for LTCH PPS standard Federal
payment rate cases of 0.3 percent, and LTCHs
with 25–49 beds will experience an increase
in payments for LTCH PPS standard Federal
payment rate cases of 0.8 percent. LTCHs
with 50–74 beds will experience an increase
in payments for LTCH PPS standard Federal
payment rate cases of 0.6 percent. We project
the largest increases in payments to occur in
LTCHs with at least 75 beds. In particular, we
project LTCHs with 75–124 beds will
experience an increase in payments for LTCH
PPS standard Federal payment rate cases of
1.3 percent while LTCHs with 125–199 beds
will experience an increase in payments for
LTCH PPS standard Federal payment rate
cases of 1.2 percent. Finally, LTCHs with 200
or more beds will experience the largest
increase in payments for LTCH PPS standard
Federal payment rate cases of 2.4 percent
mostly due to estimated increase in payments
from changes to our SSO payment
methodology.
4. Effect on the Medicare Program
As stated previously, we project that the
provisions of this final rule will result in an
increase in estimated aggregate LTCH PPS
payments to LTCH PPS standard Federal
payment rate cases in FY 2018 relative to FY
2017 of approximately 35 million (or
approximately 1.0 percent) for the 415
LTCHs in our database. Although, as stated
previously, the hospital-level impacts do not
include LTCH PPS site neutral payment rate
cases, we estimate that the provisions of this
final rule will result in a decrease in
estimated aggregate LTCH PPS payments to
site neutral payment rate cases in FY 2018
relative to FY 2017 of approximately $230
million (or approximately 20 percent) for the
415 LTCHs in our database. Therefore, we
project that the provisions of this final rule
will result in a decrease in estimated
aggregate LTCH PPS payments to all LTCH
cases in FY 2018 relative to FY 2017 of
approximately $195 million (or
approximately 4.2 percent) for the 415
LTCHs in our database. Furthermore, as
stated previously, our Office of the Actuary
estimates an additional estimated increase in
aggregate FY 2018 LTCH PPS payments of
approximately $85 million for our finalized
policy to delay full implementation of the 25percent threshold policy for FY 2018 and our
implementation of certain provisions of the
21st Century Cures Act. Therefore, in total,
we project an overall decrease in LTCH PPS
payments of approximately $110 million
($195 million decrease + $85 million
increase) or approximately a 2.4 percent
decrease in LTCH PPS payments in FY 2018
as compared to FY 2017.
5. Effect on Medicare Beneficiaries
Under the LTCH PPS, hospitals receive
payment based on the average resources
consumed by patients for each diagnosis. We
do not expect any changes in the quality of
care or access to services for Medicare
beneficiaries as a result of this final rule, but
we continue to expect that paying
prospectively for LTCH services will enhance
the efficiency of the Medicare program. As
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discussed above, we do not expect the
continued implementation of the site neutral
payment system to have a negative impact
access to or quality of care, as demonstrated
in areas where there is little or no LTCH
presence, general short-term acute care
hospitals are effectively providing treatment
for the same types of patients that are treated
in LTCHs.
K. Effects of Requirements for the Hospital
Inpatient Quality Reporting (IQR) Program
1. Background
In section IX.A. of the preambles of the FY
2018 IPPS/LTCH PPS proposed rule (82 FR
20031 through 20075) and this final rule, we
discuss our requirements for hospitals to
report quality data under the Hospital IQR
Program in order to receive the full annual
percentage increase for the FY 2020 payment
determination.
In this final rule, we are finalizing our
policies to: (1) modify the previously
finalized the electronic clinical quality
measure (eCQM) reporting requirements for
the FY 2019 and FY 2020 payment
determinations, such that hospitals submit
one, self-selected calendar quarter of data for
4 eCQMs; (2) update the eCQM certification
requirements for the FY 2019 and FY 2020
payment determinations; (3) modify the
previously finalized eCQM data validation
process, whereby hospitals selected for
eCQM data validation will be required to
submit a reduced number of cases for eCQM
data validation for the FY 2020 and FY 2021
payment determinations; (4) allow hospitals
to use an educational review process to
correct incorrect validation results for the
first three quarters of validation for chartabstracted measures beginning with the FY
2020 payment determination and for
subsequent years; (5) begin voluntary
reporting on the Hybrid Hospital-Wide 30Day Readmission (HWR) measure for the CY
2018 reporting period; (6) refine the Hospital
Consumer Assessment of Healthcare
Providers and Systems (HCAHPS) survey
measure to replace the questions on Pain
Management for the FY 2020 payment
determination and subsequent years; (7)
refine the Hospital 30-Day Mortality
Following Acute Ischemic Stroke
Hospitalization measure to include the use of
NIH Stroke Scale claims data for the FY 2023
payment determination and subsequent
years; and (8) update the terminology used to
refer to the Extraordinary Circumstances
Exceptions (ECE) policy for the FY 2020
payment determination and subsequent
years.
As further explained in section XIII.B.3. of
the preamble of this final rule, we believe
that there will be an overall decrease in
burden for hospitals due to the finalized
policies discussed above. We refer readers to
section XIII.B.3. of the preamble of this final
rule for a summary of our burden estimates.
2. Impact of the Updates to the eCQM
Reporting Requirements for the CY 2017
Reporting Period/FY 2019 and CY 2018
Reporting Period/FY 2020 Payment
Determinations
In the FY 2017 IPPS/LTCH PPS final rule,
we finalized policies to require hospitals to
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submit a full year (four quarters) of data (81
FR 57159) for at least eight eCQMs (81 FR
57157) for both the FY 2019 and FY 2020
payment determinations. In section IX.A.8. of
the preamble of this final rule, we are
finalizing modifications to the eCQM
reporting requirements we proposed in the
FY 2018 IPPS/LTCH PPS proposed rule, such
that, for the CY 2017 reporting period/FY
2019 payment determination and CY 2018
reporting period/FY 2020 payment
determination, hospitals must submit one,
self-selected, calendar quarter of data for 4
eCQMs. As discussed in section XIII.B.3.b. of
the preamble of this final rule, we believe the
reduced number of eCQMs required for the
CY 2017 and CY 2018 reporting periods will
result in a reduction of 15,400 hours (¥280
minutes per hospital per year/60 minutes per
hours × 3,300 hospitals) and $563,332
(15,400 hours × $36.58 per hour) for each of
the FY 2019 and FY 2020 payment
determinations.
3. Impact of the Modifications to the Existing
Data Validation Processes for the FY 2020
Payment Determination and Subsequent
Years
In section IX.A.11. of the preamble of this
final rule, we discuss our finalized policy to
modify the existing eCQM data validation
process for the Hospital IQR Program data
beginning with validation for the FY 2020
payment determination. First, we are
finalizing with modifications our proposal to
require hospitals selected for eCQM data
validation to submit eight cases per quarter
for the FY 2020 payment determination and
subsequent years.519 We are also finalizing
our proposals to: (1) Add additional
exclusion criteria to our hospital and case
selection process for eCQM data validation
for the FY 2020 payment determination and
subsequent years; and (2) extend our
previously finalized medical record
submission requirements the accuracy of
eCQM data submitted for validation will not
affect a hospital’s validation score for the FY
2021 payment determination and subsequent
years. As discussed in section XIII.B.3.d.(1)
of the preamble of this final rule, we estimate
our proposal to reduce the number of cases
submitted by hospitals submitted by
hospitals selected for eCQM data validation
will result in an annual burden reduction of
approximately 6,400 hours (8,533 hours
estimated in the FY 2017 IPPS/LTCH PPS
final rule ¥2,133 hours estimated in this
final rule) and $234,112 (6,400 hours ×
$36.58 per hour) across the 200 hospitals
selected for eCQM validation.
4. Impact of the Voluntary Reporting on the
Hybrid Hospital-Wide 30-Day Readmission
Measure for the CY 2018 Reporting Period
In section IX.A.7.b. of the preamble of this
final rule, we are finalizing our proposal that
519 We are finalizing this requirement in
conjunction with our finalized policy to require
hospitals to report one, self-selected quarter of data
for 4 eCQMs for each of the CY 2017 and CY 2018
eCQM reporting periods, as described above.
Accordingly, we are finalizing our modified policy
and will require the number of required case files
for validation will be 8 records (eight cases for one
quarter) for each of the FY 2020 and FY 2021
payment determinations.
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38581
hospitals may voluntarily submit the 13 core
clinical data elements and the 6 data
elements required for linking with claims
data for this measure using the same
submission process required for eCQM
reporting, specifically, that these data be
reported using QRDA I files submitted to the
CMS data receiving system. As discussed in
section XIII.B.3.e., we expect the burden
associated with voluntary reporting of this
measure to be approximately 67 hours (40
minutes per hospital/60 minutes per hour ×
100 hospitals = 67 hours) and $2,451 ($36.58
per hour × 67 hours annually) across up to
100 hospitals voluntarily participating in
reporting for the Hybrid HWR measure.
5. Summary of Effects
Historically, 100 hospitals, on average, that
participate in the Hospital IQR Program do
not receive the full annual percentage
increase in any fiscal year due to the
requirements of this program. We anticipate
that, because of the modified, reduced
requirements for eCQM reporting that we are
finalizing for the FY 2019 and FY 2020
payment determinations, the number of
hospitals not receiving the full annual
percentage increase will not substantially
increase due to this requirement of the
program. If the number of hospitals failing to
receive the full annual percentage increase
does increase because of our modified
requirements, we anticipate that, over the
long run, this number will decline as
hospitals gain more experience with these
requirements.
In implementing the Hospital IQR Program
and other quality reporting programs, we
have focused on measures that have high
impact and support CMS and HHS priorities
for improving the quality of care and value
for Medicare beneficiaries.
L. Effects of Requirements for the PPSExempt Cancer Hospital Quality Reporting
(PCHQR) Program
In section IX.B. of the preambles of the FY
2018 IPPS/LTCH PPS proposed rule (82 FR
20075 through 20086) and this final rule, we
discuss our policies for the quality data
reporting program for PPS-exempt cancer
hospitals (PCHs), which we refer to as the
PPS-Exempt Cancer Hospital Quality
Reporting (PCHQR) Program. The PCHQR
Program is authorized under section 1866(k)
of the Act, which was added by section 3005
of the Affordable Care Act. There is no
financial impact to PCH Medicare
reimbursement if a PCH does not submit
data.
In section IX.B.4. of the preamble of this
final rule, we are finalizing our proposals to
adopt four claims-based measures beginning
with the FY 2020 program: (1) Proportion of
Patients Who Died from Cancer Receiving
Chemotherapy in the Last 14 Days of Life
(NQF #0210); (2) Proportion of Patients Who
Died from Cancer Admitted to the ICU in the
Last 30 Days of Life (NQF #0213); (3)
Proportion of Patients Who Died from Cancer
Not Admitted to Hospice (NQF #0215); and
(4) Proportion of Patients Who Died from
Cancer Admitted to Hospice for Less Than
Three Days (NQF #0216)). In conjunction
with our finalized proposal in section
IX.B.3.b. of the preamble of this final rule to
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remove three existing chart-abstracted
measures beginning with the FY 2020
program—(1) Adjuvant Chemotherapy is
Considered or Administered Within 4
Months (120 Days) of Diagnosis to Patients
Under the Age of 80 with AJCC III (Lymph
Node Positive) Colon Cancer (PCH–01/NQF
#0223); (2) Combination Chemotherapy is
Considered or Administered Within 4
Months (120 Days) of Diagnosis for Women
Under 70 with AJCC T1c, or Stage II or III
Hormone Receptor Negative Breast Cancer
(PCH–02/NQF #0559); and (3) Adjuvant
Hormonal Therapy (PCH–03/NQF #0220)—
the PCHQR Program measure set will consist
of 18 measures for the FY 2020 program.
As further explained in section XIII.B.4. of
the preamble of this final rule, we anticipate
that these new requirements will reduce
overall burden on participating PCHs. In the
FY 2013 IPPS/LTCH PPS final rule (77 FR
53667), we estimated a burden of 30 minutes
for a PCH to perform chart abstraction of a
single patient record and submit it to CMS.
Using estimates from the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53667), we
estimate the total annual hourly burden for
each PCH for the collection and submission
of measure information and the training of
personnel for submitting quality measure
data applicable to one (1) chart-abstracted
measure is approximately 1,258.7 hours per
year, or 104.9 hours per month (1,258.7 hours
per year/12 months). We multiply this
number by three (3) to obtain our estimated
reduction in burden for collecting measure
information, submitting measure
information, and training personnel provided
by the finalized removal of the three
measures, which is approximately 3,776
hours per year for each PCH, or an average
reduction in burden of 315 hours per month
per PCH and a total of 41,536 hours across
all 11 PCHs. Our finalized removal of three
chart-abstracted measures will reduce the
burden associated with quality data reporting
on PCHs by reducing quality measure chart
abstraction by approximately 16,364 cases
across all 11 PCHs.
We do not anticipate any increase in
burden on the PCHs corresponding to our
finalized adoption of four claims-based
measures into the PCHQR Program beginning
with the FY 2020 program year. These
measures are claims-based and therefore do
not require facilities to report any additional
data. Because these measures do not require
facilities to submit any additional data, we
do not believe that there is any associated
burden with this finalized policy.
M. Effects of Requirements for the Long-Term
Care Hospital Quality Reporting Program
(LTCH QRP)
In section IX.C.1. of the preambles of the
FY 2018 IPPS/LTCH PPS proposed rule (82
FR 20086 through 20121) and this final rule,
we discuss the implementation of the LTCH
QRP. At the time that this analysis was
prepared, 41, or approximately 9.7 percent,
of 424 eligible LTCHs were determined to be
noncompliant and therefore received a 2
percentage point reduction to their FY 2017
annual payment update. We anticipate that
fewer LTCHs will receive the reduction for
FY 2018 as LTCHs become more familiar
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with the requirements as we believe that
continued trainings, as well as utilization of
new reports for LTCHs, will help LTCHs
comply with the LTCH QRP requirements.
Thus, we estimate that the proposals that we
are finalizing in this final rule will have a
negligible impact on overall LTCH payments
for FY 2018.
In section IX.C.7. of the preamble of this
final rule, we are finalizing our proposal to
replace the current pressure ulcer measure,
Percent of Residents or Patients with
Pressure Ulcers That Are New or Worsened
(Short Stay) (NQF #0678), with a new
modified version of the measure, Changes in
Skin Integrity Post-Acute Care: Pressure
Ulcer/Injury, beginning with the FY 2020
LTCH QRP. We are also finalizing our
proposals to adopt two additional measures:
Compliance with Spontaneous Breathing
Trial (SBT) by Day 2 of the LTCH Stay; and
Ventilator Liberation Rate, beginning with
the FY 2020 LTCH QRP. In addition, we are
finalizing our proposals that data for these
measures will be collected and reported
using the LTCH CARE Data Set (LTCH CARE
Data Set Version 4.00, which will be effective
July 1, 2018). For more information regarding
the LTCH CARE Data Set Version 4.00
implementation date, we refer readers to
section IX.C.11. of the preamble of this final
rule.
We also are finalizing our proposal to
remove the All-Cause Unplanned
Readmission Measure for 30 Days PostDischarge from LTCHs (NQF #2512). Because
LTCHs will still be required to report data on
this measure for payment purposes, we
believe that the removal of this measure will
not affect the burden estimate for the LTCH
QRP.
In addition, adoption of the pressure ulcer
measure, Change in Skin Integrity Post-Acute
Care: Pressure Ulcer Injury which will
replace the current pressure ulcer measure,
Percent of Residents or Patients with
Pressure Ulcers That Are New or Worsened
(Short Stay) (NQF #0678), will result in the
removal of some data elements related to
pressure ulcer assessment that we believe are
duplicative or no longer necessary. As a
result, the estimated burden and cost for
LTCHs to report the newly finalized measure
will be reduced from the burden and cost to
report the current measure.
We also are finalizing our proposals to
remove the program interruption items from
the LTCH CARE Data Set. Specifically, we
are finalizing our proposals to remove the
following items: A2500, Program
Interruption(s); A2510, Number of Program
Interruptions During This Stay in This
Facility; and A2525, Program Interruption
Dates, because we do not currently utilize
this information and do not have plans to
utilize this information for the LTCH QRP.
As a result, the estimated burden and cost for
LTCHs will be reduced.
In section IX.C.10. of the preamble of this
final rule, we are finalizing standardized
patient assessment data proposals with
respect to the Functional Status and Medical
Condition and Comorbidity categories. All of
the data elements are already included on the
LTCH CARE Data Set and therefore our
finalized policy to characterize those data
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elements as standardized patient assessment
data will not result in an additional reporting
burden for LTCHs.
We are not finalizing our proposals to
require LTCHs to report 25 new standardized
patient assessment data elements with
respect to LTCH admissions and 17 new
standardized patient assessment data
elements with respect to LTCH discharges.
This results in a burden reduction from what
we proposed. We refer readers to the FY 2018
IPPS/LTCH PPS proposed rule (82 FR 20225
through 20226), for a discussion of our
burden estimates for these proposals.
As described in section XIII.B.6. of the
preamble of this final rule, the 4.5-minute
increase in burden for the two finalized
ventilator weaning quality measures is offset
by the 3 minute reduction in burden for the
finalized pressure ulcer quality measure and
the 3.6 minute reduction in burden for the
program interruption items. This results in a
net reduction in burden of 2.1 minutes.
Overall, this results in a net decrease in cost
associated with the finalized changes to the
LTCH QRP, which we estimate to be reduced
by estimated at a reduction of $893.14 per
LTCH annually, or $380,480 for all LTCHs
annually.
For additional discussion of information
collection requirements related to our
finalized proposals, we refer readers to
section XIII.B.6 of the preamble of this final
rule. We received public comments about the
effects of requirements for the LTCH QRP,
which we summarize and respond to below.
Comment: Several commenters expressed
views regarding the burden imposed by the
proposed LTCH CARE Data Set Version 4.00.
One commenter commended CMS for
ensuring robust and accurate quality
reporting, but noted that the absence of EHRs
in the LTCH setting contributes to this
burden and requires extra staff to collect,
process, and transmit the necessary data.
Another commenter noted the importance of
assessing the value of new quality measures,
and ensuring that they are not prematurely
implemented.
Response: We always considers provider
burden, and we take this into account when
developing quality measures or standardized
patient assessment data elements for
inclusion into our quality reporting
programs. We assess the value of adopting
new quality measures into the LTCH QRP
and we consider overall clinical relevance
and usability to support clinical decisionmaking, care transitions, and resource
utilization.
In response to the commenter’s concern
regarding EHRs, while we support the use of
EHRs, we do not require that providers use
EHRs to populate assessment data in the
LCDS. We also disagree with the
commenter’s suggestion that we do not
provide a mechanism for collecting,
processing, and transmitting data, and we
note that with each assessment release, we
offer free software for LTCHs (LASER),
allowing LTCHs to record and transmit the
required LTCH CARE Data Set assessment
based data. This free software, including
instructions for installing and using the
software, is located at: https://www.qtso.com/
laser.html.
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We intend to continue to closely monitor
the effects of the LTCH QRP on LTCHs and
help facilitate successful reporting outcomes
through ongoing stakeholder education,
national trainings, LTCH announcements,
Web site postings, CMS Open Door Forums,
and general and technical help desks.
As discussed in section IX.C.11.d. of the
preamble of this final rule, after
consideration of the public comments we
received, we are moving the release date for
the LTCH CARE Data Set Version 4.00 from
April 1, 2018 to July 1, 2018. The LTCH
CARE Data Set Version 4.00, which will be
effective July 1, 2018, will contain additional
data elements needed to calculate the Drug
Regimen Review Conducted with Follow-Up
for Identified Issues-PAC LTCH QRP quality
measure, which was finalized in the FY 2017
IPPS/LTCH PPS final rule (81 FR 57219
through 57223), as well as the data elements
needed to calculate the measures we are
adopting in this final rule.
Comment: A few commenters stated that
CMS’ burden estimates were inaccurate,
pointing out the need for additional staff,
training, and expenses when items are added
to the LTCH CARE Data Set.
Response: Our burden estimates only
capture the time needed to complete LTCH
CARE Data Set data elements and do not
include clinical time spent assessing the
patient as this activity is already part of the
healthcare providers standard of care.
N. Effects of Updates to the Inpatient
Psychiatric Facility Quality Reporting
(IPFQR) Program
As discussed in section IX.D. of the
preambles of the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20120 through 20130)
and this final rule, and in accordance with
section 1886(s)(4)(A) of the Act, we will
implement a 2 percentage point reduction in
the FY 2020 market basket update for IPFs
that have failed to comply with the IPFQR
Program requirements for the FY 2020
payment determination. In section IX.D. of
the preamble of this final rule, we discuss
how the 2 percentage point reduction will be
applied. For the FY 2017, payment
determination (that is, data collected during
CY 2015 and submitted in CY 2016) of the
1,647 IPFs eligible for the IPFQR Program, 49
did not receive the full market basket update
due to reasons specific to the IPFQR Program;
22 of these IPFs chose not to participate and
27 did not meet the requirements of the
Program. We anticipate that even fewer IPFs
will receive the reduction for FY 2018 as IPFs
become more familiar with the requirements.
Thus, we estimate that the IPFQR Program
will have a negligible impact on overall IPF
payments for FY 2018.
We intend to closely monitor the effects of
this quality reporting program on IPFs and to
help facilitate successful reporting outcomes
through ongoing stakeholder education,
national trainings, and a technical help desk.
We are finalizing our proposals, without
change, that impact the FY 2018 procedural
requirements and subsequent years. We are
not finalizing our proposal to adopt one
claims-based measure for the FY 2020
payment determinations and subsequent
years. We refer readers to section XIII.B.7. of
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the preamble of this final rule for details
discussing information collection
requirements for the IPFQR Program.
O. Effects of Requirements Regarding the
Electronic Health Record (EHR) Incentive
Programs and Meaningful Use
In section IX.E of the preambles of the FY
2018 IPPS/LTCH PPS proposed rule (82 FR
20130 through 20133) and this final rule, we
discuss proposed and newly finalized
policies for eligible hospitals and CAHs
reporting CQMs electronically under the
Medicare and Medicaid EHR Incentive
Programs in 2017 and 2018. As outlined in
this final rule, we are finalizing
modifications to our proposals and making
the following modifications to the CY 2017
final CQM policies: (1) Revising the CY 2017
reporting period for eligible hospitals and
CAHs reporting CQMs electronically to
require the submission of one, self-selected
calendar quarter of data; and (2) revising the
number of CQMs eligible hospitals and CAHs
are required to report electronically for CY
2017 to 4 (self-selected) available CQMs.
In addition, we are finalizing modifications
to our proposals that adopt the following
CQM reporting requirements for CY 2018: (1)
For eligible hospitals and CAHs reporting
CQMs electronically that demonstrate
meaningful use for the first time in 2018 or
that have demonstrated meaningful use in
any year prior to 2018, the reporting period
will be one, self-selected quarter of data from
CY 2018 with a submission period (Medicare
EHR Incentive Program only) consisting of
the 2 months following the close of the
calendar year, ending on February 28, 2019;
(2) eligible hospitals and CAHs reporting
CQMs electronically will be required to
report at least 4 (self-selected) of the available
CQMs; (3) eligible hospitals and CAHs that
report CQMs by attestation under the
Medicare EHR Incentive Program because
electronic reporting is not feasible, and
eligible hospitals and CAHs that report CQMs
by attestation under their State’s Medicaid
EHR Incentive Program, will be required to
report on all 16 available CQMs; and (4)
eligible hospitals and CAHs reporting CQMs
by attestation under the Medicare EHR
Incentive Program will have a submission
period that will be the 2 months following
the close of the CY 2018 CQM reporting
period, ending February 28, 2019.
Because the finalized reporting
requirements for data collection regarding the
reporting of CQMs electronically under the
Medicare and Medicaid EHR Incentive
Programs will align with the reporting
requirements under the Hospital IQR
Program, we do not believe that there is any
additional burden for the collection of such
information. We did not propose
modifications for the CQMs reporting
requirements by attestation in this section.
Therefore, no change in burden associated
with attestation of CQMs will result from this
section.
In section IX.F of the preambles of the FY
2018 IPPS/LTCH PPS proposed rule (82 FR
20134 through 20135) and this final rule, we
discuss proposed and newly finalized
policies regarding clinical quality
measurement for EPs participating in the
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38583
Medicaid EHR Incentive Program. We note
that there may be costs incurred by States
associated with systems development as a
result of the newly finalized policies. State
attestation systems will likely require minor
updates, which may be eligible for support
through enhanced Federal funding, subject to
CMS prior approval, if outlined in an
updated Implementation Advance Planning
Document (IAPD). We anticipate that eligible
professionals (EPs) may also face minor
burden and incremental capital cost for
updating clinical quality measures and
reporting capabilities in the EHR. However,
we intend to reduce EP burden and simplify
the program through these newly finalized
policies, which are intended to better align
CQM reporting periods and CQM reporting
for the Medicaid EHR Incentive Program with
policies under MIPS. Overall, we believe the
finalized CQM alignment at the State
attestation system and EP levels will both
reduce burden associated with reporting on
multiple CMS programs and enhance State
and CMS operational efficiency.
In section IX.G.1. of the preamble of the FY
2018 IPPS/LTCH PPS proposed rule (82 FR
20135 through 20136) and section IX.G.2. of
the preamble of this final rule, we discuss
our proposed and newly finalized policies to
change the EHR reporting period in 2018
from the full CY 2018 to any continuous 90day period within CY 2018 for all new and
returning EPs, eligible hospitals and CAHs
attesting to meaningful use in the Medicare
and Medicaid EHR Incentive Programs. We
do not believe that modifying the EHR
reporting period for attestation will cause an
increase in cost because the reporting
requirements for a 90-day EHR reporting
period are virtually the same as for a full
calendar year EHR reporting period because
the requirements for a full calendar year EHR
reporting period and 90-day EHR reporting
period require the same number of objectives
and measures to be met.
In section IX.G.2. of the preamble of the FY
2018 IPPS/LTCH PPS proposed rule (82 FR
20136 through 20138) and section IX.G.3. of
the preamble of this final rule, as required by
the 21st Century Cures Act (Pub. L. 114–255),
we discuss and finalize our proposal for an
exemption from the payment adjustments
under sections 1848(a)(7)(A),
1886(b)(3)(B)(ix)(I), and 1814(l)(4) of the Act
for EPs, eligible hospitals and CAHs,
respectively, that demonstrate through an
application process that compliance with the
requirements for being a meaningful EHR
user is not possible because their certified
EHR technology has been decertified under
ONC’s Health IT Certification Program. The
application process involves participants
completing an application form for an
exception. While the form is standardized,
we believe it is exempt from the PRA. The
form is structured as an attestation.
Therefore, we believe it is exempt under 5
CFR 1320.3(h)(1) of the implementing
regulations of the PRA. The form is an
attestation that imposes no burden beyond
what is required to provide identifying
information and to attest to the applicable
information.
In section IX.G.3. of the preamble of the FY
2018 IPPS/LTCH PPS proposed rule (82 FR
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20138 through 20139) and IX.G.4. of the
preamble of this final rule, as required by the
21st Century Cures Act, we discuss and
finalize our proposal to exempt ambulatory
surgical center-based EPs from the 2017 and
2018 payment adjustments under section
1848(a)(7)(A) of the Act if they furnish
substantially all of their covered professional
services in an ambulatory surgical center. We
do not believe this requirement will cause an
increase in burden as CMS will identify the
EPs who might meet this requirement.
For the information collection
requirements relating to the above finalized
proposals, we refer readers to section
XIII.B.8. of the preamble of this final rule.
P. Effects of Electronic Signature and
Electronic Submission of the Certification
and Settlement Summary Page of Medicare
Cost Reports
In section X.A. of the preambles of the FY
2018 IPPS/LTCH PPS proposed rule (82 FR
20139 through 20142) and this final rule, we
discuss and finalize our proposal to allow
providers to use an electronic signature on
the certification statement of the Certification
and Settlement Summary page of the
Medicare cost report and submit it
electronically. This final policy will result in
savings to providers.
Using the most current data from
Medicare’s System for Tracking Audit and
Reimbursement, approximately 51,000
providers file a Medicare cost report and,
therefore, must currently mail the
Certification and Settlement Summary page.
Because most providers mail the Certification
and Settlement Summary page via certified
mail with return receipt (which includes
delivery confirmation), at the current U.S.
Postal Service price of $7.10, if all of these
providers elect to electronically submit the
Certification and Settlement Summary page
with an electronic signature, this final policy
will collectively save these providers
approximately $362,000 in postage costs.
This is an underestimate as it does not
include mailing costs when providers choose
to mail the Certification and Settlement
Summary page to their contractors via
overnight mail at a significantly higher
expense.
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Q. Effects of Changes Relating to Survey and
Certification Requirements
In section XI.B. of the preambles of the FY
2018 IPPS/LTCH PPS proposed rule (82 FR
20145 through 20146) and this final rule, we
discuss and finalize our proposal to eliminate
the term ‘‘newspaper’’ from the requirement
to publish public notice upon a provider’s
involuntary termination for RHCs, FQHCs,
ASCs, and OPOs. Eliminating the term
‘‘newspaper’’ will allow greater flexibility for
the CMS Regional Offices in publishing
public notices and will also reduce burden
on the CMS Regional Offices.
The print newspaper advertisements for an
involuntary termination are required to be
purchased by the CMS Regional Office
assigned to that provider or supplier. The
advertisement is placed under the legal
advertisement section of the local newspaper
outlet. A single CMS Regional Office may
incur an average annual cost of
approximately $3,000 to $5,000 for the
purchase of involuntary termination notices
for the providers or suppliers assigned to its
region. For example, from 2014 to 2016, the
Dallas Regional Office spent $14,331.89 on
the publication of termination notices in
local newspapers, with costs of $3,949.45 in
2014, costs of $5,386.67 in 2015, and costs
of $4,998.77 in 2016. In same timeframe of
2014 to 2016, the Philadelphia Regional
Office spent a total of $7,114.75 and the
Kansas Regional Office spent a total of
$11,121.40. The table below depicts the
actual FY 2016 costs for all 10 CMS Regional
Offices.
Regional office
2016 costs
Boston ...................................
New York ..............................
Philadelphia ..........................
Atlanta ...................................
Chicago .................................
Dallas ....................................
Kansas City ..........................
Denver ..................................
San Francisco .......................
Seattle ...................................
$4,766
645
3,570
6,712
10.853
4,252
3,098
910
1,507
707
Total Cost ..........................
37,020.00
If one CMS Regional Office spends
approximately $5,000 annually, and there are
10 CMS Regional Offices, the average cost
nationwide per annum for termination
notices could be as high as $50,000.
The cost associated with the involuntary
termination notice is assessed only to the
CMS Regional Offices. The provider or
supplier is not required to post a notice for
an involuntary termination. Therefore, there
will be no associated costs for the provider
or supplier.
All CMS Regional Offices have Web sites
available to the public, which are regularly
maintained and updated. Creation of a
subsite to reflect termination notices for
providers will be at no cost to CMS. In
addition, the use of Regional Press Officers
to convey termination of a provider will be
a minimal cost to CMS and absorbed through
the Survey & Certification budget.
R. Effects of Clarification of Limitations on
the Valuation of Depreciable Assets Disposed
of on or after December 1, 1997
In section X.B. of the preambles of the FY
2018 IPPS/LTCH PPS proposed rule (82 FR
20142 through 20143) and this final rule, we
discuss and finalize our proposal to revise
the Medicare provider reimbursement
regulations to clarify our longstanding policy
pertaining to allowable costs and the limits
on the valuation of a depreciable asset that
may be recognized in establishing an
appropriate allowance for depreciation for
assets disposed of on or after December 1,
1997. Specifically, we are clarifying that the
elimination of the gain or loss for depreciable
assets applies to assets a provider disposes of
by sale or scrapping on or after December 1,
1997, regardless of whether the asset is
scrapped, sold as an individual asset of a
Medicare participating provider, or sold
incident to a provider change of ownership.
Because we are not making any change in
policy, but rather are restating longstanding
Medicare policy, there is no economic impact
on providers resulting from this policy
clarification.
S. Alternatives Considered
This final rule contains a range of policies.
It also provides descriptions of the statutory
provisions that are addressed, identifies the
finalized policies, and presents rationales for
our decisions and, where relevant,
alternatives that were considered.
As discussed in section III.H. of the
preamble of this final rule, we are extending
the imputed floor policy for developing the
hospital wage index for 1 additional year. We
note that if the imputed floor policy had
expired at the end of FY 2017, we estimate
that IPPS payments would have decreased by
approximately $12 million in New Jersey,
$22 million in Rhode Island, and $12 million
in Delaware. Because the imputed floor
policy is budget neutral nationally, had the
policy expired, these payments would have
been redistributed to all IPPS hospitals
nationally.
T. Reducing Regulation and Controlling
Regulatory Costs
Executive Order 13771, titled ‘‘Reducing
Regulation and Controlling Regulatory
Costs,’’ was issued on January 30, 2017. This
final rule is considered an Executive Order
13771 regulatory action. In the table below,
we provide a summation of the savings/costs
delineated in the sections XIII.B of the
preamble and section I. of Appendix A of this
final rule. Additional details on the estimated
costs of this rule can be found in the
preceding and subsequent analyses.
Amount of
costs or
savings
Section of the final rule
Description
Section XII.B.3. of the preamble ............................
Section XII.B.4. of the preamble ............................
Section I.M.of Appendix A ......................................
ICRs for the Hospital IQR Programs ..............................................................
ICRs for the PCHQR Program .......................................................................
Effects of Requirements for the LTCH QRP ..................................................
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(1,519,427)
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Amount of
costs or
savings
Section of the final rule
Description
Section I.P.of Appendix A ......................................
Effects of Electronic Signature and Electronic Submission of the Certification and Settlement Summary Page of Medicare Cost Reports for FY
2018.
(362,000)
Total ................................................................
.........................................................................................................................
(3,854,344)
U. Overall Conclusion
1. Acute Care Hospitals
Table I of section I.G. of this Appendix
demonstrates the estimated distributional
impact of the IPPS budget neutrality
requirements for the MS–DRG and wage
index changes, and for the wage index
reclassifications under the MGCRB. Table I
also shows a projected overall increase of 1.3
percent in operating payments before
accounting for the impact of the changes in
Medicare DSH payments and uncompensated
care payments. When combined with the
impact of those changes, consistent with our
policy discussed in section V.G. of the
preamble of this final rule, we estimate that
operating payments will increase by
approximately 2.3 percent in FY 2018, or
approximately $2.5 billion. We also currently
estimate that the changes in new technology
add-on payments for FY 2018 will decrease
spending by approximately $34 million and
the changes to the volume decrease
adjustment will increase spending by
approximately $15 million. In addition, we
estimate the change in low-volume hospital
payments, including the statutory expiration
of the temporary increase in the low-volume
hospital payment adjustment in FY 2018 will
decrease spending by approximately $312
million in FY 2018. These estimates,
combined with our estimated increase in FY
2018 operating payment of $2.5 billion, will
result in an estimated increase of
approximately $2.2 billion for FY 2018. We
estimate that hospitals will experience a 2.7
percent increase in capital payments per
case, as shown in Table III of section I.I. of
this Appendix. We project that there will be
a $226 million increase in capital payments
in FY 2018 compared to FY 2017. The
cumulative operating and capital payments
will result in a net increase of approximately
$2.4 billion to IPPS providers. The
discussions presented in the previous pages,
in combination with the rest of this final rule,
constitute a regulatory impact analysis.
2. LTCHs
Overall, LTCHs are projected to experience
a decrease in estimated payments per
discharge in FY 2018. In the impact analysis,
we are using the rates, factors, and policies
presented in this final rule based on the best
available claims and CCR data to estimate the
change in payments under the LTCH PPS for
FY 2018. Accordingly, based on the best
available data for the 415 LTCHs in our
database, we estimate that FY 2018 LTCH
PPS payments will decrease approximately
$110 million relative to FY 2017 as a result
of the payment rates and factors presented in
this final rule.
V. Regulatory Review Costs
If regulations impose administrative costs
on private entities, such as the time needed
to read and interpret a rule, we should
estimate the cost associated with regulatory
review. In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 20228), due to the
uncertainty involved with accurately
quantifying the number of entities that would
review the proposed rule, we assumed that
the total number of timely pieces of
correspondence on last year’s proposed rule
would be the number of reviewers of the
proposed rule. We acknowledged that this
assumption may understate or overstate the
costs of reviewing the rule. It is possible that
not all commenters reviewed last year’s rule
in detail, and it is also possible that some
reviewers chose not to comment on the
proposed rule. For those reasons, we decided
that the number of past commenters would
be a fair estimate of the number of reviewers
of the proposed rule. We welcomed any
public comments on the approach in
estimating the number of entities that would
review the proposed rule. We did not receive
any public comments specific to our
solicitation.
We also recognized that different types of
entities are in many cases affected by
mutually exclusive sections of the proposed
rule. Therefore, for the purposes of our
estimate, we assumed that each reviewer read
approximately 50 percent of the proposed
rule. We sought public comments on this
assumption. We did not receive any public
comments specific to our solicitation.
We have used the number of timely pieces
of correspondence on the FY 2018 proposed
rule as our estimate for the number of
reviewers of this final rule. We continue to
acknowledge the uncertainty involved with
using this number, but we believe it is a fair
estimate due to the variety of entities affected
and the likelihood that some of them choose
to rely (in full or in part) on press releases,
newsletters, fact sheets, or other sources
rather than the comprehensive review of
preamble and regulatory text. Using the wage
information from the BLS for medical and
health service managers (Code 11–9111), we
estimate that the cost of reviewing the final
rule is $105.16 per hour, including overhead
and fringe benefits (https://www.bls.gov/oes/
current/oes_nat.htm). Assuming an average
reading speed, we estimate that it will take
approximately 21 hours for the staff to review
half of the final rule. For each IPPS hospital
or LTCH that reviews the final rule, the
estimated cost is $2,208.36 (21 hours x
$105.16). Therefore, we estimate that the
total cost of reviewing the final rule is
$9,707,951 ($2,208.36 x 4,396 reviewers).
II. Accounting Statements and Tables
A. Acute Care Hospitals
As required by OMB Circular A–4
(available at https://obamawhite
house.archives.gov/omb/circulars_a-004_a-4/
and https://georgewbushwhitehouse.archives.gov/omb/circulars/
a004/a-4.html), in the following Table V., we
have prepared an accounting statement
showing the classification of the
expenditures associated with the provisions
of this final rule as they relate to acute care
hospitals. This table provides our best
estimate of the change in Medicare payments
to providers as a result of the changes to the
IPPS presented in this final rule. All
expenditures are classified as transfers to
Medicare providers.
As shown below in Table V., the net costs
to the Federal Government associated with
the policies in this final rule are estimated at
$2.4 billion.
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TABLE V—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES UNDER THE IPPS FROM FY 2017
TO FY 2018
Category
Transfers
Annualized Monetized Transfers ..............................................................
From Whom to Whom ..............................................................................
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$2.4 billion.
Federal Government to IPPS Medicare Providers.
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B. LTCHs
PPS. Therefore, as required by OMB Circular
A–4 (available at https://obama
whitehouse.archives.gov/omb/circulars_
a004_a-4/ and https://georgewbushwhitehouse.archives.gov/omb/circulars/
a004/a-4.html), in Table VI., we have
prepared an accounting statement showing
the classification of the expenditures
associated with the provisions of this final
rule as they relate to the changes to the LTCH
PPS. Table VI. provides our best estimate of
As discussed in section I.J. of this
Appendix, the impact analysis of the
payment rates and factors presented in this
final rule under the LTCH PPS is projected
to result in a decrease in estimated aggregate
LTCH PPS payments in FY 2018 relative to
FY 2017 of approximately $110 million based
on the data for 415 LTCHs in our database
that are subject to payment under the LTCH
the estimated change in Medicare payments
under the LTCH PPS as a result of the
payment rates and factors and other
provisions presented in this final rule based
on the data for the 415 LTCHs in our
database.
As shown in Table VI. below, the net
savings to the Federal Government associated
with the policies for LTCHs in this final rule
are estimated at $110 million.
TABLE VI—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES FROM THE FY 2017 LTCH PPS TO
THE FY 2018 LTCH PPS
Category
Transfers
Annualized Monetized Transfers ..............................................................
From Whom to Whom ..............................................................................
C. Information Collection Requirements,
Regulatory Impact Analyses, and Regulatory
Familiarization Costs
As noted in section I.T. of Appendix A of
this final rule, the savings and costs reflected
¥$110 million
Federal Government to LTCH Medicare Providers
in the information collection requirements
and regulatory impact analyses of this final
rule is a savings of $3,854,344. Also, as noted
in section I.V. of Appendix A of this final
rule, the regulatory review cost for this final
rule is $9,707,951.
TABLE VII—ACCOUNTING STATEMENT: SAVINGS FROM THE HOSPITAL IQR PROGRAM AND COST OF REGULATION
FAMILIARIZATION
Category
Cost *
Cost (in millions) .......................................................................................
$5.853607
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* Familiarization cost is one time and some of the savings associated with the Hospital IQR Program are annually.
III. Regulatory Flexibility Act (RFA)
Analysis
The RFA requires agencies to analyze
options for regulatory relief of small entities.
For purposes of the RFA, small entities
include small businesses, nonprofit
organizations, and small government
jurisdictions. We estimate that most hospitals
and most other providers and suppliers are
small entities as that term is used in the RFA.
The great majority of hospitals and most
other health care providers and suppliers are
small entities, either by being nonprofit
organizations or by meeting the SBA
definition of a small business (having
revenues of less than $7.5 million to $38.5
million in any 1 year). (For details on the
latest standards for health care providers, we
refer readers to page 36 of the Table of Small
Business Size Standards for NAIC 622 found
on the SBA Web site at: https://www.sba.gov/
sites/default/files/files/Size_Standards_
Table.pdf.)
For purposes of the RFA, all hospitals and
other providers and suppliers are considered
to be small entities. Individuals and States
are not included in the definition of a small
entity. We believe that the provisions of this
final rule relating to acute care hospitals will
have a significant impact on small entities as
explained in this Appendix. For example,
because all hospitals are considered to be
small entities for purposes of the RFA, the
hospital impacts described in this final rule
are impacts on small entities. For example,
we refer readers to ‘‘Table I—Impact Analysis
of Changes to the IPPS for Operating Costs for
FY 2018.’’ Because we lack data on
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individual hospital receipts, we cannot
determine the number of small proprietary
LTCHs. Therefore, we are assuming that all
LTCHs are considered small entities for the
purpose of the analysis in section I.J. of this
Appendix. MACs are not considered to be
small entities because they do not meet the
SBA definition of a small business. Because
we acknowledge that many of the affected
entities are small entities, the analysis
discussed throughout the preamble of this
final rule constitutes our regulatory
flexibility analysis. This final rule contains a
range of policies. It provides descriptions of
the statutory provisions that are addressed,
identifies the finalized policies, and presents
rationales for our decisions and, where
relevant, alternatives that were considered.
In the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 20229), we solicited public
comments on our estimates and analysis of
the impact of our proposals on those small
entities. Any public comments that we
received and our responses are presented
throughout this final rule.
IV. Impact on Small Rural Hospitals
Section 1102(b) of the Social Security Act
requires us to prepare a regulatory impact
analysis for any proposed or final rule that
may have a significant impact on the
operations of a substantial number of small
rural hospitals. This analysis must conform
to the provisions of section 604 of the RFA.
With the exception of hospitals located in
certain New England counties, for purposes
of section 1102(b) of the Act, we define a
small rural hospital as a hospital that is
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located outside of an urban area and has
fewer than 100 beds. Section 601(g) of the
Social Security Amendments of 1983 (Pub. L.
98–21) designated hospitals in certain New
England counties as belonging to the adjacent
urban area. Thus, for purposes of the IPPS
and the LTCH PPS, we continue to classify
these hospitals as urban hospitals. (We refer
readers to Table I in section I.G. of this
Appendix for the quantitative effects of the
policy changes under the IPPS for operating
costs.)
V. Unfunded Mandates Reform Act Analysis
Section 202 of the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104–4) 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 2017, that threshold
level is approximately $146 million. This
final rule will not mandate any requirements
for State, local, or tribal governments, nor
will it affect private sector costs.
VI. Executive Order 13175
Executive Order 13175 directs agencies to
consult with Tribal officials prior to the
formal promulgation of regulations having
tribal implications. This final rule contains
provisions applicable to hospitals and
facilities operated by the Indian Health
Service or Tribes or Tribal organizations
under the Indian Self-Determination and
Education Assistance Act and, thus, has
tribal implications. Therefore, in accordance
with Executive Order 13175 and the CMS
Tribal Consultation Policy (December 2015),
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CMS has consulted with Tribal officials on
these Indian-specific provisions of the
proposed rule prior to the formal
promulgation of this final rule.
VII. Executive Order 12866
In accordance with the provisions of
Executive Order 12866, the Executive Office
of Management and Budget reviewed this
final rule.
Appendix B: Recommendation of
Update Factors for Operating Cost
Rates of Payment for Inpatient Hospital
Services
I. Background
Section 1886(e)(4)(A) of the Act requires
that the Secretary, taking into consideration
the recommendations of MedPAC,
recommend update factors for inpatient
hospital services for each fiscal year that take
into account the amounts necessary for the
efficient and effective delivery of medically
appropriate and necessary care of high
quality. Under section 1886(e)(5) of the Act,
we are required to publish update factors
recommended by the Secretary in the
proposed and final IPPS rules, respectively.
Accordingly, this Appendix provides the
recommendations for the update factors for
the IPPS national standardized amount, the
hospital-specific rate for SCHs, and the rateof-increase limits for certain hospitals
excluded from the IPPS, as well as LTCHs.
In prior years, we have made a
recommendation in the IPPS proposed rule
and final rule for the update factors for the
payment rates for IRFs and IPFs. However,
for FY 2018, consistent with approach for FY
2017, we are including the Secretary’s
recommendation for the update factors for
IRFs and IPFs in separate Federal Register
documents at the time that we announce the
annual updates for IRFs and IPFs. We also
discuss our response to MedPAC’s
recommended update factors for inpatient
hospital services.
II. Inpatient Hospital Update for FY 2018
A. FY 2018 Inpatient Hospital Update
As discussed in section V.B. of the
preamble to this final rule, for FY 2018,
consistent with section 1886(b)(3)(B) of the
Act, as amended by sections 3401(a) and
10319(a) of the Affordable Care Act, we are
setting the applicable percentage increase by
applying the following adjustments in the
following sequence. Specifically, the
applicable percentage increase under the
IPPS is equal to the rate-of-increase in the
hospital market basket for IPPS hospitals in
all areas, subject to a reduction of one-quarter
of the applicable percentage increase (prior to
the application of other statutory
adjustments; also referred to as the market
basket update or rate-of-increase (with no
adjustments)) for hospitals that fail to submit
quality information under rules established
by the Secretary in accordance with section
1886(b)(3)(B)(viii) of the Act and a reduction
of three-quarters of the applicable percentage
increase (prior to the application of other
statutory adjustments; also referred to as the
market basket update or rate-of-increase
(with no adjustments)) for hospitals not
considered to be meaningful electronic
health record (EHR) users in accordance with
section 1886(b)(3)(B)(ix) of the Act, and then
subject to an adjustment based on changes in
economy-wide productivity (the multifactor
productivity (MFP) adjustment), and an
additional reduction of 0.75 percentage point
as required by section 1886(b)(3)(B)(xii) of
the Act. Sections 1886(b)(3)(B)(xi) and
(b)(3)(B)(xii) of the Act, as added by section
3401(a) of the Affordable Care Act, state that
application of the MFP adjustment and the
additional FY 2018 adjustment of 0.75
percentage point may result in the applicable
percentage increase being less than zero.
We note that, in compliance with section
404 of the MMA, in this final rule, we are
replacing the FY 2010-based IPPS operating
and capital market baskets with the rebased
and revised 2014-based IPPS operating and
capital market baskets for FY 2018.
In the FY 2018 IPPS/LTCH PPS proposed
rule, based on the most recent data available
at that time, in accordance with section
1886(b)(3)(B) of the Act, we proposed to
establish the FY 2018 market basket update
used to determine the applicable percentage
increase for the IPPS on the IGI’s fourth
quarter 2016 forecast of the proposed 2014based IPPS market basket rate-of-increase
with historical data through third quarter
2016, which was estimated to be 2.9 percent.
Based on the most recent data available for
Hospital
submitted
quality data
and is a
meaningful
EHR user
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FY 2018
Market Basket Rate-of-Increase ......................................................................
Adjustment for Failure to Submit Quality Data under Section
1886(b)(3)(B)(viii) of the Act .........................................................................
Adjustment for Failure to be a Meaningful EHR User under Section
1886(b)(3)(B)(ix) of the Act ..........................................................................
MFP Adjustment under Section 1886(b)(3)(B)(xi) of the Act ..........................
Statutory Adjustment under Section 1886(b)(3)(B)(xii) of the Act ...................
Applicable Percentage Increase Applied to Standardized Amount .................
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38587
this FY 2018 IPPS/LTCH PPS final rule, in
accordance with section 1886(b)(3)(B) of the
Act, we are establishing the FY 2018 market
basket update used to determine the
applicable percentage increase for the IPPS
on IGI’s second quarter 2017 forecast of the
2014-based IPPS market basket rate-ofincrease with historical data through first
quarter 2017, which is estimated to be 2.7
percent.
In accordance with section 1886(b)(3)(B) of
the Act, as amended by section 3401(a) of the
Affordable Care Act, in section V.B. of the
preamble of the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19932), we proposed an
MFP adjustment of 0.4 percent for FY 2018.
Therefore, based on IGI’s fourth quarter 2016
forecast of the proposed 2014-based IPPS
market basket, depending on whether a
hospital submits quality data under the rules
established in accordance with section
1886(b)(3)(B)(viii) of the Act (hereafter
referred to as a hospital that submits quality
data) and is a meaningful EHR user under
section 1886(b)(3)(B)(ix) of the Act (hereafter
referred to as a hospital that is a meaningful
EHR user), we presented in the proposed rule
four possible applicable percentage increases
that could be applied to the standardized
amount. Based on the most recent data
available for this FY 2018 IPPS/LTCH PPS
final rule, in accordance with section
1886(b)(3)(B) of the Act, as amended by
section 3401(a) of the Affordable Care Act, in
section V.B. of the preamble of this final rule,
we are establishing a MFP adjustment (the
10-year moving average percent change of
MFP for the period ending FY 2018) of 0.6
percent.
In accordance with section 1886(b)(3)(B) of
the Act, as amended by section 3401(a) of the
Affordable Care Act, in section V.B. of the
preamble of this final rule, we are
establishing the applicable percentages
increases for the FY 2018 updates based on
IGI’s second quarter 2017 forecast of the
2014-based IPPS market basket, depending
on whether a hospital submits quality data
under the rules established in accordance
with section 1886(b)(3)(B)(viii) of the Act and
is a meaningful EHR user under section
1886(b)(3)(B)(ix) of the Act as outlined in the
table below.
Hospital
submitted
quality data
and is NOT a
meaningful
EHR user
Hospital
did NOT
submit
quality data
and is a
meaningful
EHR user
Hospital
did NOT
submit
quality data
and is NOT a
meaningful
EHR user
2.7
2.7
2.7
2.7
0.0
0.0
¥0.675
¥0.675
0.0
¥0.6
¥0.75
1.35
¥2.025
¥0.6
¥0.75
¥0.675
0.0
¥0.6
¥0.75
0.675
¥2.025
¥0.6
¥0.75
¥1.35
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B. Update for SCHs for FY 2018
Section 1886(b)(3)(B)(iv) of the Act
provides that the FY 2018 applicable
percentage increase in the hospital-specific
rate for SCHs equals the applicable
percentage increase set forth in section
1886(b)(3)(B)(i) of the Act (that is, the same
update factor as for all other hospitals subject
to the IPPS).
(We note that, as discussed in section V.H.
of the preamble of this final rule, section 205
of the Medicare Access and CHIP
Reauthorization Act of 2015 (MACRA) (Pub.
L. 114–10, enacted on April 16, 2015)
extended the MDH program (which, under
previous law, was to be in effect for
discharges on or before March 31, 2015 only)
for discharges occurring on or after April 1,
2015, through FY 2017 (that is, for discharges
occurring on or before September 30, 2017).
Therefore, under current law, the MDH
program will expire at the end of FY 2017.
However, as discussed in section V.H. of the
preamble of this final rule, MDHs have the
opportunity to apply for SCH status in
advance of the expiration of the MDH
program and be paid as such under certain
conditions, as specified in the regulations at
42 CFR 412.92(b)(2)(i) and (b)(2)(v).)
As previously mentioned, the update to the
hospital specific rate for SCHs is subject to
section 1886(b)(3)(B)(i) of the Act, as
amended by sections 3401(a) and 10319(a) of
the Affordable Care Act. Accordingly,
depending on whether a hospital submits
quality data and is a meaningful EHR user,
we are establishing the same four possible
applicable percentage increases in the table
above for the hospital-specific rate applicable
to SCHs.
C. FY 2018 Puerto Rico Hospital Update
As discussed in the FY 2017 IPPS/LTCH
PPS final rule (81 FR 56939), prior to January
1, 2016, Puerto Rico hospitals were paid
based on 75 percent of the national
standardized amount and 25 percent of the
Puerto Rico-specific standardized amount.
Section 601 of Public Law 114–113 amended
section 1886(d)(9)(E) of the Act to specify
that the payment calculation with respect to
operating costs of inpatient hospital services
of a subsection (d) Puerto Rico hospital for
inpatient hospital discharges on or after
January 1, 2016, shall use 100 percent of the
national standardized amount. Because
Puerto Rico hospitals are no longer paid with
a Puerto Rico-specific standardized amount
under the amendments to section
1886(d)(9)(E) of the Act, there is no longer a
need for us to make an update to the Puerto
Rico standardized amount. Hospitals in
Puerto Rico are now paid 100 percent of the
national standardized amount and, therefore,
are subject to the same update to the national
standardized amount discussed under
section V.B.1. of the preamble of this final
rule. Accordingly, for FY 2018, we are
establishing an applicable percentage
increase of 1.35 percent to the standardized
amount for hospitals located in Puerto Rico.
D. Update for Hospitals Excluded from the
IPPS for FY 2018
Section 1886(b)(3)(B)(ii) of the Act is used
for purposes of determining the percentage
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increase in the rate-of-increase limits for
children’s hospitals, cancer hospitals, and
hospitals located outside the 50 States, the
District of Columbia, and Puerto Rico (that is,
short-term acute care hospitals located in the
U.S. Virgin Islands, Guam, the Northern
Mariana Islands, and America Samoa).
Section 1886(b)(3)(B)(ii) of the Act sets the
percentage increase in the rate-of-increase
limits equal to the market basket percentage
increase. In accordance with § 403.752(a) of
the regulations, RNHCIs are paid under the
provisions of § 413.40, which also use section
1886(b)(3)(B)(ii) of the Act to update the
percentage increase in the rate-of-increase
limits.
Currently, children’s hospitals, PPSexcluded cancer hospitals, RNHCIs, and
short-term acute care hospitals located in the
U.S. Virgin Islands, Guam, the Northern
Mariana Islands, and American Samoa are
among the remaining types of hospitals still
paid under the reasonable cost methodology,
subject to the rate-of-increase limits. As
discussed in section VII. of the preamble of
this final rule, we are using the percentage
increase in the 2014-based IPPS operating
market basket to update the target amounts
for children’s hospitals, PPS-excluded cancer
hospitals, RNHCIs, and short-term acute care
hospitals located in the U.S. Virgin Islands,
Guam, the Northern Mariana Islands, and
American Samoa for FY 2018 and subsequent
fiscal years. Accordingly, for FY 2018, the
rate-of-increase percentage to be applied to
the target amount for these children’s
hospitals, cancer hospitals, RNHCIs, and
short-term acute care hospitals located in the
U.S. Virgin Islands, Guam, the Northern
Mariana Islands, and American Samoa would
be the FY 2018 percentage increase in the
2014-based IPPS operating market basket. For
this final rule, the current estimate of the
IPPS operating market basket percentage
increase for FY 2018 is 2.7 percent.
E. Update for LTCHs for FY 2018
Section 123 of Public Law 106–113, as
amended by section 307(b) of Public Law
106–554 (and codified at section 1886(m)(1)
of the Act), provides the statutory authority
for updating payment rates under the LTCH
PPS.
As discussed in section V.A. of the
Addendum to this final rule, we are
establishing an update the LTCH PPS
standard Federal payment rate by 1.0 percent
for FY 2018, consistent with the amendments
to section 1886(m)(3) of the Act provided by
section 411 of MACRA. In accordance with
the LTCHQR Program under section
1886(m)(5) of the Act, we are reducing the
annual update to the LTCH PPS standard
Federal rate by 2.0 percentage points for
failure of a LTCH to submit the required
quality data. Accordingly, we are establishing
an update factor of 1.01 in determining the
LTCH PPS standard Federal rate for FY 2018.
For LTCHs that fail to submit quality data for
FY 2018, we are establishing an annual
update to the LTCH PPS standard Federal
rate of ¥1.0 percent (that is, the annual
update for FY 2018 of 1.0 percent less 2.0
percentage points for failure to submit the
required quality data in accordance with
section 1886(m)(5)(C) of the Act and our
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rules) by applying an update factor of 0.99 in
determining the LTCH PPS standard Federal
rate for FY 2018.
For FY 2018, consistent with the
amendments to section 1886(m)(3) of the Act
provided by section 411 of MACRA, for
LTCHs that submit quality data, we are
recommending an update of 1.0 percent to
the LTCH PPS standard Federal rate. For
LTCHs that fail to submit quality data for FY
2018, we are recommending an annual
update to the LTCH PPS standard Federal
rate of ¥1.0 percent.
III. Secretary’s Recommendations
MedPAC is recommending an inpatient
hospital update in the amount specified in
current law for FY 2018. MedPAC’s rationale
for this update recommendation is described
in more detail below. As mentioned above,
section 1886(e)(4)(A) of the Act requires that
the Secretary, taking into consideration the
recommendations of MedPAC, recommend
update factors for inpatient hospital services
for each fiscal year that take into account the
amounts necessary for the efficient and
effective delivery of medically appropriate
and necessary care of high quality. Consistent
with current law, depending on whether a
hospital submits quality data and is a
meaningful EHR user, we are recommending
the four applicable percentage increases to
the standardized amount listed in the table
under section II. of this Appendix B. We are
recommending that the same applicable
percentage increases apply to SCHs.
In addition to making a recommendation
for IPPS hospitals, in accordance with
section 1886(e)(4)(A) of the Act, we are
recommending update factors for certain
other types of hospitals excluded from the
IPPS. Consistent with our policies for these
facilities, we are recommending an update to
the target amounts for children’s hospitals,
cancer hospitals, RNHCIs, and short-term
acute care hospitals located in the U.S. Virgin
Islands, Guam, the Northern Mariana Islands,
and American Samoa of 2.7 percent.
For FY 2018, consistent with the
amendments to section 1886(m)(3) of the Act
provided by section 411 of MACRA, for
LTCHs that submit quality data, we are
recommending an update of 1.0 percent to
the LTCH PPS standard Federal rate. For
LTCHs that fail to submit quality data for FY
2018, we are recommending an annual
update to the LTCH PPS standard Federal
rate of -1.0 percent.
IV. MedPAC Recommendation for Assessing
Payment Adequacy and Updating Payments
in Traditional Medicare
In its March 2017 Report to Congress,
MedPAC assessed the adequacy of current
payments and costs, and the relationship
between payments and an appropriate cost
base. MedPAC recommended an update to
the hospital inpatient rates in the amount
specified in current law. We refer the reader
to the March 2017 MedPAC report, which is
available for download at www.medpac.gov
for a complete discussion on this
recommendation. MedPAC expects Medicare
margins to decline from 2015 to 2017.
Response: We agree with MedPAC, and
consistent with current law, we are applying
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an applicable percentage increase for FY
2018 of 1.35 percent, provided the hospital
submits quality data and is a meaningful EHR
user, consistent with statutory requirements.
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We note that, because the operating and
capital prospective payment systems remain
separate, we are continuing to use separate
updates for operating and capital payments.
The update to the capital rate is discussed in
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section III. of the Addendum to this final
rule.
[FR Doc. 2017–16434 Filed 8–2–17; 4:15 pm]
BILLING CODE 4120–01–P
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Agencies
[Federal Register Volume 82, Number 155 (Monday, August 14, 2017)]
[Rules and Regulations]
[Pages 37990-38589]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-16434]
[[Page 37989]]
Vol. 82
Monday,
No. 155
August 14, 2017
Part II
Book 2 of 2 Books
Pages 37989-38590
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 405, 412, 413, et al.
Medicare Program; Hospital Inpatient Prospective Payment Systems for
Acute Care Hospitals and the Long-Term Care Hospital Prospective
Payment System and Policy Changes and Fiscal Year 2018 Rates; Quality
Reporting Requirements for Specific Providers; Medicare and Medicaid
Electronic Health Record (EHR) Incentive Program Requirements for
Eligible Hospitals, Critical Access Hospitals, and Eligible
Professionals; Provider-Based Status of Indian Health Service and
Tribal Facilities and Organizations; Costs Reporting and Provider
Requirements; Agreement Termination Notices; Final Rule
Federal Register / Vol. 82 , No. 155 / Monday, August 14, 2017 /
Rules and Regulations
[[Page 37990]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 405, 412, 413, 414, 416, 486, 488, 489, and 495
[CMS-1677-F]
RIN 0938-AS98
Medicare Program; Hospital Inpatient Prospective Payment Systems
for Acute Care Hospitals and the Long-Term Care Hospital Prospective
Payment System and Policy Changes and Fiscal Year 2018 Rates; Quality
Reporting Requirements for Specific Providers; Medicare and Medicaid
Electronic Health Record (EHR) Incentive Program Requirements for
Eligible Hospitals, Critical Access Hospitals, and Eligible
Professionals; Provider-Based Status of Indian Health Service and
Tribal Facilities and Organizations; Costs Reporting and Provider
Requirements; Agreement Termination Notices
AGENCY: Centers for Medicare and Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: We are revising the Medicare hospital inpatient prospective
payment systems (IPPS) for operating and capital-related costs of acute
care hospitals to implement changes arising from our continuing
experience with these systems for FY 2018. Some of these changes
implement certain statutory provisions contained in the Pathway for
Sustainable Growth Rate (SGR) Reform Act of 2013, the Improving
Medicare Post-Acute Care Transformation Act of 2014, the Medicare
Access and CHIP Reauthorization Act of 2015, the 21st Century Cures
Act, and other legislation. We also are making changes relating to the
provider-based status of Indian Health Service (IHS) and Tribal
facilities and organizations and to the low-volume hospital payment
adjustment for hospitals operated by the IHS or a Tribe. In addition,
we are providing the market basket update that will apply to the rate-
of-increase limits for certain hospitals excluded from the IPPS that
are paid on a reasonable cost basis subject to these limits for FY
2018. We are updating the payment policies and the annual payment rates
for the Medicare prospective payment system (PPS) for inpatient
hospital services provided by long-term care hospitals (LTCHs) for FY
2018.
In addition, we are establishing new requirements or revising
existing requirements for quality reporting by specific Medicare
providers (acute care hospitals, PPS-exempt cancer hospitals, LTCHs,
and inpatient psychiatric facilities). We also are establishing new
requirements or revising existing requirements for eligible
professionals (EPs), eligible hospitals, and critical access hospitals
(CAHs) participating in the Medicare and Medicaid Electronic Health
Record (EHR) Incentive Programs. We are updating policies relating to
the Hospital Value-Based Purchasing (VBP) Program, the Hospital
Readmissions Reduction Program, and the Hospital-Acquired Condition
(HAC) Reduction Program.
We also are making changes relating to transparency of accrediting
organization survey reports and plans of correction of providers and
suppliers; electronic signature and electronic submission of the
Certification and Settlement Summary page of the Medicare cost reports;
and clarification of provider disposal of assets.
DATES: This final rule is effective on October 1, 2017.
FOR FURTHER INFORMATION CONTACT:
Donald Thompson, (410) 786-4487, and Michele Hudson, (410) 786-
4487, Operating Prospective Payment, MS-DRGs, Wage Index, New Medical
Service and Technology Add-On Payments, Hospital Geographic
Reclassifications, Graduate Medical Education, Capital Prospective
Payment, Excluded Hospitals, Sole Community Hospitals, Medicare
Disproportionate Share Hospital (DSH) Payment Adjustment, Medicare-
Dependent Small Rural Hospital (MDH) Program, and Low-Volume Hospital
Payment Adjustment Issues.
Michele Hudson, (410) 786-4487, Mark Luxton, (410) 786-4530, and
Emily Lipkin, (410) 786-3633, Long-Term Care Hospital Prospective
Payment System and MS-LTC-DRG Relative Weights Issues.
Mollie Knight, (410) 786-7948, and Bridget Dickensheets, (410) 786-
8670, Rebasing and Revising the Hospital Market Basket Issues.
Siddhartha Mazumdar, (410) 786-6673, Rural Community Hospital
Demonstration Program Issues.
Jeris Smith, (410) 786-0110, Frontier Community Health Integration
Project Demonstration Issues.
Lein Han, (617) 879-0129, Hospital Readmissions Reduction Program--
Readmission Measures for Hospitals Issues.
James Poyer, (410) 786-2261, Hospital Readmissions Reduction
Program--Administration Issues.
Elizabeth Bainger, (410) 786-0529, Hospital-Acquired Condition
Reduction Program Issues.
Joseph Clift, (410) 786-4165, Hospital-Acquired Condition Reduction
Program--Measures Issues.
Grace Im, (410) 786-0700, and James Poyer, (410) 786-2261, Hospital
Inpatient Quality Reporting and Hospital Value-Based Purchasing--
Program Administration, Validation, and Reconsideration Issues.
Reena Duseja, (410) 786-1999, and Cindy Tourison, (410) 786-1093,
Hospital Inpatient Quality Reporting--Measures Issues Except Hospital
Consumer Assessment of Healthcare Providers and Systems Issues; and
Readmission Measures for Hospitals Issues.
Kim Spaulding Bush, (410) 786-3232, Hospital Value-Based Purchasing
Efficiency Measures Issues.
Elizabeth Goldstein, (410) 786-6665, Hospital Inpatient Quality
Reporting--Hospital Consumer Assessment of Healthcare Providers and
Systems Measures Issues.
James Poyer, (410) 786-2261, PPS-Exempt Cancer Hospital Quality
Reporting Issues.
Mary Pratt, (410) 786-6867, Long-Term Care Hospital Quality Data
Reporting Issues.
Jeffrey Buck, (410) 786-0407, and Cindy, Tourison (410) 786-1093,
Inpatient Psychiatric Facilities Quality Data Reporting Issues.
Lisa Marie Gomez, (410) 786-1175, EHR Incentive Program Clinical
Quality Measure Related Issues.
Kathleen Johnson, (410) 786-3295, and Steven Johnson (410) 786-
3332, EHR Incentive Program Nonclinical Quality Measure Related Issues.
Caecilia Blondiaux, (410), 786-2190, and Ariadne Saklas, (410) 786-
3322, Changes in Notice of Termination of Medicare Providers and
Suppliers Issues.
Monda Shaver, (410) 786-3410, and Patricia Chmielewski, (410) 786-
6899, Accrediting Organizations Survey Reporting Transparency Issues.
Kellie Shannon, (410) 786-0416, Medicare Cost Reporting and
Valuation of Assets Issues.
SUPPLEMENTARY INFORMATION:
Electronic Access
This Federal Register document is available from the Federal
Register online database through Federal Digital System (FDsys), a
service of the U.S. Government Printing Office. This database can be
accessed via the Internet at: https://www.gpo.gov/fdsys.
[[Page 37991]]
Tables Available Only Through the Internet on the CMS Web Site
In the past, a majority of the tables referred to throughout this
preamble and in the Addendum to the proposed rule and the final rule
were published in the Federal Register as part of the annual proposed
and final rules. However, beginning in FY 2012, some of the IPPS tables
and LTCH PPS tables are no longer published in the Federal Register.
Instead, these tables generally will be available only through the
Internet. The IPPS tables for this final rule are available through the
Internet on the CMS Web site at: https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/. Click on
the link on the left side of the screen titled, ``FY 2018 IPPS Final
Rule Home Page'' or ``Acute Inpatient--Files for Download''. The LTCH
PPS tables for this FY 2018 final rule are available through the
Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/LongTermCareHospitalPPS/ under the
list item for Regulation Number CMS-1677-F. For further details on the
contents of the tables referenced in this final rule, we refer readers
to section VI. of the Addendum to this final rule.
Readers who experience any problems accessing any of the tables
that are posted on the CMS Web sites identified above should contact
Michael Treitel at (410) 786-4552.
Acronyms
3M 3M Health Information System
AAMC Association of American Medical Colleges
ACGME Accreditation Council for Graduate Medical Education
ACoS American College of Surgeons
AHA American Hospital Association
AHIC American Health Information Community
AHIMA American Health Information Management Association
AHRQ Agency for Healthcare Research and Quality
AJCC American Joint Committee on Cancer
ALOS Average length of stay
ALTHA Acute Long-Term Hospital Association
AMA American Medical Association
AMGA American Medical Group Association
AMI Acute myocardial infarction
AO Accrediting Organizations
AOA American Osteopathic Association
APR DRG All Patient Refined Diagnosis Related Group System
APRN Advanced practice registered nurse
ARRA American Recovery and Reinvestment Act of 2009, Public Law 111-
5
ASCA Administrative Simplification Compliance Act of 2002, Public
Law 107-105
ASITN American Society of Interventional and Therapeutic
Neuroradiology
ASPE Assistant Secretary for Planning and Evaluation (DHHS)
ATRA American Taxpayer Relief Act of 2012, Public Law 112-240
BBA Balanced Budget Act of 1997, Public Law 105-33
BBRA Medicare, Medicaid, and SCHIP [State Children's Health
Insurance Program] Balanced Budget Refinement Act of 1999, Public
Law 106-113
BIPA Medicare, Medicaid, and SCHIP [State Children's Health
Insurance Program] Benefits Improvement and Protection Act of 2000,
Public Law 106-554
BLS Bureau of Labor Statistics
CABG Coronary artery bypass graft [surgery]
CAH Critical access hospital
CARE [Medicare] Continuity Assessment Record & Evaluation
[Instrument]
CART CMS Abstraction & Reporting Tool
CAUTI Catheter-associated urinary tract infection
CBSAs Core-based statistical areas
CC Complication or comorbidity
CCN CMS Certification Number
CCR Cost-to-charge ratio
CDAC [Medicare] Clinical Data Abstraction Center
CDAD Clostridium difficile-associated disease
CDC Centers for Disease Control and Prevention
CEHRT Certified electronic health record technology
CERT Comprehensive error rate testing
CDI Clostridium difficile [C. difficile] infection
CFR Code of Federal Regulations
CLABSI Central line-associated bloodstream infection
CIPI Capital input price index
CMI Case-mix index
CMS Centers for Medicare & Medicaid Services
CMSA Consolidated Metropolitan Statistical Area
COBRA Consolidated Omnibus Reconciliation Act of 1985, Public Law
99-272
COLA Cost-of-living adjustment
CoP [Hospital] condition of participation
COPD Chronic obstructive pulmonary disease
CPI Consumer price index
CQL Clinical quality language
CQM Clinical quality measure
CY Calendar year
DACA Data Accuracy and Completeness Acknowledgement
DPP Disproportionate patient percentage
DRA Deficit Reduction Act of 2005, Public Law 109-171
DRG Diagnosis-related group
DSH Disproportionate share hospital
EBRT External beam radiotherapy
ECE Extraordinary circumstances exemption
ECI Employment cost index
eCQM Electronic clinical quality measure
EDB [Medicare] Enrollment Database
EHR Electronic health record
EMR Electronic medical record
EMTALA Emergency Medical Treatment and Labor Act of 1986, Public Law
99-272
EP Eligible professional
FAH Federation of American Hospitals
FDA Food and Drug Administration
FFY Federal fiscal year
FPL Federal poverty line
FQHC Federally qualified health center
FR Federal Register
FTE Full-time equivalent
FY Fiscal year
GAF Geographic Adjustment Factor
GME Graduate medical education
HAC Hospital-acquired condition
HAI Healthcare-associated infection
HCAHPS Hospital Consumer Assessment of Healthcare Providers and
Systems
HCFA Health Care Financing Administration
HCO High-cost outlier
HCP Healthcare personnel
HCRIS Hospital Cost Report Information System
HF Heart failure
HHA Home health agency
HHS Department of Health and Human Services
HICAN Health Insurance Claims Account Number
HIPAA Health Insurance Portability and Accountability Act of 1996,
Public Law 104-191
HIPC Health Information Policy Council
HIS Health information system
HIT Health information technology
HMO Health maintenance organization
HPMP Hospital Payment Monitoring Program
HSA Health savings account
HSCRC [Maryland] Health Services Cost Review Commission
HSRV Hospital-specific relative value
HSRVcc Hospital-specific relative value cost center
HQA Hospital Quality Alliance
HQI Hospital Quality Initiative
HwH Hospital-within-hospital
HWR Hospital-wide readmission
ICD-9-CM International Classification of Diseases, Ninth Revision,
Clinical Modification
ICD-10-CM International Classification of Diseases, Tenth Revision,
Clinical Modification
ICD-10-PCS International Classification of Diseases, Tenth Revision,
Procedure Coding System
ICR Information collection requirement
ICU Intensive care unit
IGI IHS Global, Inc.
IHS Indian Health Service
IME Indirect medical education
IMPACT Act Improving Medicare Post-Acute Care Transformation Act of
2014, Public Law 113-185
I-O Input-Output
IOM Institute of Medicine
IPF Inpatient psychiatric facility
IPFQR Inpatient Psychiatric Facility Quality Reporting [Program]
IPPS [Acute care hospital] inpatient prospective payment system
IRF Inpatient rehabilitation facility
IQR [Hospital] Inpatient Quality Reporting
LAMCs Large area metropolitan counties
LDS Limited Data Set
LOS Length of stay
LTC-DRG Long-term care diagnosis-related group
[[Page 37992]]
LTCH Long-term care hospital
LTCH QRP Long-Term Care Hospital Quality Reporting Program
MA Medicare Advantage
MAC Medicare Administrative Contractor
MACRA Medicare Access and CHIP Reauthorization Act of 2015, Public
Law 114-10
MAP Measure Application Partnership
MCC Major complication or comorbidity
MCE Medicare Code Editor
MCO Managed care organization
MDC Major diagnostic category
MDH Medicare-dependent, small rural hospital
MedPAC Medicare Payment Advisory Commission
MedPAR Medicare Provider Analysis and Review File
MEI Medicare Economic Index
MGCRB Medicare Geographic Classification Review Board
MIEA-TRHCA Medicare Improvements and Extension Act, Division B of
the Tax Relief and Health Care Act of 2006, Public Law 109-432
MIPPA Medicare Improvements for Patients and Providers Act of 2008,
Public Law 110-275
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003, Public Law 108-173
MMEA Medicare and Medicaid Extenders Act of 2010, Public Law 111-309
MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007, Public
Law 110-173
MOON Medicare Outpatient Observation Notice
MRHFP Medicare Rural Hospital Flexibility Program
MRSA Methicillin-resistant Staphylococcus aureus
MSA Metropolitan Statistical Area
MS-DRG Medicare severity diagnosis-related group
MS-LTC-DRG Medicare severity long-term care diagnosis-related group
MU Meaningful Use [EHR Incentive Program]
MUC Measure under consideration
NAICS North American Industrial Classification System
NALTH National Association of Long Term Hospitals
NCD National coverage determination
NCHS National Center for Health Statistics
NCQA National Committee for Quality Assurance
NCVHS National Committee on Vital and Health Statistics
NECMA New England County Metropolitan Areas
NHSN National Healthcare Safety Network
NOP Notice of Participation
NOTICE Act Notice of Observation Treatment and Implication for Care
Eligibility Act, Public Law 114-42
NQF National Quality Forum
NQS National Quality Strategy
NTIS National Technical Information Service
NTTAA National Technology Transfer and Advancement Act of 1991,
Public Law 104-113
NUBC National Uniform Billing Code
NVHRI National Voluntary Hospital Reporting Initiative
OACT [CMS'] Office of the Actuary
OBRA 86 Omnibus Budget Reconciliation Act of 1986, Public Law 99-509
OES Occupational employment statistics
OIG Office of the Inspector General
OMB [Executive] Office of Management and Budget
ONC Office of the National Coordinator for Health Information
Technology
OPM [U.S.] Office of Personnel Management
OQR [Hospital] Outpatient Quality Reporting
O.R. Operating room
OSCAR Online Survey Certification and Reporting [System]
PAC Post-acute care
PAMA Protecting Access to Medicare Act of 2014, Public Law 113-93
PCH PPS-exempt cancer hospital
PCHQR PPS-exempt cancer hospital quality reporting
PMSAs Primary metropolitan statistical areas
POA Present on admission
PPI Producer price index
PPR Potentially Preventable Readmissions
PPS Prospective payment system
PRA Paperwork Reduction Act
PRM Provider Reimbursement Manual
ProPAC Prospective Payment Assessment Commission
PRRB Provider Reimbursement Review Board
PRTFs Psychiatric residential treatment facilities
PSF Provider-Specific File
PSI Patient safety indicator
PS&R Provider Statistical and Reimbursement [System]
PQRS Physician Quality Reporting System
PUF Public use file
QDM Quality data model
QIES ASAP Quality Improvement Evaluation System Assessment
Submission and Processing
QIG Quality Improvement Group [CMS]
QIO Quality Improvement Organization
QM Quality measure
QPP Quality Payment Program
QRDA Quality Reporting Document Architecture
RFA Regulatory Flexibility Act, Public Law 96-354
RHC Rural health clinic
RHQDAPU Reporting hospital quality data for annual payment update
RIM Reference information model
RNHCI Religious nonmedical health care institution
RPL Rehabilitation psychiatric long-term care (hospital)
RRC Rural referral center
RSMR Risk-standard mortality rate
RSP Risk-standardized payment
RSSR Risk-standard readmission rate
RTI Research Triangle Institute, International
RUCAs Rural-urban commuting area codes
RY Rate year
SAF Standard Analytic File
SCH Sole community hospital
SCHIP State Child Health Insurance Program
SCIP Surgical Care Improvement Project
SFY State fiscal year
SGR Sustainable Growth Rate
SIC Standard Industrial Classification
SIR Standardized infection ratio
SNF Skilled nursing facility
SNF QRP Skilled Nursing Facility Quality Reporting Program
SNF VBP Skilled Nursing Facility Value-Based Purchasing
SOCs Standard occupational classifications
SOM State Operations Manual
SRR Standardized risk ratio
SSI Surgical site infection
SSI Supplemental Security Income
SSO Short-stay outlier
SUD Substance use disorder
TEFRA Tax Equity and Fiscal Responsibility Act of 1982, Public Law
97-248
TEP Technical expert panel
THA/TKA Total hip arthroplasty/total knee arthroplasty
TMA TMA [Transitional Medical Assistance], Abstinence Education, and
QI [Qualifying Individuals] Programs Extension Act of 2007, Public
Law 110-90
TPS Total Performance Score
UHDDS Uniform hospital discharge data set
UR Utilization review
VBP [Hospital] Value Based Purchasing [Program]
VTE Venous thromboembolism
Table of Contents
I. Executive Summary and Background
A. Executive Summary
1. Purpose and Legal Authority
2. Summary of the Major Provisions
3. Summary of Costs and Benefits
B. Summary
1. Acute Care Hospital Inpatient Prospective Payment System
(IPPS)
2. Hospitals and Hospital Units Excluded from the IPPS
3. Long-Term Care Hospital Prospective Payment System (LTCH PPS)
4. Critical Access Hospitals (CAHs)
5. Payments for Graduate Medical Education (GME)
C. Summary of Provisions of Recent Legislation Implemented in
This Final Rule
1. The American Taxpayer Relief Act of 2012 (ATRA) (Pub. L. 112-
240), the Medicare Access and CHIP Reauthorization Act of 2015
(MACRA) (Pub. L. 114-10), and the 21st Century Cures Act (Pub. L.
114-255)
2. Pathway for SGR Reform Act of 2013 (Pub. L. 113-67)
3. Improving Medicare Post-Acute Care Transformation Act of 2014
(IMPACT Act) (Pub. L. 113-185)
4. The Medicare Access and CHIP Reauthorization Act of 2015
(MACRA) (Pub. L. 114-10)
5. The 21st Century Cures Act (Pub. L. 114-255)
D. Issuance of Notice of Proposed Rulemaking
II. Changes to Medicare Severity Diagnosis-Related Group (MS-DRG)
Classifications and Relative Weights
A. Background
B. MS-DRG Reclassifications
C. Adoption of the MS-DRGs in FY 2008
D. FY 2018 MS-DRG Documentation and Coding Adjustment
[[Page 37993]]
1. Background on the Prospective MS-DRG Documentation and Coding
Adjustments for FY 2008 and FY 2009 Authorized by Public Law 110-90
2. Recoupment or Repayment Adjustment Authorized by Section 631
of the American Taxpayer Relief Act of 2012 (ATRA)
3. Adjustment for FY 2018 Required Under Section 414 of Public
Law 114-10 (MACRA) and Section 15005 of Public Law 114-255
E. Refinement of the MS-DRG Relative Weight Calculation
1. Background
2. Discussion of Policy for FY 2018
F. Changes to Specific MS-DRG Classifications
1. Discussion of Changes to Coding System and Basis for FY 2018
MS-DRG Updates
a. Conversion of MS-DRGs to the International Classification of
Diseases, 10th Revision (ICD-10)
b. Basis for FY 2018 MS-DRG Updates
2. MDC 1 (Diseases and Disorders of the Nervous System)
a. Functional Quadriplegia
b. Responsive Neurostimulator (RNS(copyright)) System
c. Precerebral Occlusion or Transient Ischemic Attack With
Thrombolytic
3. MDC 2 (Diseases and Disorders of the Eye: Swallowing Eye
Drops (Tetrahydrozoline))
4. MDC 5 (Diseases and Disorders of the Circulatory System)
a. Percutaneous Cardiovascular Procedures and Insertion of a
Radioactive Element
b. Modification of the Titles for MS-DRG 246 (Percutaneous
Cardiovascular Procedures With Drug-Eluting Stent With MCC or 4+
Vessels or Stents) and MS-DRG 248 (Percutaneous Cardiovascular
Procedures With Non-Drug-Eluting Stent With MCC or 4+ Vessels or
Stents)
c. Transcatheter Aortic Valve Replacement (TAVR) and Left Atrial
Appendage Closure (LAAC)
d. Percutaneous Mitral Valve Replacement Procedures
e. Percutaneous Tricuspid Valve Repair
5. MDC 8 (Diseases and Disorders of the Musculoskeletal System
and Connective Tissue)
a. Total Ankle Replacement (TAR) Procedures
b. Revision of Total Ankle Replacement (TAR) Procedures
c. Magnetic Controlled Growth Rods (MAGEC[supreg] System)
d. Combined Anterior/Posterior Spinal Fusion
6. MDC 14 (Pregnancy, Childbirth and the Puerperium)
a. Vaginal Delivery and Complicating Diagnoses
b. MS-DRG 998 (Principal Diagnosis Invalid as Discharge
Diagnosis)
c. MS-DRG 782 (Other Antepartum Diagnoses Without Medical
Complications)
d. Shock During or Following Labor and Delivery
7. MDC 15 (Newborns and Other Neonates with Conditions
Originating in Perinatal Period): Observation and Evaluation of
Newborn
8. MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs):
Complication Codes
9. MDC 23 (Factors Influencing Health Status and Other Contacts
With Health Services): Updates to MS-DRGs 945 and 946
(Rehabilitation With CC/MCC and Without CC/MCC, Respectively)
10. Changes to the Medicare Code Editor (MCE)
a. Age Conflict Edit
b. Sex Conflict Edit
c. Non-Covered Procedure Edit
d. Unacceptable Principal Diagnosis Edit
e. Future Enhancement
11. Changes to Surgical Hierarchies
12. Changes to the MS-DRG Diagnosis Codes for FY 2018
a. Background of the CC List and the CC Exclusions List
b. Additions and Deletions to the Diagnosis Code Severity Levels
for FY 2018
c. Principal Diagnosis Is Its Own CC or MCC
d. CC Exclusions List for FY 2018
13. Comprehensive Review of CC List for FY 2019
14. Review of Procedure Codes in MS DRGs 981 Through 983; 984
Through 986; and 987 Through 989
a. Moving Procedure Codes From MS-DRGs 981 Through 983 or MS-
DRGs 987 Through 989 Into MDCs
b. Reassignment of Procedures Among MS-DRGs 981 Through 983, 984
Through 986, and 987 Through 989
15. Changes to the ICD-10-CM and ICD-10-PCS Coding Systems
16. Replaced Devices Offered Without Cost or With a Credit
a. Background
b. Changes for FY 2018
17. Other Policy Changes: Other Operating Room (O.R.) and Non-
O.R. Issues
a. O.R. Procedures to Non-O.R. Procedures
b. Revision of Neurostimulator Generator
c. External Repair of Hymen
d. Non-O.R. Procedures in MDC 17 (Myeloproliferative Diseases
and Disorders Poorly Differentiated Neoplasms)
G. Recalibration of the FY 2018 MS-DRG Relative Weights
1. Data Sources for Developing the Relative Weights
2. Methodology for Calculation of the Relative Weights
3. Development of National Average CCRs
H. Add-On Payments for New Services and Technologies for FY 2018
1. Background
2. Public Input Before Publication of a Notice of Proposed
Rulemaking on Add-On Payments
3. ICD-10-PCS Section ``X'' Codes for Certain New Medical
Services and Technologies
4. Revision of Reference to an ICD-9-CM Code in Sec.
412.87(b)(2) of the Regulations
5. FY 2018 Status of Technologies Approved for FY 2017 Add-On
Payments
a. CardioMEMSTM HF (Heart Failure) Monitoring System
b. Defitelio[supreg] (Defibrotide)
c. GORE[supreg] EXCLUDER[supreg] Iliac Branch Endoprosthesis
(IBE)
d. Idarucizumab
e. Lutonix[supreg] Drug Coated Balloon PTA Catheter and
In.PACTTM AdmiralTM Paclitaxel Coated
Percutaneous Transluminal Angioplasty (PTA) Balloon Catheter
f. MAGEC[supreg] Spinal Bracing and Distraction System
(MAGEC[supreg] Spine)
g. VistogardTM (Uridine Triacetate)
h. Blinatumomab (BLINCYTOTM Trade Brand)
6. FY 2018 Applications for New Technology Add-On Payments
a. Bezlotoxumab (ZINPLAVATM)
b. EDWARDS INTUITY EliteTM Valve System (INTUITY) and
Liva Nova Perceval Valve (Perceval)
c. Ustekinumab (Stelara[supreg])
III. Changes to the Hospital Wage Index for Acute Care Hospitals
A. Background
1. Legislative Authority
2. Core-Based Statistical Areas (CBSAs) for the FY 2018 Hospital
Wage Index
3. Codes for Constituent Counties in CBSAs
B. Worksheet S-3 Wage Data for the FY 2018 Wage Index
1. Included Categories of Costs
2. Excluded Categories of Costs
3. Use of Wage Index Data by Suppliers and Providers Other Than
Acute Care Hospitals Under the IPPS
C. Verification of Worksheet S-3 Wage Data
D. Method for Computing the FY 2018 Unadjusted Wage Index
1. Methodology for FY 2018
2. Clarification of Other Wage Related Costs in the Wage Index
E. Occupational Mix Adjustment to the FY 2018 Wage Index
1. Use of 2013 Occupational Mix Survey for the FY 2018 Wage
Index
2. Use of the 2016 Medicare Wage Index Occupational Mix Survey
for the FY 2019 Wage Index
3. Calculation of the Occupational Mix Adjustment for FY 2018
F. Analysis and Implementation of the Occupational Mix
Adjustment and the FY 2018 Occupational Mix Adjusted Wage Index
G. Application of the Rural, Imputed, and Frontier Floors
1. Rural Floor
2. Expiration of the Imputed Floor Policy
3. State Frontier Floor for FY 2018
H. FY 2018 Wage Index Tables
I. Revisions to the Wage Index Based on Hospital Redesignations
and Reclassifications
1. General Policies and Effects of Reclassification and
Redesignation
2. MGCRB Reclassification and Redesignation Issues for FY 2018
a. FY 2018 Reclassification Requirements and Approvals
b. Extension of PRA Information Collection Requirement Approval
for MGCRB Applications
c. Deadline for Submittal of Documentation of Sole Community
Hospital (SCH) and Rural Referral Center (RRC) Classification Status
to the MGCRB
[[Page 37994]]
d. Clarification of Special Rules for SCHs and RRCs
Reclassifying to Geographic Home Area
3. Redesignations Under Section 1886(d)(8)(B) of the Act
4. Changes to the 45-Day Notification Rules
J. Out-Migration Adjustment Based on Commuting Patterns of
Hospital Employees
K. Reclassification From Urban to Rural Under Section
1886(d)(8)(E) of the Act Implemented at 42 CFR 412.103
L. Clarification of Application Deadline for Rural Referral
Center (RRC) Classification
M. Process for Requests for Wage Index Data Corrections
1. Process for Hospitals to Accept Wage Index Data Corrections
2. Process for Wage Index Data Corrections by CMS After the
January Public Use File (PUF)
N. Labor Market Share for the FY 2018 Wage Index
IV. Rebasing and Revising of the Hospital Market Baskets for Acute
Care Hospitals
A. Background
B. Rebasing and Revising the IPPS Market Basket
1. Development of Cost Categories and Weights
a. Use of Medicare Cost Report Data
b. Final Major Cost Category Computation
c. Derivation of the Detailed Cost Weights
2. Selection of Price Proxies
3. Labor-Related Share
C. Market Basket for Certain Hospitals Presently Excluded From
the IPPS
D. Rebasing and Revising the Capital Input Price Index (CIPI)
V. Other Decisions and Changes to the IPPS for Operating Costs
A. Changes to MS-DRGs Subject to Postacute Care Transfer and MS-
DRG Special Payment Policies
B. Changes in the Inpatient Hospital Updates for FY 2018 (Sec.
412.64(d))
1. FY 2018 Inpatient Hospital Update
2. FY 2018 Puerto Rico Hospital Update
C. Change to Volume Decrease Adjustment for Sole Community
Hospitals (SCHs) and Medicare-Dependent, Small Rural Hospitals
(MDHs) (Sec. 412.92)
1. Background
2. Changes to the Volume Decrease Adjustment Calculation
Methodology for SCHs
D. Rural Referral Centers (RRCs): Annual Updates to Case-Mix
Index (CMI) and Discharge Criteria (Sec. 412.96)
1. Case-Mix Index (CMI)
2. Discharges
E. Payment Adjustment for Low-Volume Hospitals (Sec. 412.101)
1. Expiration of Temporary Changes to Low-Volume Hospital
Payment Policy
2. Background
3. Payment Adjustment for FY 2018 and Subsequent Fiscal Years
4. Parallel Low-Volume Hospital Payment Adjustment Regarding
Hospitals Operated by the Indian Health Service (IHS) or a Tribe
F. Indirect Medical Education (IME) Payment Adjustment (Sec.
412.105)
G. Payment Adjustment for Medicare Disproportionate Share
Hospitals (DSHs) for FY 2018 (Sec. 412.106)
1. General Discussion
2. Eligibility for Empirically Justified Medicare DSH Payments
and Uncompensated Care Payments
3. Empirically Justified Medicare DSH Payments
4. Uncompensated Care Payments
a. Calculation of Factor 1 for FY 2018
b. Calculation of Factor 2 for FY 2018
(1) Background
(2) Methodology for Calculation of Factor 2 for FY 2018
c. Calculation of Factor 3 for FY 2018
(1) Background
(2) Data Source for FY 2018
(3) Time Period for Calculating Factor 3 for FY 2018, Including
Methodology for Incorporating Worksheet S-10 Data
(4) Methodological Considerations for Calculating Factor 3
(5) Methodological Considerations for Incorporating Worksheet S-
10 Data
H. Medicare-Dependent, Small Rural Hospital (MDH) Program (Sec.
412.108)
1. Background for the MDH Program
a. Expiration of the MDH Program
I. Hospital Readmissions Reduction Program: Updates and Changes
(Sec. Sec. 412.150 Through 412.154)
1. Statutory Basis for the Hospital Readmissions Reduction
Program
2. Regulatory Background
3. Maintenance of Technical Specifications for Quality Measures
4. Policies for the Hospital Readmissions Reduction Program
5. Applicable Period for FY 2018
6. Calculation of Aggregate Payments for Excess Readmissions for
FY 2018
7. Background and Current Payment Adjustment Methodology
a. Background
b. Current Payment Adjustment Methodology
8. Provisions for the Payment Adjustment Methodology for FY
2019: Methodology for Calculating the Proportion of Dual-Eligible
Patients
a. Background
b. Data Sources Used To Determine Dual Eligibility
c. Data Period Used To Define Dual Eligibility
9. Provisions for the Payment Adjustment Methodology for FY
2019: Methodology for Assigning Hospitals to Peer Groups
10. Provisions for the Payment Adjustment Methodology for FY
2019: Payment Adjustment Formula Calculation Methodology
a. Background
b. Proposals
c. Analysis
11. Accounting for Social Risk Factors in the Hospital
Readmissions Reduction Program
12. Extraordinary Circumstances Exceptions (ECE) Policy
13. Timeline for Public Reporting of Excess Readmission Ratios
on Hospital Compare for the FY 2018 Payment Determination
J. Hospital Value-Based Purchasing (VBP) Program: Policy Changes
1. Background
a. Statutory Background and Overview of Past Program Years
b. FY 2018 Program Year Payment Details
2. Accounting for Social Risk Factors in the Hospital VBP
Program
3. Retention and Removal of Quality Measures for the FY 2019
Program Year
a. Retention of Previously Adopted Hospital VBP Program Measures
b. Removal of the PSI 90 Measure
c. Summary of Previously Adopted Measures and Measure for
Removal for the FY 2019 and FY 2020 Program Years
4. New Measures for the FY 2022 Program Year, FY 2023 Program
Year, and Subsequent Years
a. New Measure for the FY 2022 Program Year and Subsequent
Years: Hospital-Level, Risk-Standardized Payment Associated with a
30-Day Episode-of-Care for Pneumonia (PN Payment)
b. New Measure for the FY 2023 Program Year and Subsequent
Years: Patient Safety and Adverse Events (Composite) (NQF #0531)
5. Previously Adopted and Baseline and Performance Periods
a. Background
b. Person and Community Engagement Domain
c. Efficiency and Cost Reduction Domain
d. Safety Domain
e. Clinical Care Domain
f. Summary of Previously Adopted and Newly Finalized Baseline
and Performance Periods for the FY 2019 Through FY 2023 Program
Years
6. Performance Standards for the Hospital VBP Program
a. Background
b. Previously Adopted and Newly Finalized Performance Standards
for the FY 2020 Program Year
c. Previously Adopted Performance Standards for Certain Measures
for the FY 2021 Program Year
d. Previously Adopted and Newly Finalized Performance Standards
for Certain Measures for the FY 2022 Program Year
e. Performance Standards for Certain Measures for the FY 2023
Program Year
7. Scoring Methodology and Data Requirements for the FY 2019
Program Year and Subsequent Years
a. Domain Weighting for the FY 2020 Program Year and Subsequent
Years for Hospitals That Receive a Score on All Domains
b. Domain Weighting for the FY 2019 Program Year and Subsequent
Years for Hospitals Receiving Scores on Fewer than Four Domains
c. Minimum Numbers of Cases for Hospital VBP Program Measures
for the FY 2019 Program Year and Subsequent Years
d. Weighting Measures Within the Efficiency and Cost Reduction
Domain
K. Changes to the Hospital-Acquired Condition (HAC) Reduction
Program
1. Background
2. Implementation of the HAC Reduction Program for FY 2018
3. Data Collection Time Periods for the FY 2020 HAC Reduction
Program
[[Page 37995]]
4. Request for Comments on Additional Measures for Potential
Future Adoption
5. Accounting for Social Risk Factors in the HAC Reduction
Program
6. Request for Comments on Inclusion on Disability and Medical
Complexity for CDC NHSN Measures
7. Extraordinary Circumstances Exceptions (ECE) Policy for the
HAC Reduction Program
8. Maintenance of Technical Specifications for Quality Measures
L. Rural Community Hospital Demonstration Program
1. Introduction
2. Background
3. Provisions of the 21st Century Cures Act (Pub. L. 114-255)
and Finalized Policies for Implementation
a. Statutory Provisions
b. Terms of Continuation for Previously Participating Hospitals
c. Solicitation for Additional Participants
4. Budget Neutrality
a. Statutory Budget Neutrality Requirement
b. Methodology Used in Previous Final Rules
c. Budget Neutrality Methodology for Extension Period Authorized
by the 21st Century Cures Act (Pub. L. 114-255)
d. Finalized Budget Neutrality Approach
e. Reconciling Actual and Estimated Costs of the Demonstration
for Previous Years (2011, 2012, and 2013)
M. Adjustment to IPPS Rates Resulting From the 2-Midnight Policy
for FY 2018
N. Provider-Based Status of Indian Health Service and Tribal
Facilities and Organizations
VI. Changes to the IPPS for Capital-Related Costs
A. Overview
B. Additional Provisions
1. Exception Payments
2. New Hospitals
3. Payments for Hospitals Located in Puerto Rico
C. Annual Update for FY 2018
VII. Changes for Hospitals Excluded From the IPPS
A. Rate-of-Increase in Payments to Excluded Hospitals for FY
2018
B. Revisions to Hospital-Within-Hospital Regulations
C. Report of Adjustment (Exceptions) Payments
D. Critical Access Hospitals (CAHs)
1. Background
2. Frontier Community Health Integration Project (FCHIP)
Demonstration
3. Physician Certification Requirement for Payment of Inpatient
CAH Services Under Medicare Part A
a. Background
b. Notice Regarding Changes to Instructions for the Review of
the CAH 96-Hour Certification Requirement
VIII. Changes to the Long-Term Care Hospital Prospective Payment
System (LTCH PPS) for FY 2018
A. Background of the LTCH PPS
1. Legislative and Regulatory Authority
2. Criteria for Classification as an LTCH
a. Classification as an LTCH
b. Hospitals Excluded From the LTCH PPS
3. Limitation on Charges to Beneficiaries
4. Administrative Simplification Compliance Act (ASCA) and
Health Insurance Portability and Accountability Act (HIPAA)
Compliance
B. Medicare Severity Long-Term Care Diagnosis-Related Group (MS-
LTC-DRG) Classifications and Relative Weights for FY 2018
1. Background
2. Patient Classifications Into MS-LTC-DRGs
a. Background
b. Changes to the MS-LTC-DRGs for FY 2018
3. Development of the FY 2018 MS-LTC-DRG Relative Weights
a. General Overview of the Development of the MS-LTC-DRG
Relative Weights
b. Development of the MS-LTC-DRG Relative Weights for FY 2018
c. Data
d. Hospital-Specific Relative Value (HSRV) Methodology
e. Treatment of Severity Levels in Developing the MS-LTC-DRG
Relative Weights
f. Low-Volume MS-LTC-DRGs
g. Steps for Determining the FY 2018 MS-LTC-DRG Relative Weights
C. Changes to the LTCH PPS Payment Rates and Other Changes to
the LTCH PPS for FY 2018
1. Overview of Development of the LTCH PPS Standard Federal
Payment Rates
2. FY 2018 LTCH PPS Standard Federal Payment Rate Annual Market
Basket Update
a. Overview
b. Annual Update to the LTCH PPS Standard Federal Payment Rate
for FY 2018
c. Adjustment to the LTCH PPS Standard Federal Payment Rate
under the Long-Term Care Hospital Quality Reporting Program (LTCH
QRP)
d. Annual Update under the LTCH PPS for FY 2018
D. Changes to the Short-Stay Outlier Adjustment Policy (Sec.
412.529)
E. Temporary Exception to the Site Neutral Payment Rate for
Certain Spinal Cord Specialty Hospitals
F. Temporary Exception to the Site Neutral Payment Rate for
Certain Discharges With Severe Wounds From Certain LTCHs
G. Moratorium and Regulatory Delay of the Full Implementation of
the ``25-Percent'' Threshold Policy'' Adjustment (Sec. 412.538)
H. Revision to Moratorium on Increasing Beds in Existing LTCH or
LTCH Satellite Locations Under the 21st Century Cures Act (Pub. L.
114-255) (Sec. 412.23)
I. Changes to the Average Length of Stay Criterion Under the
21st Century Cures Act (Pub. L. 114-255)
J. Change in Medicare Classification for Certain Hospitals
(Sec. 412.23)
IX. Quality Data Reporting Requirements for Specific Providers and
Suppliers
A. Hospital Inpatient Quality Reporting (IQR) Program
1. Background
a. History of the Hospital IQR Program
b. Maintenance of Technical Specifications for Quality Measures
c. Public Display of Quality Measures
d. Accounting for Social Risk Factors in the Hospital IQR
Program
2. Retention of Previously Adopted Hospital IQR Program Measures
for Subsequent Payment Determinations
3. Removal and Suspension of Previously Adopted Hospital IQR
Program Measures
4. Previously Adopted Hospital IQR Program Measures for the FY
2019 Payment Determination and Subsequent Years
5. Considerations in Expanding and Updating of Quality Measures
6. Refinements to Existing Measures in the Hospital IQR Program
for the FY 2020 Payment Determination and Subsequent Years
a. Refining Hospital Consumer Assessment of Healthcare Providers
and Systems (HCAHPS) Survey (NQF #0166) for the FY 2020 Payment
Determination and Subsequent Years
b. Refinement of the Hospital 30-Day, All-Cause, Risk-
Standardized Mortality Rate (RSMR) following Acute Ischemic Stroke
Hospitalization Measure for the FY 2023 Payment Determination and
Subsequent Years
c. Summary of Previously Adopted Hospital IQR Program Measures
for the FY 2020 Payment Determination and Subsequent Years
7. Voluntary Hybrid Hospital-Wide Readmission Measure With
Claims and Electronic Health Record Data (NQF #2879)
a. Background
b. Voluntary Reporting of Electronic Health Record Data for the
Hybrid HWR Measure (NQF #2879)
c. Data Sources
d. Outcome
e. Cohort
f. Inclusion and Exclusion Criteria
g. Risk-Adjustment
h. Calculating the Risk-Standardized Readmission Rate (RSRR)
i. Data Submission and Reporting Requirements
j. Confidential Hospital-Specific Reports
8. Changes to Policies on Reporting of eCQMs
a. Background
b. Modifications to the eCQM Reporting Requirements for the
Hospital IQR Program for the CY 2017 Reporting Period/FY 2019
Payment Determination
c. Modifications to the eCQM Reporting Requirements for the
Hospital IQR Program for the CY 2018 Reporting Period/FY 2020
Payment Determination
9. Possible New Quality Measures and Measure Topics for Future
Years
a. Potential Inclusion of the Quality of Informed Consent
Documents for Hospital-Performed, Elective Procedures Measure
b. Potential Inclusion of Four End-of-Life (EOL) Measures for
Cancer Patients
c. Potential Inclusion of Two Nurse Staffing Measures
d. Potential Inclusion of Additional Electronic Clinical Quality
Measures (eCQMs) in the Hospital IQR and Medicare and Medicaid EHR
Incentive Programs
[[Page 37996]]
10. Form, Manner, and Timing of Quality Data Submission
a. Background
b. Procedural Requirements for the FY 2020 Payment Determination
and Subsequent Years
c. Data Submission Requirements for Chart-Abstracted Measures
d. Changes to the Reporting and Submission Requirements for
eCQMs
e. Submission Form and Method for the Voluntary Hybrid Hospital-
Wide Readmission Measure with Claims and Electronic Health Record
Data (NQF #2879)
f. Sampling and Case Thresholds for the FY 2020 Payment
Determination and Subsequent Years
g. HCAHPS Administration and Submission Requirements for the FY
2020 Payment Determination and Subsequent Years
h. Data Submission Requirements for Structural Measures for the
FY 2020 Payment Determination and Subsequent Years
i. Data Submission and Reporting Requirements for HAI Measures
Reported via NHSN
11. Modifications to the Validation of Hospital IQR Program Data
a. Background
b. Changes to the Existing Processes for Validation of Hospital
IQR Program eCQM Data for the FY 2020 Payment Determination and
Subsequent Years
c. Modifications to the Educational Review Process for Chart-
Abstracted Measures Validation
12. Data Accuracy and Completeness Acknowledgement (DACA)
Requirements for the FY 2020 Payment Determination and Subsequent
Years
13. Public Display Requirements for the FY 2020 Payment
Determination and Subsequent Years
a. Background
b. Potential Options for Confidential and Public Reporting of
Hospital IQR Measures Stratified by Patient Dual-Eligibility Status
14. Reconsideration and Appeal Procedures for the FY 2020
Payment Determination and Subsequent Years
15. Change to the Hospital IQR Program Extraordinary
Circumstances Exceptions (ECE) Policy
a. Background
b. Alignment of the Hospital IQR Program ECE Policy With Other
CMS Quality Programs
B. PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program
1. Background
2. Criteria for Removal and Retention of PCHQR Program Measures
3. Retention and Removal of Previously Finalized Quality
Measures for PCHs Beginning With the FY 2020 Program Year
a. Background
b. Removal of Measures from the PCHQR Program Beginning With the
FY 2020 Program Year
4. New Quality Measures Beginning With the FY 2020 Program Year
a. Considerations in the Selection of Quality Measures
b. New Quality Measures Beginning With the FY 2020 Program Year
c. Summary of Previously Finalized and Newly Finalized PCHQR
Program Measures for the FY 2020 Program Year and Subsequent Years
5. Accounting for Social Risk Factors in the PCHQR Program
6. Possible New Quality Measure Topics for Future Years
a. Background
b. Localized Prostate Cancer: Vitality; Localized Prostate
Cancer: Urinary Incontinence; Localized Prostate Cancer: Urinary
Frequency, Obstruction, and/or Irritation; Localized Prostate
Cancer: Sexual Function; and Localized Prostate Cancer: Bowel
Function
c. 30-Day Unplanned Readmission for Cancer Patients
7. Maintenance of Technical Specifications for Quality Measures
8. Public Display Requirements
a. Background
b. Deferment of Public Display of Two Measures
9. Form, Manner, and Timing of Data Submission
a. Background
b. Reporting Requirements for New Measures
10. Extraordinary Circumstances Exceptions (ECE) Policy Under
the PCHQR Program
a. Background
b. Modifications to the ECE Policy
C. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
1. Background and Statutory Authority
2. General Considerations Used for Selection of Quality Measures
for the LTCH QRP
a. Background
b. Accounting for Social Risk Factors in the LTCH QRP
3. Collection of Standardized Patient Assessment Data Under the
LTCH QRP
a. Definition of Standardized Patient Assessment Data
b. General Considerations Used for the Selection of Standardized
Patient Assessment Data
4. Policy for Retaining LTCH QRP Measures and Policy To Apply
That Retention Policy to Standardized Patient Assessment Data
5. Policy for Adopting Changes to LTCH QRP Measures and Policy
To Apply That Policy for Adopting Changes to Standardized Patient
Assessment Data
6. Quality Measures Currently Adopted for the LTCH QRP
7. LTCH QRP Quality Measures Beginning With the FY 2020 LTCH QRP
a. Finalized Proposal To Replace the Current Pressure Ulcer
Quality Measure, Percent of Residents or Patients With Pressure
Ulcers That Are New or Worsened (Short Stay) (NQF #0678), With a
Modified Pressure Ulcer Measure, Changes in Skin Integrity Post-
Acute Care: Pressure Ulcer/Injury
b. Mechanical Ventilation Process Quality Measure: Compliance
With Spontaneous Breathing Trial (SBT) by Day 2 of the LTCH Stay
c. Mechanical Ventilation Outcome Quality Measure: Ventilator
Liberation Rate
8. Removal of the All-Cause Unplanned Readmission Measure for 30
Days Post-Discharge From LTCHS From the LTCH QRP
9. LTCH QRP Quality Measures Under Consideration for Future
Years
a. LTCH QRP Quality Measures Under Consideration for Future
Years
b. IMPACT Act Measure--Possible Future Update to Measure
Specifications
c. IMPACT Act Implementation Update
10. Standardized Patient Assessment Data Reporting for the LTCH
QRP
a. Standardized Patient Assessment Data Reporting for the FY
2019 LTCH QRP
b. Standardized Patient Assessment Data Reporting Beginning With
the FY 2020 LTCH QRP
11. Form, Manner, and Timing of Data Submission Under the LTCH
QRP
a. Start Date for Standardized Patient Assessment Data Reporting
by New LTCHs
b. Mechanism for Reporting Standardized Patient Assessment Data
Beginning With the FY 2019 LTCH QRP
c. Schedule for Reporting Standardized Patient Assessment Data
Beginning With the FY 2019 LTCH QRP
d. Schedule for Reporting the Newly Finalized Quality Measures
Beginning With the FY 2020 LTCH QRP
e. Removal of Interrupted Stay Items From the LTCH CARE Data Set
12. Changes to Previously Codified Participation Requirements
Under the LTCH QRP
13. Changes to Previously Codified Data Submission Requirements
Under the LTCH QRP
14. Changes to Previously Codified Exception and Extension
Requirements Under the LTCH QRP
15. Changes to Previously Codified Reconsiderations Requirements
Under the LTCH QRP
16. Application of the LTCH QRP Data Completion Thresholds to
the Submission of Standardized Patient Assessment Data Beginning
With the FY 2019 LTCH QRP
17. Policies Regarding Public Display of Measure Data for the
LTCH QRP
18. Mechanism for Providing Feedback Reports to LTCHs
D. Inpatient Psychiatric Facility Quality Reporting (IPFQR)
Program
1. Background
a. Statutory Authority
b. Covered Entities
c. Considerations in Selecting Quality Measures
2. Factors for Removal or Retention of IPFQR Program Measures
a. Background
b. Considerations in Removing or Retaining Measures
3. Proposal for New Quality Measure for the FY 2020 Payment
Determination and Subsequent Years--Medication Continuation
following Inpatient Psychiatric Discharge
[[Page 37997]]
a. Background
b. Appropriateness for the IPFQR Program
c. Measure Calculation
d. Data Sources
e. Public Comment
4. Summary of Previously Finalized Measures for the FY 2020
Payment Determinations and Subsequent Years
5. Possible IPFQR Program Measures and Topics for Future
Consideration
6. Public Display and Review Requirements
7. Form, Manner, and Timing of Quality Data Submission for the
FY 2019 Payment Determination and Subsequent Years
a. Procedural Requirements for FY 2019 Payment Determination and
Subsequent Years
b. Data Submission Requirements for the FY 2019 Payment
Determination and Subsequent Years
c. Reporting Requirements for the FY 2019 Payment Determination
and Subsequent Years
d. Population and Sampling
e. Data Accuracy and Completeness Acknowledgement (DACA)
Requirements
8. Reconsideration and Appeals Procedures
9. Extraordinary Circumstances Exceptions (ECE) for the IPFQR
Program
a. Background
b. ECE Policy Modifications
E. Clinical Quality Measurement for Eligible Hospitals and
Critical Access Hospitals (CAHs) Participating in the EHR Incentive
Programs
1. Background
2. Modifications to the CQM Reporting Requirements for the
Medicare and Medicaid EHR Incentive Programs for CY 2017
a. Background
b. Changes to Policies Regarding Electronic Reporting of CQMs
for CY 2017
3. CQM Reporting for the Medicare and Medicaid EHR Incentive
Programs in 2018
a. Background
b. CQM Reporting Period for the Medicare and Medicaid EHR
Incentive Programs in CY 2018
c. CQM Reporting Form and Method for the Medicare EHR Incentive
Program in 2018
F. Clinical Quality Measurement for Eligible Professionals (EPs)
Participating in the Medicaid EHR Incentive Program in 2017
1. Modifications to the CQM Reporting Period for EPs in 2017
2. Modifications to CQM Reporting Requirements for Medicaid EPs
Under the Medicaid EHR Incentive Program
G. Changes to the Medicare and Medicaid EHR Incentive Programs
1. Revisions to the EHR Reporting Period in 2018
2. Significant Hardship Exception for Decertified Certified EHR
Technology (CEHRT) for EPs, Eligible Hospitals, and CAHs Seeking To
Avoid the Medicare Payment Adjustment
3. Ambulatory Surgical Center (ASC)-Based Eligible Professionals
(EPs)
4. Certification Requirements for 2018
X. Revisions of Medicare Cost Reporting and Provider Requirements
A. Electronic Signature and Submission of the Certification and
Settlement Summary Page of the Medicare Cost Report
1. Background
2. Changes Relating to Electronic Signature on the Certification
and Settlement Summary Page of the Medicare Cost Report
3. Changes Relating to Electronic Submission of the
Certification and Settlement Summary Page of the Medicare Cost
Report
4. Clarifications Relating to the Items Required to be Submitted
by Providers with the Medicare Cost Report
a. Settlement Summary and Certification Statement
b. Removal of the Transition Period Language
5. Revisions to 42 CFR 413.24(f)(4)(iv)
B. Clarification of Limitations on the Valuation of Depreciable
Assets Disposed of on or after December 1, 1997
XI. Changes Relating to Survey and Certification Requirements
A. Revisions to the Application and Re-Application Procedures
for National Accrediting Organizations (AOs), Provider and Supplier
Conditions, and Posting of Survey Reports and Acceptable Plans of
Corrections (PoCs)
B. Changes to Termination Public Notice Requirements for Certain
Providers and Suppliers
1. Background
2. Basis for Changes
3. Changes to Regulations
XII. MedPAC Recommendations
XIII. Other Required Information
A. Publicly Available Data
B. Collection of Information Requirements
1. Statutory Requirement for Solicitation of Comments
2. ICRs for Temporary Exception to the LTCH PPS Site Neutral
Payment Rate for Certain Spinal Cord Specialty Hospitals
3. ICRs for the Hospital Inpatient Quality Reporting (IQR)
Program
4. ICRs for PPS-Exempt Cancer Hospital Quality Reporting (PCHQR)
Program
5. ICRs for Hospital Value-Based Purchasing (VBP) Program
6. ICRs for the Long-Term Care Hospital Quality Reporting
Program (LTCH QRP)
7. ICRs for the Inpatient Psychiatric Facility Quality Reporting
(IPFQR) Program
8. ICRs for the Electronic Health Record (EHR) Incentive
Programs and Meaningful Use
9. ICRs Relating to Electronic Signature and Electronic
Submission of the Certification and Settlement Summary Page of
Medicare Cost Reports
10. ICRs Relating to Changes in Public Notices of Terminations
Regulation Text
Addendum--Schedule of Standardized Amounts, Update Factors, and
Rate-of-Increase Percentages Effective with Cost Reporting Periods
Beginning on or after October 1, 2017 and Payment Rates for LTCHs
Effective with Discharges Occurring on or after October 1, 2017
I. Summary and Background
II. Changes to the Prospective Payment Rates for Hospital Inpatient
Operating Costs for Acute Care Hospitals for FY 2018
A. Calculation of the Adjusted Standardized Amount
B. Adjustments for Area Wage Levels and Cost-of-Living
C. Calculation of the Prospective Payment Rates
III. Changes to Payment Rates for Acute Care Hospital Inpatient
Capital-Related Costs for FY 2018
A. Determination of Federal Hospital Inpatient Capital-Related
Prospective Payment Rate Update
B. Calculation of the Inpatient Capital-Related Prospective
Payments for FY 2018
C. Capital Input Price Index
IV. Changes to Payment Rates for Excluded Hospitals: Rate-of-
Increase Percentages for FY 2018
V. Updates to the Payment Rates for the LTCH PPS for FY 2018
A. LTCH PPS Standard Federal Payment Rate for FY 2018
B. Adjustment for Area Wage Levels Under the LTCH PPS for FY
2018
1. Background
2. Geographic Classifications (Labor Market Areas) for the LTCH
PPS Standard Federal Payment Rate
3. Labor-Related Share for the LTCH PPS Standard Federal Payment
Rate
4. Wage Index for FY 2018 for the LTCH PPS Standard Federal
Payment Rate
5. Budget Neutrality Adjustment for Changes to the LTCH PPS
Standard Federal Payment Rate Area Wage Level Adjustment
C. LTCH PPS Cost-of-Living Adjustment (COLA) for LTCHs Located
in Alaska and Hawaii
D. Adjustment for LTCH PPS High-Cost Outlier (HCO) Cases
E. Update to the IPPS Comparable/Equivalent Amounts to Reflect
the Statutory Changes to the IPPS DSH Payment Adjustment Methodology
F. Computing the Adjusted LTCH PPS Federal Prospective Payments
for FY 2018
VI. Tables Referenced in this Final Rule and Available through the
Internet on the CMS Web site
Appendix A--Economic Analyses
I. Regulatory Impact Analysis
A. Introduction
B. Need
C. Objectives of the IPPS
D. Limitations of Our Analysis
E. Hospitals Included in and Excluded From the IPPS
F. Effects on Hospitals and Hospital Units Excluded From the
IPPS
G. Quantitative Effects of the Policy Changes Under the IPPS for
Operating Costs
1. Basis and Methodology of Estimates
2. Analysis of Table I
3. Impact Analysis of Table II
H. Effects of Other Policy Changes
[[Page 37998]]
1. Effects of Policy Relating to New Medical Service and
Technology Add-On Payments
2. Effects of Changes to MS-DRGs Subject to the Postacute Care
Transfer Policy and the MS-DRG Special Payment Policy
3. Effects of the Changes to the Volume Decrease Adjustment for
Sole Community Hospitals (SCHs)
4. Effects of Changes to Low-Volume Hospital Payment Adjustment
Policy
5. Effects of the Changes to Medicare DSH and Uncompensated Care
Payments for FY 2018
6. Effects of Reduction Under the Hospital Readmissions
Reduction Program
7. Effects of Changes Under the FY 2018 Hospital Value-Based
Purchasing (VBP) Program
8. Effects of Changes to the HAC Reduction Program for FY 2018
9. Effects of Implementation of the Additional 5-Year Expansion
of the Rural Community Hospital Demonstration Program
10. Effects of the Changes Relating to Provider-Based Status of
Indian Health Service and Tribal Facilities and Organizations
11. Effects of the Changes Relating to Hospital-Within-Hospital
Policy
12. Effects of Continued Implementation of the Frontier
Community Health Integration Project (FCHIP) Demonstration
I. Effects of Changes in the Capital IPPS
1. General Considerations
2. Results
J. Effects of Payment Rate Changes and Policy Changes Under the
LTCH PPS
1. Introduction and General Considerations
2. Impact on Rural Hospitals
3. Anticipated Effects of LTCH PPS Payment Rate Changes and
Policy Changes
4. Effect on the Medicare Program
5. Effect on Medicare Beneficiaries
K. Effects of Requirements for Hospital Inpatient Quality
Reporting (IQR) Program
L. Effects of Requirements for the PPS-Exempt Cancer Hospital
Quality Reporting (PCHQR) Program
M. Effects of Requirements for the Long-Term Care Hospital
Quality Reporting Program (LTCH QRP)
N. Effects of Updates to the Inpatient Psychiatric Facility
Quality Reporting (IPFQR) Program
O. Effects of Requirements Regarding the Electronic Health
Record (EHR) Incentive Programs and Meaningful Use
P. Effects of Electronic Signature and Electronic Submission of
the Certification and Settlement Summary Page of Medicare Cost
Reports
Q. Effects of Changes Relating to Survey and Certification
Requirements
R. Effects of Clarification of Limitations on the Valuation of
Depreciable Assets Disposed of on or after December 1, 1997
S. Alternatives Considered
T. Reducing Regulation and Controlling Regulatory Costs
U. Overall Conclusion
1. Acute Care Hospitals
2. LTCHs
V. Regulatory Review Costs
II. Accounting Statements and Tables
A. Acute Care Hospitals
B. LTCHs
III. Regulatory Flexibility Act (RFA) Analysis
IV. Impact on Small Rural Hospitals
V. Unfunded Mandate Reform Act (UMRA) Analysis
VI. Executive Order 13175
VII. Executive Order 12866
Appendix B: Recommendation of Update Factors for Operating Cost
Rates of Payment for Inpatient Hospital Services
I. Background
II. Inpatient Hospital Update for FY 2018
A. FY 2018 Inpatient Hospital Update
B. Update for SCHs for FY 2018
C. FY 2018 Puerto Rico Hospital Update
D. Update for Hospitals Excluded from the IPPS
E. Update for LTCHs for FY 2018
III. Secretary's Recommendation
IV. MedPAC Recommendation for Assessing Payment Adequacy and
Updating Payments in Traditional Medicare
I. Executive Summary and Background
A. Executive Summary
1. Purpose and Legal Authority
This final rule makes payment and policy changes under the Medicare
inpatient prospective payment systems (IPPS) for operating and capital-
related costs of acute care hospitals as well as for certain hospitals
and hospital units excluded from the IPPS. We also are making changes
relating to the provider-based status of Indian Health Service (IHS)
and Tribal facilities and organizations and to the IPPS low-volume
hospital payment adjustment for hospitals operated by the IHS or a
Tribe. In addition, it makes payment and policy changes for inpatient
hospital services provided by long-term care hospitals (LTCHs) under
the long-term care hospital prospective payment system (LTCH PPS). It
also makes policy changes to programs associated with Medicare IPPS
hospitals, IPPS-excluded hospitals, and LTCHs.
We are establishing new requirements or revising requirements for
quality reporting by specific providers (acute care hospitals, PPS-
exempt hospitals, LTCHs, and inpatient psychiatric facilities) that are
participating in Medicare. We also are establishing new requirements or
revising existing requirements for eligible professionals (EPs),
eligible hospitals, and CAHs participating in the Medicare and Medicaid
EHR Incentive Programs. We are updating policies relating to the
Hospital Value-Based Purchasing (VBP) Program, the Hospital
Readmissions Reduction Program, and the Hospital-Acquired Condition
(HAC) Reduction Program. We also are making changes related to the
transparency of accrediting organization survey reports and plans of
correction; to allow electronic signature and electronic submission of
the Certification and Settlement Summary page of the Medicare cost
reports; and to clarify provider reimbursement regulations relative to
the sale or scrapping of depreciable assets on or after December 1,
1997.
Under various statutory authorities, we are making changes to the
Medicare IPPS, to the LTCH PPS, and to other related payment
methodologies and programs for FY 2018 and subsequent fiscal years.
These statutory authorities include, but are not limited to, the
following:
Section 1886(d) of the Social Security Act (the Act),
which sets forth a system of payment for the operating costs of acute
care hospital inpatient stays under Medicare Part A (Hospital
Insurance) based on prospectively set rates. Section 1886(g) of the Act
requires that, instead of paying for capital-related costs of inpatient
hospital services on a reasonable cost basis, the Secretary use a
prospective payment system (PPS).
Section 1886(d)(1)(B) of the Act, which specifies that
certain hospitals and hospital units are excluded from the IPPS. These
hospitals and units are: Rehabilitation hospitals and units; LTCHs;
psychiatric hospitals and units; children's hospitals; cancer
hospitals; extended neoplastic disease care hospitals (previously
referred to as ``long-term care neoplastic disease hospitals'' and
renamed in this final rule), and hospitals located outside the 50
States, the District of Columbia, and Puerto Rico (that is, hospitals
located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands,
and American Samoa). Religious nonmedical health care institutions
(RNHCIs) are also excluded from the IPPS.
Sections 123(a) and (c) of the BBRA (Pub. L. 106-113) and
section 307(b)(1) of the BIPA (Pub. L. 106-554) (as codified under
section 1886(m)(1) of the Act), which provide for the development and
implementation of a prospective payment system for payment for
inpatient hospital services of LTCHs described in section
1886(d)(1)(B)(iv) of the Act.
Sections 1814(l), 1820, and 1834(g) of the Act, which
specify that payments are made to critical access hospitals (CAHs)
(that is, rural hospitals or facilities that meet certain statutory
requirements) for inpatient and outpatient services and that these
payments are generally based on 101 percent of reasonable cost.
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Section 1866(k) of the Act, as added by section 3005 of
the Affordable Care Act, which establishes a quality reporting program
for hospitals described in section 1886(d)(1)(B)(v) of the Act,
referred to as ``PPS-exempt cancer hospitals.''
Section 1886(a)(4) of the Act, which specifies that costs
of approved educational activities are excluded from the operating
costs of inpatient hospital services. Hospitals with approved graduate
medical education (GME) programs are paid for the direct costs of GME
in accordance with section 1886(h) of the Act.
Section 1886(b)(3)(B)(viii) of the Act, which requires the
Secretary to reduce the applicable percentage increase that would
otherwise apply to the standardized amount applicable to a subsection
(d) hospital for discharges occurring in a fiscal year if the hospital
does not submit data on measures in a form and manner, and at a time,
specified by the Secretary.
Section 1886(o) of the Act, which requires the Secretary
to establish a Hospital Value-Based Purchasing (VBP) Program under
which value-based incentive payments are made in a fiscal year to
hospitals meeting performance standards established for a performance
period for such fiscal year.
Section 1886(p) of the Act, as added by section 3008 of
the Affordable Care Act, which establishes a Hospital-Acquired
Condition (HAC) Reduction Program, under which payments to applicable
hospitals are adjusted to provide an incentive to reduce hospital-
acquired conditions.
Section 1886(q) of the Act, as added by section 3025 of
the Affordable Care Act and amended by section 10309 of the Affordable
Care Act and section 15002 of the 21st Century Cures Act, which
establishes the ``Hospital Readmissions Reduction Program.'' Under the
program, payments for discharges from an ``applicable hospital'' under
section 1886(d) of the Act will be reduced to account for certain
excess readmissions. Section 15002 of the 21st Century Cures Act
requires the Secretary to compare cohorts of hospitals to each other in
determining the extent of excess readmissions.
Section 1886(r) of the Act, as added by section 3133 of
the Affordable Care Act, which provides for a reduction to
disproportionate share hospital (DSH) payments under section
1886(d)(5)(F) of the Act and for a new uncompensated care payment to
eligible hospitals. Specifically, section 1886(r) of the Act requires
that, for fiscal year 2014 and each subsequent fiscal year, subsection
(d) hospitals that would otherwise receive a DSH payment made under
section 1886(d)(5)(F) of the Act will receive two separate payments:
(1) 25 percent of the amount they previously would have received under
section 1886(d)(5)(F) of the Act for DSH (``the empirically justified
amount''), and (2) an additional payment for the DSH hospital's
proportion of uncompensated care, determined as the product of three
factors. These three factors are: (1) 75 percent of the payments that
would otherwise be made under section 1886(d)(5)(F) of the Act; (2) 1
minus the percent change in the percent of individuals who are
uninsured (minus 0.2 percentage point for FY 2018 through FY 2019); and
(3) a hospital's uncompensated care amount relative to the
uncompensated care amount of all DSH hospitals expressed as a
percentage.
Section 1886(m)(6) of the Act, as added by section 1206(c)
of the Pathway for Sustainable Growth Rate (SGR) Reform Act of 2013
(Pub. L. 113-67), which provided for the establishment of site neutral
payment rate criteria under the LTCH PPS with implementation beginning
in FY 2016.
Section 1886(m)(6) of the Act, as amended by section 15009
of the 21st Century Cures Act (Pub. L. 114-255), which provides for a
temporary exception to the application of the site neutral payment rate
under the LTCH PPS for certain spinal cord specialty hospitals for
discharges in cost reporting periods beginning during FYs 2018 and
2019.
Section 1886(m)(6) of the Act, as amended by section 15010
of the 21st Century Cures Act (Pub. L. 114-255), which provides for a
temporary exception to the application of the site neutral payment rate
under the LTCH PPS for certain LTCHs with certain discharges with
severe wounds occurring in cost reporting periods beginning during FY
2018.
Section 1886(m)(5)(D)(iv) of the Act, as added by section
1206(c) of the Pathway for Sustainable Growth Rate (SGR) Reform Act of
2013 (Pub. L. 113-67), which provides for the establishment of a
functional status quality measure under the LTCH QRP for change in
mobility among inpatients requiring ventilator support.
Section 1899B of the Act, as added by section 2(a) of the
Improving Medicare Post-Acute Care Transformation Act of 2014 (the
IMPACT Act, Pub. L. 113-185), which provides for the establishment of
data reporting for certain post-acute care providers, including LTCHs.
2. Summary of the Major Provisions
a. MS-DRG Documentation and Coding Adjustment
Section 631 of the American Taxpayer Relief Act of 2012 (ATRA, Pub.
L. 112-240) amended section 7(b)(1)(B) of Public Law 110-90 to require
the Secretary to make a recoupment adjustment to the standardized
amount of Medicare payments to acute care hospitals to account for
changes in MS-DRG documentation and coding that do not reflect real
changes in case-mix, totaling $11 billion over a 4-year period of FYs
2014, 2015, 2016, and 2017. The FY 2014 through FY 2017 adjustments
represented the amount of the increase in aggregate payments as a
result of not completing the prospective adjustment authorized under
section 7(b)(1)(A) of Public Law 110-90 until FY 2013. Prior to the
ATRA, this amount could not have been recovered under Public Law 110-
90. Section 414 of the Medicare Access and CHIP Reauthorization Act of
2015 (MACRA) (Pub. L. 114-10) replaced the single positive adjustment
we intended to make in FY 2018 with a 0.5 percent positive adjustment
to the standardized amount of Medicare payments to acute care hospitals
for FYs 2018 through 2023. The FY 2018 adjustment was subsequently
adjusted to 0.4588 percent by section 15005 of the 21st Century Cures
Act.
For FY 2018, we are making the 0.4588 percent positive adjustment
to the standardized amount as required by section 414 of Public Law
114-10, as amended by section 15005 of the 21st Century Cures Act.
b. Adjustment to IPPS Rates Resulting From 2-Midnight Policy
In FY 2017, we made a permanent adjustment to the standardized
amount, the hospital-specific payment rates, and the national capital
Federal rate to prospectively remove the 0.2 percent reduction to the
rates put in place in FY 2014 to offset the estimated increase in IPPS
expenditures as a result of the 2-midnight policy. In addition, we made
a temporary one-time prospective increase to the FY 2017 standardized
amount, the hospital-specific payment rates, and the national capital
Federal rate of 0.6 percent by including a temporary one-time factor of
1.006 in the calculation of the standardized amount, the hospital-
specific payment rates, and the national capital Federal rate to
address the effects of the 0.2 percent reduction to the rate for the 2-
midnight policy in effect for FYs 2014, 2015, and 2016.
For FY 2018, we are including a factor of (1/1.006) in the
calculation of the FY
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2018 standardized amount, the hospital-specific payment rates, and the
national capital Federal rate to remove the temporary one-time factor
of 1.006, as established in the FY 2017 IPPS/LTCH PPS final rule.
c. Reduction of Hospital Payments for Excess Readmissions
We are making changes to policies for the Hospital Readmissions
Reduction Program, which is established under section 1886(q) of the
Act, as added by section 3025 of the Affordable Care Act, as amended by
section 10309 of the Affordable Care Act. The Hospital Readmissions
Reduction Program requires a reduction to a hospital's base operating
DRG payment to account for excess readmissions of selected applicable
conditions. For FY 2018 and subsequent years, the reduction is based on
a hospital's risk-adjusted readmission rate during a 3-year period for
acute myocardial infarction (AMI), heart failure (HF), pneumonia,
chronic obstructive pulmonary disease (COPD), total hip arthroplasty/
total knee arthroplasty (THA/TKA), and coronary artery bypass graft
(CABG). In this final rule, we are establishing the following policies:
(1) Specify applicable time period for FY 2018; (2) specifying the
calculation of aggregate payments for excess readmissions for FY 2018;
(3) making changes to the payment adjustment factor in accordance with
the 21st Century Cures Act for FY 2019; and (4) updating the
Extraordinary Circumstances Exceptions policy.
d. Hospital Value-Based Purchasing (VBP) Program
Section 1886(o) of the Act requires the Secretary to establish a
Hospital VBP Program under which value-based incentive payments are
made in a fiscal year to hospitals based on their performance on
measures established for a performance period for such fiscal year. In
this final rule, we are removing one previously adopted measure, the
PSI 90: Patient Safety for Selected Indicators measure, from the
Hospital VBP Program beginning with the FY 2019 program year. We also
are adopting one new measure, Hospital-Level, Risk-Standardized Payment
Associated with a 30-Day Episode of Care for Pneumonia, beginning with
the FY 2022 program year, and adopting a modified version of a
previously adopted measure, Patient Safety and Adverse Events Composite
(NQF #0531), beginning with the FY 2023 program year. In addition, we
are making two modifications to our domain scoring policies beginning
with the FY 2019 program year, and further establishing a new weighting
methodology for the measures within the Efficiency and Cost Reduction
domain. We also are addressing public comment submitted in response to
our comment solicitation on whether and how to account for social risk
factors in the Hospital VBP Program.
e. Hospital-Acquired Condition (HAC) Reduction Program
Section 1886(p) of the Act, as added under section 3008(a) of the
Affordable Care Act, establishes an incentive to hospitals to reduce
the incidence of hospital-acquired conditions by requiring the
Secretary to make an adjustment to payments to applicable hospitals
effective for discharges beginning on October 1, 2014. This 1-percent
payment reduction applies to a hospital whose ranking is in the top
quartile (25 percent) of all applicable hospitals, relative to the
national average, of conditions acquired during the applicable period
and on all of the hospital's discharges for the specified fiscal year.
In this final rule, we are establishing the following policies: (1)
Specifying the data collection time periods for the FY 2020 HAC
Reduction Program; and (2) updating the Extraordinary Circumstances
Exception policy for the HAC Reduction Program. In this final rule, we
also are responding to comments received regarding: (1) Additional
measures and potential future adoption; (2) accounting for social risk
factors; and (3) the inclusion of disability and medical complexity for
the CDC NHSN measures.
f. DSH Payment Adjustment and Additional Payment for Uncompensated Care
Section 3133 of the Affordable Care Act modified the Medicare
disproportionate share hospital (DSH) payment methodology beginning in
FY 2014. Under section 1886(r) of the Act, which was added by section
3133 of the Affordable Care Act, starting in FY 2014, DSHs receive 25
percent of the amount they previously would have received under the
statutory formula for Medicare DSH payments in section 1886(d)(5)(F) of
the Act. The remaining amount, equal to 75 percent of the amount that
otherwise would have been paid as Medicare DSH payments, is paid as
additional payments after the amount is reduced for changes in the
percentage of individuals that are uninsured. Each Medicare DSH will
receive an additional payment based on its share of the total amount of
uncompensated care for all Medicare DSHs for a given time period.
In this final rule, we are updating our estimates of the three
factors used to determine uncompensated care payments for FY 2018. The
statute permits the use of a data source other than the CBO estimates
to determine the percent change in the rate of uninsurance as part of
the calculation of Factor 2 beginning in FY 2018. We are using
uninsured estimates produced by CMS' Office of the Actuary (OACT) as
part of the development of the National Health Expenditure Accounts
(NHEA) in the calculation of Factor 2. We also are beginning to
incorporate data from Worksheet S-10 in the calculation of hospitals'
share of uncompensated care by combining data on uncompensated care
costs from the Worksheet S-10 for FY 2014 with proxy data regarding a
hospital's share of low-income insured days for FYs 2012 and 2013 to
determine Factor 3 for FY 2018. We will continue to use data from three
cost reporting periods to calculate Factor 3, which will gradually
incorporate uncompensated care data from Worksheet S-10 into the
calculation of Factor 3. As part of this policy, we are including a
definition of uncompensated care costs consisting of the sum of charity
care and bad debt and a trim methodology to address aberrant cost-to-
charge ratios (CCRs) as well as potentially aberrant uncompensated care
costs that exceed a threshold of 50 percent of total operating costs.
We also are providing that, for Puerto Rico hospitals, Indian Health
Service and Tribal hospitals, and all-inclusive rate providers, we will
substitute data regarding low-income insured days for FY 2013 for the
Worksheet S-10 data from FY 2014 cost reports.
We are continuing the policies that were finalized in FY 2015 to
address several specific issues concerning the process and data to be
employed in determining hospitals' share of uncompensated care in the
case of hospital mergers. We also are continuing the policies finalized
in FY 2017 concerning the methodology for calculating each hospital's
relative share of uncompensated care, such as combining data from
multiple cost reports beginning in the same fiscal year and averaging
the sum of three individual Factor 3s by the number of cost reporting
periods with data. In addition, we are annualizing hospital cost
reports that do not span 12 months. We also are applying a scaling
factor to each hospital's uncompensated care amount so that total
uncompensated care payments will be consistent with the estimated
amount available to make
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uncompensated care payments for FY 2018.
g. Changes to the LTCH PPS
In this final rule, we set forth changes to the LTCH PPS Federal
payment rates, factors, and other payment rate policies under the LTCH
PPS for FY 2018; changes to the payment methodology under the short-
stay outlier (SSO) policy; implementation of several provisions of the
21st Century Cures Act; and the adoption of a 1-year regulatory delay
on the full implementation of the 25-percent threshold policy for
discharges occurring in FY 2018 (that is, for the fiscal year after
expiration of the current statutory moratoria under the 21st Century
Cures Act, which is set to expire September 30, 2017).
h. Hospital Inpatient Quality Reporting (IQR) Program
Under section 1886(b)(3)(B)(viii) of the Act, subsection (d)
hospitals are required to report data on measures selected by the
Secretary for a fiscal year in order to receive the full annual
percentage increase that would otherwise apply to the standardized
amount applicable to discharges occurring in that fiscal year. In past
years, we have established measures on which hospitals must report data
and the process for submittal and validation of the data.
In this final rule, we are finalizing several changes. First, we
are refining two previously adopted measures. Specifically, we are
finalizing an update to the Hospital Consumer Assessment of Healthcare
Providers and Systems (HCAHPS) survey measure by replacing the three
existing questions about Pain Management with three new questions that
address Communication About Pain During the Hospital Stay, beginning
with the FY 2020 payment determination with modification that public
reporting would be delayed. In addition, we are finalizing an update to
the stroke mortality measure to include the use of NIH Stroke Scale
claims data for risk adjustment, beginning with the FY 2023 payment
determination. We also are adopting the Hospital-Wide All-Cause
Unplanned Readmission Hybrid Measure as a voluntary measure for the CY
2018 reporting period.
In addition, we are finalizing a modified, reduced policy for eCQM
reporting as compared to our proposals. For both the CY 2017 reporting
period/FY 2019 payment determination and CY 2018 reporting period/FY
2020 payment determination, we are finalizing that hospitals will be
required to select and submit four of the available eCQMs included in
the Hospital IQR Program measure set and provide one self-selected,
calendar year quarter of data. We are also modifying our eCQM
certification requirements such that for the CY 2018 reporting period
hospitals will be able to use: (1) The 2014 Edition of CERHT, (2) the
2015 Edition of CEHRT, or (3) a combination of both the 2014 and 2015
Editions of CEHRT. In addition, we are finalizing the following
policies: (1) For the CY 2017 reporting period/FY 2019 payment
determination and the CY 2018 reporting period/FY 2020 payment
determination, a hospital using EHR technology certified to the 2014 or
2015 Edition, but for which such EHR technology is not certified to all
15 available eCQMs available to report, will be required to have its
EHR technology certified to all 15 eCQMs that are available to report
in the Hospital IQR Program; (2) for the CY 2017 reporting period/FY
2019 payment determination, hospitals will be required to use the most
recent version of the eCQM electronic specifications (namely, the
Spring 2016 version of the eCQM specifications and any applicable
addenda); (3) for the CY 2018 reporting period/FY 2020 payment
determination, hospitals will be required to use the most recent
version of the eCQM electronic specifications (namely, the Spring 2017
version of the eCQM specifications and any applicable addenda); and (5)
hospitals' EHR technology certified to all 15 eCQMs would not need to
be recertified each time it is updated to a more recent version of the
eCQMs. These policies are being made in alignment with the CQM
electronic reporting policies for the Medicare and Medicaid EHR
Incentive Programs, and will decrease the required number of eCQMs and
quarters of reporting as compared with the previously finalized
requirements in the FY 2017 IPPS/LTCH PPS final rule.
Furthermore, we are finalizing our policies for the eCQM data
validation process, whereby we will select eight cases per quarter (the
number of quarters required will vary by specific FY payment
determination) to complete eCQM validation for the FY 2020 payment
determination and subsequent years. In addition, for the FY 2020
payment determination and subsequent years, we are establishing
policies related to the exclusion criteria for hospital and case
selection, and the data submission requirements for participating
hospitals. For the FY 2021 payment determination and subsequent years,
we are finalizing our proposal to extend our previously finalized
medical record submission policy for eCQM validation requiring
submission of at least 75 percent of sampled eCQM measure medical
records in a timely and complete manner. Also, we are: (1) Formalizing
our educational review process for chart-abstracted measures for the FY
2020 payment determination and subsequent years, and (2) finalizing
that we will use this process to correct quarterly scores for any of
the first 3 quarters of validation in order to compute the final
confidence interval.
Moreover, we are establishing policies related to our Hospital IQR
Program Extraordinary Circumstances Extension or Exemptions policy,
including a change to the name of the policy to Extraordinary
Circumstances Exceptions (ECE) policy and updates to 42 CFR
412.140(c)(2) to reflect our ECE policy. Finally, we responded to our
solicitation of public comment on accounting for social risk factors in
the Hospital IQR Program, the confidential and potential future public
reporting of clinical quality measure data stratified by patients'
dual-eligible status, and the following clinical quality measures that
we are considering for future inclusion in the Hospital IQR Program:
(1) Quality of Informed Consent Documents for Hospital-Performed,
Elective Procedures measure; (2) four End-of-Life process and outcome
measures for cancer patients; (3) two nurse staffing measures; and (4)
11 newly specified electronic clinical quality measures (eCQMs).
i. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
Section 1886(m)(5) of the Act requires LTCHs to report certain
quality data to CMS in order to receive their full annual update under
the LTCH PPS. In this final rule, we are adopting one new outcome
measure related to pressure ulcers and two new measures (one process
and one outcome) related to ventilator weaning. We also are defining
the certain standardized patient assessment data that LTCHs must report
to comply with section 1886(m)(5)(F)(ii) of the Act, as well as the
requirements for the reporting of these data. Finally, we will publicly
report data on four assessment-based measures and three claims-based
measures.
j. Inpatient Psychiatric Facility Quality Reporting (IPFQR) Program
For the Inpatient Psychiatric Facility Quality Reporting (IPFQR)
Program, we are making several policy changes. First, beginning with
the FY 2019 payment determination (that is, for extraordinary
circumstances occurring during CY 2018), we are updating the IPFQR
Program's extraordinary circumstances
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exceptions (ECE) policy by: (1) Allowing designated personnel to
provide their contact information and sign the ECE request in lieu of
the requesting IPF's Chief Executive Officer (CEO); (2) allowing up to
90 days after the extraordinary circumstance to submit the request; and
(3) stating that we will strive to respond to ECE requests within 90
days of receiving them. Second, we are changing the annual data
submission period from a specific date range to a 45-day period that
begins at least 30 days following the end of the collection period.
Third, we are aligning our deadlines for submission of a Notice of
Participation (NOP) or program withdrawal with this data submission
timeframe. Finally, we are establishing factors by which we will
evaluate measures for removal from or retention under the IPFQR
Program. These factors align with those in use in other quality
reporting programs.
We are not finalizing our proposal to adopt the Medication
Continuation following Inpatient Psychiatric Discharge measure for FY
2020 payment determination and subsequent years.
3. Summary of Costs and Benefits
Adjustment for MS-DRG Documentation and Coding Changes.
Section 414 of the MACRA replaced the single positive adjustment we
intended to make in FY 2018 once the recoupment required by section 631
of the ATRA was complete with a 0.5 percent positive adjustment to the
standardized amount of Medicare payments to acute care hospitals for
FYs 2018 through 2023. The FY 2018 adjustment was subsequently adjusted
to 0.4588 percent by section 15005 of the 21st Century Cures Act (Pub.
L. 114-255). For FY 2018, we are making the 0.4588 percent positive
adjustment to the standardized amount as required by these provisions.
Adjustment to IPPS Payment Rates as a Result of the 2-
Midnight Policy. The removal of the adjustment to IPPS rates resulting
from the 2-midnight policy will decrease IPPS payment rates by (1/
1.006) for FY 2018. The (1/1.006) is a one-time factor that will be
applied to the standardized amount, the hospital-specific rates, and
the national capital Federal rate for FY 2018 only.
Medicare DSH Payment Adjustment and Additional Payment for
Uncompensated Care. Under section 1886(r) of the Act (as added by
section 3133 of the Affordable Care Act), DSH payments to hospitals
under section 1886(d)(5)(F) of the Act are reduced and an additional
payment for uncompensated care is made to eligible hospitals beginning
in FY 2014. Hospitals that receive Medicare DSH payments receive 25
percent of the amount they previously would have received under the
statutory formula for Medicare DSH payments in section 1886(d)(5)(F) of
the Act. The remainder, equal to an estimate of 75 percent of what
otherwise would have been paid as Medicare DSH payments, is the basis
for determining the additional payments for uncompensated care after
the amount is reduced for changes in the percentage of individuals that
are uninsured and additional statutory adjustments. Each hospital that
receives Medicare DSH payments will receive an additional payment for
uncompensated care based on its share of the total uncompensated care
amount reported by Medicare DSHs. The reduction to Medicare DSH
payments is not budget neutral.
For FY 2018, we are providing that the 75 percent of what otherwise
would have been paid for Medicare DSH will be adjusted to approximately
58.01 percent of the amount to reflect changes in the percentage of
individuals that are uninsured and additional statutory adjustments. In
other words, approximately 43.51 percent (the product of 75 percent and
58.01 percent) of our estimate of Medicare DSH payments, prior to the
application of section 3133 of the Affordable Care Act, will be
available to make additional payments to hospitals for their relative
share of the total amount of uncompensated care.
We project that estimated Medicare DSH payments, and additional
payments for uncompensated care made for FY 2018, will increase
payments overall by approximately 0.6 percent as compared to the
estimate of overall payments, including Medicare DSH payments and
uncompensated care payments that will be distributed in FY 2017. The
additional payments have redistributive effects based on a hospital's
uncompensated care amount relative to the uncompensated care amount for
all hospitals that are estimated to receive Medicare DSH payments, and
the calculated payment amount is not directly tied to a hospital's
number of discharges.
Changes to the Hospital Readmissions Reduction Program.
For FY 2018 and subsequent years, the reduction is based on a
hospital's risk-adjusted readmission rate during a 3-year period for
acute myocardial infarction (AMI), heart failure (HF), pneumonia,
chronic obstructive pulmonary disease (COPD), total hip arthroplasty/
total knee arthroplasty (THA/TKA), and coronary artery bypass graft
(CABG). Overall, in this final rule, we estimate that 2,591 hospitals
will have their base operating DRG payments reduced by their determined
proxy FY 2018 hospital-specific readmission adjustment. As a result, we
estimate that the Hospital Readmissions Reduction Program will save
approximately $564 million in FY 2018, an increase of approximately $27
million over the estimated FY 2017 savings.
Value-Based Incentive Payments Under the Hospital VBP
Program. We estimate that there will be no net financial impact to the
Hospital VBP Program for the FY 2018 program year in the aggregate
because, by law, the amount available for value-based incentive
payments under the program in a given year must be equal to the total
amount of base operating MS-DRG payment amount reductions for that
year, as estimated by the Secretary. The estimated amount of base
operating MS-DRG payment amount reductions for the FY 2018 program year
and, therefore, the estimated amount available for value-based
incentive payments for FY 2018 discharges is approximately $1.9
billion.
Changes to the HAC Reduction Program. A hospital's Total
HAC score and its ranking in comparison to other hospitals in any given
year depends on several different factors. Any significant impact due
to the HAC Reduction Program changes for FY 2018, including which
hospitals will receive the adjustment, will depend on actual
experience.
Update to the LTCH PPS Payment Rates and Other Payment
Factors. Based on the best available data for the 415 LTCHs in our
database, we estimate that the changes to the payment rates and factors
that we are presenting in the preamble and Addendum of this final rule,
which reflects the rolling end to the transition of the statutory
application of the site neutral payment rate required by section
1886(m)(6)(A) of the Act, the update to the LTCH PPS standard Federal
payment rate for FY 2018, and estimated changes to the site neutral
payment rate and high-cost outlier (HCO) payments will result in an
estimated decrease in payments from FY 2017 of approximately $195
million.
Changes to the 25-Percent Threshold Policy. In this final
rule, we estimate our adoption of a 1-year regulatory delay of the full
implementation of the 25-percent threshold policy for discharges
occurring in FY 2018 will increase payments to LTCHs in FY 2018 by $70
million.
Changes to the Hospital Inpatient Quality Reporting (IQR)
Program. Across 3,300 IPPS hospitals, we
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estimate that our finalized requirements for the Hospital IQR Program
will result in the following changes to costs and benefits in this
program compared to previously finalized requirements: (1) A cost
reduction of $613,864 for the FY 2019 payment determination due to the
updates to the eCQM reporting requirements; (2) a total net cost
reduction of $866,277 for the FY 2020 payment determination due to the
updates to the eCQM reporting requirements, the updates to the eCQM
validation procedures, and the voluntary reporting of the new Hybrid
Hospital-Wide Readmission measure; and (3) a total cost reduction of
$255,104 for the FY 2021 payment determination due to the updates to
the eCQM validation procedures.
Changes Related to the LTCH QRP. In this final rule, we
are adopting one outcome measure related to pressure ulcers and two new
measures (one process and one outcome) related to ventilator weaning.
We also are specifying the use of certain standardized patient
assessment data as required under section 1899B(b)(1)(B) of the Act and
policies regarding public display of measure data. Overall, the cost
associated with the changes to the LTCH QRP is estimated at a reduction
of $893.14 per LTCH annually or $380,480 for all LTCHs.
Changes to the IPFQR Program. In this final rule, we are
not adopting the one claims-based measure we proposed. However, we are
updating our ECE process; changing the specification of the data
submission period; aligning the timeframe for submission of the NOP or
program withdrawal with the data submission period; and establishing
factors to evaluate measures for retention or removal. We do not
believe that these policies will have any impact on the IPFQR program
burden.
B. Summary
1. Acute Care Hospital Inpatient Prospective Payment System (IPPS)
Section 1886(d) of the Social Security Act (the Act) sets forth a
system of payment for the operating costs of acute care hospital
inpatient stays under Medicare Part A (Hospital Insurance) based on
prospectively set rates. Section 1886(g) of the Act requires the
Secretary to use a prospective payment system (PPS) to pay for the
capital-related costs of inpatient hospital services for these
``subsection (d) hospitals.'' Under these PPSs, Medicare payment for
hospital inpatient operating and capital-related costs is made at
predetermined, specific rates for each hospital discharge. Discharges
are classified according to a list of diagnosis-related groups (DRGs).
The base payment rate is comprised of a standardized amount that is
divided into a labor-related share and a nonlabor-related share. The
labor-related share is adjusted by the wage index applicable to the
area where the hospital is located. If the hospital is located in
Alaska or Hawaii, the nonlabor-related share is adjusted by a cost-of-
living adjustment factor. This base payment rate is multiplied by the
DRG relative weight.
If the hospital treats a high percentage of certain low-income
patients, it receives a percentage add-on payment applied to the DRG-
adjusted base payment rate. This add-on payment, known as the
disproportionate share hospital (DSH) adjustment, provides for a
percentage increase in Medicare payments to hospitals that qualify
under either of two statutory formulas designed to identify hospitals
that serve a disproportionate share of low-income patients. For
qualifying hospitals, the amount of this adjustment varies based on the
outcome of the statutory calculations. The Affordable Care Act revised
the Medicare DSH payment methodology and provides for a new additional
Medicare payment that considers the amount of uncompensated care
beginning on October 1, 2013.
If the hospital is training residents in an approved residency
program(s), it receives a percentage add-on payment for each case paid
under the IPPS, known as the indirect medical education (IME)
adjustment. This percentage varies, depending on the ratio of residents
to beds.
Additional payments may be made for cases that involve new
technologies or medical services that have been approved for special
add-on payments. To qualify, a new technology or medical service must
demonstrate that it is a substantial clinical improvement over
technologies or services otherwise available, and that, absent an add-
on payment, it would be inadequately paid under the regular DRG
payment.
The costs incurred by the hospital for a case are evaluated to
determine whether the hospital is eligible for an additional payment as
an outlier case. This additional payment is designed to protect the
hospital from large financial losses due to unusually expensive cases.
Any eligible outlier payment is added to the DRG-adjusted base payment
rate, plus any DSH, IME, and new technology or medical service add-on
adjustments.
Although payments to most hospitals under the IPPS are made on the
basis of the standardized amounts, some categories of hospitals are
paid in whole or in part based on their hospital-specific rate, which
is determined from their costs in a base year. For example, sole
community hospitals (SCHs) receive the higher of a hospital-specific
rate based on their costs in a base year (the highest of FY 1982, FY
1987, FY 1996, or FY 2006) or the IPPS Federal rate based on the
standardized amount. SCHs are the sole source of care in their areas.
Specifically, section 1886(d)(5)(D)(iii) of the Act defines an SCH as a
hospital that is located more than 35 road miles from another hospital
or that, by reason of factors such as isolated location, weather
conditions, travel conditions, or absence of other like hospitals (as
determined by the Secretary), is the sole source of hospital inpatient
services reasonably available to Medicare beneficiaries. In addition,
certain rural hospitals previously designated by the Secretary as
essential access community hospitals are considered SCHs.
Under current law, the Medicare-dependent, small rural hospital
(MDH) program is effective through FY 2017. Through and including FY
2006, an MDH received the higher of the Federal rate or the Federal
rate plus 50 percent of the amount by which the Federal rate was
exceeded by the higher of its FY 1982 or FY 1987 hospital-specific
rate. For discharges occurring on or after October 1, 2007, but before
October 1, 2017, an MDH receives the higher of the Federal rate or the
Federal rate plus 75 percent of the amount by which the Federal rate is
exceeded by the highest of its FY 1982, FY 1987, or FY 2002 hospital-
specific rate. MDHs are a major source of care for Medicare
beneficiaries in their areas. Section 1886(d)(5)(G)(iv) of the Act
defines an MDH as a hospital that is located in a rural area, has not
more than 100 beds, is not an SCH, and has a high percentage of
Medicare discharges (not less than 60 percent of its inpatient days or
discharges in its cost reporting year beginning in FY 1987 or in two of
its three most recently settled Medicare cost reporting years).
Section 1886(g) of the Act requires the Secretary to pay for the
capital-related costs of inpatient hospital services in accordance with
a prospective payment system established by the Secretary. The basic
methodology for determining capital prospective payments is set forth
in our regulations at 42 CFR 412.308 and 412.312. Under the capital
IPPS, payments are adjusted by the same DRG for the case as they are
under the operating IPPS. Capital IPPS payments are also adjusted for
IME and DSH, similar to the adjustments made under the operating IPPS.
In addition, hospitals may receive outlier payments
[[Page 38004]]
for those cases that have unusually high costs.
The existing regulations governing payments to hospitals under the
IPPS are located in 42 CFR part 412, subparts A through M.
2. Hospitals and Hospital Units Excluded From the IPPS
Under section 1886(d)(1)(B) of the Act, as amended, certain
hospitals and hospital units are excluded from the IPPS. These
hospitals and units are: Inpatient rehabilitation facility (IRF)
hospitals and units; long-term care hospitals (LTCHs); psychiatric
hospitals and units; children's hospitals; cancer hospitals; extended
neoplastic disease care hospitals (referred to as ``long-term care
neoplastic disease hospitals'' in the proposed rule and renamed for
this final rule, which were formerly LTCHs classified under section
1886(d)(1)(B)(iv)(II) of the Act and redesignated by section 15008 of
Pub. L 114-255) and hospitals located outside the 50 States, the
District of Columbia, and Puerto Rico (that is, hospitals located in
the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and
American Samoa). Religious nonmedical health care institutions (RNHCIs)
are also excluded from the IPPS. Various sections of the Balanced
Budget Act of 1997 (BBA, Pub. L. 105-33), the Medicare, Medicaid and
SCHIP [State Children's Health Insurance Program] Balanced Budget
Refinement Act of 1999 (BBRA, Pub. L. 106-113), and the Medicare,
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000
(BIPA, Pub. L. 106-554) provide for the implementation of PPSs for IRF
hospitals and units, LTCHs, and psychiatric hospitals and units
(referred to as inpatient psychiatric facilities (IPFs)). (We note that
the annual updates to the LTCH PPS are included along with the IPPS
annual update in this document. Updates to the IRF PPS and IPF PPS are
issued as separate documents.) Children's hospitals, cancer hospitals,
hospitals located outside the 50 States, the District of Columbia, and
Puerto Rico (that is, hospitals located in the U.S. Virgin Islands,
Guam, the Northern Mariana Islands, and American Samoa), and RNHCIs
continue to be paid solely under a reasonable cost-based system subject
to a rate-of-increase ceiling on inpatient operating costs.
The existing regulations governing payments to excluded hospitals
and hospital units are located in 42 CFR parts 412 and 413.
3. Long-Term Care Hospital Prospective Payment System (LTCH PPS)
The Medicare prospective payment system (PPS) for LTCHs applies to
hospitals described in section 1886(d)(1)(B)(iv) of the Act effective
for cost reporting periods beginning on or after October 1, 2002. The
LTCH PPS was established under the authority of sections 123 of the
BBRA and section 307(b) of the BIPA (as codified under section
1886(m)(1) of the Act). During the 5-year (optional) transition period,
a LTCH's payment under the PPS was based on an increasing proportion of
the LTCH Federal rate with a corresponding decreasing proportion based
on reasonable cost principles. Effective for cost reporting periods
beginning on or after October 1, 2006, all LTCHs are paid 100 percent
of the Federal rate. Section 1206(a) of the Pathway for SGR Reform Act
of 2013 (Pub. L. 113-67) established the site neutral payment rate
under the LTCH PPS, which made the LTCH PPS a dual rate payment system
beginning in FY 2016. Under this statute, based on a rolling effective
date that is linked to the date on which a given LTCH's Federal FY 2016
cost reporting period begins, LTCHs are paid for discharges at the site
neutral payment rate unless the discharge meets the patient criteria
for payment at the LTCH PPS standard Federal payment rate. The existing
regulations governing payment under the LTCH PPS are located in 42 CFR
part 412, subpart O. Beginning October 1, 2009, we issue the annual
updates to the LTCH PPS in the same documents that update the IPPS (73
FR 26797 through 26798).
4. Critical Access Hospitals (CAHs)
Under sections 1814(l), 1820, and 1834(g) of the Act, payments made
to critical access hospitals (CAHs) (that is, rural hospitals or
facilities that meet certain statutory requirements) for inpatient and
outpatient services are generally based on 101 percent of reasonable
cost. Reasonable cost is determined under the provisions of section
1861(v) of the Act and existing regulations under 42 CFR part 413.
5. Payments for Graduate Medical Education (GME)
Under section 1886(a)(4) of the Act, costs of approved educational
activities are excluded from the operating costs of inpatient hospital
services. Hospitals with approved graduate medical education (GME)
programs are paid for the direct costs of GME in accordance with
section 1886(h) of the Act. The amount of payment for direct GME costs
for a cost reporting period is based on the hospital's number of
residents in that period and the hospital's costs per resident in a
base year. The existing regulations governing payments to the various
types of hospitals are located in 42 CFR part 413.
C. Summary of Provisions of Recent Legislation Implemented in This
Final Rule
1. The American Taxpayer Relief Act of 2012 (ATRA) (Pub. L. 112-240),
the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub.
L. 114-10), and the 21st Century Cures Act (Pub. L. 114-255)
Section 631 of the American Taxpayer Relief Act of 2012 (ATRA)
(Pub. L. 112-240) amended section 7(b)(1)(B) of Public Law 110-90 to
require CMS to make a recoupment adjustment to the standardized amounts
under section 1886(d) of the Act based upon the Secretary's estimates
for discharges occurring from FYs 2014 through FY 2017 to fully offset
$11 billion. Once the recoupment required under section 631 of the ATRA
was completed, CMS had anticipated making a single positive adjustment
in FY 2018 to offset the reductions required to recoup the $11 billion
under section 631 of the ATRA. However, section 414 of the MACRA
replaced the single positive adjustment CMS intended to make in FY 2018
with a 0.5 percent positive adjustment for each of FYs 2018 through
2023. Section 15005 of the 21st Century Cures Act (Pub. L. 114-255,
enacted December 13, 2016) further amended Public Law 110-90 to reduce
the adjustment for FY 2018 from 0.5 percent point to 0.4588 percentage
point.
2. Pathway for SGR Reform Act of 2013 (Pub. L. 113-67)
The Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) introduced
new payment rules in the LTCH PPS. Under section 1206 of this law,
discharges in cost reporting periods beginning on or after October 1,
2015 under the LTCH PPS will receive payment under a site neutral rate
unless the discharge meets certain patient-specific criteria. In this
final rule, we are continuing to update certain policies that
implemented provisions under section 1206 of the Pathway for SGR Reform
Act.
3. Improving Medicare Post-Acute Care Transformation Act of 2014
(IMPACT Act) (Pub. L. 113-185)
The Improving Medicare Post-Acute Care Transformation Act of 2014
(IMPACT Act (Pub. L. 113-185), enacted on October 6, 2014, made a
number of changes that affect the Long-Term Care
[[Page 38005]]
Quality Reporting Program (LTCH QRP). In this final rule, we are
continuing to implement portions of section 1899B of the Act, as added
by section 2(a) of the IMPACT Act, which, in part, requires LTCHs,
among other postacute care providers, to report standardized patient
assessment data, data on quality measures, and data on resource use and
other measures.
4. The Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L.
114-10)
Section 411(g) of the Medicare Access and CHIP Reauthorization Act
of 2015 (MACRA, Pub. L. 114-10) sets the annual update under the LTCH
PPS to 1.0 percent for FY 2018. In this final rule, consistent with
this requirement, we are updating the LTCH standard Federal payment
rate by 1.0 percent for FY 2018.
The MACRA also extended the MDH program and temporary changes to
the payment adjustment for low-volume hospitals through FY 2017. In
this final rule, we discuss the expiration of the MDH program and the
expiration of the temporary changes to the low-volume hospital payment
adjustment under current law.
5. The 21st Century Cures Act (Pub. L. 114-255)
The 21st Century Cures Act (Pub. L. 114-255), enacted on December
13, 2016, contains a number of provisions affecting payments under the
LTCH PPS, the Hospital Readmissions Reduction Program and the Medicare
EHR Incentive Program, which we are implementing in this final rule:
Section 4002(b)(1)(A) amended section 1848(a)(7)(B) of the
Act to provide that the Secretary shall exempt an eligible professional
from the application of the payment adjustment under section
1848(a)(7)(A) of the Act with respect to a year, subject to annual
renewal, if the Secretary determines that compliance with the
requirement for being a meaningful EHR user is not possible because the
certified EHR technology used by such eligible professional has been
decertified under the Office of the National Coordinator for Health
Information Technology's (ONC) Health IT Certification Program.
Section 4002(b)(2) amended section 1886(b)(3)(B)(ix)(II)
of the Act to provide that the Secretary shall exempt a hospital from
the application of the payment adjustment under section
1886(b)(3)(B)(ix)(I) with respect to a fiscal year, subject to annual
renewal, if the Secretary determines that compliance with the
requirement for being a meaningful EHR user is not possible because the
certified EHR technology used by the hospital is decertified under
ONC's Health IT Certification Program.
Section 15002, which amended section 1886(q)(3) of the Act
by adding subparagraphs (D) and (E), which requires the Secretary to
develop a methodology for the calculating the excess readmissions
adjustment factor for the Hospital Readmissions Reduction Program based
on cohorts defined by the percentage of dual eligible patients (that
is, patients who are eligible for both Medicare and full-benefit
Medicaid coverage) cared for by a hospital. In this final rule, we are
implementing changes to the payment adjustment factor to assess
penalties based on a hospital's performance relative to other hospitals
treating a similar proportion of dual-eligible patients.
Section 15004(a), which further amended section 114(d)(7)
of the MMSEA (as amended) by striking ``The moratorium under paragraph
(1)(A)'' and inserting ``[a]ny moratorium under paragraph (1)'' and
specified that such amendment shall take effect as if included in the
enactment of section 112 of the PAMA. We are implementing the
exceptions to the current statutory moratorium, which is in effect
through September 30, 2017, on increasing beds in an existing LTCH or
an existing LTCH satellite as provided by Section 15004(a).
Section 15004(b), which modifies high cost outlier
payments to LTCH standard Federal rate cases beginning in FY 2018.
Section 15006, which further amended section 114(c)(1)(A)
of the MMSEA (as amended) by extending the moratorium on the full
implementation of the 25-percent threshold policy through June 30,
2016, and for discharges occurring on or after October 1, 2016 and
before October 1, 2017. In this final rule, we are implementing the
moratorium on the full implementation of the 25-percent threshold
policy for discharges occurring on or after October 1, 2016, through
September 30, 2017, as provided by section 15006.
Section 15007, which amended section 1206(a)(3) of the
Pathway for SGR Reform Act by extending the exclusion for of Medicare
Advantage plans' and site neutral payment rate discharges from the
calculation of the average length-of-stay to all LTCHs, for discharges
occurring in cost reporting periods beginning on or after October 1,
2015.
Section 15008, which provided for a change in Medicare
classification for ``subclause (II)'' LTCHs by redesignating such
hospitals from section 1886(d)(1)(B)(iv)(II) to section
1886(d)(1)(B)(vi) of the Act. In this final rule, we are implementing
the reclassification of hospitals which had previously been classified
as ``subclause (II)'' LTCHs as their own category of IPPS-excluded
hospitals as provided by the provisions of section 15008.
Section 15009 of Public Law 114-255, which added new
subparagraph (F) to section 1886(m)(6) of the Act, providing for a
temporary exception to the site neutral payment rate for certain spinal
cord specialty hospitals for all discharges occurring during such
LTCH's cost reporting periods that begin during FYs 2018 and 2019.
Section 15010, which added a new subparagraph (G) to
section 1886(m)(6) of the Act, to create a temporary exception to the
site neutral payment rate for certain severe wound discharges from
certain LTCHs during such LTCH's cost reporting period beginning during
FY 2018.
Section 16003 amended section 1848(a)(7)(D) of the Act to
provide that no payment adjustment may be made under section
1848(a)(7)(A) of the Act for 2017 and 2018 in the case of an eligible
professional who furnishes substantially all of his or her covered
professional services in an ambulatory surgical center (ASC). Section
1848(a)(7)(D)(iii) of the Act provides that determinations of whether
an eligible professional is ASC-based may be made based on the site of
service as defined by the Secretary or an attestation, but shall be
made without regard to any employment or billing arrangement between
the eligible professional and any other supplier or provider of
services. Section 1848(a)(7)(D)(iv) of the Act provides that the ASC-
based exception shall no longer apply as of the first year that begins
more than 3 years after the date on which the Secretary determines,
through notice-and-comment rulemaking, that certified EHR technology
applicable to the ASC setting is available.
D. Issuance of a Notice of Proposed Rulemaking
In the proposed rule that appeared in the Federal Register on April
28, 2017 (82 FR 19796), we set forth proposed payment and policy
changes to the Medicare IPPS for FY 2018 operating costs and for
capital-related costs of acute care hospitals and certain hospitals and
hospital units that are excluded from IPPS. In addition, we set forth
proposed changes to the payment rates, factors, and other payment and
policy-related changes to programs
[[Page 38006]]
associated with payment rate policies under the LTCH PPS for FY 2018.
Below is a summary of the major changes that we proposed to make.
1. Proposed Changes to MS-DRG Classifications and Recalibrations of
Relative Weights
In section II. of the preamble of the proposed rule, we included--
Proposed changes to MS-DRG classifications based on our
yearly review for FY 2018.
Proposed adjustment to the standardized amounts under
section 1886(d) of the Act for FY 2018 in accordance with the
amendments made to section 7(b)(1)(B) of Public Law 110-90 by section
414 of the MACRA and section 15005 of the 21st Century Cures Act.
Proposed recalibration of the MS-DRG relative weights.
A discussion of the FY 2018 status of new technologies
approved for add-on payments for FY 2017 and a presentation of our
evaluation and analysis of the FY 2018 applicants for add-on payments
for high-cost new medical services and technologies (including public
input, as directed by Pub. L. 108-173, obtained in a town hall
meeting).
2. Proposed Changes to the Hospital Wage Index for Acute Care Hospitals
In section III. of the preamble to the proposed rule, we proposed
to make revisions to the wage index for acute care hospitals and the
annual update of the wage data. Specific issues addressed include, but
are not limited to, the following:
The proposed FY 2018 wage index update using wage data
from cost reporting periods beginning in FY 2014.
Clarification of other wage-related costs in the wage
index.
Calculation of the proposed occupational mix adjustment
for FY 2018 based on the 2013 Occupational Mix Survey.
Analysis and implementation of the proposed FY 2018
occupational mix adjustment to the wage index for acute care hospitals.
Proposed application of the rural floor and the frontier
State floor and the proposed expiration of the imputed floor.
Proposed revisions to the wage index for acute care
hospitals based on hospital redesignations and reclassifications under
sections 1886(d)(8)(B), (d)(8)(E), and (d)(10) of the Act.
Proposal to require documentation of SCH and RRC
classification status approvals to be submitted to the MGCRB by the
first business day after January 1.
Clarification of special rules for SCHs and RRCs
reclassifying to geographic home areas.
Proposed changes to the 45-day notification rule.
The proposed adjustment to the wage index for acute care
hospitals for FY 2018 based on commuting patterns of hospital employees
who reside in a county and work in a different area with a higher wage
index.
Determination of the labor-related share for the proposed
FY 2018 wage index.
3. Proposed Rebasing and Revising of Hospital Market Basket
In section IV. of the proposed rule, we proposed to revise and
rebase the hospital market baskets for acute care hospitals and update
the labor-related share.
4. Other Decisions and Proposed Changes to the IPPS for Operating Costs
In section V. of the preamble of the proposed rule, we discussed
proposed changes or clarifications of a number of the provisions of the
regulations in 42 CFR parts 412 and 413, including the following:
Proposed changes to MS-DRGs subject to the postacute care
transfer policy.
Proposed changes to the inpatient hospital update for FY
2018.
Proposed changes to the volume decrease adjustment for
SCHs.
Proposed updated national and regional case-mix values and
discharges for purposes of determining RRC status.
Expiration of the temporary changes to the payment
adjustment for low-volume hospitals at the end of FY 2017.
Proposed parallel low-volume hospital payment adjustment
concerning hospitals operated by the Indian Health Service (IHS) or a
Tribe.
The statutorily required IME adjustment factor for FY
2018.
Proposed changes to the methodologies for determining
Medicare DSH payments and the additional payments for uncompensated
care.
Discussion of expiration of the MDH program at the end of
FY 2017 and our policy to allow MDHs to apply for SCH status in advance
of the expiration of the MDH program and be paid as such under certain
conditions.
Proposed changes to the rules for payment adjustments
under the Hospital Readmissions Reduction Program based on hospital
readmission measures and the process for hospital review and correction
of those rates for FY 2018.
Proposed changes to the requirements and provision of
value-based incentive payments under the Hospital Value-Based
Purchasing Program.
Proposed requirements for payment adjustments to hospitals
under the HAC Reduction Program for FY 2018.
Discussion of and proposals relating to the additional 5-
year extension of the Rural Community Hospital Demonstration Program.
Proposals related to the provider-based status of IHS and
Tribal facilities and organizations that would remove the regulatory
date limitation that restricted the grandfathering provision to IHS or
Tribal facilities and organizations furnishing services on or before
April 7, 2000. We also proposed to make a technical change to make the
regulation text more consistent with our current rules that require
these facilities to comply with all applicable Medicare conditions of
participation that apply to the main provider.
5. Proposed FY 2018 Policy Governing the IPPS for Capital-Related Costs
In section VI. of the preamble to the proposed rule, we discussed
the proposed payment policy requirements for capital-related costs and
capital payments to hospitals for FY 2018.
6. Proposed Changes to the Payment Rates for Certain Excluded
Hospitals: Rate-of-Increase Percentages
In section VII. of the preamble of the proposed rule, we
discussed--
Proposed changes to payments to certain excluded hospitals
for FY 2018.
Proposed policy changes relating to payments to hospitals-
within-hospitals.
Proposed continued implementation of the Frontier
Community Health Integration Project (FCHIP) Demonstration.
7. Proposed Changes to the LTCH PPS
In section VIII. of the preamble of the proposed rule, we set
forth--
Proposed changes to the LTCH PPS Federal payment rates,
factors, and other payment rate policies under the LTCH PPS for FY
2018.
Proposed changes to the short-stay outlier (SSO) policy.
Proposed 1-year regulatory delay of the full
implementation of the 25-percent threshold policy for discharges
occurring in FY 2018.
Proposed changes to implement the temporary exception to
the site neutral payment rate for certain spinal cord specialty
hospitals and for certain discharges with severe wounds from certain
LTCHs, as provided under sections 15009 and 15010 of Public Law 114-
255, respectively.
[[Page 38007]]
Proposed change to the average length of stay criterion to
implement section 15007 of Public Law 114-255.
Proposed change in Medicare classification for certain
hospitals to implement section 15008 of Public Law 114-255.
8. Proposed Changes Relating to Quality Data Reporting for Specific
Providers and Suppliers
In section IX. of the preamble of the proposed rule, we addressed--
Proposed requirements for the Hospital Inpatient Quality
Reporting (IQR) Program.
Proposed changes to the requirements for the quality
reporting program for PPS-exempt cancer hospitals (PCHQR Program).
Proposed changes to the requirements under the LTCH
Quality Reporting Program (LTCH QRP).
Proposed changes to the requirements under the Inpatient
Psychiatric Facility Quality Reporting (IPFQR) Program.
Proposed changes to requirements pertaining to the
clinical quality measurement of eligible hospitals and CAHs as well as
EPs participating in the Medicare and Medicaid Electronic Health Record
(EHR) Incentive Programs.
9. Proposed Changes Relating to Medicare Cost Reporting and Provider
Requirements
In section X. of the preamble of the proposed rule, we presented
our proposals to revise the regulations to allow providers to use an
electronic signature to sign the Certification and Settlement Summary
page of the Medicare cost report and submit this page electronically,
and clarify the rules relating to the sale or scrapping of depreciable
assets disposed of on or after December 1, 1997.
10. Proposed Changes Relating to Survey and Certification Requirements
In section XI. of the preamble of the proposed rule, we present our
proposals for allowing transparency in accrediting organization survey
reports and plans of correction and for changing the requirement for
providers to publish self-termination notices in newspapers.
11. Determining Prospective Payment Operating and Capital Rates and
Rate-of-Increase Limits for Acute Care Hospitals
In section V. of the Addendum to the proposed rule, we set forth
proposed changes to the amounts and factors for determining the
proposed FY 2018 prospective payment rates for operating costs and
capital-related costs for acute care hospitals. We proposed to
establish the threshold amounts for outlier cases. In addition, we
addressed the update factors for determining the rate-of-increase
limits for cost reporting periods beginning in FY 2018 for certain
hospitals excluded from the IPPS.
12. Determining Prospective Payment Rates for LTCHs
In the Addendum to the proposed rule, we set forth proposed changes
to the amounts and factors for determining the proposed FY 2018 LTCH
PPS standard Federal payment rate and other factors used to determine
LTCH PPS payments under both the LTCH PPS standard Federal payment rate
and the site neutral payment rate in FY 2018. We proposed to establish
the adjustments for wage levels, the labor-related share, the cost-of-
living adjustment, and high-cost outliers, including the applicable
fixed-loss amounts and the LTCH cost-to-charge ratios (CCRs) for both
payment rates.
13. Impact Analysis
In Appendix A of the proposed rule, we set forth an analysis of the
impact that the proposed changes would have on affected acute care
hospitals, CAHs, LTCHs, PCHs, and IPFs.
14. Recommendation of Update Factors for Operating Cost Rates of
Payment for Hospital Inpatient Services
In Appendix B of the proposed rule, as required by sections
1886(e)(4) and (e)(5) of the Act, we provided our recommendations of
the appropriate percentage changes for FY 2018 for the following:
A single average standardized amount for all areas for
hospital inpatient services paid under the IPPS for operating costs of
acute care hospitals (and hospital-specific rates applicable to SCHs).
Target rate-of-increase limits to the allowable operating
costs of hospital inpatient services furnished by certain hospitals
excluded from the IPPS.
The LTCH PPS standard Federal payment rate and the site
neutral payment rate for hospital inpatient services provided for LTCH
PPS discharges.
15. Discussion of Medicare Payment Advisory Commission Recommendations
Under section 1805(b) of the Act, MedPAC is required to submit a
report to Congress, no later than March 15 of each year, in which
MedPAC reviews and makes recommendations on Medicare payment policies.
MedPAC's March 2017 recommendations concerning hospital inpatient
payment policies address the update factor for hospital inpatient
operating costs and capital-related costs for hospitals under the IPPS.
We addressed these recommendations in Appendix B of the proposed rule.
For further information relating specifically to the MedPAC March 2017
report or to obtain a copy of the report, contact MedPAC at (202) 220-
3700 or visit MedPAC's Web site at: https://www.medpac.gov.
II. Changes to Medicare Severity Diagnosis-Related Group (MS-DRG)
Classifications and Relative Weights
A. Background
Section 1886(d) of the Act specifies that the Secretary shall
establish a classification system (referred to as diagnosis-related
groups (DRGs)) for inpatient discharges and adjust payments under the
IPPS based on appropriate weighting factors assigned to each DRG.
Therefore, under the IPPS, Medicare pays for inpatient hospital
services on a rate per discharge basis that varies according to the DRG
to which a beneficiary's stay is assigned. The formula used to
calculate payment for a specific case multiplies an individual
hospital's payment rate per case by the weight of the DRG to which the
case is assigned. Each DRG weight represents the average resources
required to care for cases in that particular DRG, relative to the
average resources used to treat cases in all DRGs. Section
1886(d)(4)(C) of the Act requires that the Secretary adjust the DRG
classifications and relative weights at least annually to account for
changes in resource consumption. These adjustments are made to reflect
changes in treatment patterns, technology, and any other factors that
may change the relative use of hospital resources.
B. MS-DRG Reclassifications
For general information about the MS-DRG system, including yearly
reviews and changes to the MS-DRGs, we refer readers to the previous
discussions in the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR
43764 through 43766) and the FYs 2011 through 2017 IPPS/LTCH PPS final
rules (75 FR 50053 through 50055; 76 FR 51485 through 51487; 77 FR
53273; 78 FR 50512; 79 FR 49871; 80 FR 49342; and 81 FR 56787 through
56872, respectively).
C. Adoption of the MS-DRGs in FY 2008
For information on the adoption of the MS-DRGs in FY 2008, we refer
readers to the FY 2008 IPPS final rule
[[Page 38008]]
with comment period (72 FR 47140 through 47189).
D. FY 2018 MS-DRG Documentation and Coding Adjustment
1. Background on the Prospective MS-DRG Documentation and Coding
Adjustments for FY 2008 and FY 2009 Authorized by Public Law 110-90
In the FY 2008 IPPS final rule with comment period (72 FR 47140
through 47189), we adopted the MS-DRG patient classification system for
the IPPS, effective October 1, 2007, to better recognize severity of
illness in Medicare payment rates for acute care hospitals. The
adoption of the MS-DRG system resulted in the expansion of the number
of DRGs from 538 in FY 2007 to 745 in FY 2008. By increasing the number
of MS-DRGs and more fully taking into account patient severity of
illness in Medicare payment rates for acute care hospitals, MS-DRGs
encourage hospitals to improve their documentation and coding of
patient diagnoses.
In the FY 2008 IPPS final rule with comment period (72 FR 47175
through 47186), we indicated that the adoption of the MS-DRGs had the
potential to lead to increases in aggregate payments without a
corresponding increase in actual patient severity of illness due to the
incentives for additional documentation and coding. In that final rule
with comment period, we exercised our authority under section
1886(d)(3)(A)(vi) of the Act, which authorizes us to maintain budget
neutrality by adjusting the national standardized amount, to eliminate
the estimated effect of changes in coding or classification that do not
reflect real changes in case-mix. Our actuaries estimated that
maintaining budget neutrality required an adjustment of -4.8 percentage
points to the national standardized amount. We provided for phasing in
this -4.8 percentage point adjustment over 3 years. Specifically, we
established prospective documentation and coding adjustments of -1.2
percentage points for FY 2008, -1.8 percentage points for FY 2009, and
-1.8 percentage points for FY 2010.
On September 29, 2007, Congress enacted the TMA [Transitional
Medical Assistance], Abstinence Education, and QI [Qualifying
Individuals] Programs Extension Act of 2007 (Public Law 110-90).
Section 7(a) of Public Law 110-90 reduced the documentation and coding
adjustment made as a result of the MS-DRG system that we adopted in the
FY 2008 IPPS final rule with comment period to -0.6 percentage point
for FY 2008 and -0.9 percentage point for FY 2009.
As discussed in prior year rulemaking, and most recently in the FY
2017 IPPS/LTCH PPS final rule (81 FR 56780 through 56782), we
implemented a series of adjustments required under sections 7(b)(1)(A)
and 7(b)(1)(B) of Public Law 110-90, based on a retrospective review of
FY 2008 and FY 2009 claims data. We completed these adjustments in FY
2013, but indicated in the FY 2013 IPPS/LTCH PPS final rule (77 FR
53274 through 53275) that delaying full implementation of the
adjustment required under section 7(b)(1)(A) of Public Law 110-90 until
FY 2013 resulted in payments in FY 2010 through FY 2012 being
overstated, and that these overpayments could not be recovered.
2. Recoupment or Repayment Adjustment Authorized by Section 631 of the
American Taxpayer Relief Act of 2012 (ATRA)
Section 631 of the ATRA amended section 7(b)(1)(B) of Public Law
110-90 to require the Secretary to make a recoupment adjustment or
adjustments totaling $11 billion by FY 2017. This adjustment
represented the amount of the increase in aggregate payments as a
result of not completing the prospective adjustment authorized under
section 7(b)(1)(A) of Public Law 110-90 until FY 2013. As discussed
earlier, this delay in implementation resulted in overstated payment
rates in FYs 2010, 2011, and 2012. The resulting overpayments could not
have been recovered under Public Law 110-90.
Similar to the adjustments authorized under section 7(b)(1)(B) of
Public Law 110-90, the adjustment required under section 631 of the
ATRA was a one-time recoupment of a prior overpayment, not a permanent
reduction to payment rates. Therefore, we anticipated that any
adjustment made to reduce payment rates in one year would eventually be
offset by a positive adjustment in 2018, once the necessary amount of
overpayment was recovered. However, section 414 of the Medicare Access
and CHIP Reauthorization Act (MACRA) of 2015, Public Law 114-10,
enacted on April 16, 2015, replaced the single positive adjustment we
intended to make in FY 2018 with a 0.5 percentage point positive
adjustment for each of FYs 2018 through 2023. We stated in the FY 2016
IPPS/LTCH PPS final rule (80 FR 49345) that we would address this MACRA
provision in future rulemaking. However, section 15005 of the 21st
Century Cures Act (Pub. L. 114-255), enacted on December 13, 2016,
reduced the adjustment for FY 2018 from 0.5 percentage points to 0.4588
percentage points. We are addressing these provisions of MACRA and the
21st Century Cures Act in section II.D.3. of the preamble of this final
rule.
As we stated in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50515
through 50517), our actuaries estimated that a -9.3 percentage point
adjustment to the standardized amount would be necessary if CMS were to
fully recover the $11 billion recoupment required by section 631 of the
ATRA in FY 2014. It is often our practice to phase in payment rate
adjustments over more than one year, in order to moderate the effect on
payment rates in any one year. Therefore, consistent with the policies
that we have adopted in many similar cases, and after consideration of
the public comments we received, in the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50515 through 50517), we implemented a -0.8 percentage
point recoupment adjustment to the standardized amount in FY 2014. We
estimated that if adjustments of approximately -0.8 percentage point
were implemented in FYs 2014, 2015, 2016, and 2017, using standard
inflation factors, the entire $11 billion would be accounted for by the
end of the statutory 4-year timeline. As estimates of any future
adjustments are subject to variations in total savings, we did not
provide for specific adjustments for FYs 2015, 2016, or 2017 at that
time.
Consistent with the approach discussed in the FY 2014 rulemaking
for recouping the $11 billion required by section 631 of the ATRA, in
the FY 2015 IPPS/LTCH PPS final rule (79 FR 49874) and the FY 2016
IPPS/LTCH PPS final rule (80 FR 49345), we implemented additional -0.8
percentage point recoupment adjustments to the standardized amount in
FY 2015 and FY 2016, respectively. We estimated that these adjustments,
combined with leaving the prior -0.8 percentage point adjustments in
place, would recover up to $2 billion in FY 2015 and another $3 billion
in FY 2016. When combined with the approximately $1 billion adjustment
made in FY 2014, we estimated that approximately $5 to $6 billion would
be left to recover under section 631 of the ATRA by the end of FY 2016.
As indicated in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR
24966), due to lower than previously estimated inpatient spending, we
determined that an adjustment of -0.8 percentage point in FY 2017 would
not recoup the $11 billion under section 631 of the ATRA. For the FY
2017 IPPS/LTCH PPS final rule (81 FR 56785), based on the Midsession
Review of the President's FY 2017 Budget, our actuaries estimated
[[Page 38009]]
that, to the nearest tenth of a percentage point, the FY 2017
documentation and coding adjustment factor that will recoup as closely
as possible $11 billion from FY 2014 through FY 2017 without exceeding
this amount is -1.5 percentage points. Based on those updated estimates
by the Office of the Actuary using the Midsession Review of the
President's FY 2017 Budget, we made a -1.5 percentage point adjustment
for FY 2017 as the final adjustment required under section 631 of the
ATRA. The estimates by our actuaries related to this finalized
adjustment were included in a memorandum that we made publicly
available on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2017-IPPS-Final-Rule-Home-Page-Items/FY2017-IPPS-Final-Rule-OACT.html.
3. Adjustment for FY 2018 Required Under Section 414 of Public Law 114-
10 (MACRA) and Section 15005 of Public Law 114-255
As stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56785),
once the recoupment required under section 631 of the ATRA was
complete, we had anticipated making a single positive adjustment in FY
2018 to offset the reductions required to recoup the $11 billion under
section 631 of the ATRA. However, section 414 of the MACRA (which was
enacted on April 16, 2015) replaced the single positive adjustment we
intended to make in FY 2018 with a 0.5 percentage point positive
adjustment for each of FYs 2018 through 2023. In the FY 2017
rulemaking, we indicated that we would address the adjustments for FY
2018 and later fiscal years in future rulemaking. As noted previously,
section 15005 of the 21st Century Cures Act (Pub. L. 114-255), which
was enacted on December 13, 2016, amended section 7(b)(1)(B) of the
TMA, as amended by section 631 of the ATRA and section 414 of the
MACRA, to reduce the adjustment for FY 2018 from a 0.5 percentage point
to a 0.4588 percentage point. We believe the directive under section
15005 of Public Law 114-255 is clear. Therefore, in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19816) for FY 2018, we proposed to
implement the required +0.4588 percentage point adjustment to the
standardized amount. This is a permanent adjustment to payment rates.
While we did not propose future adjustments required under section 414
of the MACRA and section 15005 of Public Law 114-255 at that time, we
stated in the proposed rule that we expect to propose positive 0.5
percentage point adjustments to the standardized amounts for FYs 2019
through 2023.
Comment: Several commenters reiterated their disagreement with the
-1.5 percentage point adjustment that CMS made for FY 2017 under
section 631 of the ATRA, which exceeded the estimated adjustment of
approximately -0.8 percentage point described in the FY 2014 IPPS/LTCH
PPS rulemaking. Commenters contended that, as a result, hospitals would
be left with a larger permanent cut than Congress intended following
the enactment of MACRA. They asserted that CMS' proposal to apply a
0.4588 percent positive adjustment for FY 2018 misinterprets the
relevant statutory authority, and urged CMS to align with their view of
Congress' intent by restoring an additional +0.7 percentage point
adjustment to the standardized amount in FY 2018; that is, the
difference between the -1.5 percentage point adjustment made in FY 2017
and the initial estimate of -0.8 percentage point discussed in the FY
2014 IPPS/LTCH PPS rulemaking. Commenters also urged CMS to use its
discretion under section 1886(d)(5)(I) of the Act to increase the FY
2018 adjustment by 0.7 percentage point. Other commenters requested
that, despite current law, CMS ensure that adjustments totaling the
full 3.9 percentage points withheld under section 631 of the ATRA be
returned.
Response: As discussed in the FY 2017 IPPS/LTCH PPS final rule (81
FR 56783 through 56785), CMS completed the $11 billion recoupment
required under section 631 of the ATRA. We continue to disagree that
section 414 of the MACRA was intended to augment or limit our separate
obligation under the ATRA to fully offset $11 billion by FY 2017, as we
discussed in response to comments in the FY 2017 IPPS/LTCH PPS final
rule (81 FR 56784). Moreover, as we discussed in the FY 2018 IPPS/LTCH
PPS proposed rule, we believe the directive regarding the applicable
adjustment for FY 2018 is clear. While we had anticipated making a
positive adjustment in FY 2018 to offset the reductions required to
recoup the $11 billion under section 631 of the ATRA, section 414 of
the MACRA requires that we not make the single positive adjustment we
intended to make in FY 2018 but instead make a 0.5 percentage point
positive adjustment for each of FYs 2018 through 2023. As noted by the
commenters, and discussed in the FY 2017 IPPS/LTCH PPS final rule, by
phasing in a total positive adjustment of only 3.0 percentage points,
section 414 of the MACRA would not fully restore even the 3.2
percentage point adjustment originally estimated by CMS in the FY 2014
IPPS/LTCH PPS final rule (78 FR 50515). Finally, Public Law 114-255,
which further reduced the positive adjustment required for FY 2018 from
0.5 percentage point to 0.4588 percentage point, was enacted on
December 13, 2016, after CMS proposed and finalized the -1.5 percentage
point adjustment as the final adjustment required under section 631 of
the ATRA in the FY 2017 rulemaking.
After consideration of the public comments we received, we are
finalizing the +0.4588 percentage point adjustment to the standardized
amount for FY 2018, as required under section 15005 of Public Law 114-
255.
E. Refinement of the MS-DRG Relative Weight Calculation
1. Background
Beginning in FY 2007, we implemented relative weights for DRGs
based on cost report data instead of charge information. We refer
readers to the FY 2007 IPPS final rule (71 FR 47882) for a detailed
discussion of our final policy for calculating the cost-based DRG
relative weights and to the FY 2008 IPPS final rule with comment period
(72 FR 47199) for information on how we blended relative weights based
on the CMS DRGs and MS-DRGs. We also refer readers to the FY 2017 IPPS/
LTCH PPS final rule (81 FR 56785 through 56787) for a detailed
discussion of the history of changes to the number of cost centers used
in calculating the DRG relative weights. Since FY 2014, we calculate
the IPPS MS-DRG relative weights using 19 CCRs, which now include
distinct CCRs for implantable devices, MRIs, CT scans, and cardiac
catheterization.
2. Discussion of Policy for FY 2018
Consistent with our established policy, we calculated the final MS-
DRG relative weights for FY 2018 using two data sources: The MedPAR
file as the claims data source and the HCRIS as the cost report data
source. We adjusted the charges from the claims to costs by applying
the 19 national average CCRs developed from the cost reports. The
description of the calculation of the 19 CCRs and the MS-DRG relative
weights for FY 2018 is included in section II.G. of the preamble to
this FY 2018 IPPS/LTCH PPS final rule. As we did with the FY 2018 IPPS/
LTCH PPS proposed rule, we are providing the version of the HCRIS from
which we calculated these 19 CCRs on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/. Click on the link on the
[[Page 38010]]
left side of the screen titled, ``FY 2018 IPPS Final Rule Home Page''
or ``Acute Inpatient Files for Download.''
Comment: One commenter recommended that CMS work with stakeholders
to update cost reporting instructions and improve the accuracy and
validity of the national average CCRs. The commenter expressed concern
that the differences between hospitals' use of nonstandard cost center
codes and CMS' procedures for mapping and rolling up nonstandard codes
to the standard cost centers will continue to result in invalid CCRs
and inaccurate payments. The commenter stressed the need for
flexibility in cost reporting, to accommodate any new or unique
services that certain hospitals may provide, which may not be easily
captured through the cost reporting software. Finally, the commenter
again recommended, as it had done in response to prior IPPS rules, that
CMS pay particular attention to data used for CT scan and MRI cost
centers; the commenter believed that the hospital payment rates
established by CMS from the CT scan and MRI CCRs simply do not
correlate with resources used for these capital-intensive services.
Response: We received a similar public comment last year and
responded to it in the FY 2017 IPPS/LTCH PPS final rule. We refer
readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56787) for our
response to these issues. We note that we will continue to explore ways
in which we can improve the accuracy of the cost report data and
calculated CCRs used in the cost estimation process.
Comment: One commenter requested that CMS use a single diagnostic
radiology CCR to set weights, rather than using the separate CT and MRI
cost centers. The commenter requested that if CMS maintains the
separate CT and MRI cost centers, CMS should not include cost reports
from hospitals that use the ``square foot'' allocation methodology. The
commenter provided an analysis to support its assertion that the CCRs
for CT and MRI are incorrect and are inappropriately reducing payments
under the IPPS. The commenter indicated that the charge-compression
hypothesis has been shown to be false with the use of the separate CT
and MRI cost centers. The commenter discussed problems with cost
allocation to the CT and MRI cost centers. The commenter referenced
discussions in prior IPPS/LTCH PPS rules about this issue. The
commenter acknowledged that CMS did not include a specific proposal in
the FY 2018 proposed rule regarding this issue.
Response: As the commenter noted, we did not make any proposals for
FY 2018 relating to the number of cost centers used to calculate the
relative weights. As noted previously and discussed in detail in prior
rulemaking, we have calculated the IPPS MS-DRG relative weights using
19 CCRs, including distinct CCRs for MRIs and CT scans, since FY 2014.
We refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56785)
for a detailed discussion of the basis for establishing these 19 CCRs.
We further note that in the FY 2014 IPPS/LTCH PPS final rule (78 FR
50518 through 50523), we presented data analyses using distinct CCRs
for implantable devices, MRIs, CT scans, and cardiac catheterization.
As we noted, we will continue to explore ways in which we can improve
the accuracy of the cost report data and calculated CCRs used in the
cost estimation process.
F. Changes to Specific MS-DRG Classifications
1. Discussion of Changes to Coding System and Basis for FY 2018 MS-DRG
Updates
a. Conversion of MS-DRGs to the International Classification of
Diseases, 10th Revision (ICD-10)
As of October 1, 2015, providers use the International
Classification of Diseases, 10th Revision (ICD-10) coding system to
report diagnoses and procedures for Medicare hospital inpatient
services under the MS-DRG system instead of the ICD-9-CM coding system,
which was used through September 30, 2015. The ICD-10 coding system
includes the International Classification of Diseases, 10th Revision,
Clinical Modification (ICD-10-CM) for diagnosis coding and the
International Classification of Diseases, 10th Revision, Procedure
Coding System (ICD-10-PCS) for inpatient hospital procedure coding, as
well as the Official ICD-10-CM and ICD-10-PCS Guidelines for Coding and
Reporting. For a detailed discussion of the conversion of the MS-DRGs
to ICD-10, we refer readers to the FY 2017 IPPS/LTCH PPS final rule (81
FR 56787 through 56789).
b. Basis for FY 2018 MS-DRG Updates
CMS has previously encouraged input from our stakeholders
concerning the annual IPPS updates when that input is made available to
us by December 7 of the year prior to the next annual proposed rule
update. For example, to be considered for any updates or changes in FY
2018, comments and suggestions should have been submitted by December
7, 2016. The comments that were submitted in a timely manner for FY
2018 are discussed in this section of the preamble of this final rule.
As CMS works with the public to examine the ICD-10 claims data used for
updates to the ICD-10 MS-DRGs, we would like to examine areas where the
MS-DRGs can be improved. This will require additional time for us to
review requests from the public to make specific updates, analyze
claims data, and consider any proposed updates. As discussed in the
proposed rule, given the need for more time to carefully evaluate
requests and propose updates, we are changing the deadline to request
updates to MS-DRGs to November 1 of each year. This will provide an
additional 5 weeks for the data analysis and review process. Interested
parties should submit any comments and suggestions for FY 2019 by
November 1, 2017, via the CMS MS-DRG Classification Change Requests
Mailbox located at: MSDRGClassificationChange@cms.hhs.gov.
Following are the changes that we proposed to the MS-DRGs for FY
2018 in the FY 2018 IPPS/LTCH PPS proposed rule. We invited public
comments on each of the MS-DRG classification proposed changes as well
as our proposals to maintain certain existing MS-DRG classifications
discussed in the proposed rule. In some cases, we proposed changes to
the MS-DRG classifications based on our analysis of claims data. In
other cases, we proposed to maintain the existing MS-DRG classification
based on our analysis of claims data. For the FY 2018 proposed rule,
our MS-DRG analysis was based on ICD-10 claims data from the December
2016 update of the FY 2016 MedPAR file, which contains hospital bills
received through September 30, 2016, for discharges occurring through
September 30, 2016. In our discussion of the proposed MS-DRG
reclassification changes, we referred to our analysis of claims data
from the ``December 2016 update of the FY 2016 MedPAR file''.
In this FY 2018 IPPS/LTCH PPS final rule, we summarize the public
comments we received on our proposals, present our responses, and state
our final policies. For this FY 2018 final rule, we performed limited
additional MS-DRG analysis of claims data. Therefore, all of the data
analysis is based on claims data from the December 2016 update of the
FY 2016 MedPAR file, which contains hospital bills received through
September 30, 2016, for discharges occurring through September 30,
2016, except where specifically noted that it is based on the
[[Page 38011]]
March 2017 update of the FY 2016 MedPAR file, which contains hospital
bills received through March 31, 2017, for discharges occurring through
September 30, 2016.
As explained in previous rulemaking (76 FR 51487), in deciding
whether to propose to make further modification to the MS-DRGs for
particular circumstances brought to our attention, we consider whether
the resource consumption and clinical characteristics of the patients
with a given set of conditions are significantly different than the
remaining patients represented in the MS-DRG. We evaluate patient care
costs using average costs and lengths of stay and rely on the judgment
of our clinical advisors to determine whether patients are clinically
distinct or similar to other patients represented in the MS-DRG. In
evaluating resource costs, we consider both the absolute and percentage
differences in average costs between the cases we select for review and
the remainder of cases in the MS-DRG. We also consider variation in
costs within these groups; that is, whether observed average
differences are consistent across patients or attributable to cases
that are extreme in terms of costs or length of stay, or both. Further,
we consider the number of patients who will have a given set of
characteristics and generally prefer not to create a new MS-DRG unless
it would include a substantial number of cases.
In our examination of the claims data, we apply the following
criteria established in FY 2008 (72 FR 47169) to determine if the
creation of a new complication or comorbidity (CC) or major
complication or comorbidity (MCC) subgroup within a base MS-DRG is
warranted:
A reduction in variance of costs of at least 3 percent.
At least 5 percent of the patients in the MS-DRG fall
within the CC or MCC subgroup.
At least 500 cases are in the CC or MCC subgroup.
There is at least a 20-percent difference in average costs
between subgroups.
There is a $2,000 difference in average costs between
subgroups.
In order to warrant creation of a CC or MCC subgroup within a base
MS-DRG, the subgroup must meet all five of the criteria.
Comment: Several commenters expressed concern regarding the use of
ICD-10 claims data for proposed updates to the FY 2018 ICD-10 MS-DRGs
Version 35 and in recalibrating the proposed FY 2018 MS-DRG relative
weights. Commenters reported that the proposed relative weights for
certain MS-DRGs had large reductions when compared to the current FY
2017 ICD-10 MS-DRG Version 34 relative weights. Specifically,
commenters noted that MS-DRG 215 (Other Heart Assist System Implant)
appeared to have the largest decrease by approximately 35% although it
was not the subject of a new proposal in the FY 2018 IPPS/LTCH PPS
proposed rule. According to the commenters, the proposed reductions for
certain relative weights are a direct result of the transition from
ICD-9 to ICD-10 coded claims data that was utilized in setting the
proposed FY 2018 MS-DRG relative weights. The commenters stated that,
if finalized as proposed, these reductions could limit access to the
necessary services for Medicare beneficiaries and urged CMS to consider
phasing in these significant fluctuations that they asserted cause
instability of the weights and hinder providers in their ability to
project anticipated payment rates. Many commenters also recommended
that CMS limit the percentage by which an MS-DRG's relative weight can
be reduced.
Commenters also believed that the fluctuations in the proposed
relative weights do not appear to be consistent with the deliberate
approach CMS has taken to ensure a smooth transition from ICD-9 to ICD-
10. The commenters noted that, in the past, CMS has appropriately
recognized and made efforts to maintain stability within the IPPS
during the transition, such as providing several versions of the ICD-10
MS-DRG Grouper for review, contracting for studies to evaluate the
impact of converting the MS-DRGs to ICD-10 and assembling various
public meetings. The commenters also noted that CMS has observed
broader principles in prior rulemaking with regard to payment stability
such as during the transition from charge-based weights to cost-based
weights in FY 2007 and the conversion of the CMS DRGs to MS-DRGs in FY
2008. Consistent with those past policy refinements and the steps taken
to mitigate fluctuations potentially affecting IPPS payment, commenters
requested that CMS once again exercise its authority to do so. We refer
readers to section II.G. of the preamble of this FY 2018 IPPS/LTCH PPS
final rule for further discussion regarding recalibration of the FY
2018 MS-DRG relative weights, including our response to comments
requesting a transition period for substantial reductions in relative
weights in order to facilitate payment stability.
As stated above, commenters noted that MS-DRG 215 (Other Heart
Assist System Implant) appeared to have the largest decrease by
approximately 35% although it was not the subject of a new proposal in
the FY 2018 IPPS/LTCH PPS proposed rule. We received multiple comments
stating that the American Hospital Association published Coding Clinic
advice that changed coding guidance for external heart assist devices
and that this will result in higher-cost patients with more ICU days
and increased lengths of stay that are assigned to MS-DRG 215 in FY
2018. The commenters noted there will be a substantial difference in
coding for this patient population that is not reflected in the current
cost data used to set the FY 2018 payment rates and a commenter urged
CMS to revise the structure of MS-DRG 215 as an alternative option to
address the decrease in the FY 2018 proposed relative weight for this
MS-DRG. According to the commenter, restructuring this MS-DRG would
more accurately reflect the resources required for cases that will be
assigned to this MS-DRG in FY 2018 and is consistent with the agency's
continuing efforts to ensure accurate replication between the ICD-9 and
ICD-10 based MS-DRGs.
The commenter noted that currently, patients who receive heart
assist devices may be assigned to the Pre-MDC MS-DRGs 001 and 002
(Heart Transplant or Implant of Heart Assist System) or MS-DRG 215
(Other Heart Assist System Implant). The commenter asserted that the
transition from using ICD-9 codes to ICD-10 codes as the basis for MS-
DRG assignment has been impacted by the significant increase in the
number of codes relevant to the assignment of a MS-DRG because ICD-10
is more granular. This commenter recommended that CMS revise the
assignments for the ICD-10 procedure codes grouping to MS-DRG 215 to
accurately replicate the logic used to assign ICD-9 procedure codes to
MS-DRG 215.
An example of how the MS-DRG assignment has been impacted by the
transition to ICD-10 was provided by the commenter who noted that under
the ICD-9 based MS-DRGs, procedure code 37.62 (Insertion of temporary
non-implantable extracorporeal circulatory assist device) was reported
for both the insertion and removal of an external heart assist device
and was assigned to MS-DRG 215. However, under ICD-10, two codes are
required, one for the insertion and one for the removal of the device
where the logic for the combination of those two codes results in
assignment to Pre-MDC MS-DRGs 001 and 002 (Heart transplant or Implant
of Heart Assist System).
[[Page 38012]]
Another example offered by the commenter included ICD-9 procedure code
37.63 (Repair of heart assist system) where, under ICD-10, these cases
could be reported with a code describing revision of an external heart
assist device or these cases could be reported with a combination of
codes, one for the removal and one for the revision of an external
heart assist device. The commenter suggested that the combinations of
insertion and removal codes and the combinations of removal and
revision codes be reassigned from the Pre-MDC MS-DRGs 001 and 002 to
MS-DRG 215 to accurately replicate the logic that was used in the ICD-9
based MS-DRGs.
The commenter performed its own analysis of MS-DRG 215 using the FY
2016 MedPAR data and noted that its findings indicated there was a
decrease in the volume of procedures involving a repair or revision of
a heart assist system device and an increase in the number of insertion
or implantation of heart assist system devices when compared to the FY
2015 MedPAR data. The commenter's findings also indicated that there
was a decrease in the average total standardized charges, as well as a
decrease in the severity of illness of the patients grouping to this
MS-DRG in FY 2016 compared to FY 2015. For example, the commenter noted
that its analysis showed approximately 95 percent of insertion or
implant of heart assist system cases also reported a secondary
diagnosis of an MCC in FY 2015; however, this number dropped to 84
percent in FY 2016. Additionally, the commenter reported that
approximately 73 percent of the revision of heart assist system cases
also reported a secondary diagnosis of an MCC in FY 2015; however, this
number dropped to 67 percent in FY 2016. The commenter stated that the
clinical and usage changes for these devices do not account for this
dramatic 1-year reversal.
Response: We agree with the commenter that under the ICD-9 based
MS-DRGs, procedure code 37.62 (Insertion of temporary non-implantable
extracorporeal circulatory assist device) was reported for both the
insertion and removal of an external heart assist device and was
assigned to MS-DRG 215. We also agree with the commenter that, under
ICD-10, two codes are currently required to describe this same
procedure, one for the insertion and one for the removal of the device
where the logic for the combination of those two codes results in
assignment to Pre-MDC MS-DRGs 001 and 002 (Heart transplant or Implant
of Heart Assist System). Lastly, we agree with the example offered by
the commenter that included ICD-9 procedure code 37.63 (Repair of heart
assist system) where under ICD-10, these cases could be reported with a
code describing revision of a heart assist device or these cases could
be reported with a combination of codes, one for the removal and one
for the revision of a heart assist device.
We also are aware that the American Hospital Association published
Coding Clinic advice that clarified coding and reporting for certain
external heart assist devices due to the technology being approved for
new indications. We point out that coding advice is issued
independently from payment policy. That is, in our annual IPPS
rulemaking, in considering updates to the MS-DRGs, it is typically not
our process to analyze changes in published coding advice. We generally
do not make proposals for MS-DRG reclassification changes in the
absence of data and clinical input from our clinical advisors.
In response to the commenters' request to ensure accurate
replication between the ICD-9 and ICD-10 based MS-DRGs for external
heart assist devices in conjunction with the public comments requesting
that we maintain stability in the MS-DRG relative payment weights, we
note that, for FY 2018 and beyond, we are no longer replicating the
ICD-9 MS-DRGs. As stated in the FY 2018 IPPS/LTCH PPS proposed rule and
this final rule, we are using ICD-10 coded claims data for the first
time to propose changes to the ICD-10 MS-DRG classifications and to
compute the relative weights. Therefore, our proposals and final
policies for FY 2018 are based only on the ICD-10 claims data from the
FY 2016 MedPAR file. However, similar to our efforts in identifying
areas where improvements could be made to better account for severity
of illness and resource utilization during the transition from the CMS
DRGs to the MS-DRGs, we are making concerted efforts to continue
refining the ICD-10 MS-DRGs after transitioning from the ICD-9 MS-DRGs.
We appreciate the commenters' acknowledgement of our efforts to
maintain stability within the IPPS during the transition period to ICD-
10 as noted above. We also acknowledge and appreciate the analysis that
was conducted by the commenter for MS-DRG 215. We believe it is
important to be able to fully evaluate the effects and the impact of
restructuring any MS-DRGs for which all heart assist system procedures
are currently assigned under ICD-10. As part of this evaluation, we
believe it would be advantageous to consider additional ICD-10 coded
claims data as well as changes in a hospital's case-mix (for example,
patient characteristics) to determine if the patients undergoing a
heart assist system procedure or a combination of heart assist system
procedures demonstrate a greater severity of illness and/or increased
treatment difficulty as a result of the surgical approach that is used
(for example, open, percutaneous, percutaneous endoscopic, among
others). Finally, consultation with our clinical advisors is also
important to properly analyze the appropriateness of any modifications
to the MS-DRGs where a heart assist device is currently assigned.
Therefore, in response to the public comments received, we are
planning to review for FY 2019 the current ICD-10 logic for Pre-MDC MS-
DRGs 001 and 002 (Heart Transplant or Implant of Heart Assist System
with and without MCC, respectively), MS-DRG 215 (Other Heart Assist
System Implant) and MS-DRGs 268 and 269 (Aortic and Heart Assist
Procedures Except Pulsation Balloon with and without MCC, respectively)
where procedures involving the heart assist devices are currently
assigned. We refer the reader to the ICD-10 MS-DRG Definitions Manual
version 34, which is available via the Internet on the CMS Web site at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2017-IPPS-Final-Rule-Home-Page-Items/FY2017-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending for
complete documentation of the GROUPER logic for Pre-MDC MS-DRGs 001 and
002, MS-DRG 215, and MS-DRGs 268 and 269. We also encourage the public
to submit any comments on restructuring the MS-DRGs for heart assist
system procedures to the CMS MS-DRG Classification Change Request
Mailbox located at: MSDRGClassificationChange@cms.hhs.gov by November
1, 2017.
As previously stated, we are making concerted efforts to continue
refining the ICD-10 MS-DRGs after transitioning from the ICD-9 MS-DRGs.
We believe that it is important to include the Pre-MDC MS-DRGs and the
other MS-DRGs comprised of heart assist system procedures as part of
our comprehensive review of each MDC and the corresponding MS-DRGs
assigned to them. After consideration of the public comments we
received, we are maintaining the current structure of MS-DRG 215 for FY
2018, under the ICD-10 MS-DRGs Version 35.
We are making the FY 2018 ICD-10 MS-DRG GROUPER and Medicare Code
Editor (MCE) Software Version 35 available to the public on our CMS Web
[[Page 38013]]
site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/ through the FY 2018 IPPS Final Rule Home
Page.
2. MDC 1 (Diseases and Disorders of the Nervous System)
a. Functional Quadriplegia
We received a request to reassign cases identified by diagnosis
code R53.2 (Functional quadriplegia) from MS-DRGs 052 and 053 (Spinal
Disorders and Injuries with and without CC/MCC, respectively). The
requestor stated that because functional quadriplegia does not involve
any spinal injury or pathology, cases identified by the diagnosis code
should not be assigned to MS-DRGs 052 and 053. However, the requestor
did not suggest an alternative MS-DRG assignment.
Section I.C.18.f. of the FY 2017 ICD-10-CM Official Coding
Guidelines addresses the coding for the diagnosis of functional
quadriplegia. Section I.C.18.f. states that functional quadriplegia
(described by diagnosis code R53.2) is the lack of ability to use one's
limbs or to ambulate due to extreme debility. The condition is not
associated with neurologic deficit or injury, and diagnosis code R53.2
should not be used to identify cases of neurologic quadriplegia. In
addition, the Guidelines state that the diagnosis code should only be
assigned if functional quadriplegia is specifically documented by a
physician in the medical record, and the diagnosis of functional
quadriplegia is not associated with a neurologic deficit or injury. A
physician may document the diagnosis of functional quadriplegia as
occurring with a variety of conditions.
As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19817 through 19818), we examined claims data from the December 2016
update of the FY 2016 MedPAR file on cases reporting diagnosis code
R53.2 in MS-DRGs 052 and 053. Our findings are shown in the table
below.
Cases Reporting Functional Quadriplegia in MS-DRGs 052 and 053
----------------------------------------------------------------------------------------------------------------
Average
MS-DRG Number of length of Average costs
cases stay
----------------------------------------------------------------------------------------------------------------
MS-DRG 052--All cases........................................... 865 5.4 $10,247
MS-DRG 052--Cases reporting diagnosis code R53.2................ 63 4.9 6,420
MS-DRG 053--All cases........................................... 239 3.3 6,326
MS-DRG 053-- Cases reporting diagnosis code R53.2............... 16 3.3 2,318
----------------------------------------------------------------------------------------------------------------
As shown in the table above, for MS-DRG 052, there were a total of
865 cases with an average length of stay of 5.4 days and average costs
of $10,247. Of the 865 cases in MS-DRG 052, there were 63 cases that
reported a principal diagnosis of functional quadriplegia, with an
average length of stay of 4.9 days and average costs of $6,420. For MS-
DRG 053, there were a total of 239 cases, with an average length of
stay of 3.3 days and average costs of $6,326. Of the 239 cases in MS-
DRG 053, there were 16 cases that reported a principal diagnosis of
functional quadriplegia, with an average length of stay of 3.3 days and
average costs of $2,318.
To address the request to reassign cases reporting a diagnosis of
functional quadriplegia to a different MS-DRG, we reviewed the data for
a total of 79 cases (63 cases in MS-DRG 052 and 16 cases in MS-DRG 053)
that reported a principal diagnosis of functional quadriplegia in MS-
DRGs 052 and 053. As shown in the table above, our data analysis
demonstrates that the average costs for these 79 cases are lower than
the average costs of all cases in MS-DRGs 052 and 053 ($6,420 compared
to $10,247 for all cases in MS-DRG 052, and $2,318 compared to $6,326
for all cases in MS-DRG 053), and the average lengths of stay are
shorter for cases reporting a diagnosis of functional quadriplegia in
MS-DRG 052 (4.9 days compared to 5.4 days for all cases in MS-DRG 052),
but equal for cases in MS-DRG 053 (3.3 days for cases reporting a
diagnosis of functional quadriplegia and for all cases).
As we discussed in the proposed rule, our clinical advisors
reviewed this issue and agreed that a diagnosis of functional
quadriplegia does not involve a spinal disorder or injury, and may be
associated with, or the result of, a variety of underlying conditions.
Our clinical advisors also agreed that it is not clinically appropriate
to include cases reporting a diagnosis of functional quadriplegia
within MS-DRGs 052 and 053 because these cases do not involve a spinal
disorder or injury. Therefore, given the fact that functional
quadriplegia can be the result of a variety of other conditions, we
reviewed the MS-DRGs in order to identify a more appropriate placement
for cases reporting this diagnosis. Our clinical advisors recommended
assigning cases representing a diagnosis of functional quadriplegia
from MS-DRGs 052 and 053 to MS-DRGs 091, 092, and 093 (Other Disorders
of Nervous System with MCC, with CC, and without CC/MCC, respectively).
Within each MDC, there are MS-DRGs that describe a variety of other
conditions that do not have the clinical characteristics of the more
specific MS-DRGs. In this case, MS-DRGs 091, 092, and 093 describe a
variety of other disorders of the nervous system that are not
clinically similar in characteristics to the disorders described by MS-
DRGs 052 and 053. We stated in the proposed rule that our clinical
advisors believe that MS-DRGs 091, 092, and 093 are more appropriate
MS-DRG assignments for cases representing a diagnosis of functional
quadriplegia.
We examined claims data from the December 2016 update of the FY
2016 MedPAR file on cases in MS-DRGs 091, 092, and 093. Our findings
are shown in the table below.
Cases in MS-DRGs 091, 092, and 093
----------------------------------------------------------------------------------------------------------------
Average
MS-DRG Number of length of Average costs
cases stay
----------------------------------------------------------------------------------------------------------------
MS-DRG 091--All cases........................................... 12,607 5.6 $10,815
MS-DRG 092--All cases........................................... 19,392 3.9 6,706
[[Page 38014]]
MS-DRG 093--All cases........................................... 8,120 2.7 5,253
----------------------------------------------------------------------------------------------------------------
As shown in the table above, for MS-DRG 091, there were a total of
12,607 cases, with an average length of stay of 5.6 days and average
costs of $10,815. For MS-DRG 092, there were a total of 19,392 cases,
with an average length of stay of 3.9 days and average costs of $6,706.
For MS-DRG 093, there were a total of 8,120 cases, with an average
length of stay of 2.7 days and average costs of $5,253. As stated
earlier, of the 865 total cases in MS-DRG 052, there were 63 cases that
reported a principal diagnosis of functional quadriplegia, with an
average length of stay of 4.9 days and average costs of $6,420. Of the
239 total cases in MS-DRG 053, there were 16 cases that reported a
principal diagnosis of functional quadriplegia, with an average length
of stay of 3.3 days and average costs of $2,318. The average lengths of
stay for cases reporting a diagnosis of functional quadriplegia in MS-
DRGs 052 and 053 are similar to the average lengths of stay for cases
found in MS-DRGs 091, 092 and 093 (4.9 days and 3.3 days for cases in
MS-DRGs 052 and 053, respectively, compared to 5.6 days, 3.9 days, and
2.7 days, respectively, for cases in MS-DRGs 091, 092, and 093). The
average costs for cases reporting a diagnosis of functional
quadriplegia in MS-DRGs 052 and 053 are $6,420 and $2,318,
respectively, compared to $10,815, $6,706, and $5,253 for all cases in
MS-DRGs 091, 092, and 093. The average costs for cases reporting a
diagnosis of functional quadriplegia in MS-DRG 053 are lower than the
average costs for all cases in MS-DRG 093 without a CC or MCC ($2,318
compared to $5,253, respectively). The average costs for cases
reporting a diagnosis of functional quadriplegia in MS-DRG 052 are
$6,420, which is lower than the average costs of $10,815 for all cases
in MS-DRG 091, but close to the average costs of $6,706 for all cases
in MS-DRG 092. We stated in the proposed rule that while we acknowledge
that the average costs for cases reporting a diagnosis of functional
quadriplegia are lower than those cases within MS-DRGs 091, 092, and
093, as stated earlier, the average costs of cases reporting a
diagnosis of functional quadriplegia also are lower than the average
costs of all cases in MS-DRGs 052 and 053 where these cases are
currently assigned.
Our clinical advisors reviewed the clinical issues as well as the
claims data for MS-DRGs 052, 053, 091, 092, and 093. As a result of
this review, they recommended that cases reporting a diagnosis of
functional quadriplegia be reassigned from MS-DRGs 052 and 053 to MS-
DRGs 091, 092, and 093 because the current MS-DRG assignment is not
clinically appropriate. We stated in the proposed rule that our
clinical advisors stated that reassigning these cases to MS-DRGs 091,
092, and 093 is more appropriate because this set of MS-DRGs includes a
variety of nervous system disorders that are not appropriately
classified to more specific MS-DRGs within MDC 1. Therefore, in the FY
2018 IPPS/LTCH PPS proposed rule (82 FR 19817 through 19818), we
proposed to reassign cases identified by diagnosis code R53.2 from MS-
DRGs 052 and 053 to MS-DRGs 091, 092, and 093 for FY 2018.
We invited public comments on our proposal.
Comment: Several commenters supported CMS' statement that diagnosis
code R53.2 does not belong in MS-DRGs 052 and 053 because this
condition does not involve a spinal disorder or injury. The commenters
supported reassigning the code from MS-DRGs 052 and 053. However, one
commenter suggested that instead of assigning diagnosis code R53.2 to
MS DRGs 091, 092, and 093 (Other Disorders of Nervous System with MCC,
with CC, and without CC/MCC, respectively) for FY 2018, CMS instead
reassign it to MS-DRGs 947 and 948 (Signs and Symptoms with MCC and
without MCC, respectively). The commenter stated that the ICD-10-CM
code for functional quadriplegia, R53.2, is located in Chapter 18,
Symptoms, Signs and Abnormal Findings because it can be the result of a
variety of underlying conditions. Therefore, the commenter believed it
was not appropriate to classify this diagnosis as a nervous system
disorder. The commenter pointed out that other codes in ICD-10-CM
category R53 are assigned to MS-DRGs 947 and 948. Therefore, the
commenter believed that it was appropriate to reassign code R53.2 from
MS-DRGs 052 and 053 to MS-DRGs 947 and 948.
Response: We agree with the commenter that diagnosis code R53.2 is
located in Chapter 18, Symptoms, Signs and Abnormal Findings because it
can be the result of a variety of underlying conditions. We also agree
that this code cannot be labeled as a nervous system disorder.
Therefore, we agree that there is merit in reassigning diagnosis code
R53.2 where other codes in category R53 are assigned in MS-DRGs 947 and
948. We examined claims data from the December 2016 update of the FY
2016 MedPAR file on cases in MS-DRGs 947 and 948. Our findings are
shown in the table below.
Cases in MS-DRGs 947 and 948
----------------------------------------------------------------------------------------------------------------
Average
MS-DRG Number of length of Average costs
cases stay
----------------------------------------------------------------------------------------------------------------
MS-DRG 947-All cases............................................ 10,799 4.7 $8,225
MS-DRG 948-All cases............................................ 36,123 3.3 5,494
----------------------------------------------------------------------------------------------------------------
As stated earlier, of the 865 total cases in MS-DRG 052, there were
63 cases that reported a principal diagnosis of functional
quadriplegia, with an average length of stay of 4.9 days and average
costs of $6,420. This compares to all cases in MS-DRG 947 which had an
average length of stay of 4.7 days and average costs of $8,225.
Therefore, the average length of stay for functional quadriprlegia
cases in MS-DRG 052 was 0.2 days longer and the average costs
[[Page 38015]]
were $1,805 lower than all cases in MS-DRG 947. Of the 239 total cases
in MS-DRG 053, there were 16 cases that reported a principal diagnosis
of functional quadriplegia, with an average length of stay of 3.3 days
and average costs of $2,318. This compares to all cases in MS-DRG 948
which had an average length of stay of 3.3 days and average costs of
$5,494. Therefore, the average length of stay for functional
quadriprlegia cases in MS-DRG 053 is the same as all cases in MS-DRG
948 and the average costs are $3,176 lower than all cases in MS-DRG
948. The average costs of functional quadriplegia cases are lower than
all cases in MS-DRGs 091, 092, and 093 as well as in MS-DRGs 947 and
948. The average length of stay of functional quadriplegia cases are
similar to those in MS-DRGs 947 and 948. We agree with the commenter
that the more appropriate MS-DRG assignment would be MS-DRGs 947 and
948 because these MS-DRGs capture similar symptom codes.
Our clinical advisors reviewed this clinical issue along with the
claims data for MS-DRGs 947 and 948. Our clinical advisors agree that
because diagnosis code R53.2 is a symptom code that could be the result
of a variety of underlying conditions, it would not be appropriate to
assign it to nervous system MS-DRGs such as MS DRGs 091, 092, and 093
as we proposed. Our clinical advisors agreed with the commenter that
this symptom code should be assigned to MS-DRGs 947 and 948 where other
symptom codes are assigned.
After consideration of the public comments that we received and the
advice of our clinical advisors, we are finalizing the assignment of
code R53.2 (Functional quadriplegia) to MS-DRGs 947 and 948 (Signs and
Symptoms with MCC and without MCC, respectively).
b. Responsive Neurostimulator (RNS(copyright)) System
We received a request to modify the MS-DRG assignment for cases
involving the use of the RNS(copyright) neurostimulator, a
cranially implanted neurostimulator that is a treatment option for
persons diagnosed with medically intractable epilepsy. Cases involving
the use of the RNS(copyright) neurostimulator are assigned
to MS-DRG 023 (Craniotomy with Major Device Implant or Acute Complex
Central Nervous System (CNS) Principal Diagnosis (PDX) with MCC or
Chemo Implant) and MS-DRG 024 (Craniotomy with Major Device Implant or
Acute Complex Central Nervous System (CNS) Principal Diagnosis (PDX)
without MCC).
Cases involving the use of the RNS(copyright)
neurostimulator generator and leads are captured within the
descriptions of four ICD-10-PCS codes. ICD-10-PCS code 0NH00NZ
(Insertion of neurostimulator generator into skull, open approach)
captures the use of the neurostimulator generator, and the other three
ICD-10-PCS codes, 00H00MZ (Insertion of neurostimulator lead into
brain, open approach), 00H03MZ (Insertion of neurostimulator lead into
brain, percutaneous approach), and 00H04MZ (Insertion of
neurostimulator lead into brain, percutaneous endoscopic approach)
describe the insertions of the leads, depending on the approach used.
The combination of an ICD-10-PCS code capturing the use of the
generator and another ICD-10-PCS code describing the specific approach
used to insert the leads would capture the performance of the entire
procedure.
The requestor stated that the RNS(copyright)
neurostimulator received FDA pre-market approval on November 14, 2013.
The RNS(copyright) neurostimulator includes a cranially
implanted programmable neurostimulator connected to one or two depth
and/or subdural cortical strip leads that are surgically placed in or
on the brain at the seizure focus. The neurostimulator and leads are
typically implanted during a single acute inpatient hospital procedure
at a Comprehensive Epilepsy Center (CEC). The implanted neurostimulator
continuously monitors brain electrical activity and is programmed by a
physician to detect abnormal patterns of electrical activity that the
physician believes may lead to seizures (epileptiform activity). In
response to the detection of epileptiform activity, the device delivers
brief, mild electrical pulses (responsive stimulation) to one or two
epileptic foci. Detection and stimulation parameters are adjusted
noninvasively by the physician to optimize control of epileptic
seizures for each patient.
As the neurostimulator monitors brain activity, electrocorticograms
(ECoGs) recorded immediately before and after certain events are stored
for later review by the physician. The physician reviews the stored
recordings to see the detections and the effects of stimulation. The
physician can reprogram the neurostimulator at an in-person office
appointment to change detection and stimulation settings based on this
information, as well as review the patient's seizures.
The RNS(copyright) neurostimulator was approved for new
technology add-on payments for FY 2015 and FY 2016, and new technology
add-on payments were discontinued for FY 2017. The new technology add-
on payment application was discussed in the FY 2015 IPPS/LTCH PPS
proposed and final rules (79 FR 28051 through 28054 and 79 FR 49946
through 49950, respectively), the FY 2016 IPPS/LTCH PPS proposed and
final rules (80 FR 24427 through 24448 and 80 FR 49442 through 49443,
respectively), and the FY 2017 IPPS/LTCH PPS proposed and final rules
(81 FR 25036 through 25037 and 81 FR 56882 through 56884,
respectively).
The requestor suggested the following three options for MS-DRG
assignment updates for cases involving the RNS(copyright)
neurostimulator:
Create new MS-DRGs for cases involving the use of the
RNS(copyright) neurostimulator. The requestor suggested MS-
DRG XXX (Cranially Implanted Neurostimulators with MCC) and MS-DRG XXX
(Cranially Implanted Neurostimulators without MCC) as possible MS-DRG
titles. The requestor acknowledged that the number of cases assigned to
this MS-DRG would be low, but anticipated that the number of cases
would increase in the future.
Reassign cases involving the use of the
RNS(copyright) neurostimulator to MS-DRGs 020 and 021
(Intracranial Vascular Procedures with Principal Diagnosis of
Hemorrhage with MCC, with CC, respectively) and update the MS-DRG logic
and titles. The requestor asked CMS to reassign all cases involving the
use of the RNS(copyright) neurostimulator that currently map
to MS-DRG 023 (Craniotomy with Major Device Implant/Acute Complex CNS
Principal Diagnosis with MCC or Chemo Implant) to MS-DRG 20, and change
the title of MS-DRG 20 to ``Intracranial Vascular Procedures with
Principal Diagnosis of Hemorrhage or Cranially Implanted
Neurostimulator with MCC.'' In addition, the requestor asked CMS to
reassign all cases involving the use of the RNS(copyright)
neurostimulator that currently map to MS-DRG 024 (Craniotomy with Major
Device Implant/Acute Complex CNS Principal Diagnosis without MCC) to
MS-DRG 021, and change the title of MS-DRG 021 to ``Intracranial
Vascular Procedures with Principal Diagnosis of Hemorrhage with CC or
Cranially Implanted Neurostimulator without MCC''. The requestor
believed that the majority of cases involving the use of the
RNS(copyright) neurostimulator that map to MS-DRG 024 do not
include a secondary diagnosis that is classified as a CC, and the
average cost of cases involving the use of the
RNS(copyright) neurostimulator without a CC is significantly
higher than the average cost of all cases in MS-DRG 022 (Intracranial
Vascular Procedures with Principal Diagnosis of Hemorrhage
[[Page 38016]]
without CC/MCC). Therefore, the requestor stated that it would not be
adequate to assign cases involving the use of the
RNS(copyright) neurostimulator without a CC to MS-DRG 022.
Reassign cases involving the use of the
RNS(copyright) neurostimulator to other higher paying MS-
DRGs that would provide adequate payment.
The requestor stated that it had analyzed data from two sources,
which demonstrated that the average cost of cases involving the use of
the RNS(copyright) neurostimulator was higher than the
average cost of all cases in MS-DRGs 023 and 024 (the current MS-DRGs
for cases involving the use of the RNS(copyright)
neurostimulator). The requestor indicated that the data used for its
analysis was obtained from hospitals performing the procedure, as well
as from the FY 2015 MedPAR file.
The requestor also asked that CMS examine the cases representing
cranially implanted neurostimulators and leads that were inserted for
the treatment of epilepsy. The requestor pointed out that
neurostimulators also are used in the treatment of movement disorders
such as Parkinson's disease, essential tremor, or dystonia. The
requestor asked that CMS identify those cases with a principal
diagnosis of epilepsy, and identified the following ICD-10-CM codes
that it believed were representative of potential epilepsy cases.
------------------------------------------------------------------------
ICD-10-CM code ICD-10-CM code title
------------------------------------------------------------------------
G40.001................... Localization-related (focal) (partial)
idiopathic epilepsy and epileptic syndromes
with seizures of localized onset, not
intractable, with status epilepticus.
G40.009................... Localization-related (focal) (partial)
idiopathic epilepsy and epileptic syndromes
with seizures of localized onset, not
intractable, without status epilepticus.
G40.011................... Localization-related (focal) (partial)
idiopathic epilepsy and epileptic syndromes
with seizures of localized onset,
intractable, with status epilepticus.
G40.019................... Localization-related (focal) (partial)
idiopathic epilepsy and epileptic syndromes
with seizures of localized onset,
intractable, without status epilepticus.
G40.101................... Localization-related (focal) (partial)
symptomatic epilepsy and epileptic
syndromes with simple partial seizures, not
intractable, with status epilepticus.
G40.119................... Localization-related (focal) (partial)
symptomatic epilepsy and epileptic
syndromes with simple partial seizures,
intractable, without status epilepticus.
G40.201................... Localization-related (focal) (partial)
symptomatic epilepsy and epileptic
syndromes with complex partial seizures,
not intractable, with status epilepticus.
G40.209................... Localization-related (focal) (partial)
symptomatic epilepsy and epileptic
syndromes with complex partial seizures,
not intractable, without status
epilepticus.
G40.211................... Localization-related (focal) (partial)
symptomatic epilepsy and epileptic
syndromes with complex partial seizures,
intractable, with status epilepticus.
G40.219................... Localization-related (focal) (partial)
symptomatic epilepsy and epileptic
syndromes with complex partial seizures,
intractable, without status epilepticus.
G40.301................... Generalized idiopathic epilepsy and
epileptic syndromes, not intractable, with
status epilepticus.
G40.309................... Generalized idiopathic epilepsy and
epileptic syndromes, not intractable,
without status epilepticus.
G40.311................... Generalized idiopathic epilepsy and
epileptic syndromes, intractable, with
status epilepticus.
G40.319................... Generalized idiopathic epilepsy and
epileptic syndromes, intractable, without
status epilepticus.
G40.401................... Other generalized epilepsy and epileptic
syndromes, not intractable, with status
epilepticus.
G40.409................... Other generalized epilepsy and epileptic
syndromes, not intractable, without status
epilepticus.
G40.411................... Other generalized epilepsy and epileptic
syndromes, intractable, with status
epilepticus.
G40.419................... Other generalized epilepsy and epileptic
syndromes, intractable, without status
epilepticus.
G40.501................... Epileptic seizures related to external
causes, not intractable, with status
epilepticus.
G40.509................... Epileptic seizures related to external
causes, not intractable, without status
epilepticus.
G40.801................... Other epilepsy, not intractable, with status
epilepticus.
G40.802................... Other epilepsy, not intractable, without
status epilepticus.
G40.803................... Other epilepsy, intractable, with status
epilepticus.
G40.804................... Other epilepsy, intractable, without status
epilepticus.
G40.811................... Lennox-Gastaut syndrome, not intractable,
with status epilepticus.
G40.812................... Lennox-Gastaut syndrome, not intractable,
without status epilepticus.
G40.813................... Lennox-Gastaut syndrome, intractable, with
status epilepticus.
G40.814................... Lennox-Gastaut syndrome, intractable,
without status epilepticus.
G40.821................... Epileptic spasms, not intractable, with
status epilepticus.
G40.822................... Epileptic spasms, not intractable, without
status epilepticus.
G40.823................... Epileptic spasms, intractable, with status
epilepticus.
G40.824................... Epileptic spasms, intractable, without
status epilepticus.
G40.89.................... Other seizures.
G40.901................... Epilepsy, unspecified, not intractable, with
status epilepticus.
G40.909................... Epilepsy, unspecified, not intractable,
without status epilepticus.
G40.911................... Epilepsy, unspecified, intractable, with
status epilepticus.
G40.919................... Epilepsy, unspecified, intractable, without
status epilepticus.
------------------------------------------------------------------------
MS-DRGs 023 and 024 contain a number of cases representing
neurostimulator generator and lead code combinations that are captured
under a list referred to as ``Major Device Implant.'' The
neurostimulator generators on this list are inserted into the skull, as
well as into the subcutaneous areas of the chest, back, or abdomen. The
leads are all inserted into the brain. The RNS(copyright)
neurostimulator generators are inserted into the skull and the leads
are inserted into the brain. The following three ICD-10-PCS code
combinations capture the use of the
[[Page 38017]]
RNS(copyright) neurostimulator and leads that would
determine an assignment of a case to MS-DRGs 023 and 024, as shown in
the ``Major Device Implant'' list:
0NH00NZ (Insertion of neurostimulator generator into
skull, open approach), in combination with 00H00MZ (Insertion of
neurostimulator lead into brain, open approach);
0NH00NZ (Insertion of neurostimulator generator into
skull, open approach), in combination with 00H03MZ (Insertion of
neurostimulator lead into brain, percutaneous approach); and
0NH00NZ (Insertion of neurostimulator generator into
skull, open approach), in combination with 00H04MZ (Insertion of
neurostimulator lead into brain, percutaneous endoscopic approach).
As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19818 through 19822), we examined claims data from the December 2016
update of the FY 2016 MedPAR file for all cases representing the use of
a neurostimulator in MS-DRGs 023 and 024 listed under the ``Major
Device Implant'' list. As requested, we also examined the cases
represented by the three neurostimulator code combinations, which
capture the use of the RNS(copyright) neurostimulator that
are a subset of the cases listed on the ``Major Device Implant'' list
using the code combinations listed above, and that had a principal
diagnosis of epilepsy from the list supplied by the requestor. The
following tables show our findings for those cases in MS-DRGs 023 and
024 as well as findings for cases in MS-DRGs 020 and 021.
MS-DRGs 023 and 024
[Neurostimulator Cases]
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 023--All cases........................................... 6,723 10.9 $39,014
MS-DRG 023--Cases with neurostimulators (Major Device Implant 21 6.7 48,821
list cases)....................................................
MS-DRG 023--Cases with neurostimulator generators inserted into 7 8.0 63,365
skull (includes cases involving the use of the RNS(copyright)
neurostimulator) and cases with a principal diagnosis of
epilepsy.......................................................
MS-DRG 024--All cases........................................... 2,275 5.5 27,574
MS-DRG 024--Cases with neurostimulators (Major Device Implant 394 2.1 31,669
list cases)....................................................
MS-DRG 024--Cases with neurostimulator generators inserted into 54 4.3 51,041
skull (includes cases involving the use of the RNS(copyright)
neurostimulator) and cases with a principal diagnosis of
epilepsy.......................................................
----------------------------------------------------------------------------------------------------------------
Cases in MS-DRGs 020 and 021
----------------------------------------------------------------------------------------------------------------
Number of Average
MS-DRG cases length of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 020-All cases............................................ 1,372 16.7 $72,926
MS-DRG 021-All cases............................................ 336 13.5 54,385
----------------------------------------------------------------------------------------------------------------
As shown by the table above, for MS-DRG 023, we identified a total
of 6,723 cases, with an average length of stay of 10.9 days and average
costs of $39,014. Of the 6,723 cases in MS-DRG 023, there were 21 cases
representing the implantation of any type of neurostimulator generator
with an average length of stay of 6.7 days, and average costs of
$48,821. Of the 21 neurostimulator generator cases, there were 7 cases
with the neurostimulator generators inserted into skull (including
cases involving the use of the RNS(copyright)
neurostimulator) and a principal diagnosis of epilepsy with an average
length of stay of 8.0 days and average costs of $63,365. For MS-DRG
024, we identified a total of 2,275 cases, with an average length of
stay of 5.5 days and average costs of $27,574. Of the 2,275 cases in
MS-DRG 024, there were 394 cases representing the implantation of any
type of neurostimulator generator with an average length of stay of 2.1
days and average costs of $31,669. Of the 394 neurostimulator generator
cases, there were 54 cases with the neurostimulator generators inserted
into skull (including cases involving the use of the
RNS(copyright) neurostimulator) and a principal diagnosis of
epilepsy with an average length of stay of 4.3 days and average costs
of $51,041.
There were only 61 cases involving the use of the
RNS(copyright) neurostimulator with a principal diagnosis of
epilepsy in MS-DRGs 023 and 024 (7 and 54, respectively). As we stated
in the proposed rule, our clinical advisors reviewed this issue, and
agreed that this number of cases is too small on which to base a
rationale for creating a new MS-DRG. Basing a new MS-DRG on such a
small number of cases (61) could lead to distortion in the relative
payment weights for the MS-DRG because several expensive cases could
impact the overall relative payment weight. Having larger clinical
cohesive groups within an MS-DRG provides greater stability for annual
updates to the relative payment weights.
We also examined the possibility of reassigning cases involving the
use of the RNS(copyright) neurostimulator to MS-DRGs 020 and
021. As the table above shows, for MS-DRG 020, there were a total of
1,372 cases with an average length of stay of 16.7 days and average
costs of $72,926. For MS-DRG 021, there were a total of 336 cases with
an average length of stay of 13.5 days and average costs of $54,385.
The cases in MS-DRG 023 with neurostimulator generators inserted into
skull (including cases involving the use of the
RNS(copyright) neurostimulator) and a principal diagnosis of
epilepsy have average costs that are $9,561 lower than that for all
cases in MS-DRG 020 ($63,365 compared to $72,926), and the average
length of stay is 8.7 days shorter (8.0 days compared to 16.7 days). We
stated in the proposed rule that we do not believe these data support
reassigning the cases in MS-DRG 023 with neurostimulator generators
inserted into the skull (including cases involving the use of the
RNS(copyright) neurostimulator) and a principal
[[Page 38018]]
diagnosis of epilepsy to MS-DRG 020. While the cases in MS-DRG 024 with
neurostimulator generators inserted into the skull (including cases
involving the use of the RNS(copyright) neurostimulator) and
a principal diagnosis of epilepsy have average costs that are similar
to the average costs of cases in MS-DRG 021 ($51,041 compared to
$54,385), they have an average length of stay that is 9.2 days shorter
(4.3 days compared to 13.5 days). Our clinical advisors reviewed the
clinical issues and the claims data and, as we discussed in the
proposed rule, did not support reassigning the cases with
neurostimulator generators inserted into skull (including cases
involving the use of the RNS(copyright) neurostimulator) and
a principal diagnosis of epilepsy from MS-DRGs 023 and 024 to MS-DRGs
020 and 021. Our clinical advisors pointed out that the cases in MS-
DRGs 020 and 021 have a principal diagnosis of a hemorrhage. The
RNS(copyright) neurostimulator generators are not used to
treat patients with diagnosis of a hemorrhage. Therefore, our clinical
advisors stated that it was inappropriate to reassign cases
representing a principal diagnosis of epilepsy to an MS-DRG that
contains cases that represent the treatment of intracranial hemorrhage.
They also stated that the differences in average length of stay and
average costs support this recommendation.
We then explored alternative MS-DRG assignments, as was requested.
We noted that the 7 cases with the neurostimulator generators inserted
into the skull (including cases involving the use of the
RNS(copyright) neurostimulator) and a principal diagnosis of
epilepsy had an average length of stay of 8.0 days and average costs of
$63,365, as compared to the 6,723 cases in MS-DRG 023 that had an
average length of stay of 10.9 days and average costs of $39,014. While
these neurostimulator cases had average costs that were $24,351 higher
than the average costs of all cases in MS-DRG 023, there were only a
total of 7 cases. There may have been other factors contributing to the
higher costs. We noted that the 54 cases with the neurostimulator
generators inserted into skull (including cases involving the use of
the RNS(copyright) neurostimulator) and a principal
diagnosis of epilepsy in MS-DRG 024 had average costs of $51,041 and an
average length of stay of 4.3 days, compared to average costs of
$27,574 and average length of stay of 5.5 days for all cases in MS-DRG
024. By reassigning all cases with the neurostimulator generators
inserted into the skull (including cases involving the use of the
RNS(copyright) neurostimulator) and a principal diagnosis of
epilepsy to MS DRG 023, even if there is not a MCC present, the cases
would receive higher payment. The average costs of MS-DRG 023 were
$39,014, compared to the average costs of $51,041 for the cases with
the neurostimulator generators inserted into skull (including cases
involving the use of the RNS(copyright) neurostimulator) and
a principal diagnosis of epilepsy in MS-DRG 024. Our clinical advisors
reviewed the clinical issues and the claims data, and supported the
recommendation to reassign the cases with the neurostimulator
generators inserted into skull (including cases involving the use of
the RNS(copyright) neurostimulator) and a principal
diagnosis of epilepsy to MS-DRG 023, even if there is not a MCC
reported. Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19818 through 19822), we proposed to reassign all cases with a
principal diagnosis of epilepsy from the epilepsy diagnosis list
provided earlier, and one of the following ICD-10-PCS code combinations
capturing cases with the neurostimulator generators inserted into the
skull (including cases involving the use of the
RNS(copyright) neurostimulator), to MS-DRG 023, even if
there is no MCC reported:
0NH00NZ (Insertion of neurostimulator generator into
skull, open approach), in combination with 00H00MZ (Insertion of
neurostimulator lead into brain, open approach);
0NH00NZ (Insertion of neurostimulator generator into
skull, open approach), in combination with 00H03MZ (Insertion of
neurostimulator lead into brain, percutaneous approach); and
0NH00NZ (Insertion of neurostimulator generator into
skull, open approach), in combination with 00H04MZ (Insertion of
neurostimulator lead into brain, percutaneous endoscopic approach).
We also proposed to change the title of MS-DRG 023 from
``Craniotomy with Major Device Implant or Acute Complex Central Nervous
System (CNS) Principal Diagnosis (PDX) with MCC or Chemo Implant'' to
``Craniotomy with Major Device Implant or Acute Complex Central Nervous
System (CNS) Principal Diagnosis (PDX) with MCC or Chemotherapy Implant
or Epilepsy with Neurostimulator'' to reflect the proposed
modifications to MS-DRG assignments.
We invited public comments on our proposals.
Comment: Commenters supported CMS' proposal to reassign cases with
insertion of a neurostimulator generator and a principal diagnosis of
epilepsy to MS-DRG 023. The commenters also agreed with the proposed
change in the title of MS-DRG 023. The commenters stated that the
updates were necessary for Comprehensive Epilepsy Centers to be able to
offer the RNS(copyright) neurostimulator. One commenter who
supported this MS-DRG update recommended that codes in subcategories
G40.A and G40.B be included in the list of epilepsy diagnosis codes
classified to MS-DRG 023 because these subcategory codes are also
epilepsy codes.
Response: We appreciate the commenters' support for our
recommendations. We identified the following list of epilepsy codes
that are included under categories G40.A and G40.B.
G40.A01 Absence epileptic syndrome, not intractable, with
status epilepticus
G40.A09 Absence epileptic syndrome, not intractable, without
status epilepticus
G40.A11 Absence epileptic syndrome, intractable, with status
epilepticus
G40.A19 Absence epileptic syndrome, intractable, without
status epilepticus
G40.B01 Juvenile myoclonic epilepsy, not intractable, with
status epilepticus
G40.B09 Juvenile myoclonic epilepsy, not intractable, without
status epilepticus
G40.B11 Juvenile myoclonic epilepsy, intractable, with status
epilepticus
G40.B19 Juvenile myoclonic epilepsy, intractable, without
status epilepticus
We agree that the codes listed above are also epilepsy codes and
should be added to the list of epilepsy codes assigned to MS-DRG 023
because they also capture a type of epilepsy. Our clinical advisors
reviewed this issue and agree with adding the additional epilepsy
codes.
For FY 2018, the complete list of epilepsy codes assigned to MS-DRG
023 under our finalized policy is as follows:
------------------------------------------------------------------------
ICD-10-CM code ICD-10-CM code title
------------------------------------------------------------------------
G40.001................... Localization-related (focal) (partial)
idiopathic epilepsy and epileptic syndromes
with seizures of localized onset, not
intractable, with status epilepticus.
[[Page 38019]]
G40.009................... Localization-related (focal) (partial)
idiopathic epilepsy and epileptic syndromes
with seizures of localized onset, not
intractable, without status epilepticus.
G40.011................... Localization-related (focal) (partial)
idiopathic epilepsy and epileptic syndromes
with seizures of localized onset,
intractable, with status epilepticus.
G40.019................... Localization-related (focal) (partial)
idiopathic epilepsy and epileptic syndromes
with seizures of localized onset,
intractable, without status epilepticus.
G40.101................... Localization-related (focal) (partial)
symptomatic epilepsy and epileptic
syndromes with simple partial seizures, not
intractable, with status epilepticus.
G40.119................... Localization-related (focal) (partial)
symptomatic epilepsy and epileptic
syndromes with simple partial seizures,
intractable, without status epilepticus.
G40.201................... Localization-related (focal) (partial)
symptomatic epilepsy and epileptic
syndromes with complex partial seizures,
not intractable, with status epilepticus.
G40.209................... Localization-related (focal) (partial)
symptomatic epilepsy and epileptic
syndromes with complex partial seizures,
not intractable, without status
epilepticus.
G40.211................... Localization-related (focal) (partial)
symptomatic epilepsy and epileptic
syndromes with complex partial seizures,
intractable, with status epilepticus.
G40.219................... Localization-related (focal) (partial)
symptomatic epilepsy and epileptic
syndromes with complex partial seizures,
intractable, without status epilepticus.
G40.301................... Generalized idiopathic epilepsy and
epileptic syndromes, not intractable, with
status epilepticus.
G40.309................... Generalized idiopathic epilepsy and
epileptic syndromes, not intractable,
without status epilepticus.
G40.311................... Generalized idiopathic epilepsy and
epileptic syndromes, intractable, with
status epilepticus.
G40.319................... Generalized idiopathic epilepsy and
epileptic syndromes, intractable, without
status epilepticus.
G40.A01................... Absence epileptic syndrome, not intractable,
with status epilepticus.
G40.A09................... Absence epileptic syndrome, not intractable,
without status epilepticus.
G40.A11................... Absence epileptic syndrome, intractable,
with status epilepticus.
G40.A19................... Absence epileptic syndrome, intractable,
without status epilepticus.
G40.B01................... Juvenile myoclonic epilepsy, not
intractable, with status epilepticus.
G40.B09................... Juvenile myoclonic epilepsy, not
intractable, without status epilepticus.
G40.B11................... Juvenile myoclonic epilepsy, intractable,
with status epilepticus.
G40.B19................... Juvenile myoclonic epilepsy, intractable,
without status epilepticus.
G40.401................... Other generalized epilepsy and epileptic
syndromes, not intractable, with status
epilepticus.
G40.409................... Other generalized epilepsy and epileptic
syndromes, not intractable, without status
epilepticus.
G40.411................... Other generalized epilepsy and epileptic
syndromes, intractable, with status
epilepticus.
G40.419................... Other generalized epilepsy and epileptic
syndromes, intractable, without status
epilepticus.
G40.501................... Epileptic seizures related to external
causes, not intractable, with status
epilepticus.
G40.509................... Epileptic seizures related to external
causes, not intractable, without status
epilepticus.
G40.801................... Other epilepsy, not intractable, with status
epilepticus.
G40.802................... Other epilepsy, not intractable, without
status epilepticus.
G40.803................... Other epilepsy, intractable, with status
epilepticus.
G40.804................... Other epilepsy, intractable, without status
epilepticus.
G40.811................... Lennox-Gastaut syndrome, not intractable,
with status epilepticus.
G40.812................... Lennox-Gastaut syndrome, not intractable,
without status epilepticus.
G40.813................... Lennox-Gastaut syndrome, intractable, with
status epilepticus.
G40.814................... Lennox-Gastaut syndrome, intractable,
without status epilepticus.
G40.821................... Epileptic spasms, not intractable, with
status epilepticus.
G40.822................... Epileptic spasms, not intractable, without
status epilepticus.
G40.823................... Epileptic spasms, intractable, with status
epilepticus.
G40.824................... Epileptic spasms, intractable, without
status epilepticus.
G40.89.................... Other seizures.
G40.901................... Epilepsy, unspecified, not intractable, with
status epilepticus.
G40.909................... Epilepsy, unspecified, not intractable,
without status epilepticus.
G40.911................... Epilepsy, unspecified, intractable, with
status epilepticus.
G40.919................... Epilepsy, unspecified, intractable, without
status epilepticus.
------------------------------------------------------------------------
After consideration of the public comments that we received, we are
finalizing our proposal to reassign all cases with a principal
diagnosis of epilepsy from the epilepsy diagnosis list provided above,
and one of the following ICD-10-PCS code combinations capturing cases
with the neurostimulator generators inserted into the skull (including
cases involving the use of the RNS(copyright)
neurostimulator), to MS-DRG 023, even if there is no MCC reported:
0NH00NZ (Insertion of neurostimulator generator into
skull, open approach), in combination with 00H00MZ (Insertion of
neurostimulator lead into brain, open approach);
0NH00NZ (Insertion of neurostimulator generator into
skull, open approach), in combination with 00H03MZ (Insertion of
neurostimulator lead into brain, percutaneous approach); and
0NH00NZ (Insertion of neurostimulator generator into
skull, open approach), in combination with 00H04MZ (Insertion of
neurostimulator lead into brain, percutaneous endoscopic approach).
We also finalizing our proposed change to the title of MS-DRG 023
from ``Craniotomy with Major Device Implant or Acute Complex Central
Nervous System (CNS) Principal Diagnosis (PDX) with MCC or Chemo
Implant'' to ``Craniotomy with Major Device Implant or Acute Complex
Central Nervous System (CNS) Principal Diagnosis (PDX) with MCC or
Chemotherapy Implant or Epilepsy with Neurostimulator'' to reflect the
modifications to MS-DRG assignments.
c. Precerebral Occlusion or Transient Ischemic Attack with Thrombolytic
We received a request to add the ICD-10-CM diagnosis codes
currently
[[Page 38020]]
assigned to MS-DRGs 067 and 068 (Nonspecific CVA and Precerebral
Occlusion without Infarction with MCC and without MCC, respectively)
and the ICD-10-CM diagnosis codes currently assigned to MS-DRG 069
(Transient Ischemia) to the GROUPER logic for MS-DRGs 061, 062, and 063
(Acute Ischemic Stroke with Use of Thrombolytic Agent with MCC, with
CC, and without CC/MCC, respectively) when those conditions are
sequenced as the principal diagnosis and reported with an ICD-10-PCS
procedure code describing use of a thrombolytic agent (for example,
tPA).
The ICD-10-CM diagnosis codes displayed in the table below identify
the conditions that are assigned to MS-DRGs 067 and 068 when reported
as a principal diagnosis.
------------------------------------------------------------------------
ICD-10-CM code Code description
------------------------------------------------------------------------
I65.01.................... Occlusion and stenosis of right vertebral
artery.
I65.02.................... Occlusion and stenosis of left vertebral
artery.
I65.03.................... Occlusion and stenosis of bilateral
vertebral arteries.
I65.09.................... Occlusion and stenosis of unspecified
vertebral artery.
I65.1..................... Occlusion and stenosis of basilar artery.
I65.21.................... Occlusion and stenosis of right carotid
artery.
I65.22.................... Occlusion and stenosis of left carotid
artery.
I65.23.................... Occlusion and stenosis of bilateral carotid
arteries.
I65.29.................... Occlusion and stenosis of unspecified
carotid artery.
I65.8..................... Occlusion and stenosis of other precerebral
arteries.
I65.9..................... Occlusion and stenosis of unspecified
precerebral artery.
I66.01.................... Occlusion and stenosis of right middle
cerebral artery.
I66.02.................... Occlusion and stenosis of left middle
cerebral artery.
I66.03.................... Occlusion and stenosis of bilateral middle
cerebral arteries.
I66.09.................... Occlusion and stenosis of unspecified middle
cerebral artery.
I66.11.................... Occlusion and stenosis of right anterior
cerebral artery.
I66.12.................... Occlusion and stenosis of left anterior
cerebral artery.
I66.13.................... Occlusion and stenosis of bilateral anterior
cerebral arteries.
I66.19.................... Occlusion and stenosis of unspecified
anterior cerebral artery.
I66.21.................... Occlusion and stenosis of right posterior
cerebral artery.
I66.22.................... Occlusion and stenosis of left posterior
cerebral artery.
I66.23.................... Occlusion and stenosis of bilateral
posterior cerebral arteries.
I66.29.................... Occlusion and stenosis of unspecified
posterior cerebral artery.
I66.3..................... Occlusion and stenosis of cerebellar
arteries.
I66.8..................... Occlusion and stenosis of other cerebral
arteries.
I66.9..................... Occlusion and stenosis of unspecified
cerebral artery.
------------------------------------------------------------------------
The ICD-10-CM diagnosis codes displayed in the table below identify
the conditions that are assigned to MS-DRG 069 when reported as a
principal diagnosis.
------------------------------------------------------------------------
ICD-10-CM code Code description
------------------------------------------------------------------------
G45.0..................... Vertebro-basilar artery syndrome.
G45.1..................... Carotid artery syndrome (hemispheric).
G45.2..................... Multiple and bilateral precerebral artery
syndromes.
G45.8..................... Other transient cerebral ischemic attacks
and related syndromes.
G45.9..................... Transient cerebral ischemic attack,
unspecified.
G46.0..................... Middle cerebral artery syndrome.
G46.1..................... Anterior cerebral artery syndrome.
G46.2..................... Posterior cerebral artery syndrome.
I67.81.................... Acute cerebrovascular insufficiency.
I67.82.................... Cerebral ischemia.
I67.841................... Reversible cerebrovascular vasoconstriction
syndrome.
I67.848................... Other cerebrovascular vasospasm and
vasoconstriction.
I67.89.................... Other cerebrovascular disease.
------------------------------------------------------------------------
The ICD-10-PCS procedure codes displayed in the table below
describe use of a thrombolytic agent. These procedure codes are
designated as non-O.R. procedure codes affecting the MS-DRG assignment
for MS-DRGs 061, 062, and 063.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
3E03017................... Introduction of other thrombolytic into
peripheral vein, open approach.
3E03317................... Introduction of other thrombolytic into
peripheral vein, percutaneous approach.
3E04017................... Introduction of other thrombolytic into
central vein, open approach.
3E04317................... Introduction of other thrombolytic into
central vein, percutaneous approach.
3E05017................... Introduction of other thrombolytic into
peripheral artery, open approach.
3E05317................... Introduction of other thrombolytic into
peripheral artery, percutaneous approach.
3E06017................... Introduction of other thrombolytic into
central artery, open approach.
3E06317................... Introduction of other thrombolytic into
central artery, percutaneous approach.
[[Page 38021]]
3E08017................... Introduction of other thrombolytic into
heart, open approach.
3E08317................... Introduction of other thrombolytic into
heart, percutaneous approach.
------------------------------------------------------------------------
At the onset of stroke symptoms, tPA must be given within 3 hours
(or up to 4.5 hours for certain eligible patients) in an attempt to
dissolve a clot and improve blood flow to the specific area affected in
the brain. If, upon receiving the tPA, the stroke symptoms completely
resolve within 24 hours and imaging studies (if performed) are
negative, the patient has suffered what is clinically defined as a
transient ischemic attack, not a stroke. According to the requestor,
the current MS-DRG assignments do not account for this subset of
patients who were successfully treated with tPA to prevent a stroke.
In addition, the requestor expressed concerns regarding
documentation and quality of the data. For example, the requestor noted
that the terms ``stroke-in-evolution'' and ``aborted stroke'' may be
documented as a ``workaround'' for a patient exhibiting symptoms of a
stroke who receives tPA and, regardless of the outcome, would result in
assignment to MS-DRG 061, 062, or 063. Therefore, in cases where the
patient's stroke symptoms completely resolved upon receiving tPA and
the patient clinically suffered a precerebral occlusion or transient
ischemia, this documentation practice is incorrectly labeling these
patients as having had a stroke and ultimately leading to inaccurate
data.
As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19822 through 19824), we analyzed claims data from the December 2016
update of the FY 2016 MedPAR file for MS-DRGs 061, 062, and 063. Our
findings are shown in the tables below.
MS-DRGs for Acute Ischemic Stroke With Use of Thrombolytic Agent
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 061-All cases............................................ 4,528 6.4 $20,270
MS-DRG 062-All cases............................................ 8,600 4.2 14,124
MS-DRG 063-All cases............................................ 1,859 3.0 11,898
----------------------------------------------------------------------------------------------------------------
Our analysis also consisted of claims data for MS-DRGs 067 and 068
when reported with a procedure code describing the use of tPA. As shown
in the table below, the total number of cases reported in MS-DRG 067
was 811, with an average length of stay of 4.8 days and average costs
of $10,248. There were 9 cases in MS-DRG 067 with a precerebral
occlusion receiving tPA, with an average length of stay of 5.2 days and
average costs of $20,156. The total number of cases reported in MS-DRG
068 was 3,809, with an average length of stay of 2.8 days and average
costs of $6,555. There were 33 cases in MS-DRG 068 with a precerebral
occlusion receiving tPA, with an average length of stay of 4.3 days and
average costs of $13,814.
MS-DRGs for Precerebral Occlusion With Use of Thrombolytic Agent
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 067--All cases........................................... 811 4.8 $10,248
MS-DRG 067--Cases with tPA...................................... 9 5.2 20,156
MS-DRG 068--All cases........................................... 3,809 2.8 6,555
MS-DRG 068--Cases with tPA...................................... 33 4.3 13,814
----------------------------------------------------------------------------------------------------------------
As we stated in the proposed rule, we recognize that while the
volume of cases for patients with a diagnosis of precerebral occlusion
receiving tPA in MS-DRGs 067 and 068 is relatively low, the average
length of stay is longer, and the average costs for this subset of
patients is approximately twice the amount of the average costs in
comparison to all cases in MS-DRGs 067 and 068.
We then analyzed claims data for cases in MS-DRG 069 when reported
with a procedure code describing the use of tPA. As shown in the table
below, the total number of cases reported in MS-DRG 069 was 50,633,
with an average length of stay of 2.5 days and average costs of $5,518.
There were 554 cases of transient ischemia receiving tPA, with an
average length of stay of 3.2 days and average costs of $12,481.
MS-DRG for Transient Ischemia With Use of Thrombolytic Agent
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 069--All cases........................................... 50,633 2.5 $5,518
MS-DRG 069--Cases with tPA...................................... 554 3.2 12,481
----------------------------------------------------------------------------------------------------------------
Similar to the findings for MS-DRGs 067 and 068, the number of
cases for transient ischemia receiving tPA in MS-DRG 069 was relatively
low in comparison to all the cases in the MS-DRG, with a longer average
length of
[[Page 38022]]
stay and approximately twice the amount of average costs in comparison
to all cases in MS-DRG 069.
We stated in the proposed rule that the results of analysis of the
data and the advice of our clinical advisors support adding the ICD-10-
CM diagnosis codes in MS-DRGs 067, 068, and 069 to the list of
principal diagnoses in MS-DRGs 061, 062, and 063 to better account for
this subset of patients who were successfully treated with tPA to
prevent a stroke, to identify the increasing use of thrombolytics at
the onset of symptoms of a stroke, to further encourage appropriate
physician documentation for a precerebral occlusion or transient
ischemic attack when patients are treated with tPA, and to reflect more
appropriate payment for the resources involved in evaluating and
treating these patients. We stated that we believe this approach will
improve accuracy of the data and assist in addressing the concern that
facilities may be reporting incorrect diagnoses for this subset of
patients.
Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19824), for FY 2018, we proposed to add the ICD-10-CM diagnosis codes
listed earlier in this section that are currently assigned to MS-DRGs
067 and 068 and the ICD-10-CM diagnosis codes currently assigned to MS-
DRG 069 to the GROUPER logic for MS-DRGs 061, 062, and 063 when those
conditions are sequenced as the principal diagnosis and reported with
an ICD-10-PCS procedure code describing use of a thrombolytic agent
(for example, tPA). We invited public comments on our proposal.
We also proposed to retitle MS-DRGs 061, 062, and 063 as ``Ischemic
Stroke, Precerebral Occlusion or Transient Ischemia with Thrombolytic
Agent with MCC, with CC and without CC/MCC'', respectively, and to
retitle MS-DRG 069 as ``Transient Ischemia without Thrombolytic''.
We invited public comments on our proposals.
Comment: Several commenters supported the proposal to modify the
GROUPER logic for MS-DRGs 061, 062, and 063 to better account for the
subset of patients who are treated successfully with tPA at the onset
of stroke symptoms. The commenters agreed that this change will
encourage appropriate physician documentation for a precerebral
occlusion or transient ischemic attack when patients are treated with
tPA and that it will more accurately reflect proper payment for stroke
care. Commenters also agreed with retitling MS-DRGs 061, 062, 063 and
069. One commenter who supported the proposals also suggested that CMS
consider developing new MS-DRGs in the future to specifically
distinguish acute ischemic strokes from precerebral occlusions and
transient ischemia, with and without thrombolytics, with and without
MCC/CC, respectively.
Response: We appreciate the commenters' support. As additional ICD-
10 claims data become available, we will continue to welcome input from
the public and consider further modifications to the ICD-10 MS-DRGs if
warranted.
After consideration of the public comments that we received, we are
finalizing our proposal to add the ICD-10-CM diagnosis codes listed
earlier in this section that are currently assigned to MS-DRGs 067 and
068 and the ICD-10-CM diagnosis codes currently assigned to MS-DRG 069
to the GROUPER logic for MS-DRGs 061, 062, and 063 when those
conditions are sequenced as the principal diagnosis and reported with
an ICD-10-PCS procedure code describing use of a thrombolytic agent
(for example, tPA). We also are finalizing our proposal to retitle MS-
DRGs 061, 062, and 063 as ``Ischemic Stroke, Precerebral Occlusion or
Transient Ischemia with Thrombolytic Agent with MCC, with CC and
without CC/MCC'', respectively, and to retitle MS-DRG 069 as
``Transient Ischemia without Thrombolytic'' effective October 1, 2017
for the ICD-10 MS-DRGs Version 35.
3. MDC 2 (Diseases and Disorders of the Eye: Swallowing Eye Drops
(Tetrahydrozoline)
We received a request to reassign the following ICD-10-CM diagnosis
codes that capture swallowing eye drops from MS-DRGs 124 and 125 (Other
Disorders of the Eye with and without MCC, respectively) to MS-DRGs 917
and 918 (Poisoning and Toxic Effects of Drugs with and without MCC,
respectively). The requestor described a case where a patient was
treated following swallowing eye drops, specifically Tetrahydrozoline,
which the provider considers to be a poisoning, not a disorder of the
eye.
T49.5X1A (Poisoning by ophthalmological drugs and
preparations, accidental (unintentional), initial encounter);
T49.5X2A (Poisoning by ophthalmological drugs and
preparations, intentional self-harm, initial encounter);
T49.5X3A (Poisoning by ophthalmological drugs and
preparations, assault, initial encounter); and
T49.5X4A (Poisoning by ophthalmological drugs and
preparations, undetermined, initial encounter).
As stated in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19824
through 19825), we agree with the requestor that the four diagnosis
codes describe a poisoning, not a disorder of the eye. We examined
claims data for cases in MS-DRGs 124 and 125 from the December 2016
update of the FY 2016 MedPAR file. Our findings are shown in the table
below.
MS-DRG 124 and 125 Cases
----------------------------------------------------------------------------------------------------------------
Number of Average
MS-DRG cases length of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 124--All cases........................................... 874 4.8 $8,826
MS-DRG 124--Cases reporting poisoning by ophthalmological drugs 1 2.0 3,007
and preparations code..........................................
MS-DRG 125--All cases........................................... 3,205 3.3 5,565
MS-DRG 125--Cases reporting poisoning by ophthalmological drugs 1 2.0 1,446
and preparations code..........................................
----------------------------------------------------------------------------------------------------------------
As shown in the table above, there were only 2 cases of poisoning
by ophthalmological drugs and preparations--1 case in MS-DRG 124 with
an average length of stay of 2 days and average costs of $3,007 and 1
case in MS-DRG 125 with an average length of stay of 2 days and average
costs of $1,446. The case of poisoning by ophthalmological drugs and
preparations in MS-DRG 124 had a shorter average length of stay than
the average length of stay for all cases in MS-DRG 124 (2.0 days
compared to 4.8 days) and lower average costs than the average costs
for all cases in MS-DRG 124 ($3,007 compared to $8,826). The case of
poisoning by ophthalmological
[[Page 38023]]
drugs and preparations in MS-DRG 125 also had a shorter average length
of stay than the average length of stay for all cases in MS-DRG 125
(2.0 days compared to 3.3 days) and lower average costs than the
average costs for all cases in MS-DRG 125 ($1,446 compared to $5,565).
We also examined claims data on cases reported in MS-DRGs 917 and
918 from the December 2016 update of the FY 2016 MedPAR file. Our
findings are shown in the table below.
MS-DRGs 917 and 918 Cases
----------------------------------------------------------------------------------------------------------------
Number of Average
MS-DRG cases length of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 917-- All cases.......................................... 32,381 4.8 $9,882
MS-DRG 918--All cases........................................... 24,061 3.0 5,326
----------------------------------------------------------------------------------------------------------------
As shown in the table above, the 2 cases of poisoning by
ophthalmological drugs and preparations also had shorter average
lengths of stay than the average length of stay for all cases in MS-
DRGs 917 and 918 (2.0 days compared to 4.8 days in MS-DRG 917 and 2.0
days compared to 3.0 days in MS-DRG 918). The average costs also were
lower for the 2 cases of poisoning by ophthalmological drugs and
preparations than the average costs for all cases in MS-DRGs 917 and
918 ($3,007 compared to $9,882 for all cases in MS-DRG 917 and $1,446
compared to $5,326 for all cases in MS-DRG 918). Therefore, cases with
this type of poisoning had lower average lengths of stay and lower
average costs than all other cases assigned to MS-DRGs 124 and 125 and
cases in MS-DRGs 917 and 918 where poisonings are assigned.
Because the codes clearly capture a poisoning and not an eye
disorder, we stated in the proposed rule that we believe that these
codes are more appropriately assigned to MS-DRGs 917 and 918 where
other poisonings are assigned. Our clinical advisors also reviewed this
issue and agreed that the codes should be moved from MS-DRGs 124 and
125 to MS-DRGs 917 and 918 because they clearly capture a poisoning and
not a disorder of the eye. Because MS-DRGs 917 and 918 contain cases
with multiple types of poisonings, it is expected that some types of
poisoning cases will have longer lengths of stay and greater average
costs than other types of poisoning cases. Therefore, in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR 19824 through 19825), we proposed to
reassign the following ICD-10-CM diagnosis codes from MS-DRGs 124 and
125 to MS-DRGs 917 and 918 for FY 2018: T49.5X1A; T49.5X2A; T49.5X3A;
and T49.5X4A.
We invited public comments on our proposal.
Comment: Several commenters supported CMS' proposal to reassign
four poisoning codes from MS-DRGs 124 and 125 to MS-DRGs 917 and 918.
The commenters stated that the proposal was reasonable considering the
information provided.
Response: We appreciate the commenters' support for our proposal.
After consideration of the public comments that we received, we are
finalizing our proposal to reassign the following ICD-10-CM diagnosis
codes from MS-DRGs 124 and 125 to MS-DRGs 917 and 918 for FY 2018:
T49.5X1A; T49.5X2A; T49.5X3A; and T49.5X4A.
4. MDC 5 (Diseases and Disorders of the Circulatory System)
a. Percutaneous Cardiovascular Procedures and Insertion of a
Radioactive Element
Currently, under ICD-10-PCS, the logic for MS-DRG 246 (Percutaneous
Cardiovascular Procedures with Drug-Eluting Stent with MCC or 4+
Vessels or Stents), MS-DRG 247 (Percutaneous Cardiovascular Procedures
with Drug-Eluting Stent without MCC), MS-DRG 248 (Percutaneous
Cardiovascular Procedures with Non-Drug-Eluting Stent with MCC or 4+
Vessels or Stents), and MS-DRG 249 (Percutaneous Cardiovascular
Procedures with Non-Drug-Eluting Stent without MCC) includes six
procedure codes that describe the insertion of a radioactive element.
When any of these six procedure codes are reported without the
reporting of a percutaneous cardiovascular procedure code, they are
assigned to MS-DRG 264 (Other Circulatory System O.R. Procedures). The
six specific procedure codes are shown in the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0WHC01Z................... Insertion of radioactive element into
mediastinum, open approach.
0WHC31Z................... Insertion of radioactive element into
mediastinum, percutaneous approach.
0WHC41Z................... Insertion of radioactive element into
mediastinum, percutaneous endoscopic
approach.
0WHD01Z................... Insertion of radioactive element into
pericardial cavity, open approach.
0WHD31Z................... Insertion of radioactive element into
pericardial cavity, percutaneous approach.
0WHD41Z................... Insertion of radioactive element into
pericardial cavity, percutaneous endoscopic
approach.
------------------------------------------------------------------------
Unlike procedures involving the insertion of stents, none of the
procedures described by the procedure codes listed above are performed
in conjunction with a percutaneous cardiovascular procedure, and two of
the six procedures described by these procedure codes (ICD-10-PCS codes
0WHC01Z and 0WHD01Z) are not performed using a percutaneous approach,
but rather describe an open approach to performing the specific
procedure. We stated in the proposed rule that our clinical advisors
agreed that these procedures should not be used to classify cases
within MS-DRGs 246 through 249 because they are not performed in
conjunction with a percutaneous cardiovascular procedure. Furthermore,
the indications for the insertion of a radioactive element typically
involve a diagnosis of cancer, whereas the indications for the
insertion of a coronary artery stent typically involve a diagnosis of
coronary artery disease.
We conducted an analysis for the six procedures described by these
procedure codes by reviewing the claims data for MS-DRGs 246 through
249 from the December 2016 update of the FY 2016 MedPAR file. We did
not find any cases where any one of the six
[[Page 38024]]
procedure codes listed above was reported. As noted earlier, when any
of these six procedure codes are reported without the reporting of a
percutaneous cardiovascular procedure code, the case is assigned to MS-
DRG 264. Therefore, as we discussed in the proposed rule, our clinical
advisors also agreed that it would be more appropriate to remove these
six procedure codes from MS-DRGs 246 through 249, but maintain their
current assignment in MS-DRG 264. Based on our analysis and the advice
from our clinical advisors, in the FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 19825 through 19826), for FY 2018, we proposed to remove ICD-10-
PCS procedure codes 0WHC01Z, 0WHC31Z, 0WHC41Z, 0WHD01Z, 0WHD31Z, and
0WHD41Z from MS-DRGs 246 through 249, but maintain their current
assignment in MS-DRG 264.
We invited public comments on our proposal to remove the six
procedure codes listed above from MS-DRGs 246 through 249. We also
invited public comments on our proposal to maintain their current
assignment in MS-DRG 264.
Comment: Commenters supported the proposal to remove the six
procedure codes describing insertion of radioactive element into the
mediastinum and insertion of radioactive element into the pericardial
cavity from MS-DRGs 246 through 249 and to maintain their assignment in
MS-DRG 264.
Response: We appreciate the commenters' support.
Comment: One commenter noted that CMS did not discuss how we
identified the listed procedure codes or why CMS believes these
procedure codes were assigned to MS-DRGs 246 through 249 erroneously.
However, the commenter also agreed with the proposal to remove the six
procedure codes describing insertion of radioactive element into the
mediastinum and insertion of radioactive element into the pericardial
cavity from MS-DRGs 246 through 249 and to maintain their assignment in
MS-DRG 264. The commenter acknowledged that eliminating erroneous
assignments that may have occurred as a result of the transition to
ICD-10 is important and requires ongoing efforts.
Response: We appreciate the commenter's support. In response to the
comment regarding how these procedure codes were identified, as
discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19825), we
recognized the fact that two of the six procedure codes describing
insertion of radioactive element (0WHC01Z and 0WHD01Z) are not
performed using a percutaneous approach, but rather described an open
approach to performing the specific procedure and their assignment was
to a group of ``percutaneous'' cardiovascular procedure MS-DRGs.
Because the comparable translation of these procedure codes under ICD-
9-CM, procedure code 92.27 (Implantation or insertion of radioactive
element) did not specify an approach, all comparable ICD-10-PCS
translations of the ICD-9-CM code were automatically replicated to the
same ICD-10 MS-DRGs during the transition. We agree with the commenter
that eliminating erroneous assignments that may have occurred as a
result of the transition to ICD-10 is important and requires ongoing
efforts.
After consideration of the public comments that we received, we are
finalizing our proposal to remove ICD-10-PCS procedure codes 0WHC01Z,
0WHC31Z, 0WHC41Z, 0WHD01Z, 0WHD31Z, and 0WHD41Z from MS-DRGs 246
through 249, and maintain their current assignment in MS-DRG 264
effective October 1, 2017 for ICD-10 MS-DRGs Version 35.
b. Proposed Modification of the Titles for MS-DRG 246 (Percutaneous
Cardiovascular Procedures With Drug-Eluting Stent With MCC or 4+
Vessels or Stents) and MS-DRG 248 (Percutaneous Cardiovascular
Procedures With Non-Drug-Eluting Stent With MCC or 4+ Vessels or
Stents)
In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19826), we
proposed to revise the titles for MS-DRGs 246 (Percutaneous
Cardiovascular Procedures with Drug-Eluting Stent with MCC or 4+
Vessels or Stents) and MS-DRG 248 (Percutaneous Cardiovascular
Procedures with Non-Drug-Eluting Stent with MCC or 4+ Vessels or
Stents) to better reflect the ICD-10-PCS terminology of ``arteries''
versus ``vessels'' as used in the procedure code titles within the
classification. Specifically, we proposed to revise the title of MS-DRG
246 to ``Percutaneous Cardiovascular Procedures with Drug-Eluting Stent
with MCC or 4+ Arteries or Stents''. We proposed to revise the title of
MS-DRG 248 to ``Percutaneous Cardiovascular Procedures with Non-Drug-
Eluting Stent with MCC or 4+ Arteries or Stents''. We invited public
comments on our proposals.
Comment: Commenters agreed with the proposal to update the titles
for MS-DRG 246 and MS-DRG 248 to better reflect the ICD-10-PCS
terminology of ``arteries'' versus ``vessels'' as used in the procedure
code titles within the classification. One commenter noted that this
change adds specificity and makes sense anatomically because
percutaneous coronary intervention procedures are performed in
arteries, which are a type of vessel.
Response: We appreciate the commenters' support.
After consideration of the public comments that we received, we are
finalizing our proposal to revise the titles for MS-DRGs 246 and MS-DRG
248. We are finalizing the title of MS-DRG 246 to ``Percutaneous
Cardiovascular Procedures with Drug-Eluting Stent with MCC or 4+
Arteries or Stents'' and the title of MS-DRG 248 to ``Percutaneous
Cardiovascular Procedures with Non-Drug-Eluting Stent with MCC or 4+
Arteries or Stents'' effective October 1, 2017 for ICD-10 MS-DRGs
Version 35.
c. Transcatheter Aortic Valve Replacement (TAVR) and Left Atrial
Appendage Closure (LAAC)
We received a request to create new MS-DRGs for cases involving
transcatheter aortic valve replacement (TAVR) and left atrial appendage
closure (LAAC) procedures when performed in combination in the same
operative episode. The requestor stated that there are both clinical
and financial advantages for the patient when performing concomitant
procedures. For example, the requestor indicated that the clinical
advantages for the patient may include single exposure to anesthesia
and a reduction in overall procedure time, while the financial
advantages may include lower cost-sharing. The requestor further
believed that a single hospitalization for these concomitant procedures
could be cost-effective for various providers and payers.
TAVR is indicated and approved as a treatment option for patients
diagnosed with symptomatic aortic stenosis who are not surgical
candidates for traditional open surgical techniques. Cases involving
TAVR procedures are assigned to MS-DRGs 266 and 267 (Endovascular
Cardiac Valve Replacement with MCC and without MCC, respectively), and
are identified by the following ICD-10-PCS procedure codes shown in the
table below.
[[Page 38025]]
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
02RF37Z................... Replacement of aortic valve with autologous
tissue substitute, percutaneous approach.
02RF38Z................... Replacement of aortic valve with zooplastic
tissue, percutaneous approach.
02RF3JZ................... Replacement of aortic valve with synthetic
substitute, percutaneous approach.
02RF3KZ................... Replacement of aortic valve with
nonautologous tissue substitute,
percutaneous approach.
02RF37H................... Replacement of aortic valve with autologous
tissue substitute, transapical,
percutaneous approach.
02RF38H................... Replacement of aortic valve with zooplastic
tissue, transapical, percutaneous approach.
02RF3JH................... Replacement of aortic valve with synthetic
substitute, transapical, percutaneous
approach.
02RF3KH................... Replacement of aortic valve with
nonautologous tissue substitute,
transapical, percutaneous approach.
------------------------------------------------------------------------
LAAC is indicated and approved as a treatment option for patients
diagnosed with atrial fibrillation. Cases involving LAAC procedures are
assigned to MS-DRGs 273 and 274 (Percutaneous Intracardiac Procedures
with MCC and without MCC, respectively), and are identified by ICD-10-
PCS procedure code 02L73DK (Occlusion of left atrial appendage with
intraluminal device, percutaneous approach).
The requestor suggested that the structure of the possible new MS-
DRGs for TAVR procedures performed in combination with LAAC procedures
could be modeled similar to the structure of MS-DRGs 266 and 267. While
contemplating creation of the new MS-DRGs, the requestor asked CMS to
also consider subdividing the possible new MS-DRGs into two severity
levels and title them as follows:
Suggested MS-DRG 26x (Endovascular Cardiac Valve
Replacement with LAAC with MCC); and
Suggested MS-DRG 26x (Endovascular Cardiac Valve
Replacement with LAAC without MCC).
As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19826 through 19827), we analyzed claims data from the December 2016
update of the FY 2016 MedPAR file for MS-DRGs 266 and 267 and
identified the cases reporting TAVR procedures with and without an LAAC
procedure. As shown in the table below, the data findings show that the
total number of cases reported in MS-DRG 266 was 9,949, with an average
length of stay of 7.2 days and average costs of $56,762. There were
9,872 cases involving a TAVR procedure, with an average length of stay
of 7.2 days and average costs of $56,628. There was only one case
identified in MS-DRG 266 where both a TAVR and an LAAC procedure were
reported. This case had an average length of stay of 21.0 days and
average costs of $60,226. For MS-DRG 267, the total number of cases
found was 13,290, with an average length of stay of 3.5 days and
average costs of $45,297. There were 13,245 cases involving a TAVR
procedure, with an average length of stay of 3.5 days and average costs
of $45,302. There were no cases identified in MS-DRG 267 where both a
TAVR and an LAAC procedure were reported.
MS-DRGs for TAVR Procedures
----------------------------------------------------------------------------------------------------------------
Number of Average
MS-DRG cases length of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 266--All cases........................................... 9,949 7.2 $56,762
MS-DRG 266--Cases with TAVR..................................... 9,872 7.2 56,628
MS-DRG 266--Cases TAVR and LAAC................................. 1 21.0 60,226
MS-DRG 267--All cases........................................... 13,290 3.5 45,297
MS-DRG 267--Cases with TAVR..................................... 13,245 3.5 45,302
MS-DRG 267--Cases TAVR and LAAC................................. 0 0 0
----------------------------------------------------------------------------------------------------------------
We then analyzed claims data in MS-DRGs 273 and 274 for cases
reporting an LAAC procedure. As shown in the table below, the data
findings show that the total number of cases reported in MS-DRG 273 was
6,541, with an average length of stay of 7.7 days and average costs of
$26,042. There were 179 cases involving an LAAC procedure, with an
average length of stay of 3.6 days and average costs of $30,131. For
MS-DRG 274, the total number of cases found was 14,441, with an average
length of stay of 3.0 days and average costs of $20,267. There were
2,428 cases involving an LAAC procedure, with an average length of stay
of 1.2 days and average costs of $26,213.
MS-DRGs for LAAC Procedures
----------------------------------------------------------------------------------------------------------------
Number of Average
MS-DRG cases length of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 273--All cases........................................... 6,541 7.7 $26,042
MS-DRG 273--Cases with LAAC..................................... 179 3.6 30,131
MS-DRG 274--All cases........................................... 14,441 3.0 20,267
MS-DRG 274--Cases with LAAC..................................... 2,428 1.2 26,213
----------------------------------------------------------------------------------------------------------------
We stated in the proposed rule that the analysis of claims data for
MS-DRGs 266, 267, 273, and 274 and input from our clinical advisors do
not support creating new MS-DRGs for TAVR and LAAC procedures when
performed in combination in the same operative episode. We found only
one case in MS-DRG 266 where both a TAVR and an LAAC procedure were
reported and the claims data for cases reporting an LAAC procedure in
MS-DRGs 273 and 274 support their current assignment. Our clinical
advisors agreed the current MS-DRG assignments are appropriate for each
respective procedure.
Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19827), we
[[Page 38026]]
did not propose to create new MS-DRGs for cases involving TAVR and LAAC
procedures when performed in combination in the same operative episode.
We invited public comments on our proposal to maintain the current MS-
DRG structure for TAVR procedures in MS-DRGs 266 and 267, as well as
the current MS-DRG structure for LAAC procedures in MS-DRGs 273 and
274.
Comment: Commenters supported the proposal to maintain the current
MS-DRG structure for TAVR and LAAC procedures when performed in
combination in the same operative episode.
Response: We appreciate the commenters' support.
After consideration of the public comments that we received, we are
finalizing our proposal to maintain the current MS-DRG structure for
TAVR procedures in MS-DRGs 266 and 267, as well as the current MS-DRG
structure for LAAC procedures in MS-DRGs 273 and 274 effective October
1, 2017 for ICD-10 MS-DRGs Version 35.
d. Percutaneous Mitral Valve Replacement Procedures
We received a request to reassign four ICD-10-PCS procedure codes
that describe percutaneous mitral valve replacement procedures from MS-
DRGs 216 through 221 (Cardiac Valve and Other Major Cardiothoracic
Procedures with and without Cardiac Catheterization with MCC, with CC
and without CC/MCC, respectively) to MS-DRGs 266 and 267 (Endovascular
Cardiac Valve Replacement with MCC and without MCC, respectively). The
requestor indicated that there are inconsistencies in the current
GROUPER logic for endovascular cardiac valve replacement procedures.
Specifically, the requestor stated that the procedure codes that
describe both the percutaneous approach and the transapical,
percutaneous approach for the aortic and pulmonary valves are included
in MS-DRGs 266 and 267. However, for the mitral valve, the GROUPER
logic only includes the procedure codes that describe the transapical,
percutaneous approach.
The requestor also stated that when MS-DRGs 266 and 267 were
created, the intent was to include percutaneous replacement procedures
for all cardiac valves. Therefore, the requestor recommended that CMS
reassign the four ICD-10-PCS procedure codes shown in the table below
that describe mitral valve replacement procedures, performed with the
percutaneous approach from MS-DRGs 216 through 221 to MS-DRGs 266 and
267 to more appropriately group these procedures within the MS-DRG
structure.
------------------------------------------------------------------------
ICD-10-PCS procedure code Code description
------------------------------------------------------------------------
02RG37Z................... Replacement of mitral valve with autologous
tissue substitute, percutaneous approach.
02RG38Z................... Replacement of mitral valve with zooplastic
tissue, percutaneous approach.
02RG3JZ................... Replacement of mitral valve with synthetic
substitute, percutaneous approach.
02RG3KZ................... Replacement of mitral valve with
nonautologous tissue substitute,
percutaneous approach.
------------------------------------------------------------------------
We stated in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19827
through 19828) that we agree with the requestor regarding the intent of
the creation of MS-DRGs 266 and 267. As discussed in the FY 2015 IPPS/
LTCH PPS final rule (79 FR 49890 through 49893), MS-DRGs 266 and 267
were created to uniquely classify the subset of high-risk cases
representing patients who undergo a cardiac valve replacement procedure
performed by a percutaneous (endovascular) approach. As such, we agree
that all cardiac valve replacement procedures should be grouped within
the same MS-DRG. In FY 2015, under the ICD-9-CM classification, there
was not a specific procedure code for a percutaneous mitral valve
replacement procedure. Therefore, when we converted from the ICD-9
based MS-DRGs to the ICD-10 MS-DRGs, there was not a code available
from which to replicate. We refer the reader to the FY 2015 IPPS/LTCH
PPS final rule (79 FR 49890 through 49893) for a detailed discussion on
the initial request to create new MS-DRGs for endovascular cardiac
valve replacement procedures, as well as the FY 2016 IPPS/LTCH PPS
final rule (80 FR 49354 through 49358) and the FY 2017 IPPS/LTCH PPS
final rule (81 FR 56787 through 56790) for a detailed discussion of the
conversion to ICD-10 MS-DRGs, including our analysis of claims data and
the need to accurately replicate the ICD-9-CM based MS-DRGs.
The requestor also noted that a proposal was discussed at the
September 13-14, 2016 ICD-10 Coordination and Maintenance Committee
meeting involving the creation of procedure codes that describe
percutaneous tricuspid valve replacement procedures and, if finalized,
these new procedure codes would also be assigned to MS-DRGs 266 and
267.
As shown in the table below and in Table 6B.-New Procedure Codes,
which is associated with the proposed rule and this final rule and
available via the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/,
there are eight new procedure codes that describe tricuspid valve
replacement procedures performed with percutaneous and transapical
types of percutaneous approaches that will be effective October 1,
2017.
------------------------------------------------------------------------
ICD-10-PCS procedure code Code description
------------------------------------------------------------------------
02RJ37H................... Replacement of tricuspid valve with
autologous tissue substitute, transapical,
percutaneous Approach.
02RJ37Z................... Replacement of tricuspid valve with
autologous tissue substitute, percutaneous
approach.
02RJ38H................... Replacement of tricuspid valve with
zooplastic tissue, transapical,
percutaneous approach.
02RJ38Z................... Replacement of tricuspid valve with
zooplastic tissue, percutaneous approach.
02RJ3JH................... Replacement of tricuspid valve with
synthetic substitute, transapical,
percutaneous approach.
02RJ3JZ................... Replacement of tricuspid valve with
synthetic substitute, percutaneous
approach.
02RJ3KH................... Replacement of tricuspid valve with
nonautologous tissue substitute,
transapical, percutaneous approach.
02RJ3KZ................... Replacement of tricuspid valve with
nonautologous tissue substitute,
percutaneous approach.
------------------------------------------------------------------------
[[Page 38027]]
We stated in the proposed rule that we agree with the requestor and
believe that, in addition to the four procedure codes that describe the
percutaneous mitral valve replacement procedures listed earlier in this
section, the eight codes that describe percutaneous and transapical
types of percutaneous tricuspid valve replacement procedures also
should be grouped with the other endovascular cardiac valve replacement
procedures. Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule (82
FR 19827 through 19828), we proposed to reassign the four percutaneous
mitral valve replacement procedures described by the procedure codes
listed in the table above from MS-DRGs 216 through 221 to MS-DRGs 266
and 267. In addition, we proposed to assign the eight new procedure
codes (also listed in a separate table above) that describe
percutaneous and transapical, percutaneous tricuspid valve replacement
procedures to MS-DRGs 266 and 267.
We invited public comments on our proposals.
Comment: Many commenters supported the proposal to reassign the
four percutaneous mitral valve replacement procedures from MS-DRGs 216
through 221 to MS-DRGs 266 and 267 and to assign the eight new
procedure codes that describe percutaneous and transapical,
percutaneous tricuspid valve replacement procedures to MS-DRGs 266 and
267. Commenters noted that these updates will appropriately reflect the
clinical characteristics and resource use for this group of
endovascular cardiac valve replacement procedures.
Response: We appreciate the commenters' support.
After consideration of the public comments that we received, we are
finalizing our proposal to reassign the four percutaneous mitral valve
replacement procedures described by the procedure codes listed in the
table above from MS-DRGs 216 through 221 to MS-DRGs 266 and 267 and
assign the eight new procedure codes (also listed in a separate table
above) that describe percutaneous and transapical, percutaneous
tricuspid valve replacement procedures to MS-DRGs 266 and 267 effective
October 1, 2017 for ICD-10 MS-DRGs Version 35.
e. Percutaneous Tricuspid Valve Repair
We received a request to reassign cases reporting ICD-10-PCS
procedure code 02UJ3JZ (Supplement tricuspid valve with synthetic
substitute, percutaneous approach) from MS-DRGs 216 through 221
(Cardiac Valve and Other Major Cardiothoracic Procedures with and
without Cardiac Catheterization with MCC, with CC and without CC/MCC,
respectively) to MS-DRGs 228 and 229 (Other Cardiothoracic Procedures
with MCC and without MCC, respectively). According to the requestor,
reassigning cases involving these procedures would more appropriately
align the cohesiveness with other clinically similar procedures, such
as percutaneous mitral valve repair (for example, procedures involving
the Mitraclip) described by procedure code 02UG3JZ (Supplement mitral
valve with synthetic substitute, percutaneous approach), which are
assigned to MS-DRGs 228 and 229.
The requestor noted that the FORMA Tricuspid Transcatheter Repair
System (herein after referred to as the FORMA system) is currently in
clinical trials in the United States, Europe, and Canada, but has not
received FDA approval/clearance marketing authorization. However, the
FORMA system is presently available through a compassionate use
program. The FORMA system technology is indicated for use in the
treatment of patients diagnosed with tricuspid regurgitation and
occupies the regurgitant area of the affected valve, providing a
surface for native leaflet coaptation. The requestor stated that the
technology offers a viable alternative treatment using traditional
tricuspid valve surgery. According to the requestor, the technology
consists of a rail and a spacer, and the procedure to insert the device
involves fluoroscopic imaging guidance.
As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19828 through 19829), we analyzed claims data from the December 2016
update of the FY 2016 MedPAR file for MS-DRGs 216 through 221 for cases
reporting procedure code 02UJ3JZ (Supplement tricuspid valve with
synthetic substitute, percutaneous approach). Our findings are shown in
the following table.
MS-DRGs for Cardiac Valve and Other Major Cardiothoracic Procedures
----------------------------------------------------------------------------------------------------------------
Number of Average
MS-DRG cases length of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 216--All cases........................................... 9,139 14.4 $68,304
MS-DRG 216--Cases with percutaneous tricuspid valve repair...... 1 5.0 14,954
MS-DRG 217--All cases........................................... 3,536 8.9 45,857
MS-DRG 217--Cases with percutaneous tricuspid valve repair...... 1 3.0 16,234
MS-DRG 218--All cases........................................... 498 5.9 41,274
MS-DRG 218--Cases with percutaneous tricuspid valve repair...... 0 0 0
MS-DRG 219--All cases........................................... 16,011 11.1 54,519
MS-DRG 219--Cases with percutaneous tricuspid valve repair...... 6 9.0 58,075
MS-DRG 220--All cases........................................... 18,476 6.8 37,506
MS-DRG 220--Cases with percutaneous tricuspid valve repair...... 1 5.0 90,155
MS-DRG 221--All cases........................................... 3,547 5.0 33,606
MS-DRG 221--Cases with percutaneous tricuspid valve repair...... 0 0 0
----------------------------------------------------------------------------------------------------------------
We also analyzed claims data for MS-DRGs 228 and 229. Our findings
are shown in the following table below.
MS-DRGs for Other Cardiothoracic Procedures
----------------------------------------------------------------------------------------------------------------
Number of Average
MS-DRG cases length of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 228--All cases........................................... 3,466 9.8 $47,435
[[Page 38028]]
MS-DRG 229--All cases........................................... 4,553 4.9 33,347
----------------------------------------------------------------------------------------------------------------
The claims data show that there were very few cases reported for
performing a percutaneous tricuspid valve repair procedure in MS-DRGs
216 through 221. Of the 6 cases found in MS-DRG 219, with average costs
of $58,075, the average cost of these cases aligned with the average
cost of all cases in the MS-DRG assignment ($54,519). We stated in the
proposed rule that the data analysis and our clinical advisors do not
support reassigning cases reporting procedure code 02UJ3JZ to MS-DRGs
228 and 229. The current MS-DRG assignment for percutaneous tricuspid
valve repair procedures to MS-DRGs 216 through 221 is clinically
coherent with the other percutaneous procedures performed on the heart
valves that are currently assigned to these MS-DRGs. Percutaneous
repair of the aortic, pulmonary and tricuspid valves utilizing various
tissue substitutes (autologous, nonautologous, zooplastic, and
synthetic) are assigned to MS-DRGs 216 through 221. The exception is
the percutaneous mitral valve repair, which, as the requestor pointed
out, is assigned to MS-DRGs 228 and 229 as discussed in the FY 2017
IPPS/LTCH PPS final rule (81 FR 56809 through 56813). Our clinical
advisors also agreed that the limited number of cases reported in MS-
DRGs 216 through 221 does not warrant reassignment.
As a result of our review and the input from our clinical advisors,
in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19829), we did not
propose to reassign cases reporting procedure code 02UJ3JZ from MS-DRGs
216 through 221 to MS-DRGs 228 and 229.
We invited public comments on our proposal to maintain the current
MS-DRG assignment for cases reporting procedure code 02UJ3JZ.
Comment: Commenters supported the proposal to maintain the current
MS-DRG assignment for ICD-10-PCS procedure code 02UJ3JZ in MS-DRGs 216
through 221. One commenter also noted that, while CMS' analysis
demonstrated the current assignment is appropriate, CMS should consider
revisiting this procedure in the future in the event it becomes more
common and warrants further consideration for reassignment. The
commenter believed that there could be value in creating MS-DRGs for
endovascular cardiac repair similar to those MS-DRGs for endovascular
cardiac valve replacement.
Response: We appreciate the commenters' support. As additional ICD-
10 claims data become available, we will continue to welcome input from
the public and consider further modifications to the ICD-10 MS-DRGs if
warranted.
Comment: One commenter did not agree with the proposal to maintain
the current MS-DRG assignment for ICD-10-PCS procedure code 02UJ3JZ in
MS-DRGs 216 through 221. The commenter stated that transcatheter
tricuspid valve repair procedures are clinically coherent with other
percutaneous transcatheter cardiac valve repair procedures. This
commenter asserted that the devices utilized in these procedures are
currently under clinical investigation and the utilization of these
technologies is expected to increase through clinical trials.
Therefore, the commenter suggested that these procedures should be
assigned to MS-DRGs 228 and 229.
Response: As we noted in the FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 19829), the results of our analysis of the current MS-DRG
assignment for percutaneous tricuspid valve repair procedures to MS-
DRGs 216 through 221 and the advice of our clinical advisors
demonstrate that this procedure is clinically coherent with the other
percutaneous procedures performed on the heart valves that are
currently assigned to these MS-DRGs because percutaneous repair of the
aortic, pulmonary, and tricuspid valves utilizing various tissue
substitutes (autologous, nonautologous, zooplastic, and snythetic) are
assigned to MS-DRGs 216 through 221. We will continue to consider
further modifications to the ICD-10 MS-DRGs as additional ICD-10 claims
data become available that support suggested changes.
After consideration of the public comments that we received, we are
finalizing our proposal to maintain the current MS-DRG assignment for
cases reporting procedure code 02UJ3JZ (Supplement tricuspid valve with
synthetic substitute, percutaneous approach) to MS-DRGs 216 through 221
for FY 2018.
5. MDC 8 (Diseases and Disorders of the Musculoskeletal System and
Connective Tissue)
a. Total Ankle Replacement (TAR) Procedures
For FY 2018, we again received two requests for the reassignment of
total ankle replacement (TAR) procedures to a different MS-DRG. TAR
procedures are currently assigned to MS-DRGs 469 and 470 (Major Joint
Replacement or Reattachment of Lower Extremity with and without MCC,
respectively). This topic was discussed previously in the FY 2015 IPPS/
LTCH PPS proposed and final rules (79 FR 28013 through 28015 and 79 FR
49896 through 49899, respectively) and in the FY 2017 IPPS/LTCH PPS
proposed and final rules (81 FR 24989 through 24990 and 81 FR 56814
through 56816, respectively). For FY 2015 and FY 2017, we did not
change the MS-DRG assignment for TAR procedures. The requestors
indicated that TAR procedures are currently assigned to MS-DRGs 469 and
470, to which total hip replacement and total knee replacement
procedures also are assigned. The requestors stated that there are
significant clinical and cost differences among these procedures, which
results in underpayment for TAR procedures. The requestors asked CMS to
examine claims data for the following six ICD-10-PCS codes within MS-
DRGs 469 and 470:
0SRF0J9 (Replacement of right ankle joint with synthetic
substitute, cemented, open approach);
0SRF0JA (Replacement of right ankle joint with synthetic
substitute, uncemented, open approach);
0SRF0JZ (Replacement of right ankle joint with synthetic
substitute, open approach);
0SRG0J9 (Replacement of left ankle joint with synthetic
substitute, cemented, open approach);
0SRG0JA (Replacement of left ankle joint with synthetic
substitute, uncemented, open approach); and
0SRG0JZ (Replacement of left ankle joint with synthetic
substitute, open approach).
The requestors recommended that, if the claims data show a
disparity in costs between TAR procedures and total hip and knee
replacement procedures, the TAR procedures be reassigned to a more
appropriate MS-DRG.
[[Page 38029]]
The requestors also stated that total ankle replacement is a
complicated surgery that involves the replacement of the damaged parts
of the three bones that comprise the ankle joint, as compared to the
two bones in hip and knee replacement procedures. Furthermore, as the
smallest weight-bearing large joint in the body, the requestors stated
that TAR procedures demand a complexity of implant device design,
engineering, and manufacture to exacting functional specifications that
is vastly different from that of total hip and knee replacement
devices. One of the requestors stated that the ankle region typically
has poorer circulation and thinner soft tissue coverage than the hip
and knee, leading to a higher risk of wound complications and infection
that may be more challenging and expensive to treat. In addition, this
requestor stated that the unique anatomical characteristics and
function of the ankle joint require a specialized surgical skill set,
operative technique, and level of operating room resource utilization
that is vastly dissimilar from that of total hip and knee replacement
procedures.
As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19829 through 19830), we examined claims data from the December 2016
update of the FY 2016 MedPAR file on reported cases of TAR procedures
in MS-DRGs 469 and 470. Our findings are shown in the table below.
Total Ankle Replacements Procedures
----------------------------------------------------------------------------------------------------------------
Number of Average
MS-DRG cases length of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 469--All cases........................................... 25,778 6.7 $22,139
MS-DRG 469--Cases reporting TAR procedure codes................. 31 4.6 23,828
MS-DRG 470--All cases........................................... 461,553 2.7 14,751
MS-DRG 470--Cases reporting TAR procedure codes................. 2,114 1.9 20,862
----------------------------------------------------------------------------------------------------------------
As shown in the table above, for MS-DRG 469, there were a total of
25,778 cases, with an average length of stay of 6.7 days and average
costs of $22,139. Of the 25,778 cases in MS-DRG 469, there were 31
cases reporting a TAR procedure, with an average length of stay of 4.6
days and average costs of $23,828. For MS-DRG 470, there were a total
of 461,553 cases, with an average length of stay of 2.7 days and
average costs of $14,751. Of the 461,553 cases in MS-DRG 470, there
were 2,114 cases reporting a TAR procedure, with an average length of
stay of 1.9 days and average costs of $20,862. As mentioned earlier,
there were only 31 TAR procedure cases in MS-DRG 469, and these cases
had average costs of $1,689 higher than the average costs of all cases
within MS-DRG 469. The relatively small number of cases may have been
impacted by other factors. Several expensive cases could impact the
average costs for a very small number of patients. We also note that
the average length of stay for the TAR procedure cases was 4.6 days, as
compared to 6.7 days for all cases within MS-DRG 469. The 2,114 TAR
procedure cases in MS-DRG 470 had average costs that were $6,111 higher
than the average costs of all cases in MS-DRG 470 ($20,862 compared to
$14,751 for all cases). We stated in the proposed rule that the data
support reassigning all of the TAR procedures to MS-DRG 469, even when
there is no MCC reported. While the average costs of the TAR procedures
in MS-DRG 470 are lower than the average costs for all cases in MS-DRG
469 ($20,862 compared to $22,139), the average costs are much closer to
the average costs of TAR procedure cases in MS-DRG 470.
We stated in the proposed rule that our clinical advisors reviewed
this clinical issue and the claims data, and agreed that it is
clinically appropriate to reassign all of the TAR procedure cases from
MS-DRG 470 to MS-DRG 469, even when there is no MCC reported. The
claims data support the fact that these cases require more resources
than other cases assigned to MS-DRG 470. Therefore, in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR 19829 through 19830), we proposed to
reassign the following TAR procedure codes from MS-DRG 470 to MS-DRG
469, even if there is no MCC reported: 0SRF0J9; 0SRF0JA; 0SRF0JZ;
0SRG0J9; 0SRG0JA; and 0SRG0JZ for FY 2018.
We proposed to change the titles of MS-DRGs 469 and 470 to the
following to reflect these proposed MS-DRG reassignments:
Proposed retitle of MS-DRG 469: ``Major Hip and Knee Joint
Replacement or Reattachment of Lower Extremity with MCC or Total Ankle
Replacement''; and
Proposed retitle of MS-DRG 470: ``Major Hip and Knee Joint
Replacement or Reattachment of Lower Extremity without MCC.''
We invited public comments on our proposals.
Comment: Several commenters supported CMS' recommendation to
reassign the following TAR procedure codes from MS DRG 470 to MS DRG
469, even if there is no MCC reported: 0SRF0J9; 0SRF0JA; 0SRF0JZ;
0SRG0J9; 0SRG0JA; and 0SRG0JZ for FY 2018. The commenters also
supported the change in MS-DRG titles for MS-DRG 469 and 470 to reflect
this MS-DRG update. One commenter stated that claims data supported
this recommendation because, as CMS pointed out, the average costs of
TAR cases in MS-DRG 470 are much closer to the average costs of all
cases in MS-DRG 469 ($20,862 versus $22,139). The commenter also agreed
with the CMS clinical advisors that it was clinically appropriate to
reassign all TAR procedure cases from MS-DRG 470 to MS-DRG 469, even
when there is no MCC reported. The commenter stated that the update
will remedy a historical cost-to-payment disparity, and thus enable
hospitals to continue offering Primary TAR surgery to Medicare
beneficiaries as an economically sustainable, and clinically viable,
alternative to ankle fusion when medically appropriate. The commenter
commended CMS for its consideration of how to address this MS-DRG
issue.
Response: We appreciate the commenters' support.
After consideration of the public comments that we received, we are
reassigning the following TAR procedure codes from MS DRG 470 to MS DRG
469, even if there is no MCC reported: 0SRF0J9; 0SRF0JA; 0SRF0JZ;
0SRG0J9; 0SRG0JA; and 0SRG0JZ for FY 2018. We are changing the titles
of MS-DRGs 469 and 470 to the following to reflect these MS-DRG
reassignments:
MS-DRG 469: ``Major Hip and Knee Joint Replacement or
Reattachment of Lower Extremity with MCC or Total Ankle Replacement'';
and
MS-DRG 470: ``Major Hip and Knee Joint Replacement or
Reattachment of Lower Extremity without MCC.''
[[Page 38030]]
b. Revision of Total Ankle Replacement (TAR) Procedures
We received two requests to modify the MS-DRG assignment for
revision of total ankle replacement (TAR) procedures, which the
requestors indicated are assigned to MS-DRGs 515, 516, and 517 (Other
Musculoskeletal System and Connective Tissue O.R. Procedures with MCC,
with CC, and without CC/MCC, respectively). This topic was discussed in
the FY 2015 IPPS/LTCH PPS proposed and final rules (79 FR 28013 through
28015 and 79 FR 49896 through 49899, respectively) and in the FY 2017
IPPS/LTCH PPS proposed and final rules (81 FR 24992 through 24993 and
81 FR 56819 through 56820, respectively). For FY 2015 and FY 2017, we
did not change the MS-DRG assignment for revision of TAR procedures.
The requestors asked that CMS examine the following eight ICD-10-
PCS codes which they indicated identify revision of TAR procedures and
which are assigned to MS-DRGs 515, 516, and 517. As we discuss later in
this section in response to public comments, while the requestors
requested that we analyze these eight procedure codes for revisions of
TAR procedures in the proposed rule, these procedures are in fact
represented by a combination of other codes that capture the root
operation removal and replacement of joint devices.
0SWF0JZ (Revision of synthetic substitute in right ankle
joint, open approach);
0SWF3JZ (Revision of synthetic substitute in right ankle
joint, percutaneous approach);
0SWF4JZ (Revision of synthetic substitute in right ankle
joint, percutaneous endoscopic approach);
0SWFXJZ (Revision of synthetic substitute in right ankle
joint, external approach);
0SWG0JZ (Revision of synthetic substitute in left ankle
joint, open approach);
0SWG3JZ (Revision of synthetic substitute in left ankle
joint, percutaneous approach);
0SWG4JZ (Revision of synthetic substitute in left ankle
joint, percutaneous endoscopic approach); and
0SWGXJZ (Revision of synthetic substitute in left ankle
joint, external approach).
One requestor stated that these ICD-10-PCS codes more specifically
identify the revision of TAR procedures than the prior ICD-9-CM codes.
Specifically, ICD-9-CM code 81.59 (Revision of joint replacement of
lower extremity, not elsewhere classified) was an unspecified code,
which included toe and foot joint revision procedures in addition to
revision of TAR procedures. The requestor stated that claims data
reporting these ICD-10-PCS codes would allow CMS to better identify
revisions of TAR procedures, and determine if the procedures are
assigned to the appropriate MS-DRGs.
One requestor suggested the following three options for MS-DRG
assignments:
Assign the ICD-10-PCS ankle revision procedure codes to
MS-DRGs 466, 467, and 468 (Revision of Hip or Knee Replacement with
MCC, with CC, and without CC/MCC, respectively), and rename MS-DRGs
466, 467, and 468 as ``Revision of Hip, Knee or Ankle with MCC, with
CC, and without CC/MCC,'' respectively);
Assign the ICD-10-PCS ankle revision procedure codes to
MS-DRG 469 (Major Joint Replacement or Reattachment of Lower Extremity
with MCC) to more appropriately recognize higher hospital procedure
costs associated with revision of TAR procedures; or
Establish a new MS-DRG for the assignment of revision of
TAR procedures.
The other requestor asked that CMS consider reassigning revision of
TAR procedures to MS-DRGs that better address the cost-to-payment
differential, such as MS-DRGs 466, 467, and 468.
As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19830 through 19831), we examined claims data from the December 2016
update of the FY 2016 MedPAR file on cases reporting the eight revision
codes listed above as well as cases assigned to MS-DRGs 466, 467, 468,
and MS-DRG 469. Our findings are shown in the tables below.
Revisions of Joint Replacements Procedures
----------------------------------------------------------------------------------------------------------------
Number of Average
MS-DRG cases length of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 515--All cases........................................... 5,038 8.0 $20,562
MS-DRG 515--Cases reporting revision of total ankle replacement 0 0 0
procedure codes................................................
MS-DRG 516--All cases........................................... 13,276 4.8 13,524
MS-DRG 516--Cases reporting revision of total ankle replacement 2 2.5 11,400
procedure codes................................................
MS-DRG 517--All cases........................................... 13,330 2.8 10,003
MS-DRG 517--Cases reporting revision of total ankle replacement 4 1.5 7,423
procedure codes................................................
----------------------------------------------------------------------------------------------------------------
Cases in MS-DRGs 466, 467, 468, and 469
----------------------------------------------------------------------------------------------------------------
Number of Average
MS-DRG cases length of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 466--All cases........................................... 3,886 8.4 $33,720
MS-DRG 467--All cases........................................... 19,145 4.2 24,609
MS-DRG 468--All cases........................................... 16,529 2.7 20,208
MS-DRG 469--All cases........................................... 25,778 6.7 22,139
----------------------------------------------------------------------------------------------------------------
As shown in the tables above, there were only 6 cases identified
with the eight revision codes suggested by the requestor with no cases
in MS-DRG 515, two cases in MS-DRG 516, and four cases in MS-DRG 517.
We stated in the proposed rule that the limited number of six cases
does not justify the creation of a new MS-DRG for the assignment of
revision of TAR procedures. Our data analysis demonstrates that the
average length of stay for these revision procedures was lower than
that for all cases in MS-DRG 516 (2.5 days compared to 4.8 days), and
the average costs were lower ($11,400 compared to $13,524). The average
length of stay for these revision
[[Page 38031]]
procedures also was lower than that for all cases in MS-DRG 517 (1.5
days compared to 2.8 days), and the average costs were lower ($7,423
compared to $10,003). We stated that the data do not support
reassigning the cases from MS-DRGs 515, 516, and 517.
Furthermore, we stated that the average length of stay and average
costs of cases in MS-DRGs 466, 467, 468, and 469 are significantly
higher than those for these revision procedures in MS-DRG 516 and 517.
We stated that the average length of stay for all cases in MS-DRGs 466,
467, 468, and 469 is 8.4, 4.2, 2.7, and 6.7 days, respectively,
compared to the average length of stay of 2.5 and 1.5 days for cases
representing these revision procedures in MS-DRGs 516 and 517,
respectively. The average costs for all cases in MS-DRGs 466, 467, 468,
and 469 are $33,720, $24,609, $20,208, and $22,139, respectively,
compared to the average costs of $11,400 and $7,423 for cases
representing these revision procedures in MS-DRGs 516 and 517,
respectively. Therefore, we stated that in the proposed rule that the
data do not support reassigning the cases to MS-DRGs 466, 467, 468, or
469.
We stated in the proposed rule that our clinical advisors reviewed
the clinical issue and the claims data and agreed that the eight
revision codes are appropriately assigned to MS-DRGs 515, 516, and 517,
along with other procedures that describe revisions of joint
replacements of the lower extremities, including the foot and toe. Our
clinical advisors did not support reassigning these cases to MS-DRGs
466, 467, 468, or 469, or creating a new MS-DRG. Therefore, based on
the findings of our analysis of claims data and the advice of our
clinical advisors, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19830 through 19831), we proposed to maintain the current MS-DRG
assignment for these revision procedures within MS-DRGs 515, 516, and
517 for FY 2018.
Comment: Commenters supported CMS' proposal to maintain the current
MS-DRG assignments for procedures within MS-DRGs 515, 516, and 517 for
FY 2018.
Several commenters questioned the reliability of the revision of
TAR data presented in the proposed rule. The commenters questioned the
codes used in the analysis and stated that revision of TAR procedures
are not captured with the Revision of synthetic substitute codes
identified in the proposed rule. The commenters stated that the
procedures are captured by reporting a combination of codes that
capture the removal of a prior device and the replacement of the device
with a new device. The commenters stated that the correct root
operations for these codes would be Removal and Replacement instead of
Revision as stated in the proposed rule. The commenters provided the
following codes which reported in combination would identify revision
of TAR procedures. The commenters stated that revisions of TAR
procedures are performed with an open approach.
Removals
0SPG0JZ (Removal of Synthetic Substitute from Left Ankle
Joint, Open Approach); and
0SPF0JZ (Removal of Synthetic Substitute from Right Ankle
Joint, Open Approach)
Replacements
0SRF0J9 (Replacement of right ankle joint with synthetic
substitute, cemented, open approach);
0SRF0JA (Replacement of right ankle joint with synthetic
substitute, uncemented, open approach);
0SRF0JZ (Replacement of right ankle joint with synthetic
substitute, open approach);
0SRG0J9 (Replacement of left ankle joint with synthetic
substitute, cemented, open approach);
0SRG0JA (Replacement of left ankle joint with synthetic
substitute, uncemented, open approach); and
0SRG0JZ (Replacement of left ankle joint with synthetic
substitute, open approach).
The commenters requested that CMS encourage the correct coding of
revision of TAR cases through additional educational materials. The
commenters requested that CMS review hospital claims data for revision
of TAR procedures using the list of Removal and Replacement code
combinations provided to identify revision of TAR cases. The commenter
stated that an increasing number of claims for revision of TAR
procedures will become identifiable in the future as patients and
implants naturally age into a need for revision surgery.
Response: We appreciate the commenters' support for our proposal to
maintain the current MS-DRG assignment for procedures within MS-DRGs
515, 516, and 517 for FY 2018.
We conducted an analysis of the correct coding of revision of TARs
and agree with the commenters that these cases are not captured with
ICD-10-PCS codes with the root operation Revision as stated in the
proposed rule. The commenters are correct that the revision of TAR
cases are correctly coded using a combination of codes with the root
operation Removal and Replacement as the commenters suggested. Updates
were made to the ICD-10-PCS index on October 1, 2015 to reinforce this
direction. The index entry is shown below:
Revision
Correcting a portion of existing device
see Revision of device in Removal of device without replacement
see Removal of device from Replacement of existing device
see Removal of device from
see Root operation to place new device, e.g., Insertion,
Replacement, Supplement
We agree that this index entry clearly indicates that the correct
root operations for revision of TARs would be Removal and Replacement.
The codes with the root operation Revision (included in the Revision of
synthetic substitute codes used in our original analysis) would not be
used to capture revision of TAR procedures. Cases reporting the
combination codes are assigned to MS-DRGs 469 and 470 (Major Joint
Replacement or Reattachment of Lower Extremity with and without MCC,
respectively).
As requested by the commenters, we identified revision of TAR cases
using the correct ICD-10-PCS codes that are captured with the root
operation of Removal and Replacement. We examined our claims data for
cases within MDC 8 that reported one of the Removal codes with one of
the Replacement codes for ankle joint devices. These codes accurately
capture revision of TAR cases. The following table shows our findings.
Revision of Total Ankle Replacement Procedures Using Code Combinations
----------------------------------------------------------------------------------------------------------------
Average
MS-DRG Number of length of Average costs
cases stay
----------------------------------------------------------------------------------------------------------------
MS-DRG 469--All cases........................................... 25,778 6.7 $22,139
MS-DRG 469--Cases reporting revision of TAR code combinations... 0 .............. ..............
[[Page 38032]]
MS-DRG 470--All cases........................................... 461,553 2.7 14,751
MS-DRG 470--Cases reporting revision of TAR code combinations... 59 1.7 19,594
----------------------------------------------------------------------------------------------------------------
Using the updated correct ICD-10-PCS codes, we found that there
were 59 revision of TAR procedures in MS-DRG 470 with average costs of
$19,594 and average length of stay of 1.7 days compared to average
costs of $14,751 and average length of stay of 2.7 days for all cases
in MS-DRG 470. There were no revision of TAR procedures in MS-DRG 469.
As discussed in section II.5.a. of the preamble of this final rule on
Total Ankle Replacements, we are finalizing updates to reassign all of
the TAR procedure codes to MS-DRG 469, even if there is no MCC present,
for FY 2018. This update will also impact revision of TAR cases because
the same total ankle replacement codes are also used to identify
revision of TAR procedures. Therefore, the MS-DRG 469 and 470 updates
result in all revision of TAR procedures being assigned to MS-DRG 469
even if there is no MCC reported in FY 2018.
Revisions of TARs were assigned to MS-DRGs 515, 516, and 517 under
the ICD-9-CM MS-DRGs. However, an error in replication for the ICD-10
MS-DRGs resulted in the revision of TAR procedure cases being assigned
to MS-DRGs 469 and 470. This replication error was not noticed until
the commenters on the FY 2018 IPPS/LTCH PPS proposed rule pointed out
that accurate coding of revision of TARs would result in cases not
being assigned to MS-DRGs 515, 516, and 517. Since the implementation
of ICD-10 MS-DRGs, revision of TAR procedure cases have not been
assigned to MS-DRGs 515, 516, and 517. Therefore, we do not need to
modify MS-DRG logic to reassign revision of TAR procedures from MS-DRGs
515, 516, and 517 because correctly coded cases are not assigned there,
but instead to MS-DRGs 469 and 470. As noted earlier, under our
finalized policy for FY 2018, all revision of TAR procedures will be
assigned to MS-DRG 469, even if there is no MCC reported.
We agree with the commenters that it is important to encourage the
accurate and consistent use of ICD-10-PCS to capture procedures such as
revision of TAR. Therefore, we have asked the American Hospital
Association to provide additional information on how to capture
revision of TARs in a future issue of Coding Clinic for ICD-10. We
encourage any providers that have revision of TAR cases on which they
need ICD-10 coding assistance to submit this information and their
questions to the American Hospital Association's Central Office on ICD-
10 at https://www.codingclinicadvisor.com/. We share information
included in Coding Clinic for ICD-10 with our contractors.
After consideration of the public comments that we received, we are
not finalizing any changes to MS-DRGs 515, 516, and 517 for FY 2018
because, as noted, the revision of TAR procedures are not assigned to
these MS-DRGs. Under our finalized policy regarding TAR procedures, as
discussed in section II.5.a. of the preamble of this final rule, all
TAR procedure cases, as well as revision of TAR procedure cases, will
be assigned to MS-DRG 469 for FY 2018, even if there is no MCC present.
c. Magnetic Controlled Growth Rods (MAGEC[supreg] System)
We received a request to add six ICD-10-PCS procedure codes that
describe the use of magnetically controlled growth rods for the
treatment of early onset scoliosis (MAGEC[supreg] System) to MS-DRGs
456, 457, and 458 (Spinal Fusion Except Cervical with Spinal Curvature
or Malignancy or Infection or Extensive Fusions with MCC, with CC or
without CC/MCC, respectively). The MAGEC[supreg] System was discussed
in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25040 through 25042)
and final rule (81 FR 56888 through 56891) as a new technology add-on
payment application. The application was approved for FY 2017 new
technology add-on payments, effective with discharges occurring on and
after October 1, 2016. The request for new procedure codes to identify
the MAGEC[supreg] System technology was discussed at the March 9-10,
2016 ICD-10 Coordination and Maintenance Committee meeting. Six new
procedure codes were approved, effective October 1, 2016, and were
displayed in Table 6B.--New Procedure Codes associated with the FY 2017
IPPS/LTCH PPS final rule (which is available via the Internet on the
CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2017-IPPS-Final-Rule-Home-Page.html). These
six procedure codes are currently assigned to MS-DRGs 518, 519, and 520
(Back and Neck Procedure Except Spinal Fusion with MCC or Disc Device/
Neurostimulator, with CC, or without CC/MCC, respectively) and are
shown in the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
XNS0032................... Reposition of lumbar vertebra using
magnetically controlled growth rod(s), open
approach, new technology group 2.
XNS0432................... Reposition of lumbar vertebra using
magnetically controlled growth rod(s),
percutaneous endoscopic approach, new
technology group 2.
XNS3032................... Reposition of cervical vertebra using
magnetically controlled growth rod(s), open
approach, new technology group 2.
XNS3432................... Reposition of cervical vertebra using
magnetically controlled growth rod(s),
percutaneous endoscopic approach, new
technology group 2.
XNS4032................... Reposition of thoracic vertebra using
magnetically controlled growth rod(s), open
approach, new technology group 2.
XNS4432................... Reposition of thoracic vertebra using
magnetically controlled growth rod(s),
percutaneous endoscopic approach, new
technology group 2.
------------------------------------------------------------------------
[[Page 38033]]
According to the requestor, adding these six procedure codes will
allow these cases to group to MS-DRGs that more accurately reflect the
diagnosis of early onset scoliosis for which the MAGEC[supreg] System
is indicated. In addition, the requestor stated that because this
technology is utilized on a small subset of patients with approximately
2,500 cases per year, adding these procedure codes to MS-DRGs 456, 457,
and 458 would have little impact.
We stated in the proposed rule that because these six procedure
codes shown in the table above were effective as of October 1, 2016,
there are no MedPAR claims data available to analyze. More importantly,
we noted that cases are assigned to MS-DRGs 456, 457, and 458 when an
actual spinal fusion procedure is performed. We stated that our
clinical advisors agree that use of the MAGEC[supreg] System's
magnetically controlled growth rods technology alone does not
constitute a spinal fusion. Therefore, because there were no claims
data available at the time of development of the proposed rule and
based on the advice of our clinical advisors, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19832), we did not propose to add the six
procedure codes to MS-DRGs 456, 457, or 458. We stated that if a spinal
fusion procedure is performed along with the procedure to insert the
MAGEC[supreg] System's magnetically controlled growth rods, it would be
appropriate to report that a spinal fusion was performed and the case
would be assigned to one of the spinal fusion MS-DRGs.
We invited public comments on our proposal to maintain the current
GROUPER logic for cases assigned to MS-DRGs 456, 457, and 458 and not
add the six procedure codes describing the use of the MAGEC[supreg]
System magnetically controlled growth rods. We also invited public
comments on our proposal to maintain the assignment of the six
procedure codes in MS-DRGs 518, 519, and 520.
Comment: Commenters agreed with CMS' proposal to maintain the
assignment of the six procedure codes in MS-DRGs 518, 519, and 520 and
to not reassign the six procedure codes describing the use of the
MAGEC[supreg] System magnetically controlled growth rods to the spinal
fusion MS-DRGs 456, 457 and 458.
Response: We appreciate the commenters' support. We also take this
time to point out that the three ICD-10-PCS procedure codes describing
reposition of the vertebra using magnetically controlled growth rods
with a percutaneous endoscopic approach listed below have been deleted
as displayed in Table 6D.--Invalid Procedure Codes associated with this
FY 2018 IPPS/LTCH PPS final rule (which is available via the Internet
on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) effective October 1, 2017
in the ICD-10 MS-DRGs Version 35.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
XNS0432................... Reposition of lumbar vertebra using
magnetically controlled growth rod(s),
percutaneous endoscopic approach, new
technology group 2.
XNS3432................... Reposition of cervical vertebra using
magnetically controlled growth rod(s),
percutaneous endoscopic approach, new
technology group 2.
XNS4432................... Reposition of thoracic vertebra using
magnetically controlled growth rod(s),
percutaneous endoscopic approach, new
technology group 2.
------------------------------------------------------------------------
The three ICD-10-PCS procedure codes listed in the table above were
discussed in a proposal at the March 7-8, 2017 ICD-10 Coordination and
Maintenance Committee meeting. Decisions for proposals presented at
that meeting were not finalized at the time of publication of the FY
2018 IPPS/LTCH PPS proposed rule. Additional information relating to
the discussion of these codes can be located via the Internet on the
CMS Web site at: https://www.cms.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/ICD-9-CM-C-and-M-Meeting-Materials.html.
Also included in that discussion was a proposal to add a new approach
value to the procedures describing Reposition of the vertebra. As
displayed in Table 6B.--New Procedure Codes associated with this FY
2018 IPPS/LTCH PPS final rule (which is available via the Internet on
the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/), the following three ICD-
10-PCS codes have been created effective October 1, 2017 in the ICD-10
MS-DRGs Version 35 and are assigned to MS-DRGs 518, 519 and 520.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
XNS0332................... Reposition of lumbar vertebra using
magnetically controlled growth rod(s),
percutaneous approach, new technology group
2.
XNS3332................... Reposition of cervical vertebra using
magnetically controlled growth rod(s),
percutaneous approach, new technology group
2.
XNS4332................... Reposition of thoracic vertebra using
magnetically controlled growth rod(s),
percutaneous approach, new technology group
2.
------------------------------------------------------------------------
After consideration of the public comments that we received, we are
finalizing our proposal to maintain the current GROUPER logic for cases
assigned to MS-DRGs 456, 457, and 458. We also are finalizing our
proposal to maintain the assignment of the three existing ICD-10-PCS
procedure codes (describing an open approach) and finalizing assignment
of the three new ICD-10-PCS codes (describing a percutaneous approach)
for the use of magnetically controlled growth rods in the treatment of
early onset scoliosis to MS-DRGs 518, 519, and 520 for FY 2018.
d. Combined Anterior/Posterior Spinal Fusion
It was brought to our attention that 7 of the 10 new ICD-10-PCS
procedure codes describing fusion using a nanotextured surface
interbody fusion device were not added to the appropriate GROUPER logic
list for MS-
[[Page 38034]]
DRGs 453, 454, and 455 (Combined Anterior/Posterior Spinal Fusion with
MCC, with CC and without CC/MCC, respectively), effective October 1,
2016. The logic for MS-DRGs 453, 454, and 455 is comprised of two
lists: An anterior spinal fusion list and a posterior spinal fusion
list. Assignment to one of the combined spinal fusion MS-DRGs requires
that a code from each list be reported.
The seven new ICD-10-PCS procedure codes currently included in the
posterior spinal fusion list for MS-DRGs 453, 454, and 455 are shown in
the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
XRG6092................... Fusion of thoracic vertebral joint using
nanotextured surface interbody fusion
device, open approach, new technology group
2.
XRG7092................... Fusion of 2 to 7 thoracic vertebral joints
using nanotextured surface interbody fusion
device, open approach, new technology group
2.
XRG8092................... Fusion of 8 or more thoracic vertebral
joints using nanotextured surface interbody
fusion device, open approach, new
technology group 2.
XRGA092................... Fusion of thoracolumbar vertebral joint
using nanotextured surface interbody fusion
device, open approach, new technology group
2.
XRGB092................... Fusion of lumbar vertebral joint using
nanotextured surface interbody fusion
device, open approach, new technology group
2.
XRGC092................... Fusion of 2 or more lumbar vertebral joints
using nanotextured surface interbody fusion
device, open approach, new technology group
2.
XRGD092................... Fusion of lumbosacral joint using
nanotextured surface interbody fusion
device, open approach, new technology group
2.
------------------------------------------------------------------------
We note that the remaining three new procedure codes are accurately
reflected in the anterior spinal fusion list; that is, ICD-10-PCS code
XRG1092 (Fusion of cervical vertebral joint using nanotextured surface
interbody fusion device, open approach, new technology group 2); ICD-
10-PCS code XRG2092 (Fusion of 2 or more cervical vertebral joints
using nanotextured surface interbody fusion device, open approach, new
technology group 2); and ICD-10-PCS code XRG4092 (Fusion of
cervicothoracic vertebral joint using nanotextured surface interbody
fusion device, open approach, new technology group 2).
The seven procedure codes currently included in the posterior
spinal fusion list describe an anterior spinal fusion by use of the
interbody fusion device. In an interbody fusion, the anterior column of
the spine is being fused. We stated in the proposed rule that the
results of our review of these procedure codes discussed below and the
advice of our clinical advisors support moving the seven procedure
codes from the posterior spinal fusion list to the anterior spinal
fusion list in the GROUPER logic for MS-DRGs 453, 454, and 455. We
stated that this will improve clinical accuracy and allow appropriate
assignment to these MS-DRGs when both an anterior and posterior spinal
fusion is performed.
During our review of the spinal fusion codes using a nanotextured
surface interbody fusion device in MS-DRGs 453, 454, and 455, we
identified 149 additional procedure codes that should be moved from the
posterior spinal fusion list to the anterior spinal fusion list. These
codes describe spinal fusion of the anterior column with a posterior
approach. As mentioned earlier, the logic for MS-DRGs 453, 454, and 455
is dependent upon a code from the anterior spinal fusion list and a
code from the posterior spinal fusion list. Spinal fusion codes
involving the anterior column should be included on the anterior spinal
fusion list only. In the FY 2018 IPPS/LTCH PPS proposed rule, we
proposed to move the 149 ICD-10-PCS procedure codes listed in Table
6P.3a. associated with the proposed rule (which is available via the
Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) from the
posterior spinal fusion list to the anterior spinal fusion list in MS-
DRGs 453, 454, and 455.
In addition, we also identified 33 ICD-10-PCS procedure codes in
the posterior spinal fusion list in MS-DRGs 453, 454, and 455 that
describe an interbody fusion device in the posterior column and,
therefore, are not considered clinically valid spinal fusion
procedures. These procedure codes are shown in the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0RG00A1................... Fusion of occipital-cervical joint with
interbody fusion device, posterior
approach, posterior column, open approach.
0RG03A1................... Fusion of occipital-cervical joint with
interbody fusion device, posterior
approach, posterior column, percutaneous
approach.
0RG04A1................... Fusion of occipital-cervical joint with
interbody fusion device, posterior
approach, posterior column, percutaneous
endoscopic approach.
0RG10A1................... Fusion of cervical vertebral joint with
interbody fusion device, posterior
approach, posterior column, open approach.
0RG13A1................... Fusion of cervical vertebral joint with
interbody fusion device, posterior
approach, posterior column, percutaneous
approach.
0RG14A1................... Fusion of cervical vertebral joint with
interbody fusion device, posterior
approach, posterior column, percutaneous
endoscopic approach.
0RG20A1................... Fusion of 2 or more cervical vertebral
joints with interbody fusion device,
posterior approach, posterior column, open
approach.
0RG23A1................... Fusion of 2 or more cervical vertebral
joints with interbody fusion device,
posterior approach, posterior column,
percutaneous approach.
0RG24A1................... Fusion of 2 or more cervical vertebral
joints with interbody fusion device,
posterior approach, posterior column,
percutaneous endoscopic approach.
0RG40A1................... Fusion of cervicothoracic vertebral joint
with interbody fusion device, posterior
approach, posterior column, open approach.
0RG43A1................... Fusion of cervicothoracic vertebral joint
with interbody fusion device, posterior
approach, posterior column, percutaneous
approach.
[[Page 38035]]
0RG44A1................... Fusion of cervicothoracic vertebral joint
with interbody fusion device, posterior
approach, posterior column, percutaneous
endoscopic approach.
0RG60A1................... Fusion of thoracic vertebral joint with
interbody fusion device, posterior
approach, posterior column, open approach.
0RG63A1................... Fusion of thoracic vertebral joint with
interbody fusion device, posterior
approach, posterior column, percutaneous
approach.
0RG64A1................... Fusion of thoracic vertebral joint with
interbody fusion device, posterior
approach, posterior column, percutaneous
endoscopic approach.
0RG70A1................... Fusion of 2 to 7 thoracic vertebral joints
with interbody fusion device, posterior
approach, posterior column, open approach.
0RG73A1................... Fusion of 2 to 7 thoracic vertebral joints
with interbody fusion device, posterior
approach, posterior column, percutaneous
approach.
0RG74A1................... Fusion of 2 to 7 thoracic vertebral joints
with interbody fusion device, posterior
approach, posterior column, percutaneous
endoscopic approach.
0RG80A1................... Fusion of 8 or more thoracic vertebral
joints with interbody fusion device,
posterior approach, posterior column, open
approach.
0RG83A1................... Fusion of 8 or more thoracic vertebral
joints with interbody fusion device,
posterior approach, posterior column,
percutaneous approach.
0RG84A1................... Fusion of 8 or more thoracic vertebral
joints with interbody fusion device,
posterior approach, posterior column,
percutaneous endoscopic approach.
0RGA0A1................... Fusion of thoracolumbar vertebral joint with
interbody fusion device, posterior
approach, posterior column, open approach.
0RGA3A1................... Fusion of thoracolumbar vertebral joint with
interbody fusion device, posterior
approach, posterior column, percutaneous
approach.
0RGA4A1................... Fusion of thoracolumbar vertebral joint with
interbody fusion device, posterior
approach, posterior column, percutaneous
endoscopic approach.
0SG00A1................... Fusion of lumbar vertebral joint with
interbody fusion device, posterior
approach, posterior column, open approach.
0SG03A1................... Fusion of lumbar vertebral joint with
interbody fusion device, posterior
approach, posterior column, percutaneous
approach.
0SG04A1................... Fusion of lumbar vertebral joint with
interbody fusion device, posterior
approach, posterior column, percutaneous
endoscopic approach.
0SG10A1................... Fusion of 2 or more lumbar vertebral joints
with interbody fusion device, posterior
approach, posterior column, open approach.
0SG13A1................... Fusion of 2 or more lumbar vertebral joints
with interbody fusion device, posterior
approach, posterior column, percutaneous
approach.
0SG14A1................... Fusion of 2 or more lumbar vertebral joints
with interbody fusion device, posterior
approach, posterior column, percutaneous
endoscopic approach.
0SG30A1................... Fusion of lumbosacral joint with interbody
fusion device, posterior approach,
posterior column, open approach.
0SG33A1................... Fusion of lumbosacral joint with interbody
fusion device, posterior approach,
posterior column, percutaneous approach.
0SG34A1................... Fusion of lumbosacral joint with interbody
fusion device, posterior approach,
posterior column, percutaneous endoscopic
approach.
------------------------------------------------------------------------
In the proposed rule, we proposed to delete these 33 procedure
codes from MS-DRGs 453, 454, and 455 for FY 2018. We also noted that
some of the above listed codes also may be included in the logic for
MS-DRGs 456, 457, and 458 (Spinal Fusion Except Cervical with Spinal
Curvature or Malignancy or Infection or Extensive Fusions with MCC,
with CC or without CC/MCC, respectively), MS-DRGs 459 and 460 (Spinal
Fusion Except Cervical with MCC and without MCC, respectively), and MS-
DRGs 471, 472, and 473 (Cervical Spinal Fusion with MCC, with CC and
without CC/MCC, respectively). Therefore, we proposed to delete the 33
procedure codes from the logic for those spinal fusion MS-DRGs as well.
In addition, we proposed to delete the 33 procedure codes from the ICD-
10-PCS classification as shown in Table 6D.--Invalid Procedure Codes
associated with the proposed rule (which is available via the Internet
on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/).
In summary, we invited public comments on our proposal to move the
seven procedure codes describing spinal fusion using a nanotextured
surface interbody fusion device from the posterior spinal fusion list
to the anterior spinal fusion list in the GROUPER logic for MS-DRGs
453, 454, and 455. We also invited public comments on our proposal to
move the 149 procedure codes describing spinal fusion of the anterior
column with a posterior approach from the posterior spinal fusion list
to the anterior spinal fusion list in the GROUPER logic for MS-DRGs
453, 454, and 455. In addition, we invited public comments on our
proposal to delete the 33 procedure codes describing spinal fusion of
the posterior column with an interbody fusion device from MS-DRGs 453,
454, 455, 456, 457, 458, 459, 460, 471, 472, and 473, as well as from
the ICD-10-PCS classification.
Comment: Many commenters supported CMS' proposals related to the
combined anterior/posterior spinal fusion MS-DRGs, including (1)
support to move the seven procedure codes describing spinal fusion
using a nanotextured surface interbody fusion device from the posterior
spinal fusion list to the anterior spinal fusion list in the GROUPER
logic for MS-DRGs 453, 454, and 455; (2) support to move the 149
procedure codes describing spinal fusion of the anterior column with a
posterior approach from the posterior spinal fusion list to the
anterior spinal fusion list in the GROUPER logic for MS-DRGs 453, 454,
and 455; and (3) to delete the 33 procedure codes describing spinal
fusion of the posterior column with an interbody fusion device from MS-
DRGs 453, 454, 455, 456, 457, 458, 459, 460, 471, 472, and 473, as well
as from the ICD-10-PCS classification.
Response: We appreciate the commenters' support.
Comment: One commenter expressed concern with the proposal to move
the 149 ICD-10-PCS procedure codes describing spinal fusion of the
anterior column with a posterior approach that are currently on the
posterior spinal fusion list to the anterior spinal fusion list and
indicated that the proposed decrease in payment weights for this set of
MS-DRGs would affect providers' ability to continue treating patients
necessitating these procedures. The commenter noted that results from
an
[[Page 38036]]
independent analysis it had conducted demonstrated that reassignment of
these procedure codes and the resulting combinations for anterior/
posterior spinal fusion are less costly in comparison to other
procedure combinations assigned to MS-DRGs 453, 454 and 455. This
commenter acknowledged that ICD-10 coded claims data enable CMS to make
important clinical refinements to the ICD-10 MS-DRGs. However, the
commenter stated, the resource homogeneity of the MS-DRGs may be
adversely affected. The commenter also stated that it understood that
the greater specificity of ICD-10 codes will naturally lead to changes
in the MS-DRG weights and assignments and that these changes should
generally lead to improved payment accuracy within the IPPS. However,
the commenter pointed out that not all weight fluctuations occurring
during the early stages of the ICD-10 transition necessarily reflect
improvements in coding and payment. The commenter stated that providers
should not be subject to such disruptive fluctuations in their payments
in a single year. The commenter recommended applying a cap to the
decline in the MS-DRG payment weights relative to the FY 2017 payment
weights until the fluctuations in the number of cases and the case
weights can be determined and Medicare's utilization reflects hospital
adaptation to ICD-10 coding. The commenter stated that applying a cap
would allow CMS to move forward with the proposal to move the 149 ICD-
10-PCS spinal fusion procedure codes from the posterior spinal fusion
list to the anterior spinal fusion list.
Response: We acknowledge the commenter's concerns and appreciate
the analysis that was conducted. In response to the recommendation that
we implement a cap to the decline in the MS-DRG payment weights
relative to the FY 2017 payment weights, we refer readers to section
II.G. of the preamble of this FY 2018 IPPS/LTCH PPS final rule for
further discussion regarding recalibration of the FY 2018 MS-DRG
relative weights, including our response to comments requesting a
transition period for substantial reductions in relative weights in
order to facilitate payment stability.
We also believe it is important to be able to fully evaluate the
MS-DRGs for which all spinal fusion procedures are currently assigned
under ICD-10 with additional claims data. Therefore, in response to the
public comments received, we are planning to review the ICD-10 logic
for the MS-DRGs where procedures involving spinal fusion are currently
assigned for FY 2019.
After consideration of the public comments we received, we are
finalizing our proposal to: (1) Move the seven procedure codes
describing spinal fusion using a nanotextured surface interbody fusion
device from the posterior spinal fusion list to the anterior spinal
fusion list in the GROUPER logic for MS-DRGs 453, 454, and 455; (2)
move the 149 procedure codes describing spinal fusion of the anterior
column with a posterior approach from the posterior spinal fusion list
to the anterior spinal fusion list in the GROUPER logic for MS-DRGs
453, 454, and 455; and (3) delete the 33 procedure codes describing
spinal fusion of the posterior column with an interbody fusion device
from MS-DRGs 453, 454, 455, 456, 457, 458, 459, 460, 471, 472, and 473,
as well as from the ICD-10-PCS classification for FY 2018.
6. MDC 14 (Pregnancy, Childbirth and the Puerperium)
a. Vaginal Delivery and Complicating Diagnoses
In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56854), we noted
that the code list as displayed in the ICD-10 MS-DRG Version 33
Definitions Manual for MS-DRG 774 (Vaginal Delivery with Complicating
Diagnoses) required further analysis to clarify what constitutes a
vaginal delivery to satisfy the ICD-10 MS-DRG logic. We stated our
plans to conduct further analysis of the diagnosis code lists in MS-DRG
774 for FY 2018. We stated in the proposed rule that we believe that
the Version 34 Definitions Manual and GROUPER logic for MS-DRG 774
continues to require additional analysis to determine how best to
classify a vaginal delivery. For example, under MS-DRG 774, the
Definitions Manual currently states that three conditions must be met,
the first of which is a vaginal delivery. To satisfy this first
condition, codes that describe conditions or circumstances from among
three lists of codes must be reported. The first list is comprised of
ICD-10-CM diagnosis codes that may be reported as a principal diagnosis
or a secondary diagnosis. These diagnosis codes describe conditions in
which it is assumed that a vaginal delivery has occurred. The second
list of codes is a list of ICD-10-PCS procedure codes that also
describe circumstances in which it is assumed that a vaginal delivery
occurred. The third list of codes identifies diagnoses describing the
outcome of the delivery. Therefore, if any code from one of those three
lists is reported, the first condition (vaginal delivery) is considered
to be met for assignment to MS-DRG 774.
As discussed in the proposed rule, our continued concern with the
first list of ICD-10-CM diagnosis codes as currently displayed in the
Definitions Manual under the first condition is that not all of the
conditions necessarily reflect that a vaginal delivery occurred.
Several of the diagnosis codes listed could also reflect that a
cesarean delivery occurred. For example, ICD-10-CM diagnosis code
O10.02 (Pre-existing essential hypertension complicating childbirth)
does not specify that a vaginal delivery took place; yet it is included
in the list of conditions that may be reported as a principal diagnosis
or a secondary diagnosis in the GROUPER logic for a vaginal delivery.
The reporting of this code also could be appropriate for a delivery
that occurred by cesarean section.
As noted earlier, the second list of codes for the first condition
are comprised of ICD-10-PCS procedure codes. As we stated in the
proposed rule, while we agree that the current list of procedure codes
in MS-DRG 774 may appropriately describe that a vaginal delivery
occurred, we also believe this list could be improved and warrants
closer review.
The third list of codes for the first condition in MS-DRG 774
includes conditions describing the outcome of the delivery that would
be reported as secondary diagnoses. Similar to concerns with the first
list of codes, we believe the conditions do not necessarily reflect
that a vaginal delivery occurred because they also can be reported on
claims where a cesarean delivery occurred.
For the second condition in MS-DRG 774 to be met, diagnosis codes
that are identified as a complicating diagnosis from among two lists
may be reported. The first list is comprised of ICD-10-CM diagnosis
codes that may be reported as a principal or secondary diagnosis. The
second list is comprised of ICD-10-CM diagnosis codes that may be
reported as a secondary diagnosis. Currently, there is only one code
listed under the secondary diagnosis list. We have concerns with these
lists and what is classified as a complicating diagnosis when reviewing
the code lists for this and other MS-DRGs that use that logic in MDC
14.
For the third condition in MS-DRG 774 to be met, a limited set of
O.R. procedures, including both extensive and nonextensive procedures,
are listed. We have concerns with this third condition as being needed
to satisfy the logic for a vaginal delivery MS-DRG.
[[Page 38037]]
In summary, the MS-DRG logic involving a vaginal delivery under MDC
14 is technically complex as a result of the requirements that must be
met to satisfy assignment to the affected MS-DRGs. As discussed in the
FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19834), upon review and
discussion, our clinical advisors recommended, and we agreed, that we
should solicit public comments on further refinement to the following
four MS-DRGs related to vaginal delivery: MS-DRG 767 (Vaginal Delivery
with Sterilization and/or D&C); MS-DRG 768 (Vaginal Delivery with O.R.
Procedure Except Sterilization and/or D&C); MS-DRG 774 (Vaginal
Delivery with Complicating Diagnosis); and MS-DRG 775 (Vaginal Delivery
without Complicating Diagnosis).
In addition, our clinical advisors agreed that we should solicit
public comments on further refinement to the conditions defined as a
complicating diagnosis in MS-DRG 774 and MS-DRG 781 (Other Antepartum
Diagnoses with Medical Complications).
Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19834), we solicited public comments on which diagnosis or procedure
codes, or both, should be considered in the logic to identify a vaginal
delivery and which diagnosis codes should be considered in the logic to
identify a complicating diagnosis. As MS-DRGs 767, 768, 774, 775, and
781 incorporate one or both aspects (vaginal delivery or complicating
diagnosis), we stated that public comments that we receive from this
solicitation will be helpful in determining what proposed revisions to
the current logic should be made. We indicated that we will review
public comments received in response to this solicitation as we
continue to evaluate these areas under MDC 14 and, if warranted, we
would propose refinements for FY 2019. We requested that all comments
be directed to the CMS MS-DRG Classification Change Request Mailbox
located at: MSDRGClassificationChange@cms.hhs.gov by November 1, 2017.
Comment: Commenters agreed that the MS-DRG logic for a vaginal
delivery under MDC 14 is technically complex. One commenter stated its
intention to provide separate comments related to the solicitation in
accordance with the November 1, 2017 deadline.
Response: We thank the commenters for their acknowledgment of the
complexity with the GROUPER logic for vaginal deliveries under MDC 14
and for their support and consideration of these issues as we continue
to consider possible refinement to the logic. We will review the
comments received in response to the solicitation as we continue to
evaluate this area and, if warranted, we will propose refinements for
the FY 2019 rulemaking.
b. MS-DRG 998 (Principal Diagnosis Invalid as Discharge Diagnosis)
The logic for MS-DRG 998 (Principal Diagnosis Invalid as Discharge
Diagnosis) currently includes a list of diagnoses that are considered
inappropriate for reporting as a principal diagnosis on an inpatient
hospital claim. In other words, these conditions would reasonably be
expected not to necessitate an inpatient admission. Examples of these
diagnosis codes include what are referred to as the ``Supervision of
pregnancy'' codes, as well as pregnancy, maternal care and fetal
related codes with an ``unspecified trimester''. We refer the reader to
the ICD-10 Version 34 Definitions Manual which is available via the
Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2017-IPPS-Final-Rule-Home-Page-Items/FY2017-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending for the
complete list of diagnosis codes in MS-DRG 998 under MDC 14.
In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56840 through
56841), there was discussion regarding the supervision of ``high-risk''
pregnancy codes, including elderly primigravida and multigravida
specifically, with regard to removing them from the Unacceptable
principal diagnosis edit code list in the Medicare Code Editor (MCE).
After consultation with the staff at the CDC's NCHS, we learned that
the FY 2017 ICD-10-CM Official Guidelines for Coding and Reporting were
updated to explain appropriate coding for this set of codes. As a
result, the codes describing supervision of high-risk pregnancy (and
other supervision of pregnancy codes) remained on the Unacceptable
principal diagnosis edit code list in the MCE. Therefore, the MCE code
edit is consistent with the logic of MS-DRG 998 (Principal Diagnosis
Invalid as Discharge Diagnosis) for these supervision of pregnancy
codes.
However, as a result of our review and consultation with our
clinical advisors regarding the ``unspecified trimester'' codes in MS-
DRG 998, as discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19835), we determined that there are more appropriate MS-DRG
assignments for this set of codes. Although it may seem unlikely that a
patient would be admitted and ultimately discharged or transferred
without the caregiver or medical personnel having any further knowledge
of the exact trimester, it is conceivable that a situation may present
itself. For example, the pregnant patient may be from out of town or
unable to communicate effectively. The fact that the specific trimester
is not known or documented does not preclude the resources required to
care for the patient with the particular diagnosis.
Therefore, as shown in Table 6P.3b. associated with the proposed
rule (which is available via the Internet on the CMS Web site at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/), we proposed to remove the 314 ICD-10-CM
diagnosis codes identified with ``unspecified trimester'' from MS-DRG
998 and reassign them to the MS-DRGs in which their counterparts (first
trimester, second trimester, or third trimester) are currently assigned
as specified in Column C. We stated that this would enable more
appropriate MS-DRG assignments and payment for these cases. We invited
public comments on our proposal.
Comment: Commenters agreed with the proposal to remove the 314 ICD-
10-CM diagnosis codes identified with ``unspecified trimester'' from
MS-DRG 998 and reassign them to the MS-DRGs in which their counterparts
(first trimester, second trimester, or third trimester) are currently
assigned. However, one commenter disagreed with the proposal and noted
that lack of documentation that specifies the trimester on an inpatient
record is representative of poor documentation and should not be
acceptable for valid MS-DRG assignment. This commenter believed that
the trimester could reasonably be determined or estimated, despite the
patient's circumstances, such as being from out of town or unable to
communicate effectively.
Response: We appreciate the commenters' support. In response to the
commenter who did not support our proposal, we acknowledge that any
diagnosis involving the term ``unspecified'' in a code title can appear
to be the result of poor documentation. However, there are several
instances across the ICD-10 MS-DRG GROUPER logic where an
``unspecified'' principal diagnosis leads to a valid MS-DRG assignment
as a result of the resources and/or complexities involved regarding the
condition itself. The ``unspecified trimester'' diagnoses involved in
the proposal included significant clinical conditions such as
eclampsia, preexisting hypertensive heart disease, and cerebral venous
thrombosis, to
[[Page 38038]]
name a few. The fact that the trimester is not specified does not
preclude the significance of these conditions nor the resources
involved in caring for the patients with these conditions. Therefore,
while we encourage providers to continue to focus efforts on improving
their respective facilities medical record documentation practices, we
also believe that the MS-DRG assignment should appropriately reflect
the resources involved in evaluating and caring for these patients.
After consideration of the public comments we received, we are
finalizing our proposal to remove the 314 ICD-10-CM diagnosis codes
identified with ``unspecified trimester'' from MS-DRG 998 as shown in
Table 6P.3b. associated with this final rule (which is available via
the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/ and
reassign them to the MS-DRGs in which their counterparts (first
trimester, second trimester, or third trimester) are currently assigned
as specified in Column C, in the ICD-10 MS-DRGs Version 35, effective
October 1, 2017.
c. MS-DRG 782 (Other Antepartum Diagnoses Without Medical
Complications)
The following three ICD-10-CM diagnosis codes are currently on the
principal diagnosis list for the MS-DRG 782 (Other Antepartum Diagnoses
without Medical Complications) logic.
------------------------------------------------------------------------
ICD-10-CM code Code description
------------------------------------------------------------------------
O09.41.................... Supervision of pregnancy with grand
multiparity, first trimester.
O09.42.................... Supervision of pregnancy with grand
multiparity, second trimester.
O09.43.................... Supervision of pregnancy with grand
multiparity, third trimester.
------------------------------------------------------------------------
It was brought to our attention that these codes also are included
in the MCE Unacceptable principal diagnosis code edit list. As
discussed in section II.F.6.b. of the preamble of the FY 2018 IPPS/LTCH
PPS proposed rule, the supervision of pregnancy codes are accurately
reflected in the MCE code edit list for Unacceptable principal
diagnosis. Therefore, we stated that it is not appropriate to include
the three above listed codes in MS-DRG 782.
In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19835), we
proposed to remove the three codes describing supervision of pregnancy
from MS-DRG 782 and reassign them to MS-DRG 998 (Principal Diagnosis
Invalid as Discharge Diagnosis) to reflect a more appropriate MS-DRG
assignment. We invited public comments on our proposal.
Comment: Commenters supported the proposal to remove the three
codes (ICD-10-CM diagnosis codes O09.41, O09.42 and O09.43) describing
supervision of pregnancy and reassign them to a more appropriate MS-DRG
assignment.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to remove ICD-10-CM diagnosis codes O09.41,
O09.42 and O09.43, which describe supervision of pregnancy, from MS-DRG
782 and reassign them to MS-DRG 998 (Principal Diagnosis Invalid as
Discharge Diagnosis) in the ICD-10 MS-DRGs Version 35, effective
October 1, 2017.
d. Shock During or Following Labor and Delivery
We received a request to review ICD-10-CM diagnosis code O75.1
(Shock during or following labor and delivery), which is currently
assigned to MS-DRG 774 (Vaginal Delivery with Complicating Diagnosis),
MS-DRG 767 (Vaginal Delivery with Sterilization and/or D&C), and MS-DRG
768 (Vaginal Delivery with O.R. Procedure Except Sterilization and/or
D&C).
The requestor provided an example of a patient that delivered at
Hospital A and was transferred to Hospital B for specialized care
related to the diagnosis of shock. The claim for Hospital B resulted in
assignment to a delivery MS-DRG, despite the fact that a delivery did
not occur during that hospitalization. The requestor noted that, by not
reporting the diagnosis code for shock, the claim grouped to a
postpartum MS-DRG and recommended that we evaluate the issue further.
Our analysis initially involved reviewing the GROUPER logic for MS-
DRGs 774, 767 and 768. As discussed in section II.F.14.a. of the
preamble of the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19835
through 19836) and this final rule, the GROUPER logic for
classification and assignment to MS-DRG 774 requires that three
conditions must be met, the first of which is a vaginal delivery.
Similar GROUPER logic applies for assignment to MS-DRGs 767 and 768,
except that only two conditions must be met, with the first condition
being a vaginal delivery. For each of these three MS-DRGs, to satisfy
the first condition, one code that describes a condition or
circumstance from among the three separate lists of codes must be
reported. The first list is comprised of ICD-10-CM diagnosis codes that
may be reported as a principal or secondary diagnosis. These diagnosis
codes describe conditions in which it is assumed that a vaginal
delivery has occurred. Among this first list is ICD-10-CM diagnosis
code O75.1, which is included in the GROUPER logic for MS-DRGs 774, 767
and 768 (under the first condition-vaginal delivery). We refer readers
to the ICD-10 MS-DRG Version 34 Definitions Manual located via the
Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2017-IPPS-Final-Rule-Home-Page-Items/FY2017-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending for
documentation of the GROUPER logic associated with these MS-DRGs.
In addition, in MS-DRG 774, to satisfy the second condition,
diagnosis codes that are identified as a complicating diagnosis from
among two lists may be reported. The first list is comprised of ICD-10-
CM diagnosis codes that may be reported as a principal or secondary
diagnosis. The second list is comprised of ICD-10-CM diagnosis codes
that may be reported as a secondary diagnosis. Currently, there is only
one code listed under the secondary diagnosis list.
Next, our analysis involved reviewing the GROUPER logic for
assignment to post-partum MS-DRG 769 (Postpartum and Post Abortion
Diagnoses with Major Procedure) and MS-DRG 776 (Postpartum and Post
Abortion Diagnoses without O.R. Procedure). The GROUPER logic for these
postpartum
[[Page 38039]]
MS-DRGs requires that a principal diagnosis be reported from a list of
several conditions, such as those following pregnancy, those
complicating the puerperium, conditions that occurred during or
following delivery and conditions associated with lactation disorders.
For assignment to MS-DRG 769, the GROUPER logic also requires that a
major procedure be reported in addition to a principal diagnosis from
the list of conditions.
We stated in the proposed rule that as a result of our analysis, we
agree with the requestor that ICD-10-CM diagnosis code O75.1 should be
added to the GROUPER logic for assignment to the postpartum MS-DRGs.
This diagnosis code is consistent with other diagnosis codes structured
within the GROUPER logic for assignment to MS-DRGs 769 and 776, and
clearly represents a post-partum diagnosis with the terminology
``during or following labor and delivery'' in the title. We stated that
we believe that adding this diagnosis code to the postpartum MS-DRGs
will enable more appropriate MS-DRG assignment for cases where a
delivery did not occur.
Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19835
through 19836), we proposed the following:
Removing ICD-10-CM diagnosis code O75.1 from the list of
principal or secondary diagnosis under the first condition-vaginal
delivery GROUPER logic in MS-DRGs 774, 767, and 768;
Moving ICD-10-CM diagnosis code O75.1 from the list of
principal or secondary diagnosis under the second condition-
complicating diagnosis for MS-DRG 774 to the secondary diagnosis list
only; and
Adding ICD-10-CM diagnosis code O75.1 to the principal
diagnosis list GROUPER logic in MS-DRGs 769 and 776.
We invited public comments on our proposals.
Comment: Many commenters supported all of CMS' proposals involving
diagnosis code O75.1 and MS-DRGs 767, 768, 769, 774, and 776.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing the following in the ICD-10 MS-DRGs Version 35, effective
October 1, 2017:
Removing ICD-10-CM diagnosis code O75.1 from the list of
principal or secondary diagnosis under the first condition-vaginal
delivery GROUPER logic in MS-DRGs 774, 767, and 768;
Moving ICD-10-CM diagnosis code O75.1 from the list of
principal or secondary diagnosis under the second condition-
complicating diagnosis for MS-DRG 774 to the secondary diagnosis list
only; and
Adding ICD-10-CM diagnosis code O75.1 to the principal
diagnosis list GROUPER logic in MS-DRGs 769 and 776.
7. MDC 15 (Newborns and Other Neonates With Conditions Originating in
Perinatal Period): Observation and Evaluation of Newborn
We received a request to add the ICD-10-CM diagnosis codes
describing observation and evaluation of newborns for suspected
conditions that are ruled out to MS-DRG 795 (Normal Newborn). The 14
diagnosis codes describing observation and evaluation of newborn for
suspected conditions ruled out are displayed in the table below.
------------------------------------------------------------------------
ICD-10-CM code Code description
------------------------------------------------------------------------
Z05.0..................... Observation and evaluation of newborn for
suspected cardiac condition ruled out.
Z05.1..................... Observation and evaluation of newborn for
suspected infectious condition ruled out.
Z05.2..................... Observation and evaluation of newborn for
suspected neurological condition ruled out.
Z05.3..................... Observation and evaluation of newborn for
suspected respiratory condition ruled out.
Z05.41.................... Observation and evaluation of newborn for
suspected genetic condition ruled out.
Z05.42.................... Observation and evaluation of newborn for
suspected metabolic condition ruled out.
Z05.43.................... Observation and evaluation of newborn for
suspected immunologic condition ruled out.
Z05.5..................... Observation and evaluation of newborn for
suspected gastrointestinal condition ruled
out.
Z05.6..................... Observation and evaluation of newborn for
suspected genitourinary condition ruled
out.
Z05.71.................... Observation and evaluation of newborn for
suspected skin and subcutaneous tissue
condition ruled out.
Z05.72.................... Observation and evaluation of newborn for
suspected musculoskeletal condition ruled
out.
Z05.73.................... Observation and evaluation of newborn for
suspected connective tissue condition ruled
out.
Z05.8..................... Observation and evaluation of newborn for
other specified suspected condition ruled
out.
Z05.9..................... Observation and evaluation of newborn for
unspecified suspected condition ruled out.
------------------------------------------------------------------------
The requestor expressed concern that currently when one of these
ruled out. codes is added to a newborn encounter with a principal
diagnosis described by ICD-10-CM code Z38.00 (Single liveborn infant,
delivered vaginally), the case is assigned to MS-DRG 794 (Neonate with
Other Significant Problems). The requestor stated that this assignment
appears to be in error and that the assignment should instead be to MS-
DRG 795 (Normal Newborn).
As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19836), we reviewed Section I.C.16.b. of the 2017 ICD-10-CM Official
Guidelines for Coding and Reporting which includes the following
instructions for the diagnosis codes listed in the table above:
Assign a code from category Z05 (Observation and
evaluation of newborns and infants for suspected conditions ruled out.)
to identify those instances when a healthy newborn is evaluated for a
suspected condition that is determined after study not to be present.
Do not use a code from category Z05 when the patient has identified
signs or symptoms of a suspected problem; in such cases code the sign
or symptom.
A code from category Z05 may also be assigned as a
principal or first-listed code for readmissions or encounters when the
code from category Z38 code no longer applies. Codes from category Z05
are for use only for healthy newborns and infants for which no
condition after study is found to be present.
A code from category Z05 is to be used as a secondary code
after the code from category Z38, Liveborn infants according to place
of birth and type of delivery.
We stated in the proposed rule that after review of the guidelines
and discussion with our clinical advisors, we agree with the requestor
that the assignment of these codes to MS-DRG
[[Page 38040]]
794 is not accurate because the assignment incorrectly labels the
newborns as having a significant problem when the condition does not
truly exist. We stated that we and our clinical advisors also agree
that the above list of diagnosis codes should be added to MS-DRG 795.
Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19836), we
proposed to add the 14 diagnosis codes describing observation and
evaluation of newborns for suspected conditions that are ruled out
listed in the table above to the GROUPER logic for MS-DRG 795. We
invited public comments on our proposals.
Comment: Commenters supported the proposal to add the 14 diagnosis
codes describing observation and evaluation of newborn for suspected
conditions ruled out to the MS-DRG logic for normal newborn.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to add the 14 diagnosis codes describing
observation and evaluation of newborns for suspected conditions that
are ruled out listed in the table above to the GROUPER logic for MS-DRG
795 (Normal newborn) in the ICD-10 MS-DRGs Version 35, effective
October 1, 2017.
8. MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs):
Complication Codes
We received a request to examine the ICD-10-CM diagnosis codes in
the T85.8-series of codes that describe other specified complications
of internal prosthetic devices, implants and grafts, not elsewhere
classified and their respective MS-DRG assignments. According to the
requestor, the 7th character values in this series of codes impact the
MS-DRG assignment under MDC 21 (Injuries, Poisonings and Toxic Effects
of Drugs) and MDC 23 (Factors Influencing Health Status & Other
Contacts with Health Services) that have resulted in inconsistencies
(that is, shifts) between the MS-DRG assignments under Version 33 and
Version 34 of the ICD-10 MS-DRGs.
Under ICD-10-CM, diagnosis codes in the range of S00 through T88
require a 7th character value of ``A-'' initial encounter, ``D-
''subsequent encounter, or ``S-''sequela to identify if the patient is
undergoing active treatment for a condition. For complication codes,
active treatment refers to treatment for the condition described by the
code, even though it may be related to an earlier precipitating
problem.
The requestor suggested that the following list of diagnosis codes
with the 7th character ``A'' (initial encounter) may have been
inadvertently assigned to the GROUPER logic in the list of diagnoses
(Assignment of Diagnosis Codes) under MDC 23 because when one of these
diagnosis codes was reported with an O.R. procedure, the requestor
found claims grouping to MS-DRG 939, 940, or 941 (O.R. Procedures with
Diagnoses of Other Contact with Health Services with MCC, with CC and
without CC/MCC, respectively) that had previously grouped to MDC 21
under Version 33 of the ICD-10 MS-DRGs. The requestor also suggested
these codes may have been inadvertently assigned to the GROUPER logic
list of principal diagnoses for MS-DRGs 949 and 950 (Aftercare with CC/
MCC and without CC/MCC, respectively) under MDC 23 because it found
claims that grouped to these MS-DRGs (949 and 950) when one of the
following diagnosis codes was reported as a principal diagnosis that
had previously grouped to MDC 21 under Version 33 of the ICD-10 MS-
DRGs.
------------------------------------------------------------------------
ICD-10-CM diagnosis code Code description
------------------------------------------------------------------------
T85.818A.................. Embolism due to other internal prosthetic
devices, implants and grafts, initial
encounter.
T85.828A.................. Fibrosis due to other internal prosthetic
devices, implants and grafts, initial
encounter.
T85.838A.................. Hemorrhage due to other internal prosthetic
devices, implants and grafts, initial
encounter.
T85.848A.................. Pain due to other internal prosthetic
devices, implants and grafts, initial
encounter.
T85.858A.................. Stenosis due to other internal prosthetic
devices, implants and grafts, initial
encounter.
T85.868A.................. Thrombosis due to other internal prosthetic
devices, implants and grafts, initial
encounter.
T85.898A.................. Other specified complication of other
internal prosthetic devices, implants and
grafts, initial encounter.
------------------------------------------------------------------------
The requestor believed that the above list of diagnosis codes with
the 7th character ``A'' (initial encounter) would be more appropriately
assigned under MDC 21 to MS-DRGs 919, 920, and 921 (Complications of
Treatment with MCC, with CC and without CC/MCC, respectively),
according to its review of the 2017 Official Coding Guidelines for use
of the 7th character and assignment of other diagnoses of associated
complications of care. The requestor also noted that these codes were
new, effective October 1, 2016 (FY 2017), and the predecessor codes
grouped to MS-DRGs 919, 920, and 921 in MDC 21 under Version 33 of the
ICD-10 MS-DRGs in FY 2016.
In addition, the requestor suggested that the following list of
diagnosis codes with the 7th character ``D'' (subsequent encounter) may
have been inadvertently assigned to the GROUPER logic list of principal
diagnoses for MS-DRG 919, 920, or 921 in MDC 21. The requestor noted
that these codes were new, effective October 1, 2016 (FY 2017), and the
predecessor codes grouped to MS-DRGs 949 and 950 (Aftercare with CC/MCC
and without CC/MCC, respectively) in MDC 23 under Version 33 of the
ICD-10 MS-DRGs in FY 2016.
------------------------------------------------------------------------
ICD-10-CM diagnosis code Code description
------------------------------------------------------------------------
T85.810D.................. Embolism due to nervous system prosthetic
devices, implants and grafts, subsequent
encounter.
T85.820D.................. Fibrosis due to nervous system prosthetic
devices, implants and grafts, subsequent
encounter.
T85.830D.................. Hemorrhage due to nervous system prosthetic
devices, implants and grafts, subsequent
encounter.
T85.840D.................. Pain due to nervous system prosthetic
devices, implants and grafts, subsequent
encounter.
T85.850D.................. Stenosis due to nervous system prosthetic
devices, implants and grafts, subsequent
encounter.
T85.860D.................. Thrombosis due to nervous system prosthetic
devices, implants and grafts, subsequent
encounter.
T85.890D.................. Other specified complication of nervous
system prosthetic devices, implants and
grafts, subsequent encounter.
------------------------------------------------------------------------
[[Page 38041]]
The requestor also suggested that the following list of additional
diagnosis codes with the 7th character ``D'' (subsequent encounter) may
have been inadvertently assigned to the GROUPER logic list of principal
diagnoses for MS-DRGs 922 and 923 (Other Injury, Poisoning and Toxic
Effect with MCC and without MCC, respectively) also under MDC 21. The
requestor noted these codes were also new, effective October 1, 2016
(FY 2017) and that the predecessor codes grouped to MS-DRGs 949 and 950
in MDC 23 under Version 33 of the ICD-10 MS-DRGs in FY 2016.
------------------------------------------------------------------------
ICD-10-CM diagnosis code Code description
------------------------------------------------------------------------
T85.818D.................. Embolism due to other internal prosthetic
devices, implants and grafts, subsequent
encounter.
T85.828D.................. Fibrosis due to other internal prosthetic
devices, implants and grafts, subsequent
encounter.
T85.838D.................. Hemorrhage due to other internal prosthetic
devices, implants and grafts, subsequent
encounter.
T85.848D.................. Pain due to other internal prosthetic
devices, implants and grafts, subsequent
encounter.
T85.858D.................. Stenosis due to other internal prosthetic
devices, implants and grafts, subsequent
encounter.
T85.868D.................. Thrombosis due to other internal prosthetic
devices, implants and grafts, subsequent
encounter.
T85.898D.................. Other specified complication of other
internal prosthetic devices, implants and
grafts, subsequent encounter.
------------------------------------------------------------------------
The requestor believed that the lists of diagnosis codes above with
7th character ``D'' (subsequent encounter) would be more appropriately
assigned to MS-DRGs 949 and 950 under MDC 23, according to its review
of the 2017 Official Coding Guidelines for use of the 7th character and
assignment of other diagnoses of associated complications of care.
As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19837 through 19839), we ran test cases to determine if we could
duplicate the requestor's findings with regard to the shifts in MS-DRG
assignment between Version 33 and Version 34 of the ICD-10 MS-DRGs.
Results of our review were consistent with the requestor's findings. We
found that the T85.8- series of diagnosis codes with the 7th character
of ``A'' (initial encounter) and 7th character of ``D'' (subsequent
encounter) were inadvertently assigned to the incorrect MDC for Version
34 of the ICD-10 MS-DRGs, which led to inconsistencies (MS-DRG shifts)
when compared to Version 33 of the ICD-10 MS-DRGs. Our analysis also
included review of all of the diagnosis codes in the T85.8- series and
their current MDC and MS-DRG assignments, as well as review of the 2017
Official Coding Guidelines for use of the 7th character and assignment
of other diagnoses of associated complications of care. Based on the
results of our review, we agreed with the requestor's findings.
In addition, we identified the following list of diagnosis codes
with the 7th character ``S'' (sequela) that appear to have been
inadvertently assigned to MS-DRGs 949 and 950 in MDC 23 rather than MDC
21 in MS-DRGs 922 and 923 (Other Injury, Poisoning and Toxic Effect
with MCC and without MCC, respectively).
------------------------------------------------------------------------
ICD-10-CM diagnosis code Code description
------------------------------------------------------------------------
T85.810S.................. Embolism due to nervous system prosthetic
devices, implants and grafts, sequela.
T85.820S.................. Fibrosis due to nervous system prosthetic
devices, implants and grafts, sequela.
T85.830S.................. Hemorrhage due to nervous system prosthetic
devices, implants and grafts, sequela.
T85.840S.................. Pain due to nervous system prosthetic
devices, implants and grafts, sequela.
T85.850S.................. Stenosis due to nervous system prosthetic
devices, implants and grafts, sequela.
T85.860S.................. Thrombosis due to nervous system prosthetic
devices, implants and grafts, sequela.
T85.890S.................. Other specified complication of nervous
system prosthetic devices, implants and
grafts, sequela.
------------------------------------------------------------------------
In the FY 2018 IPPS/LTCH PPS proposed rule, we invited public
comment on our proposals to (1) reassign the ICD-10-CM diagnosis codes
with the 7th character ``A'' (initial encounter) from MS-DRGs 949 and
950 in MDC 23 to MS-DRGs 919, 920 and 921 in MDC 21; (2) reassign the
ICD-10-CM diagnosis codes with the 7th character ``D'' (subsequent
encounter) from MS-DRGs 919, 920, 921, 922, and 923 in MDC 21 to MS-
DRGs 949 and 950 in MDC 23; and (3) reassign the ICD-10-CM diagnosis
codes with the 7th character ``S'' (sequela) from MS-DRGs 949 and 950
in MDC 23 to MS-DRGs 922 and 923 in MDC 21 for FY 2018. The table below
displays the current Version 34 MDC and MS-DRG assignments and the
proposed Version 35 MDC and MS-DRG assignments on which we sought
public comment for the respective ICD-10-CM diagnosis codes.
----------------------------------------------------------------------------------------------------------------
Current V34 Current V34 MS- Proposed V35 Proposed V35
ICD-10-CM code Code description MDC DRG MDC MS-DRG
----------------------------------------------------------------------------------------------------------------
T85.810D................... Embolism due to 21 919, 920, 921 23 949, 950
nervous system
prosthetic
devices, implants
and grafts,
subsequent
encounter.
T85.810S................... Embolism due to 23 949, 950 21 922, 923
nervous system
prosthetic
devices, implants
and grafts,
sequela.
T85.818A................... Embolism due to 23 949, 950 21 919, 920, 921
other internal
prosthetic
devices, implants
and grafts,
initial encounter.
T85.818D................... Embolism due to 21 922, 923 23 949, 950
other internal
prosthetic
devices, implants
and grafts,
subsequent
encounter.
T85.820D................... Fibrosis due to 21 919, 920, 921 23 949, 950
nervous system
prosthetic
devices, implants
and grafts,
subsequent
encounter.
T85.820S................... Fibrosis due to 23 949, 950 21 922, 923
nervous system
prosthetic
devices, implants
and grafts,
sequela.
[[Page 38042]]
T85.828A................... Fibrosis due to 23 949, 950 21 919, 920, 921
other internal
prosthetic
devices, implants
and grafts,
initial encounter.
T85.828D................... Fibrosis due to 21 922, 923 23 949, 950
other internal
prosthetic
devices, implants
and grafts,
subsequent
encounter.
T85.830D................... Hemorrhage due to 21 919, 920, 921 23 949, 950
nervous system
prosthetic
devices, implants
and grafts,
subsequent
encounter.
T85.830S................... Hemorrhage due to 23 949, 950 21 922, 923
nervous system
prosthetic
devices, implants
and grafts,
sequela.
T85.838A................... Hemorrhage due to 23 949, 950 21 919, 920, 921
other internal
prosthetic
devices, implants
and grafts,
initial encounter.
T85.838D................... Hemorrhage due to 21 922, 923 23 949, 950
other internal
prosthetic
devices, implants
and grafts,
subsequent
encounter.
T85.840D................... Pain due to nervous 21 919, 920, 921 23 949, 950
system prosthetic
devices, implants
and grafts,
subsequent
encounter.
T85.840S................... Pain due to nervous 23 949, 950 21 922, 923
system prosthetic
devices, implants
and grafts,
sequela.
T85.848A................... Pain due to other 23 949, 950 21 919, 920, 921
internal
prosthetic
devices, implants
and grafts,
initial encounter.
T85.848D................... Pain due to other 21 922, 923 23 949, 950
internal
prosthetic
devices, implants
and grafts,
subsequent
encounter.
T85.850D................... Stenosis due to 21 919, 920, 921 23 949, 950
nervous system
prosthetic
devices, implants
and grafts,
subsequent
encounter.
T85.850S................... Stenosis due to 23 949, 950 21 922, 923
nervous system
prosthetic
devices, implants
and grafts,
sequela.
T85.858A................... Stenosis due to 23 949, 950 21 919, 920, 921
other internal
prosthetic
devices, implants
and grafts,
initial encounter.
T85.858D................... Stenosis due to 21 922, 923 23 949, 950
other internal
prosthetic
devices, implants
and grafts,
subsequent
encounter.
T85.860D................... Thrombosis due to 21 919, 920, 921 23 949, 950
nervous system
prosthetic
devices, implants
and grafts,
subsequent
encounter.
T85.860S................... Thrombosis due to 23 949, 950 21 922, 923
nervous system
prosthetic
devices, implants
and grafts,
sequela.
T85.868A................... Thrombosis due to 23 949, 950 21 919, 920, 921
other internal
prosthetic
devices, implants
and grafts,
initial encounter.
T85.868D................... Thrombosis due to 21 922, 923 23 949, 950
other internal
prosthetic
devices, implants
and grafts,
subsequent
encounter.
T85.890D................... Other specified 21 919, 920, 921 23 949, 950
complication of
nervous system
prosthetic
devices, implants
and grafts,
subsequent
encounter.
T85.890S................... Other specified 23 949, 950 21 922, 923
complication of
nervous system
prosthetic
devices, implants
and grafts,
sequela.
T85.898A................... Other specified 23 949, 950 21 919, 920, 921
complication of
other internal
prosthetic
devices, implants
and grafts,
initial encounter.
T85.898D................... Other specified 21 922, 923 23 949, 950
complication of
other internal
prosthetic
devices, implants
and grafts,
subsequent
encounter.
----------------------------------------------------------------------------------------------------------------
Comment: Commenters supported the proposals to (1) reassign the
ICD-10-CM diagnosis codes with the 7th character ``A'' (initial
encounter) from MS-DRGs 949 and 950 in MDC 23 to MS-DRGs 919, 920 and
921 in MDC 21; (2) reassign the ICD-10-CM diagnosis codes with the 7th
character ``D'' (subsequent encounter) from MS-DRGs 919, 920, 921, 922,
and 923 in MDC 21 to MS-DRGs 949 and 950 in MDC 23; and (3) reassign
the ICD-10-CM diagnosis codes with the 7th character ``S'' (sequela)
from MS-DRGs 949 and 950 in MDC 23 to MS-DRGs 922 and 923 in MDC 21 for
FY 2018. However, one commenter did not support the reassignment of
ICD-10-CM diagnosis codes with the 7th character ``S'' (sequela) from
MS-DRGs 949 and 950 in MDC 23 to MS-DRGs 922 and 923 in MDC 21. This
commenter agreed that the codes with the 7th character ``S'' should not
be assigned to MS-DRGs 949 and 950. However, the commenter disagreed
with the proposed reassignment to MS-DRGs 922 and 923 and referenced
language from the FY 2017 ICD-10-CM Official Guidelines for Coding and
Reporting under Section I.B.10. Sequela (Late Effects) which states:
``A sequela is the residual effect (condition produced) after the acute
phase of an illness or injury has terminated. The condition or nature
of the sequela is sequenced first. The sequela code is sequenced
second.'' According to the commenter, sequela cases are appropriately
classified to the MS-DRGs corresponding to the reported residual
condition rather than MS-DRGs 922 and 923 or MS-DRGs 949 and 950.
Response: We appreciate the support of the commenters on our
proposals. In response to the commenter who did not agree with the
reassignment of ICD-10-CM diagnosis codes with the 7th character ``S''
(sequela) from MS-DRGs 949 and 950 in MDC 23 to MS-DRGs 922 and 923 in
MDC 21, we note that the proposal for the ICD-10-CM diagnosis codes
with the 7th character ``S'' (sequela) is consistent with the
assignments under Version 33 of the ICD-10 MS-DRGs from which their
respective predecessor codes were derived. For example, under Version
33 of the ICD-10 MS-DRGs, ICD-10-CM diagnosis code T85.81XS (Embolism
due to internal prosthetic devices, implants and grafts, not elsewhere
[[Page 38043]]
classified, sequela) was assigned to MDC 21 under MS-DRGs 922 and 923.
Similar to the inadvertent errors in MDC and MS-DRG assignments that
occurred with the ICD-10-CM diagnosis codes involving 7th characters
``A'' (initial encounter) and ``D'' (subsequent encounter) from Version
33 to Version 34 of the ICD-10 MS-DRGs, the ICD-10-CM diagnosis codes
involving 7th character ``S'' were also inadvertently assigned to the
incorrect MDC and MS-DRGs under Version 34 of the ICD-10 MS-DRGs.
Therefore, the proposal is consistent for all the 7th characters. In
addition, while the commenter disagreed with our proposed MDC and MS-
DRG assignments, the commenter did not offer suggestions on alternative
assignments.
After consideration of the public comments we received, we are
finalizing our proposals as set forth in the FY 2018 IPPS/LTCH PPS
proposed rule for the complication codes discussed above in the ICD-10
MS-DRGs Version 35, effective October 1, 2017.
9. MDC 23 (Factors Influencing Health Status and Other Contacts With
Health Services): Updates to MS-DRGs 945 and 946 (Rehabilitation With
CC/MCC and Without CC/MCC, Respectively)
In FY 2016, we received requests to modify the MS-DRG assignment
for MS-DRGs 945 and 946 (Rehabilitation with CC/MCC and without CC/MCC,
respectively). This issue was addressed in the FY 2017 IPPS/LTCH PPS
proposed and final rules (81 FR 24998 through 25000 and 81 FR 56826
through 56831). For FY 2017, we did not change the MS-DRG assignments
for MS-DRGs 945 and 946.
We did not receive a request to address this issue as part of the
FY 2018 IPPS/LTCH PPS proposed rule or suggestions on how to update the
MS-DRGs 945 and 946 logic. However, we did refer the FY 2016 requests
for a new ICD-10-CM diagnosis code to the Centers for Disease Control
and Prevention (CDC) for consideration at a future meeting of the ICD-
10 Coordination and Maintenance Committee. CDC has the lead on updating
and maintaining ICD-10-CM codes. CDC did not address the issue at the
September 13-14, 2016 ICD-10 Coordination and Maintenance Committee
meeting. When the topic was not addressed at the September 13-14, 2016
ICD-10 Coordination and Maintenance Committee meeting, we asked CDC to
address the code request at the March 7-8, 2017 meeting of the ICD-10
Coordination and Maintenance Committee. The topic was on the agenda for
the March 7-8, 2017 ICD-10 Coordination and Maintenance Committee
meeting. The deadline for providing comments on proposals considered at
this meeting was April 7, 2017. Any new codes approved after this
meeting which will be implemented on October 1, 2017 were posted on the
CMS Web site at: https://www.cms.gov/Medicare/Coding/ICD10/
and on the CDC Web site at: https://www.cdc.gov/nchs/icd/icd10.html in
June 2017. New codes also are included in Table 6A associated with this
FY 2018 IPPS/LTCH PPS final rule (which is available via the Internet
on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/).
As addressed in the FY 2017 IPPS/LTCH PPS final rule, the ICD-9-CM
MS-DRGs used ICD-9-CM codes reported as the principal diagnosis that
clearly identified an encounter for rehabilitation services, such as
diagnosis codes V57.89 (Care involving other specified rehabilitation
procedure) and V57.9 (Care involving unspecified rehabilitation
procedure), and these codes were not included in ICD-10-CM. Given this
lack of ICD-10-CM codes to indicate that the reason for the encounter
was for rehabilitation, the ICD-10 MS-DRG logic could not reflect the
logic of the ICD-9-CM MS-DRGs. Commenters on the final rule recommended
that CDC create new diagnosis codes for these concepts in ICD-10-CM so
that the MS-DRG logic could be updated to more closely reflect that of
the ICD-9-CM MS-DRGs.
As we stated in the proposed rule, if new ICD-10-CM codes are
created for encounter for rehabilitation services, we would address any
updates to MS-DRGs 945 and 946 utilizing these new codes in future
rulemaking. In the meantime, we welcome other specific recommendations
on how to update MS-DRGs 945 and 946. We are sharing the following data
on these MS-DRGs from the MedPAR file.
----------------------------------------------------------------------------------------------------------------
Number of Average length
FY 2015 MS-DRGs with ICD-9-CM codes cases of stay Average cost
----------------------------------------------------------------------------------------------------------------
MS-DRG 945...................................................... 3,991 10.3 $8,242
MS-DRG 946...................................................... 1,184 8.0 7,322
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Number of Average length
FY 2016 MS-DRGs with ICD-10-CM codes cases of stay Average cost
----------------------------------------------------------------------------------------------------------------
MS-DRG 945...................................................... 671 10.8 $7,814
MS-DRG 946...................................................... 157 7.3 7,672
----------------------------------------------------------------------------------------------------------------
As shown by the tables above, there was a decrease of 3,320 MS-DRG
945 cases (from 3,991 to 671) from FY 2015, when claims were submitted
with ICD-9-CM codes, to FY 2016 when ICD-10 codes were submitted. There
was a decrease of 1,027 MS-DRG 946 cases (from 1,184 to 157) from FY
2015 to FY 2016. The average length of stay increased 0.5 days (from
10.3 to 10.8 days) for MS-DRG 945 and decreased 0.7 days (from 8.0 to
7.3 days) for MS-DRG 946. The average costs decreased by $428 (from
$8,242 to $7,814) for MS-DRG 945 cases and increased by $350 (from
$7,322 to $7,672) for MS-DRG 946 cases. The number of cases was
significantly lower in FY 2016 compared to FY 2015. However, the
difference in average length of stay and average costs did not show
large changes.
As discussed in the FY 2018 IPPS/LTCH PPS proposed rule, we also
examined possible MS-DRGs where these cases may have been assigned in
FY 2016 based on increases in the number of claims. Because there is
not a diagnosis code that could be reported as a principal diagnosis,
which would indicate if the admissions were for rehabilitation
services, we are unable to determine if these were cases admitted for
rehabilitation that moved from MS-DRGs 945 and 946 because of the lack
of a code for encounter for rehabilitation, or if there was simply a
change in the number of cases. The following tables show our findings
for MS-DRG 056 (Degenerative Nervous System Disorders with MCC); MS-DRG
057 (Degenerative Nervous System
[[Page 38044]]
Disorders without MCC); MS-DRG 079 (Hypertensive Encephalopathy without
CC/MCC); MS DRG 083 (Traumatic Stupor & Coma, Coma >1 Hour with CC);
MS-DRG 084 (Traumatic Stupor & Coma, Coma >1 Hour without CC/MCC); MS-
DRG 092 (Other Disorders of Nervous System with MCC); and MS-DRG 093
(Other Disorders of Nervous System without CC/MCC).
----------------------------------------------------------------------------------------------------------------
Number of Average length
FY 2015 MS-DRGs with ICD-9-CM codes cases of stay Average cost
----------------------------------------------------------------------------------------------------------------
MS-DRG 056...................................................... 9,548 7.3 $12,606
MS-DRG 057...................................................... 25,652 5.1 7,918
MS-DRG 079...................................................... 618 2.7 5,212
MS-DRG 083...................................................... 2,516 4.3 9,446
MS-DRG 084...................................................... 1,955 2.8 6,824
MS-DRG 092...................................................... 12,643 5.7 11,158
MS-DRG 093...................................................... 7,928 2.8 5,182
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Number of Average length
FY 2016 MS-DRGs with ICD-10-CM codes cases of stay Average cost
----------------------------------------------------------------------------------------------------------------
MS-DRG 056...................................................... 10,817 7.6 $12,930
MS-DRG 057...................................................... 28,336 5.3 7,902
MS-DRG 079...................................................... 1,233 2.7 5,579
MS-DRG 083...................................................... 4,058 6.2 9,134
MS-DRG 084...................................................... 3,016 2.7 6,508
MS-DRG 092...................................................... 19,392 3.9 6,706
MS-DRG 093...................................................... 8,120 2.7 5,253
----------------------------------------------------------------------------------------------------------------
As shown by the tables above, some of the MS-DRGs that show the
largest increase in number of cases do not show significant changes in
the average length of stay or average costs. For instance, MS-DRG 079
cases doubled from FY 2015 to FY 2016 (from 618 to 1,233). However, the
average length of stay did not change from 2.7 days and the average
costs increased only $367 (from $5,212 to $5,579). MS-DRG 083 cases
increased by 1,542 (from 2,516 to 4,058) with a 1.9 day increase in the
average length of stay (from 4.3 to 6.2 days); however, the average
costs decreased only $312 (from $9,446 to $9,134). There were large
changes for MS-DRG 092 with cases increasing by 6,749 (from 12,643 to
19,392), the average length of stay decreasing by 1.8 days (from 5.7 to
3.9) and the average costs decreasing by $4,452 (from $11,158 to
$6,706). Once again, it is not possible to determine if any changes are
a result of the impact of not having a code for the encounter for
rehabilitation services to report as a principal diagnosis, or if other
factors such as changes in types of patient admissions were involved.
Given the lack of a diagnosis code to capture the principal
diagnosis of encounter for rehabilitation, we stated in the FY 2018
proposed rule that we were unable to update MS-DRG 945 or MS-DRG 946 to
better identify those cases in which patients are admitted for
rehabilitation services. If the CDC creates a new code, we will
consider proposing updates to MS-DRGs 945 and 946 in the future.
We invited public comments on our proposal not to update MS-DRGs
945 and 946 for FY 2018.
Comment: Several commenters acknowledged that CMS' analysis
indicates that there was a decrease in the number of cases reported in
MS-DRG 945 and 946 from FY 2015 to FY 2016 and there was an increase in
average length of stay for MS-DRG 945 and a decrease in average length
of stay for MS-DRG 946 from FY 2015 to FY 2016. The commenters stated
that, without an ICD-10-CM diagnosis code to capture encounters for
rehabilitation therapy, it was not possible to identify any specific
shifts in these cases. The commenters stated that they had written to
CDC to support the creation of a new diagnosis code to capture these
admissions after the topic was presented at the March 7-8, 2017 ICD-10
Coordination and Maintenance Committee meeting. The commenters stated
that if CDC creates a new ICD-10-CM code for encounters for
rehabilitation therapy, it recommended that CMS propose adding the new
code as part of the MS-DRG logic for MS-DRGs 945 and 946 as part of the
FY 2019 IPPS/LTCH PPS proposed rule. The commenters stated that if CDC
decides not to create a new ICD-10-CM code for encounters for
rehabilitation therapy, CMS should consider assembling a technical
advisory panel made up of stakeholders, such as rehabilitation
providers and other representation, to conduct an evaluation of this
issue and recommend options to improve the MS-DRG logic and changes
that could be proposed as part of future rulemaking.
Response: We agree with the commenters that without a specific ICD-
10-CM code for encounters for rehabilitation therapy, it is not
possible to identify any specific shifts in these cases. If the CDC
creates a new code effective October 1, 2018, we will evaluate
potential updates to the MS-DRGs utilizing this new code as part of the
FY 2019 IPPS/LTCH PPS proposed rule. If the CDC decides not to create a
new code, we welcome recommendations from the public on how the MS-DRG
logic could be updated to better capture patients within MS-DRGs 945
and 946.
After consideration of the public comments that we received, we are
finalizing our proposal not to update MS-DRGs 945 and 946 for FY 2018.
10. Changes to the Medicare Code Editor (MCE)
The Medicare Code Editor (MCE) is a software program that detects
and reports errors in the coding of Medicare claims data. Patient
diagnoses, procedure(s), and demographic information are entered into
the Medicare claims processing systems and are subjected to a series of
automated screens. The MCE screens are designed to identify cases that
require further review before classification into an MS-DRG.
As discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56831
through 56844), we made available the FY 2017 ICD-10 MCE Version 34
manual file and an ICD-9-CM MCE
[[Page 38045]]
Version 34.0A manual file (for analysis purposes only). The links to
these MCE manual files, along with the links to purchase the mainframe
and computer software for the MCE Version 34 (and ICD-10 MS-DRGs) are
posted on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/ through the FY
2017 IPPS Final Rule Home Page.
In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19840 through
19846), we addressed the MCE requests we received by the December 7,
2016 deadline. We also discussed the proposals we made based on our
internal review and analysis. In addition, as a result of new and
modified code updates approved after the annual spring ICD-10
Coordination and Maintenance Committee meeting, we routinely make
changes to the MCE. In the past, in both the IPPS proposed and final
rules, we have only provided the list of changes to the MCE that were
brought to our attention after the prior year's final rule. We
historically have not listed the changes we have made to the MCE as a
result of the new and modified codes approved after the annual spring
ICD-10 Coordination and Maintenance Committee meeting. These changes
are approved too late in the rulemaking schedule for inclusion in the
proposed rule. Furthermore, although our MCE policies have been
described in our proposed and final rules, we have not provided the
detail of each new or modified diagnosis and procedure code edit in the
final rule. However, we make available the finalized Definitions of
Medicare Code Edits (MCE) file. Therefore, we have made available the
FY 2018 ICD-10 MCE Version 35 manual file. The link to this MCE manual
file, along with the link to the mainframe and computer software for
the MCE Version 35 (and ICD-10 MS-DRGs) are posted on the CMS Web site
at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/ through the FY 2018 IPPS Final Rule Home
Page.
a. Age Conflict Edit
In the MCE, the Age Conflict edit exists to detect inconsistencies
between a patient's age and any diagnosis on the patient's record; for
example, a 5-year-old patient with benign prostatic hypertrophy or a
78-year-old patient coded with a delivery. In these cases, the
diagnosis is clinically and virtually impossible for a patient of the
stated age. Therefore, either the diagnosis or the age is presumed to
be incorrect. Currently, in the MCE, the following four age diagnosis
categories appear under the Age Conflict edit and are listed in the
manual and written in the software program:
Perinatal/Newborn--Age of 0 years only; a subset of
diagnoses which will only occur during the perinatal or newborn period
of age 0 (for example, tetanus neonatorum, health examination for
newborn under 8 days old).
Pediatric--Age is 0 to 17 years inclusive (for example,
Reye's syndrome, routine child health examination).
Maternity--Age range is 12 to 55 years inclusive (for
example, diabetes in pregnancy, antepartum pulmonary complication).
Adult--Age range is 15 to 124 years inclusive (for
example, senile delirium, mature cataract).
We received a request to provide clarification regarding the
overlapping age ranges (0 to 17 years and 15 to 124 years) in the
Pediatric and Adult categories under the Age Conflict edit. The
requestor questioned which diagnosis code would be most appropriate to
identify when a general or routine health examination is performed on
patients who are within the age range of 15 to 17 years. The specific
ICD-10-CM diagnosis codes that the requestor inquired about related to
a child or to an adult encounter for a health examination are displayed
in the table below.
------------------------------------------------------------------------
ICD-10-CM code Code description
------------------------------------------------------------------------
Z00.00.................... Encounter for general adult medical
examination without abnormal findings.
Z00.01.................... Encounter for general adult medical
examination with abnormal findings.
Z00.121................... Encounter for routine child health
examination with abnormal findings.
Z00.129................... Encounter for routine child health
examination without abnormal findings.
------------------------------------------------------------------------
The age ranges defined within the Age Conflict edits were
established with the implementation of the IPPS. The adult age range
includes the minimum age of 15 years for those patients who are
declared emancipated minors. We note that, historically, we have not
provided coding advice in rulemaking with respect to policy. We
collaborate with the American Hospital Association (AHA) through the
Coding Clinic for ICD-10-CM and ICD-10-PCS to promote proper coding. We
recommend that the requestor and other interested parties submit any
questions pertaining to correct coding practices for this specific
issue to the AHA.
Comment: Some commenters believe that CMS is responsible for
addressing questions relating to the pediatric and adult age ranges in
the Age Conflict edit. Other commenters stated that, while the Coding
Clinic for ICD-10-CM and ICD-10-PCS addresses proper coding, it cannot
address issues related to payer-specific edits or definitions.
Response: We believe there is some confusion with regard to the
issue presented in the FY 2018 IPPS/LTCH PPS proposed rule pertaining
to the Age Conflict edit. We specifically responded to a request that
sought clarification regarding the overlapping age ranges (0 to 17
years and 15 to 124 years) in the Pediatric and Adult categories under
the Age Conflict edit. We responded that the age ranges defined within
the Age Conflict edits were established with the implementation of the
IPPS and noted that the adult age range includes the minimum age of 15
years for those patients who are declared emancipated minors.
Therefore, we fully responded to the request that we clarify the Age
ranges in the MCE. However, in addition to the request regarding the
overlapping age ranges in the Age Conflict edit, the requester
specifically asked for coding advice. As noted earlier, ``The requester
questioned which diagnosis code would be most appropriate to identify
when a general or routine health examination is performed on patients
who are within the age range of 15 to 17 years.'' We provided the
specific ICD-10-CM diagnosis codes that the requestor inquired about
related to a child or to an adult encounter for a health examination as
displayed in the table above. The statement recommending that the
requester and other interested parties submit questions pertaining to
correct coding practices for this specific issue to the AHA was with
regard to reporting the most appropriate diagnosis code based on the
clarification provided regarding the Age Conflict edit. As stated in
the FY 2018 IPPS/LTCH PPS proposed rule, we have not provided coding
advice in rulemaking with respect to policy. Accordingly, any
[[Page 38046]]
questions regarding which diagnosis code would be most appropriate to
report when a general or routine health examination is performed on
patients who are within the age range of 15 to 17 years would be best
addressed by the Coding Clinic.
(1) Perinatal/Newborn Diagnosis Category
Under the ICD-10 MCE, the Perinatal/Newborn Diagnosis category
under the Age Conflict edit considers the age of 0 years only; a subset
of diagnoses which will only occur during the perinatal or newborn
period of age 0 to be inclusive. This includes conditions that have
their origin in the fetal or perinatal period (before birth through the
first 28 days after birth) even if morbidity occurs later. For that
reason, the diagnosis codes on this Age Conflict edit list would be
expected to apply to conditions or disorders specific to that age group
only.
In the ICD-10-CM classification, there are two diagnosis codes that
describe conditions as occurring during infancy and the neonatal period
that are currently not on the Perinatal/Newborn Diagnosis category edit
code list. We consulted with staff at the Centers for Disease Control's
(CDC's) National Center for Health Statistics (NCHS) because NCHS has
the lead responsibility for the ICD-10-CM diagnosis codes. The NCHS'
staff confirmed that, although diagnosis codes D80.7 (Transient
hypogammaglobulinemia of infancy) and diagnosis code E71.511 (Neonatal
adrenoleukodystrophy) do occur during infancy and the neonatal period,
both conditions can last beyond the 28-day timeframe which is used to
define the perinatal/newborn period. These diagnosis codes are not
intended to be restricted for assignment to newborn patients.
Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19841), we
proposed to not add these two diagnosis codes to the Perinatal/Newborn
Diagnosis category under the Age Conflict edit. We invited public
comments on our proposal.
Comment: Commenters agreed that ICD-10-CM diagnosis codes D80.7 and
E71.511 should not be added to the Perinatal/Newborn Diagnosis category
under the Age Conflict edit.
Response: We appreciate the commenters' support.
After consideration of the public comments that we received, we are
finalizing our proposal to not add diagnosis code D80.7 (Transient
hypogammaglobulinemia of infancy) and diagnosis code E71.511 (Neonatal
adrenoleukodystrophy) to the Perinatal/Newborn Diagnosis category under
the Age Conflict edit.
(2) Pediatric Diagnosis Category
Under the ICD-10 MCE, the Pediatric diagnosis category under the
Age Conflict edit considers the age range of 0 to 17 years inclusive.
For that reason, the diagnosis codes on this Age Conflict edit list
would be expected to apply to conditions or disorders specific to that
age group only.
The ICD-10-CM diagnosis code list for the Pediatric diagnosis
category under the Age Conflict edit currently includes a diagnosis
code pertaining to dandruff that is not intended to apply to pediatric
patients only. We consulted with staff at the Centers for Disease
Control's (CDC's) National Center for Health Statistics (NCHS) because
NCHS has the lead responsibility for the ICD-10-CM diagnosis codes. The
NCHS' staff confirmed that, although diagnosis code L21.0 (Seborrhea
capitis) has an inclusion term of ``Cradle cap,'' the description of
the diagnosis code is not intended to be restricted for assignment of
pediatric patients. Therefore, in the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 19841), we proposed to remove diagnosis code L21.0 from the
list of diagnosis codes for the Pediatric diagnosis category under the
Age Conflict edit. We invited public comments on our proposal.
Comment: Commenters agreed that diagnosis code L21.0 should be
removed from the list of diagnosis codes for the Pediatric diagnosis
category under the Age Conflict edit.
Response: We appreciate the commenters support.
After consideration of the public comments that we received, we are
finalizing our proposal to remove diagnosis code L21.0 (Seborrhea
capitis) from the Pediatric diagnosis category under the Age Conflict
edit in the ICD-10 MCE Version 35, effective October 1, 2017.
(3) Maternity Diagnoses
Under the ICD-10 MCE, the Maternity diagnosis category under the
Age Conflict edit considers the age range of 12 to 55 years inclusive.
For that reason, the ICD-10-CM diagnosis codes on this Age Conflict
edit list would be expected to apply to conditions or disorders
specific to that age group only.
As discussed in section II.F.12. of the preamble of the proposed
rule and this final rule, Table 6A.--New Diagnosis Codes lists the new
ICD-10-CM diagnosis codes that have been approved to date, which will
become effective with discharges occurring on and after October 1,
2017. Included on this list are a number of diagnosis codes associated
with pregnancy and maternal care that we believe are appropriate to add
to the list of diagnosis codes for the Maternity diagnoses category
under the Age Conflict edit. We refer readers to Table 6P.1a.
associated with the FY 2018 IPPS/LTCH PPS proposed rule (which is
available via the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/)
for a review of the ICD-10-CM diagnosis codes that we proposed to add
to the Age Conflict edit list. We invited public comments on our
proposal.
Comment: Commenters supported the proposal to add the list of
diagnosis codes displayed in Table 6P.1a. associated with the FY 2018
IPPS/LTCH PPS proposed rule to the Maternity diagnoses category under
the Age Conflict edit. Commenters recommended that this same list of
diagnosis codes also be added to the Diagnoses for Females Only edit.
Response: We appreciate the commenters' support. We agree that the
diagnosis codes proposed to be added to the Maternity diagnoses
category under the Age Conflict edit are also appropriate to be added
to the Diagnoses for Females Only edit code list under the Sex Conflict
edit with other diagnosis codes associated with pregnancy and maternal
care.
After consideration of the public comments that we received, we are
finalizing our proposal to add the list of diagnosis codes displayed in
Table 6P.1a. associated with the FY 2018 IPPS/LTCH PPS proposed rule
and this final rule (which is available via the Internet on the CMS Web
site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) to the Maternity diagnoses category under
the Age Conflict edit and we are adding this same list of diagnosis
codes to the Diagnoses for Females Only code list under the Sex
Conflict edit, effective October 1, 2017.
b. Sex Conflict Edit
In the MCE, the Sex Conflict edit detects inconsistencies between a
patient's sex and any diagnosis or procedure on the patient's record;
for example, a male patient with cervical cancer (diagnosis) or a
female patient with a prostatectomy (procedure). In both instances, the
indicated diagnosis or the procedure conflicts with the stated sex of
the patient. Therefore, the patient's diagnosis, procedure, or sex is
presumed to be incorrect.
[[Page 38047]]
(1) Diagnoses for Males Only Edit
We received a request to review the following ICD-10-CM diagnosis
codes pertaining to conditions associated with males for possible
inclusion on the list of diagnosis codes for the Diagnoses for Males
Only edit.
------------------------------------------------------------------------
ICD-10-CM code Code description
------------------------------------------------------------------------
B37.42.................... Candidal balanitis.
N35.011................... Post-traumatic bulbous urethral stricture.
N35.012................... Post-traumatic membranous urethral
stricture.
N35.013................... Post-traumatic anterior urethral stricture.
N35.112................... Postinfective bulbous urethral stricture,
not elsewhere classified.
N35.113................... Postinfective membranous urethral stricture,
not elsewhere classified.
N35.114................... Postinfective anterior urethral stricture,
not elsewhere classified.
N99.115................... Postprocedural fossa navicularis urethral
stricture.
------------------------------------------------------------------------
As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19842), we agreed with the requestor that diagnosis code B37.42
describes a condition that is applicable only to males. Balanitis is
the inflammation of the glans (rounded head) of the penis. We also
agreed that the diagnosis codes listed above that align under
subcategory N35.01 (Post-traumatic urethral stricture, male) and
subcategory N35.11 (Postinfection urethral stricture, not elsewhere
classified, male) are appropriate to add to the list of diagnosis codes
for the Diagnoses for Males Only edit because these diagnosis codes
include specific terminology that is applicable only to males. Further,
we agreed that diagnosis code N99.115 is appropriate to add to the list
of diagnosis codes for the Diagnoses for Males Only edit because
subcategory N99.11 (Postprocedural urethral stricture, male) includes
specific terminology that is applicable to males only as well.
Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule, we proposed to
add the ICD-10-CM diagnosis codes listed in the table above to the list
of diagnosis codes for the Diagnoses for Males Only edit.
We also proposed to remove ICD-10-CM diagnosis code Q64.0
(Epispadias) from the list of diagnosis codes for the Diagnoses for
Males Only edit because this rare, congenital condition involving the
opening of the urethra can occur in both males and females.
In addition, as discussed in section II.F.12. of the preamble of
the proposed rule, Table 6A.--New Diagnosis Codes associated with the
proposed rule listed the new ICD-10-CM diagnosis codes that had been
approved to date, which will become effective with discharges occurring
on and after October 1, 2017. Included on this list are a number of
diagnosis codes associated with male body parts that we believe are
appropriate to add to the list of diagnosis codes for the Diagnoses for
Males Only category under the Sex Conflict edit. We refer readers to
Table 6P.1b. associated with the proposed rule (which is available via
the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) for a
review of the ICD-10-CM diagnosis codes that we proposed to add to the
list of diagnosis codes for the Diagnoses for Males Only category.
We invited public comments on our proposals.
Comment: Commenters supported the proposal to add the diagnosis
codes listed in the table in the proposed rule describing conditions
applicable to males to the Diagnoses for Males Only edit. Commenters
also supported the addition of new diagnosis codes associated with male
body parts as displayed in Table 6P.1b. associated with the proposed
rule to the Diagnoses for Males Only edit. In addition, commenters
supported the proposal to remove diagnosis code Q64.0 (Epispadias) from
the list of diagnosis codes for the Diagnoses for Males Only edit
because this condition can occur in both males and females.
Response: We appreciate the commenters' support.
After consideration of the public comments that we received, we are
finalizing our proposals to add the eight diagnosis codes displayed in
the table above and the new diagnosis codes associated with male body
parts as displayed in Table 6P.1b. associated with the proposed rule
and this final rule (which is available via the Internet on the CMS Web
site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) to the Diagnoses for Males Only edit,
effective October 1, 2017. We are also finalizing our proposal to
remove diagnosis code Q64.0 (Epispadias) from the list of diagnosis
codes for the Diagnoses for Males Only edit, effective October 1, 2017.
(2) Diagnoses for Females Only
We received a request to review the following ICD-10-CM diagnosis
codes for possible removal from the list of diagnosis codes for the
Diagnoses for Females Only edit.
------------------------------------------------------------------------
ICD-10-CM code Code description
------------------------------------------------------------------------
F52.6..................... Dyspareunia not due to a substance or known
physiological condition.
J84.81.................... Lymphangioleiomyomatosis.
R97.1..................... Elevated cancer antigen 125 [CA 125].
------------------------------------------------------------------------
The requestor noted that, in the ICD-10-CM classification, the term
``Dyspareunia'' (painful sexual intercourse) has specified codes for
males and females located in the Alphabetic Index to Diseases for
Reporting Physiological Dyspareunia. However, the indexing for
diagnosis code F52.6 (Dyspareunia not due to a substance or known
physiological condition) specifies that it is not due to a
physiological condition and the entry is not gender specific. According
to the requestor, while the condition is most often associated with
female sexual dysfunction, there is a subset of males who also suffer
from this condition.
[[Page 38048]]
In addition, the requestor stated that diagnosis code J84.81
(Lymphangioleiomyomatosis) describes a rare form of lung disease
believed to occur more often in patients with tuberous sclerosis
complex (TSC), a disorder due to genetic mutation. Although the
condition is described as being exclusive to women, unique cases for
men with TSC have also been reported.
Lastly, the requestor indicated that diagnosis code R97.1 (Elevated
cancer antigen 125 [CA 125]) describes the tumor marker that commonly
identifies ovarian cancer cells in women. However, the requestor stated
that high levels have also been demonstrated in men (and women) with
lung cancer as well.
As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19842 through 19843), we reviewed ICD-10-CM diagnosis codes F52.6,
J84.81, and R97.1, and we agree with the requestor that Dyspareunia,
not due to a physiological condition, can also occur in males. We also
agree that the condition of Lymphangioleiomyomatosis and Elevated CA
125 levels can be found in males. Therefore, we proposed to remove
these three diagnosis codes from the list of diagnosis codes for the
Diagnoses for Females Only edit. We invited public comments on our
proposals.
In addition, we proposed to add new diagnosis code Z40.03
(Encounter for prophylactic removal of fallopian tube(s)) to the list
of diagnosis codes for the Diagnoses for Females Only edit. Currently,
diagnosis code Z40.02 (Encounter for prophylactic removal of ovary) is
on the edit's code list; therefore, inclusion of new diagnosis code
Z40.03 would be consistent. We referred readers to Table 6A.--New
Diagnosis Codes associated with the FY 2018 IPPS/LTCH PPS proposed rule
(which is available via the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) for the list of new ICD-10-CM diagnosis
codes that had been finalized to date. We invited public comments on
our proposal.
Comment: Commenters supported the proposal to remove diagnosis
codes F52.6, J84.81, and R97.1 from the list of diagnosis codes for the
Diagnoses for Females Only edit. Commenters also supported the proposal
to add new diagnosis code Z40.03 to the list of diagnosis codes for the
Diagnoses for Females Only edit.
Response: We appreciate the commenters' support.
After consideration of the public comments that we received, we are
finalizing our proposal to remove diagnosis codes F52.6 (Dyspareunia
not due to a substance or known physiological condition), J84.81
(Lymphangioleiomyomatosis) and diagnosis code R97.1 (Elevated cancer
antigen 125 [CA 125]) from the Diagnoses for Females Only edit,
effective October 1, 2017. We are also finalizing our proposal to add
new diagnosis code Z40.03 (Encounter for prophylactic removal of
fallopian tube(s)) to the list of diagnosis codes for the Diagnoses for
Females Only edit, effective Octber 1, 2017.
c. Non-Covered Procedure Edit: Gender Reassignment Surgery
In the MCE, the Non-Covered Procedure edit identifies procedures
for which Medicare does not provide payment. Payment is not provided
due to specific criteria that are established in the National Coverage
Determination (NCD) process. We refer readers to the Web site at:
https://www.cms.gov/Medicare/Coverage/DeterminationProcess/howtorequestanNCD.html for additional information on this process. In
addition, there are procedures that would normally not be paid by
Medicare but, due to the presence of certain diagnoses, are paid.
We issued instructions on June 27, 2014, as a one-time
notification, Pub. 100-03, Transmittal 169, Change Request 8825,
effective May 30, 2014, announcing to MACs the invalidation of National
Coverage Determination (NCD) 140.3 for Transsexual Surgery. As a
result, MACs determined coverage on a case-by-case basis. The
transmittal is available via the Internet on the CMS Web site at:
https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2014-Transmittals-Items/R169NCD.html?DLPage=1&DLEntries=10&DLFilter=Transsexual&DLSort=1&DLSortDir=ascending.
It was brought to our attention that the ICD-10-PCS procedure codes
shown in the table below are currently included on the list of
procedure codes for the Non-Covered Procedure edit. As a result, when
one of these procedure codes is reported on a claim, the edit for Non-
Covered Procedure is triggered and claims are not able to process
correctly.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0W4M070................... Creation of vagina in male perineum with
autologous tissue substitute, open
approach.
0W4M0J0................... Creation of vagina in male perineum with
synthetic substitute, open approach.
0W4M0K0................... Creation of vagina in male perineum with
nonautologous tissue substitute, open
approach.
0W4M0Z0................... Creation of vagina in male perineum, open
approach.
0W4N071................... Creation of penis in female perineum with
autologous tissue substitute, open
approach.
0W4N0J1................... Creation of penis in female perineum with
synthetic substitute, open approach.
0W4N0K1................... Creation of penis in female perineum with
nonautologous tissue substitute, open
approach.
0W4N0Z1................... Creation of penis in female perineum, open
approach.
------------------------------------------------------------------------
Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19843), we proposed to remove the ICD-10-PCS procedure codes included
in the table above from the list of procedure codes for the Non-Covered
Procedure edit to help resolve claims processing issues associated with
the reporting of these procedure codes. We invited public comments on
our proposal.
Comment: Commenters agreed with the proposal to remove the ICD-10-
PCS procedure codes included in the table in the proposed rule from the
list of procedure codes under the Non-Covered Procedure edit. One
commenter who supported the proposal also requested that CMS review
current policies related to breast implant procedures for transgender
females. This commenter noted that estrogen therapy by itself does not
provide adequate growth tissue. Another commenter stated that these
gender reassignment procedures should remain noncovered as they are a
form of plastic surgery and, in principle, are not unlike elective
abortion procedures.
Response: We appreciate the commenters' support. In response to the
commenter who requested that we review current policies related to
breast implant procedures for transgender females, we recommend that
the commenter contact its local MAC for additional information because
there is
[[Page 38049]]
no national coverage determination (NCD) for this service. With regard
to the commenter who stated that the procedure codes describing gender
reassignment surgery listed in the table in the proposed rule should
remain noncovered, we note that, as mentioned earlier in this section,
NCD 140.3 for Transsexual Surgery was invalidated effective May 30,
2014, and therefore, the MACs determine coverage on a case-by-case
basis.
After consideration of the public comments we received, we are
finalizing our proposal to remove the ICD-10-PCS procedure codes
included in the table above from the list of procedure codes for the
Non-Covered Procedure edit to help resolve claims processing issues
associated with the reporting of these procedure codes.
d. Unacceptable Principal Diagnosis Edit
In the MCE, there are select codes that describe a circumstance
that influences an individual's health status, but does not actually
describe a current illness or injury. There also are codes that are not
specific manifestations but may be due to an underlying cause. These
codes are considered unacceptable as a principal diagnosis. In limited
situations, there are a few codes on the MCE Unacceptable Principal
Diagnosis edit code list that are considered ``acceptable'' when a
specified secondary diagnosis is also coded and reported on the claim.
(1) Bacterial and Viral Infectious Agents (B95 Through B97)
As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19843), we examined ICD-10-CM diagnosis codes in Chapter 1 (Certain
Infectious and Parasitic Diseases) of the Classification Manual that
fall within the range of three code categories for ``Bacterial and
Viral Infectious Agents'' (B95 through B97). The instructional note
provided at this section states that these categories are provided for
use as supplementary or additional codes to identify the infectious
agent(s) in diseases classified elsewhere. We identified 45 ICD-10-CM
diagnosis codes within the range of these code categories for
``Bacterial and Viral Infectious Agents'' (B95 through B97) that, as a
result of the instructional note, are not appropriate to report as a
principal diagnosis. In the FY 2018 IPPS/LTCH PPS proposed rule, we
proposed to add the 45 ICD-10-CM diagnosis codes shown in Table 6P.1c.
associated with the proposed rule (which is available via the Internet
on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) to the list of codes for
the Unacceptable Principal Diagnosis edit. We invited public comments
on our proposal.
Comment: Commenters supported the proposal to add the 45 ICD-10-CM
diagnosis codes shown in Table 6P.1c. associated with the proposed rule
to the list of codes for the Unacceptable Principal Diagnosis edit.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to add the 45 ICD-10-CM diagnosis codes shown
in Table 6P.1c. associated with the proposed rule and this final rule
(which is available via the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) to the list of codes for the Unacceptable
Principal Diagnosis edit, effective October 1, 2017.
(2) Mental Disorders Due to Known Physiological Conditions (F01 Through
F09)
We examined ICD-10-CM diagnosis codes in Chapter 5 (Mental and
Behavioral Disorders) of the Classification Manual that fall within the
range of nine code categories for ``Mental Disorders Due to Known
Physiological Conditions'' (F01 through F09). The instructional note
provided at this section states that this block comprises a range of
mental disorders grouped together on the basis of their having in
common a demonstrable etiology in cerebral disease, brain injury, or
other insult leading to cerebral dysfunction. The dysfunction may be
primary, as in diseases, injuries, and insults that affect the brain
directly and selectively; or secondary, as in systemic diseases and
disorders that attack the brain only as one of the multiple organs or
systems of the body that are involved.
We identified 21 ICD-10-CM diagnosis codes that fall within the
range of these code categories for ``Mental Disorders Due to Known
Physiological Conditions'' (F01 through F09). Of these nine code
categories, seven have a ``Code first the underlying physiological
condition'' note. For example, at code category F01--Vascular dementia,
the note reads, ``Code first the underlying physiological condition or
sequelae of cerebrovascular disease.'' We stated in the proposed rule
that there are a total of 19 diagnosis codes that fall under these 7
code categories with a ``Code first'' note and, therefore, are not
appropriate to report as a principal diagnosis. Therefore, in the FY
2018 IPPS/LTCH PPS proposed rule (82 FR 19843 through 19844), we
proposed to add the 19 ICD-10-CM diagnosis codes shown in Table 6P.1d.
associated with the proposed rule (which is available via the Internet
on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) to the list of codes for
the Unacceptable Principal Diagnosis edit. We invited public comments
on our proposal.
Comment: Some commenters disagreed with the proposal to add the 19
ICD-10-CM diagnosis codes shown in Table 6P.1d. associated with the
proposed rule to the list of codes for the Unacceptable Principal
Diagnosis edit. The commenters suggested that CMS consult with the NCHS
to determine if any of the codes may appropriately be sequenced as a
principal diagnosis in certain circumstances. One commenter noted it
had been informed through communications with the NCHS and AHA that,
within the ICD-10-CM classification, there are instances where some
``Code first'' notes are intended to be interpreted as ``Code first, if
applicable'' or ``Code first, if known,'' although those terms are not
explicitly stated in the instructional note. The commenter acknowledged
that while some of the diagnosis codes that were proposed to be added
to the Unacceptable Principal Diagnosis edit appear straightforward,
such as diagnosis code F04 (Amnestic disorder due to known
physiological condition), other diagnosis codes are not as clear, such
as diagnosis code F01.5 (Vascular dementia) or diagnosis code F07.81
(Postconcussional syndrome).
Response: We appreciate the commenters' review and input regarding
the proposal. We consulted with the staff at NCHS and they acknowledged
that this group of codes was modified from the original World Health
Organization (WHO) version of ICD-10. They indicated that while some
code titles do include the language ``due to known physiological
condition,'' they are evaluating these ``Code first'' instructional
notes further as they perform their annual review of the coding
guidelines and consider updates for FY 2018.
After consideration of the public comments that we received and for
the reasons described, we are not finalizing our proposal to add the 19
ICD-10-CM diagnosis codes shown in Table 6P.1d. associated with the
proposed rule to the list of codes for the Unacceptable Principal
Diagnosis edit.
[[Page 38050]]
(3) Other Obstetric Conditions, Not Elsewhere Classified (O94 Through
O9A)
We examined ICD-10-CM diagnosis codes in Chapter 15 (Pregnancy,
Childbirth and the Puerperium) of the Classification Manual that fall
within the range of four code categories for ``Other Obstetric
Conditions, Not Elsewhere Classified'' (O94 through O9A). The
instructional note provided at this section under category O94 states
that ``this category is to be used to indicate conditions in O00
through O77, O85 through O94 and O98 through O9A as the cause of late
effects. The sequelae include conditions specified as such, or as late
effects, which may occur at any time after the puerperium. Code first
condition resulting from (sequela) of complication of pregnancy,
childbirth, and the puerperium.''
We stated in the proposed rule that we identified one ICD-10-CM
diagnosis code within the range of these code categories for ``Other
Obstetric Conditions, Not Elsewhere Classified'' (O94 through O9A)
that, as a result of the instructional note, is not appropriate to
report as a principal diagnosis because that code identifies the cause
of the late effect. This ICD-10-CM diagnosis code is O94 (Sequelae of
complication of pregnancy, childbirth, and the puerperium). In the FY
2018 IPPS/LTCH PPS proposed rule (82 FR 19844), we proposed to add ICD-
10-CM diagnosis code O94 to the list of codes for the Unacceptable
Principal Diagnosis edit. We invited public comments on our proposal.
Comment: Commenters agreed with the proposal to add diagnosis code
O94 to the list of codes for the Unacceptable Principal Diagnosis edit.
Response: We appreciate the commenters' support.
After consideration of the public comments that we received, we are
finalizing our proposal to add diagnosis code O94 (Sequelae of
complication of pregnancy, childbirth, and the puerperium) to the list
of codes for the Unacceptable Principal Diagnosis edit, effective
October 1, 2017.
(4) Symptoms and Signs Involving Cognition, Perception, Emotional State
and Behavior (R40 Through R46)
We examined ICD-10-CM diagnosis codes in Chapter 18 (Symptoms,
Signs and Abnormal Findings) of the Classification Manual that fall
within the range of code categories for ``Symptoms and Signs Involving
Cognition, Perception, Emotional State and Behavior'' (R40 through
R46), specifically under code category R40--Somnolence, stupor and
coma. At subcategory R40.2--Coma, there is an instructional note, which
states ``Code first any associated: Fracture of skull (S02.-);
Intracranial injury (S06.-).'' We stated in the proposed rule that we
identified 96 ICD-10-CM diagnosis codes under this subcategory that, as
a result of the instructional note, are not appropriate to report as a
principal diagnosis. In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19844), we proposed to add the 96 ICD-10-CM diagnosis codes shown in
Table 6P.1e. associated with the proposed rule (which is available via
the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) to the
list of codes for the Unacceptable Principal Diagnosis edit. We invited
public comments on our proposal.
Comment: Commenters agreed with the proposed addition of 95 of the
96 diagnosis codes included in Table 6P.1e. associated with the
proposed rule. The commenters specifically disagreed with the proposal
to include diagnosis code R40.20 (Unspecified coma) to the Unacceptable
Principal Diagnosis edit because the term ``any'' in the instructional
note ``Code first any associated: Fracture of skull (S02.-);
Intracranial injury (S06.-)'' indicates that if there is not a
documented skull fracture or intracranial injury, then diagnosis code
R40.20 could appropriately be reported as a Principal Diagnosis.
Response: We appreciate the commenters' support to add 95 of the 96
diagnosis codes included in our proposal as shown in Table 6P.1e.
associated with the proposed rule. We agree with the commenters that
there could be circumstances in which diagnosis code R40.20 would
appropriately be reported as the principal diagnosis in the absence of
a documented fracture of skull or intracranial injury.
After consideration of the public comments we received, we are
finalizing the addition of 95 of the 96 diagnosis codes shown in Table
6P.1e. associated with the proposed rule (which is available via the
Internet on the CMS Web site) to the list of codes for the Unacceptable
Principal Diagnosis edit. For the reasons stated, we are not finalizing
the proposal to add diagnosis code R40.20 (Unspecified coma) to the
Unacceptable Principal Diagnosis edit. Table 6P.1e. associated with
this final rule (which is available via the Internet on the CMS Web
site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) sets forth the 95 diagnosis codes that we
are adding to the list of codes for the Unacceptable Principal
Diagnosis edit, consistent with our finalized policy.
(5) General Symptoms and Signs (R50 Through R69)
We examined ICD-10-CM diagnosis codes in Chapter 18 (Symptoms,
Signs and Abnormal Findings) of the Classification Manual that fall
within the range of code categories for ``General Symptoms and Signs''
(R50 through R69), specifically, at code category R65--Symptoms and
signs associated with systemic inflammation and infection. There is an
instructional note at subcategory R65.1--Systemic inflammatory response
syndrome (SIRS) of non-infectious origin, which states ``Code first
underlying condition, such as: Heatstroke (T67.0); Injury and trauma
(S00-T88).'' There is also an instructional note at subcategory R65.2--
Severe sepsis, which states ``Code first underlying infection, such
as:'' and provides a list of examples.
We identified four ICD-10-CM diagnosis codes in these subcategories
that, as a result of the instructional notes described above, are not
appropriate to report as a principal diagnosis. These four ICD-10-CM
codes are shown in the table below.
------------------------------------------------------------------------
ICD-10-CM code Code description
------------------------------------------------------------------------
R65.10.................... Systemic inflammatory response syndrome
(SIRS) of non-infectious origin without
acute organ dysfunction.
R65.11.................... Systemic inflammatory response syndrome
(SIRS) of non-infectious origin with acute
organ dysfunction.
R65.20.................... Severe sepsis without septic shock.
R65.21.................... Severe sepsis with septic shock.
------------------------------------------------------------------------
[[Page 38051]]
In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19844), we
proposed to add the four ICD-10-CM diagnosis codes shown in the table
above to the list of codes for the Unacceptable Principal Diagnosis
edit. We invited public comments on our proposal.
Comment: Commenters agreed with the proposal to add the four
diagnosis codes listed in the table in the proposed rule to the
Unacceptable Principal Diagnosis edit. However, another commenter
disagreed with adding diagnosis code R65.10 (Systemic inflammatory
response syndrome (SIRS) of non-infectious origin without acute organ
dysfunction) and diagnosis code R65.11 (Systemic inflammatory response
syndrome (SIRS) of non-infectious origin with acute organ dysfunction)
to the edit. According to the commenter, if the underlying condition is
not known, it would be appropriate to report either one of the two
codes (R65.10 and R65.11) as the principal diagnosis.
Response: We appreciate the commenters' support. We disagree with
the commenter who asserted that if the underlying condition is not
known, it would be appropriate to report either diagnosis code R65.10
or R65.11 as a principal diagnosis. The current FY 2017 ICD-10-CM
Official Guidelines for Coding and Reporting at Section 1.C.18.g.
states, ``The systemic inflammatory response syndrome (SIRS) can
develop as a result of certain non-infectious disease processes, such
as trauma, malignant neoplasm, or pancreatitis. When SIRS is documented
with a noninfectious condition, and no subsequent infection is
documented, the code for the underlying condition, such as an injury,
should be assigned, followed by code R65.10, Systemic inflammatory
response syndrome (SIRS) of non-infectious origin without acute organ
dysfunction, or code R65.11, Systemic inflammatory response syndrome
(SIRS) of non-infectious origin with acute organ dysfunction.''
Therefore, the underlying condition (for example, trauma, neoplasm,
pancreatitis, amongothers) responsible for causing the systemic
inflammatory response syndrome (SIRS) should be readily available in
the medical record documentation due to its clinical significance for
the care and treatment of the patient.
After consideration of the public comments that we received, we are
finalizing our proposal to add the four diagnosis codes shown in the
table above from code category R65 (Symptoms and signs associated with
systemic inflammation and infection) to the Unacceptable Principal
Diagnosis edit code list, effective October 1, 2017.
(6) Poisoning by, Adverse Effects of, and Underdosing of Drugs,
Medicaments and Biological Substances (T36 Through T50)
We examined ICD-10-CM diagnosis codes in Chapter 19 (Injury and
Poisoning) of the Classification Manual that fall within the range of
code categories for ``Poisoning by, Adverse Effects of and Underdosing
of Drugs, Medicaments and Biological Substances'' (T36 through T50).
The instructional note provided at this section states ``Code first,
for adverse effects, the nature of the adverse effect, such as:'' and
provides a list of examples. In addition, the FY 2017 ICD-10-CM
Official Guidelines for Coding and Reporting at Section I.C.19.e.5.c.,
state that ``Codes for underdosing should never be assigned as
principal or first-listed codes.''
We identified 996 ICD-10-CM diagnosis codes that, as a result of
the instructional note for adverse effects and the guideline for
reporting diagnosis codes for underdosing, are not appropriate to
report as a principal diagnosis. In the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 19844 through 19845), we proposed to add the 996 ICD-10-CM
diagnosis codes shown in Table 6P.1f. associated with the proposed rule
(which is available via the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) to the list of codes for the Unacceptable
Principal Diagnosis edit. We invited public comments on our proposal.
Comment: Commenters supported the proposal to add the 996 ICD-10-CM
diagnosis codes shown in Table 6P.1f. associated with the proposed rule
describing adverse effects and underdosing to the Unacceptable
Principal Diagnosis edit.
Response: We appreciate the commenters' support.
After consideration of the public comments that we received, we are
finalizing our proposal to add the 996 ICD-10-CM diagnosis codes shown
in Table 6P.1f. associated with the proposed rule and this final rule
(which is available via the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) to the list of codes for the Unacceptable
Principal Diagnosis edit code list, effective October 1, 2017.
(7) Complications of Surgical and Medical Care, Not Elsewhere
Classified (T80 Through T88)
We examined ICD-10-CM diagnosis codes in Chapter 19 (Injury and
Poisoning) of the Classification Manual that fall within the range of
code categories for ``Complications of Surgical and Medical Care, Not
Elsewhere Classified'' (T80 through T88), specifically, at code
category T81--Complications of procedures, not elsewhere classified.
There is an instructional note at subcategory T81.12x--Postprocedural
septic shock, which states, ``Code first underlying infection.''
We identified two ICD-10-CM diagnosis codes in this subcategory
that, as a result of the instructional note, are not appropriate to
report as a principal diagnosis. These two ICD-10-CM codes are shown in
the table below.
------------------------------------------------------------------------
ICD-10-CM code Code description
------------------------------------------------------------------------
T81.12XD.................. Postprocedural septic shock, subsequent
encounter.
T81.12XS.................. Postprocedural septic shock, sequela.
------------------------------------------------------------------------
In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19845), we
proposed to add the two ICD-10-CM diagnosis codes shown in the table
above to the list of codes for the Unacceptable Principal Diagnosis
edit. We invited public comments on our proposal.
Comment: Commenters supported the proposal to add the two diagnosis
codes shown in the table in the proposed rule to the Unacceptable
Principal Diagnosis edit.
Response: We appreciate the commenters' support.
After consideration of the public comments that we received, we are
finalizing our proposal to add the two diagnosis codes describing
postprocedural septic shock listed in the
[[Page 38052]]
proposed rule and above in this final rule to the list of codes for the
Unacceptable Principal Diagnosis edit, effective October 1, 2017.
(8) Persons Encountering Health Services for Examinations (Z00 Through
Z13)
We examined ICD-10-CM diagnosis codes in Chapter 21 (Factors
Influencing Health Status) of the Classification Manual that fall
within the range of code categories for ``Persons Encountering Health
Services for Examinations'' (Z00 through Z13), specifically, at code
category Z00--Encounter for general examination without complaint,
suspected or reported diagnosis. The FY 2017 ICD-10-CM Official
Guidelines for Coding and Reporting at Section I.C.21.c.16., state that
the following ICD-10-CM Z-codes/categories may only be reported as the
principal/first-listed diagnosis, except when there are multiple
encounters on the same day and the medical records for the encounters
are combined:
Z00 (Encounter for general examination without complaint,
suspected or reported diagnosis); except Z00.6 (Encounter for
examination for normal comparison and control in clinical research
program).
Therefore, we stated in the proposed rule that diagnosis code Z00.6
should not be reported as a principal/first-listed diagnosis. In the FY
2018 IPPS/LTCH PPS proposed rule (82 FR 19845), we proposed to add ICD-
10-CM diagnosis code Z00.6 to the list of codes for the Unacceptable
Principal Diagnosis edit. We invited public comments on our proposal.
Comment: Commenters did not support the proposal to add diagnosis
code Z00.6 to the list of codes for the Unacceptable Principal
Diagnosis edit. The commenters stated that, although this diagnosis
code is listed as an exception in the FY 2017 ICD-10-CM Official
Guidelines for Coding and Reporting, the code is not prohibited from
ever being reported as a principal diagnosis, rather, it is not
required to be reported as a principal diagnosis. According to the
commenters, there are circumstances when a control subject in a
clinical research program may be admitted to the hospital and diagnosis
code Z00.6 would be appropriate to report as the principal diagnosis.
One commenter also noted that while Medicare may not be the responsible
payer in these circumstances, other payers use the MCE edits, and these
edits are frequently programmed in their billing software. Therefore,
the commenter believed that including diagnosis code Z00.6 on the edit
could cause unintended coding and reporting issues.
Response: We appreciate the commenters' feedback on our proposal.
We agree that there could be circumstances where it would be
appropriate to report diagnosis code Z00.6 as the principal diagnosis.
We have noted previously (72 FR 47152) that we encourage other payers
to develop refinements to Medicare's DRG system, which includes the
Medicare code edits, consistent with their population's needs. However,
we also recognize that tother payers use the MCE edits in their
systems.
After consideration of the public comments we received and for the
reasons described, we are not finalizing our proposal to add diagnosis
code Z00.6 (Encounter for examination for normal comparison and control
in clinical research program) to the list of codes for the Unacceptable
Principal Diagnosis edit.
To address a separate issue, in the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 19845), we proposed to remove the diagnosis codes under
category Z05 (Encounter for observation and examination of newborn for
suspected diseases and conditions ruled out) from the list of codes for
the Unacceptable Principal Diagnosis edit. The FY 2017 ICD-10-CM
Official Guidelines for Coding and Reporting at Section I.C.16.b. state
the following:
Assign a code from category Z05, Observation and
evaluation of newborns and infants for suspected conditions ruled out,
to identify those instances when a healthy newborn is evaluated for a
suspected condition that is determined after study not to be present.
Do not use a code from category Z05 when the patient has identified
signs or symptoms of a suspected problem; in such cases code the sign
or symptom.
A code from category Z05 may also be assigned as a
principal or first-listed code for readmissions or encounters when the
code from category Z38 no longer applies. Codes from category Z05 are
for use only for healthy newborns and infants for which no condition
after study is found to be present.
A code from category Z05 is to be used as a secondary code
after the code from category Z38, Liveborn infants according to place
of birth and type of delivery.
Therefore, the ICD-10-CM diagnosis codes under category Z05 are
allowed to be reported as a principal diagnosis. We proposed to remove
the 14 ICD-10-CM diagnosis codes shown in the table below from the list
of codes for the Unacceptable Principal Diagnosis edit.
------------------------------------------------------------------------
ICD-10-CM code Code description
------------------------------------------------------------------------
Z05.0..................... Observation and evaluation of newborn for
suspected cardiac condition ruled out.
Z05.1..................... Observation and evaluation of newborn for
suspected infectious condition ruled out.
Z05.2..................... Observation and evaluation of newborn for
suspected neurological condition ruled out.
Z05.3..................... Observation and evaluation of newborn for
suspected respiratory condition ruled out.
Z05.41.................... Observation and evaluation of newborn for
suspected genetic condition ruled out.
Z05.42.................... Observation and evaluation of newborn for
suspected metabolic condition ruled out.
Z05.43.................... Observation and evaluation of newborn for
suspected immunologic condition ruled out.
Z05.5..................... Observation and evaluation of newborn for
suspected gastrointestinal condition ruled
out.
Z05.6..................... Observation and evaluation of newborn for
suspected genitourinary condition ruled
out.
Z05.71.................... Observation and evaluation of newborn for
suspected skin and subcutaneous tissue
condition ruled out.
Z05.72.................... Observation and evaluation of newborn for
suspected musculoskeletal condition ruled
out.
Z05.73.................... Observation and evaluation of newborn for
suspected connective tissue condition ruled
out.
Z05.8..................... Observation and evaluation of newborn for
other specified suspected condition ruled
out.
Z05.9..................... Observation and evaluation of newborn for
unspecified suspected condition ruled out.
------------------------------------------------------------------------
We invited public comments on our proposal.
Comment: Commenters agreed with the proposal to remove the 14 ICD-
10-CM diagnosis codes describing observation and evaluation of newborn
for various suspected conditions that have been ruled out as shown in
the
[[Page 38053]]
table in the proposed rule from the list of codes for the Unacceptable
Principal Diagnosis edit.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to remove the 14 ICD-10-CM diagnosis codes as
shown in the table above from the list of codes for the Unacceptable
Principal Diagnosis edit, effective October 1, 2017.
(9) Encounters for Other Specific Health Care (Z40 Through Z53)
We examined ICD-10-CM diagnosis codes in Chapter 21 (Factors
Influencing Health Status) of the Classification Manual that fall
within the range of code categories for ``Encounters for Other Specific
Health Care'' (Z40 through Z53), specifically, at code category Z52--
Donors of organs and tissues. The FY 2017 ICD-10-CM Official Guidelines
for Coding and Reporting at Section I.C.21.c.16. state that the
following Z-codes/categories may only be reported as the principal/
first-listed diagnosis, except when there are multiple encounters on
the same day and the medical records for the encounters are combined:
Z52 (Donors of organs and tissues); except Z52.9 (Donor of
unspecified organ or tissue).
Therefore, we stated in the proposed rule that ICD-10-CM diagnosis
code Z52.9 should not be reported as a principal/first-listed
diagnosis. In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19846), we
proposed to add ICD-10-CM diagnosis code Z52.9 to the list of codes for
the Unacceptable Principal Diagnosis edit. We invited public comments
on our proposal.
Comment: Commenters supported the proposal to add diagnosis code
Z52.9 to the list of codes for the Unacceptable Principal Diagnosis
edit. Commenters stated that this code is on the list of ``non-specific
Z codes'' in the FY 2017 ICD-10-CM Official Guidelines for Coding and
Reporting, indicating that this code is so nonspecific that there is
little justification for its use in the hospital inpatient setting.
However, another commenter disagreed with adding diagnosis code Z52.9
to the list of codes for the Unacceptable Principal Diagnosis edit.
Similar to the circumstances with diagnosis code Z00.6 (Encounter for
examination for normal comparison and control in clinical research
program) discussed earlier in this section, this commenter stated that
the FY 2017 ICD-10-CM Official Guidelines for Coding and Reporting does
not prohibit diagnosis code Z52.9 from ever being reported as a
principal diagnosis; rather, it is not required to be reported as a
principal diagnosis.
Response: We thank the commenters for their support and feedback.
Upon further review, we agree that, consistent with the FY 2017 ICD-10-
CM Official Guidelines for Coding and Reporting, the interpretation of
the exception for diagnosis code Z52.9 is that it does not prohibit the
code from ever being reported as a principal diagnosis; rather, the
exception is indicating that the code is not required to be reported as
a principal diagnosis.
After consideration of the public comments we received and for the
reasons described, we are not finalizing our proposal to add ICD-10-CM
diagnosis code Z52.9 to the list of codes for the Unacceptable
Principal Diagnosis edit.
(10) Persons Encountering Health Services in Other Circumstances (Z69
Through Z76)
We examined ICD-10-CM diagnosis codes in Chapter 21 (Factors
Influencing Health Status) of the Classification Manual that fall
within the range of code categories for ``Persons Encountering Health
Services in Other Circumstances'' (Z69 through Z76), specifically, at
subcategory Z71.8--Other specified counseling. Consistent with ICD-10-
CM diagnosis codes Z71.81 (Spiritual or religious counseling) and
Z71.89 (Other specified counseling), in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19846), we proposed to add new diagnosis code
Z71.82 (Exercise counseling) to the list of codes for the Unacceptable
Principal Diagnosis edit. We referred readers to Table 6A.--New
Diagnosis Codes associated with the proposed rule (which is available
via the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) for the
list of new ICD-10-CM diagnosis codes that had been finalized to date.
We invited public comments on our proposal.
Comment: Commenters supported the proposal to add new diagnosis
code Z71.82 (Exercise counseling) to the list of codes for the
Unacceptable Principal Diagnosis edit.
Response: We appreciate the commenters' support.
After consideration of the public comments that we received, we are
finalizing our proposal to add new ICD-10-CM diagnosis code Z71.82
(Exercise counseling) to the list of codes for the Unacceptable
Principal Diagnosis edit, effective October 1, 2017.
(11) Persons With Potential Health Hazards Related to Family and
Personal History and Certain Conditions Influencing Health Status (Z77
Through Z99)
We examined ICD-10-CM diagnosis codes in Chapter 21 (Factors
Influencing Health Status) of the Classification Manual that fall
within the range of code categories for ``Persons with Potential Health
Hazards Related to Family and Personal History and Certain Conditions
Influencing Health Status'' (Z77 through Z99), specifically, at code
category Z91.8--Other specified personal risk factors, not elsewhere
classified. Consistent with ICD-10-CM diagnosis codes Z91.81 (History
of falling), Z91.82 (Personal history of military deployment), and
Z91.89 (Other specified personal risk factors, not elsewhere
classified), in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19846),
we proposed to add new ICD-10-CM diagnosis codes Z91.841 (Risk for
dental caries, low), Z91.842 (Risk for dental caries, moderate),
Z91.843 (Risk for dental caries, high), and Z91.849 (Unspecified risk
for dental caries) to the list of codes for the Unacceptable Principal
Diagnosis edit. We referred readers to Table 6A.--New Diagnosis Codes
associated with the proposed rule (which is available via the Internet
on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) for the list of new ICD-
10-CM diagnosis codes that had been finalized to date. We invited
public comments on our proposal.
Comment: Commenters supported the proposal to add new diagnosis
codes in subcategory Z91.84, Risk for dental caries, to the list of
codes for the Unacceptable Principal Diagnosis edit.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to add new ICD-10-CM diagnosis codes Z91.841
(Risk for dental caries, low), Z91.842 (Risk for dental caries,
moderate), Z91.843 (Risk for dental caries, high), and Z91.849
(Unspecified risk for dental caries) to the list of codes for the
Unacceptable Principal Diagnosis edit, effective October 1, 2017.
e. Future Enhancement
Similar to our discussion in the FY 2017 IPPS/LTCH PPS final rule
(81 FR 56843 through 56844), with the implementation of ICD-10, it is
clear that there are several new concepts in the classification.
Looking ahead to the needs and uses of coded data as the data
[[Page 38054]]
continue to evolve from the reporting, collection, processing,
coverage, payment and analysis aspects, we believe the need to ensure
the accuracy of the coded data becomes increasingly significant.
The purpose of the MCE is to ensure that errors and inconsistencies
in the coded data are recognized during Medicare claims processing. As
we continue to evaluate the purpose and function of the MCE with
respect to ICD-10, we encourage public input for future discussion. As
we discussed in the FY 2017 IPPS/LTCH PPS final rule, we recognize a
need to further examine the current list of edits and the definitions
of those edits. We continue to encourage public comments on whether
there are additional concerns with the current edits, including
specific edits or language that should be removed or revised, edits
that should be combined, or new edits that should be added to assist in
detecting errors or inaccuracies in the coded data. Comments should be
directed to the MS-DRG Classification Change Mailbox located at
MSDRGClassificationChange@cms.hhs.gov by November 1, 2017 for FY 2019.
11. Changes to Surgical Hierarchies
Some inpatient stays entail multiple surgical procedures, each one
of which, occurring by itself, could result in assignment of the case
to a different MS-DRG within the MDC to which the principal diagnosis
is assigned. Therefore, it is necessary to have a decision rule within
the GROUPER by which these cases are assigned to a single MS-DRG. The
surgical hierarchy, an ordering of surgical classes from most resource-
intensive to least resource-intensive, performs that function.
Application of this hierarchy ensures that cases involving multiple
surgical procedures are assigned to the MS-DRG associated with the most
resource-intensive surgical class.
As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19846), because the relative resource intensity of surgical classes can
shift as a function of MS-DRG reclassification and recalibrations, for
FY 2018, we reviewed the surgical hierarchy of each MDC, as we have for
previous reclassifications and recalibrations, to determine if the
ordering of classes coincides with the intensity of resource
utilization.
A surgical class can be composed of one or more MS-DRGs. For
example, in MDC 11, the surgical class ``kidney transplant'' consists
of a single MS-DRG (MS-DRG 652) and the class ``major bladder
procedures'' consists of three MS-DRGs (MS-DRGs 653, 654, and 655).
Consequently, in many cases, the surgical hierarchy has an impact on
more than one MS-DRG. The methodology for determining the most
resource-intensive surgical class involves weighting the average
resources for each MS-DRG by frequency to determine the weighted
average resources for each surgical class. For example, assume surgical
class A includes MS-DRGs 001 and 002 and surgical class B includes MS-
DRGs 003, 004, and 005. Assume also that the average costs of MS-DRG
001 are higher than that of MS-DRG 003, but the average costs of MS-
DRGs 004 and 005 are higher than the average costs of MS-DRG 002. To
determine whether surgical class A should be higher or lower than
surgical class B in the surgical hierarchy, we would weigh the average
costs of each MS-DRG in the class by frequency (that is, by the number
of cases in the MS-DRG) to determine average resource consumption for
the surgical class. The surgical classes would then be ordered from the
class with the highest average resource utilization to that with the
lowest, with the exception of ``other O.R. procedures'' as discussed in
this rule.
This methodology may occasionally result in assignment of a case
involving multiple procedures to the lower-weighted MS-DRG (in the
highest, most resource-intensive surgical class) of the available
alternatives. However, given that the logic underlying the surgical
hierarchy provides that the GROUPER search for the procedure in the
most resource-intensive surgical class, in cases involving multiple
procedures, this result is sometimes unavoidable.
We note that, notwithstanding the foregoing discussion, there are a
few instances when a surgical class with a lower average cost is
ordered above a surgical class with a higher average cost. For example,
the ``other O.R. procedures'' surgical class is uniformly ordered last
in the surgical hierarchy of each MDC in which it occurs, regardless of
the fact that the average costs for the MS-DRG or MS-DRGs in that
surgical class may be higher than those for other surgical classes in
the MDC. The ``other O.R. procedures'' class is a group of procedures
that are only infrequently related to the diagnoses in the MDC, but are
still occasionally performed on patients with cases assigned to the MDC
with these diagnoses. Therefore, assignment to these surgical classes
should only occur if no other surgical class more closely related to
the diagnoses in the MDC is appropriate.
A second example occurs when the difference between the average
costs for two surgical classes is very small. We have found that small
differences generally do not warrant reordering of the hierarchy
because, as a result of reassigning cases on the basis of the hierarchy
change, the average costs are likely to shift such that the higher-
ordered surgical class has lower average costs than the class ordered
below it.
We received a request to examine a case involving the principal
procedure for excision of pituitary gland (ICD-10-PCS code 0GB00ZZ
(Excision of pituitary gland, open approach)) with a secondary
procedure for harvesting of a fat graft (ICD-10-PCS code 0JB80ZZ
(Excision of abdomen subcutaneous tissue and fascia, open approach)) to
treat a condition of pituitary adenoma (ICD-10-CM diagnosis code D35.2
(Benign neoplasm of pituitary gland)) and the resulting sella turcica
defect. The requestor noted that when the procedure code for harvesting
of the fat graft is reported on the claim, the case currently groups to
MS-DRGs 622, 623, and 624 (Skin Grafts and Wound Debridement for
Endocrine, Nutritional, and Metabolic Disorders with MCC, with CC and
without CC/MCC, respectively). However, when the procedure code for
harvesting of the fat graft is not reported on the claim, the case
groups to MS-DRGs 614 and 615 (Adrenal and Pituitary Procedures with
CC/MCC and without CC/MCC, respectively), which appears to be a more
appropriate assignment. The requester expressed concern regarding the
procedure code for harvesting of the fat graft in the secondary
position driving the MS-DRG assignment versus the principal procedure
of the excision of pituitary gland.
As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19847), we analyzed the codes provided by the requestor in the GROUPER
to determine if we could duplicate the requestor's findings. The
findings from our analysis were consistent with the requestor's
findings. Our clinical advisors reviewed this issue and agreed that it
should be the procedure code for excision of the pituitary gland that
is used to determine the MS-DRG assignment in this scenario and not the
harvesting of the fat graft procedure code.
Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule, we proposed
to move MS-DRGs 614 and 615 above MS-DRGs 622, 623, and 624 in the
surgical hierarchy to enable more appropriate MS-DRG assignment for
these types of cases.
We invited public comments on our proposal.
Comment: Commenters supported the proposal to move MS-DRGs 614 and
[[Page 38055]]
615 above MS-DRGs 622, 623, and 624 in the surgical hierarchy. Another
commenter expressed concern that the proposal to move MS-DRGs 614 and
615 above MS-DRGs 622, 623, and 624 in the surgical hierarchy was made
as the result of a single scenario and recommended that a more thorough
analysis be performed to determine the potential impact of such a
change prior to modifying existing GROUPER logic.
Response: We appreciate the commenters' support. In response to the
commenter who expressed concern that the proposal to move MS-DRGs 614
and 615 above MS-DRGs 622, 623, and 624 in the surgical hierarchy was
made as the result of a single scenario and that additional analysis
should be performed to determine potential impacts, we are unclear as
to what specific impacts the commenter is referring to and what type of
analysis the commenter is recommending. However, we did analyze claims
from the December 2016 update of the FY 2016 MedPAR file for MS-DRGs
614 and 615, as well as from MS-DRGs 622, 623 and 624, to determine the
volume of cases where procedure codes from both sets of MS-DRGs were
reported. Our findings are shown in the tables below.
MS-DRGs for Adrenal and Pituitary Procedures
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 614--All cases........................................... 1,526 5 $16,957
MS-DRG 615--All cases........................................... 1,007 2.4 10,680
----------------------------------------------------------------------------------------------------------------
MS-DRGs for Skin Grafts and Wound Debridement Procedures
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 622--All cases........................................... 1,289 10.7 $23,954
MS-DRG 623--All cases........................................... 4,423 6.3 12,522
MS-DRG 624--All cases........................................... 454 3.5 9,345
----------------------------------------------------------------------------------------------------------------
As shown in the tables above, there were a total of 1,526 cases in
MS-DRG 614 with an average length of stay of 5 days and average costs
of $16,957. There were a total of 1,007 cases in MS-DRG 615 with an
average length of stay of 2.4 days and average costs of $10,680. For
MS-DRG 622, there were a total of 1,289 cases with an average length of
stay of 10.7 days and average costs of $23,954. For MS-DRG 623, there
were a total of 4,423 cases with an average length of stay of 6.3 days
and average costs of $12,522. For MS-DRG 624, there were a total of 454
cases with an average length of stay of 3.5 days and average costs of
$9,345.
We then analyzed claims from the March 2017 update of the FY 2016
MedPAR file to determine the number of cases where a procedure code
from MS-DRG 614 or MS-DRG 615 was reported with a procedure code from
MS-DRGs 622, 623 or 624 on the same claim. Our findings are shown in
the table below.
MS-DRGs for Adrenal, Pituitary, Skin Grafts and Wound Debridement Procedures
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 614 procedures with MS-DRG 622 procedures................ 46 10.2 $12,977
MS-DRG 614 procedures with MS-DRG 623 procedures................ 240 4.4 11,540
MS-DRG 615 procedures with MS-DRG 624 procedures................ 125 2.9 14,494
----------------------------------------------------------------------------------------------------------------
As shown in the table above, there were a total of 46 cases
reporting procedures from MS-DRG 614 and 622 on the same claim with an
average length of stay of 10.15 days and average costs of $12,977.
There were a total of 240 cases reporting procedures from MS-DRG 614
and MS-DRG 623 on the same claim with an average length of stay of 4.42
days and average costs of $11,540. Lastly, there were a total of 125
cases reporting procedures from MS-DRG 615 and MS-DRG 624 on the same
claim with an average length of stay of 2.93 days and average costs of
$14,494.
We then examined the redistribution of cases that is anticipated to
occur as a result of the proposal to move MS-DRGs 614 and 615 above MS-
DRGs 622, 623, and 624 in the surgical hierarchy for Version 35 of the
ICD-10 MS-DRGs, by processing the claims data from the March update of
the FY 2016 MedPAR file through the ICD-10 MS-DRG GROUPER Version 34
and then processing the same claims data through the ICD-10 MS-DRG
GROUPER Version 35 for comparison. The number of cases from this
comparison that result in different MS-DRG assignments is the number of
the cases that are anticipated to potentially shift or be
redistributed. We found that the number of cases moving out of MS-DRG
622 and into MS-DRG 614 is approximately 46 cases, the number of cases
moving out of MS-DRG 623 and into MS-DRG 614 is approximately 240 cases
and the number of cases moving out of MS-DRG 624 and into MS-DRG 615 is
approximately 125 cases. We believe that overall, the impact of this
change is limited because the subset of cases that would be
reclassified is approximately 6.7 percent of the total cases currently
grouping to MS-DRGs 622, 623 and 624. Additionally, as shown above, in
the analysis of claims where a procedure code from MS-DRG 614 or MS-DRG
615 was reported with a procedure code from MS-DRGs 622, 623, or 624 on
the same claim, the average costs for those cases are consistent with
the average costs for all cases in MS DRGs 614 and 615.
For issues pertaining to the surgical hierarchy, as with other MS-
DRG
[[Page 38056]]
related requests, we encourage commenters to submit requests to examine
ICD-10 claims data via the CMS MS-DRG Classification Change Requests
Mailbox located at MSDRGClassificationChange@cms.hhs.gov by November 1,
2017 for FY 2019 consideration.
After consideration of the public comments we received, we are
finalizing our proposal to move MS-DRGs 614 and 615 above MS-DRGs 622,
623, and 624 in the surgical hierarchy effective October 1, 2017.
12. Changes to the MS-DRG Diagnosis Codes for FY 2018
a. Background of the CC List and the CC Exclusions List
Under the IPPS MS-DRG classification system, we have developed a
standard list of diagnoses that are considered CCs. Historically, we
developed this list using physician panels that classified each
diagnosis code based on whether the diagnosis, when present as a
secondary condition, would be considered a substantial complication or
comorbidity. A substantial complication or comorbidity was defined as a
condition that, because of its presence with a specific principal
diagnosis, would cause an increase in the length-of-stay by at least 1
day in at least 75 percent of the patients. However, depending on the
principal diagnosis of the patient, some diagnoses on the basic list of
complications and comorbidities may be excluded if they are closely
related to the principal diagnosis. In FY 2008, we evaluated each
diagnosis code to determine its impact on resource use and to determine
the most appropriate CC subclassification (non-CC, CC, or MCC)
assignment. We refer readers to sections II.D.2. and 3. of the preamble
of the FY 2008 IPPS final rule with comment period for a discussion of
the refinement of CCs in relation to the MS-DRGs we adopted for FY 2008
(72 FR 47152 through 47171).
b. Additions and Deletions to the Diagnosis Code Severity Levels for FY
2018
We stated in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19847)
that the following tables identifying the proposed additions and
deletions to the MCC severity levels list and the proposed additions
and deletions to the CC severity levels list for FY 2018 are available
via the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/.
Table 6I.1--Proposed Additions to the MCC List--FY 2018;
Table 6I.2--Proposed Deletions to the MCC List--FY 2018;
Table 6J.1--Proposed Additions to the CC List--FY 2018; and
Table 6J.2--Proposed Deletions to the CC List--FY 2018.
We invited public comments on our proposed severity level
designations for the diagnosis codes listed in Table 6I.1. and Table
6J.1. We noted that, for Table 6I.2. and Table 6J.2., the proposed
deletions were a result of code expansions. Therefore, the diagnosis
codes on these lists are no longer valid codes, effective FY 2018. For
example, diagnosis code O00.10 (Tubal pregnancy without intrauterine
pregnancy) is a current CC for FY 2017 under Version 34 of the ICD-10
MS-DRGs. Effective FY 2018, under Version 35 of the ICD-10 MS-DRGs,
this single code has been expanded into three diagnosis codes to
include laterality (left/right) and an unspecified option with the
addition of a sixth character. Therefore, diagnosis code O00.10 is
included in Table 6J.2. for deletion from the CC list because it is no
longer a valid code in FY 2018.
Comment: Commenters agreed with the proposed additions and
deletions to the MCC and CC List severity level designations for FY
2018. One commenter suggested that CMS also consider adding existing
diagnosis codes from subcategories L97.5 (Non-pressure chronic ulcer of
other part of foot) and L98.4 (Non-pressure chronic ulcer of skin, not
elsewhere classified) to the CC List. This commenter noted that new
diagnosis codes from these subcategories were proposed to be added to
the CC List. However, according to the commenter, existing codes from
these same subcategories are not currently included in the CC List even
though some of them represent a greater severity level than the new
codes that were proposed to be added to the CC List.
Response: We appreciate the commenters' support. In response to the
commenter who suggested that we consider adding existing diagnosis
codes in subcategories L97.5 and L98.4 to the CC list, we were unable
to fully evaluate this request for FY 2018 but will consider this
recommendation as part of our comprehensive review of the CC and MCC
lists. As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19848) and in the sections that follow, we have plans to conduct a
comprehensive review of the CC and MCC lists for FY 2019. Therefore, we
will be evaluating all of the ICD-10-CM diagnosis codes for this
effort.
After consideration of the public comments we received, we are
finalizing our proposed additions and deletions to the MCC severity
levels list and the proposed additions and deletions to the CC severity
levels list for FY 2018. We refer readers to the Tables 6I.1, 6I.2,
6J.1, and 6J.2 associated with this final rule, which are available via
the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/.
c. Principal Diagnosis Is Its Own CC or MCC
CMS' initial goal in developing the ICD-10 MS-DRGs was to ensure
that a patient case was assigned to the same MS-DRG, regardless of
whether the patient record was to be coded in ICD-9-CM or ICD-10. When
certain ICD-10-CM combination codes are reported as a principal
diagnosis, it implies that a CC or MCC is present. This occurs as a
result of evaluating the cluster of ICD-9-CM codes that would have been
coded on an ICD-9-CM record. If one of the ICD-9-CM codes in the
cluster was a CC or an MCC, the single ICD-10-CM combination code used
as a principal diagnosis also must imply that the CC or MCC is present.
The ICD-10-CM diagnosis codes to which this logic applies are
included in Appendix J of the ICD-10 MS-DRG Version 34 Definitions
Manual (which is available via the Internet on the CMS Web site at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2017-IPPS-Final-Rule-Home-Page-Items/FY2017-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending).
Appendix J includes two lists: Part 1 is the list of principal
diagnosis codes where the ICD-10-CM code is its own MCC. Part 2 is the
list of principal diagnosis codes where the ICD-10-CM code is its own
CC. Part 1 of Appendix J corresponds to Table 6L.--Principal Diagnosis
Is Its Own MCC List, and Part 2 of Appendix J corresponds to Table
6M.--Principal Diagnosis Is Its Own CC List.
We received a request to add the ICD-10-CM diagnosis codes for
acute myocardial infarction, decompensated heart failure and specified
forms of shock, which are currently designated as a CC or an MCC when
reported as a secondary diagnosis, to Table 6L.--Principal Diagnosis Is
Its Own MCC List. According to the requestor, the addition of these
codes to the list is necessary for bundled payment initiatives and so
that facilities that
[[Page 38057]]
accept these patients in transfer have resources to care for them.
As we stated in the proposed rule, the purpose of the Principal
Diagnosis Is Its Own CC or MCC Lists was to ensure consistent MS-DRG
assignment between the ICD-9-CM and ICD-10 MS-DRGs due to the clusters
and combination codes. There are a number of other ICD-10-CM
combination codes that, due to their prior designation as a CC or an
MCC when reported as a secondary diagnosis, are not on either of these
lists. Having multiple lists for CC and MCC diagnoses when reported as
a principal and/or secondary diagnosis may not provide an accurate
representation of resource utilization for the MS-DRGs. As discussed in
further detail below, we have plans to conduct a comprehensive review
of the CC and MCC lists for FY 2019. We believe the results of that
review will help to inform the future of these lists.
Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19848), we did not propose to add the ICD-10-CM diagnosis codes for
acute myocardial infarction, decompensated heart failure and specified
forms of shock to Table 6L.--Principal Diagnosis Is Its Own MCC List.
In addition, we did not propose any changes to Table 6L.--Principal
Diagnosis Is Its Own MCC List and Table 6M.--Principal Diagnosis Is Its
Own CC List. We invited public comments on our proposal to maintain the
existing lists of principal diagnosis codes in Tables 6L. and 6M for FY
2018.
Comment: Commenters supported the proposal to not make changes to
Table 6L and Table 6M. One commenter acknowledged that CMS is delaying
further modifications to Tables 6L. and 6M. until the severity level
(MCC and CC) analysis is performed for FY 2019. However, this commenter
requested that the proposed MS-DRG assignments for the new myocardial
infarction type 2 diagnosis codes be reviewed for more appropriate
assignments.
Response: We appreciate the commenters' support. In response to the
commenter's request that we review the proposed MS-DRG assignments for
the new myocardial infarction type 2 diagnosis codes for more
appropriate assignments, we point out that the codes identifying
myocardial infarction type 2 diagnoses were not finalized at the time
of publication of the FY 2018 IPPS/LTCH PPS proposed rule and,
therefore, were not included in Table 6A.--New Diagnosis Codes that was
associated with the proposed rule. As discussed in the section that
follows, we have made available the final tables associated with this
final rule via the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/. We refer readers to the final rule Table
6A.--New Diagnosis Codes for the MS-DRG assignments for the acute
myocardial infarction type 2 diagnosis codes for FY 2018, which are
based on our usual process of assigning new codes to their predecessor
code's MS-DRG assignment(s).
After consideration of the public comments we received, we are
maintaining the current code lists for Table 6L.--Principal Diagnosis
Is Its Own MCC and Table 6M.--Principal Diagnosis Is Its Own CC List
for FY 2018.
d. CC Exclusions List for FY 2018
In the September 1, 1987 final notice (52 FR 33143) concerning
changes to the DRG classification system, we modified the GROUPER logic
so that certain diagnoses included on the standard list of CCs would
not be considered valid CCs in combination with a particular principal
diagnosis. We created the CC Exclusions List for the following reasons:
(1) To preclude coding of CCs for closely related conditions; (2) to
preclude duplicative or inconsistent coding from being treated as CCs;
and (3) to ensure that cases are appropriately classified between the
complicated and uncomplicated DRGs in a pair. As previously indicated,
we developed a list of diagnoses, using physician panels, to include
those diagnoses that, when present as a secondary condition, would be
considered a substantial complication or comorbidity.
In previous years, we made changes to the list of CCs, either by
adding new CCs or deleting CCs already on the list.
In the May 19, 1987 proposed notice (52 FR 18877) and the September
1, 1987 final notice (52 FR 33154), we explained that the excluded
secondary diagnoses were established using the following five
principles:
Chronic and acute manifestations of the same condition
should not be considered CCs for one another;
Specific and nonspecific (that is, not otherwise specified
(NOS)) diagnosis codes for the same condition should not be considered
CCs for one another;
Codes for the same condition that cannot coexist, such as
partial/total, unilateral/bilateral, obstructed/unobstructed, and
benign/malignant, should not be considered CCs for one another;
Codes for the same condition in anatomically proximal
sites should not be considered CCs for one another; and
Closely related conditions should not be considered CCs
for one another.
The creation of the CC Exclusions List was a major project
involving hundreds of codes. We have continued to review the remaining
CCs to identify additional exclusions and to remove diagnoses from the
master list that have been shown not to meet the definition of a CC. We
refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50541
through 50544) for detailed information regarding revisions that were
made to the CC and CC Exclusion Lists under the ICD-9-CM MS-DRGs.
In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19848), for FY
2018, we proposed changes to the ICD-10 MS-DRGs Version 35 CC Exclusion
List. Therefore, we developed Table 6G.1.--Proposed Secondary Diagnosis
Order Additions to the CC Exclusions List--FY 2018; Table 6G.2.--
Proposed Principal Diagnosis Order Additions to the CC Exclusions
List--FY 2018; Table 6H.1.--Proposed Secondary Diagnosis Order
Deletions to the CC Exclusions List--FY 2018; and Table 6H.2.--Proposed
Principal Diagnosis Order Deletions to the CC Exclusions List--FY 2018.
Each of these principal diagnosis codes for which there is a CC
exclusion is shown in Table 6G.2. with an asterisk and the conditions
that will not count as a CC are provided in an indented column
immediately following the affected principal diagnosis. Beginning with
discharges on or after October 1 of each year, the indented diagnoses
are not recognized by the GROUPER as valid CCs for the asterisked
principal diagnoses. Tables 6G. and 6H. associated with the proposed
rule are available via the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/.
Comment: Commenters supported the proposed modifications to the CC
Exclusion List for FY 2018 as displayed in Table 6G.1., Table 6G.2.,
Table 6H.1., and Table 6H.2. that were associated with the proposed
rule and made available via the Internet on the CMS Web site.
Response: We appreciate the commenters' support.
We note that, for this FY 2018 IPPS/LTCH PPS final rule, we have
developed Table 6K.--Complete List of CC Exclusions. Table 6K.
corresponds to the Part 1 list of Appendix C in the ICD-10 MS-DRG
Definitions Manual as described above.
The complete documentation of the ICD-10 MS-DRG Version 35 GROUPER
logic, including the CC Exclusion List, is available via the Internet
on the CMS Acute Inpatient PPS Web page at: https://www.cms.gov/
Medicare/
[[Page 38058]]
Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/.
To identify new, revised and deleted diagnosis and procedure codes,
for FY 2018, we developed Table 6A.--New Diagnosis Codes, Table 6B.--
New Procedure Codes, Table 6C.--Invalid Diagnosis Codes, Table 6D.--
Invalid Procedure Codes, Table 6E.--Revised Diagnosis Code Titles, and
Table 6F.--Revised Procedure Code Titles for the proposed rule and this
final rule.
These tables are not published in the Addendum to the proposed rule
or the final rule but are available via the Internet on the CMS Web
site at: (https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) as described in section VI. of
the Addendum to this final rule. As discussed in section II.F.15. of
the preamble of this final rule, the code titles are adopted as part of
the ICD-10 (previously ICD-9-CM) Coordination and Maintenance Committee
process. Therefore, although we publish the code titles in the IPPS
proposed and final rules, they are not subject to comment in the
proposed or final rules. In the FY 2018 IPPS/LTCH PPS proposed rule (82
FR 19849), we invited public comments on the MDC and MS-DRG assignments
for the new diagnosis and procedure codes as set forth in Table 6A.--
New Diagnosis Codes and Table 6B.--New Procedure Codes. In addition, we
invited public comments on the proposed severity level designations for
the new diagnosis codes as set forth in Table 6A. and the proposed O.R.
status for the new procedure codes as set forth in Table 6B.
Comment: One commenter disagreed with the addition of new ICD-10-CM
diagnosis code R06.03 (Acute respiratory distress) as displayed in
Table 6A.--New Diagnosis Codes associated with the FY 2018 IPPS/LTCH
PPS proposed rule, stating that the terminology for this code title is
outdated. The commenter stated that physician documentation generally
supports either Acute Respiratory Distress Syndrome (ARDS) or Acute
Respiratory Failure (ARF). The commenter requested that new diagnosis
codes be created to avoid confusion and to support appropriate
physician documentation.
Response: As noted earlier and discussed in section II.F.15. of the
preamble of this final rule, the code titles are adopted as part of the
ICD-10 (previously ICD-9-CM) Coordination and Maintenance Committee
process. Therefore, although we publish the code titles in the IPPS
proposed and final rules, they are not subject to comment in the
proposed or final rules. We also note that the condition of ARDS is
identified by ICD-10-CM diagnosis code J80 (Acute respiratory distress
syndrome) and ARF is identified in ICD-10-CM subcategory J96.0 (Acute
respiratory failure). Therefore, it is not necessary to submit a
request for new diagnosis codes to the ICD-10 Coordination and
Maintenance Committee.
Comment: Several commenters disagreed with the proposed Non-O.R.
designations for certain procedure codes displayed in Table 6B.--New
Procedure Codes associated with the FY 2018 IPPS/LTCH PPS proposed
rule. The commenters recommended that CMS consider revising the
designation of these procedure codes from Non-O.R. to O.R. The
commenters identified approximately 200 new procedure codes describing
the insertion, removal, or revision of ``other device'' in various body
parts that they stated require an O.R. setting or are most often
performed in the O.R. setting using sterile technique. The commenters
further stated that patients undergoing these procedures are placed
under general anesthesia and the procedures require significant time
and skill.
Response: We reexamined a significant portion of the procedure
codes listed in Table 6B.--New Procedure Codes that was associated with
the FY 2018 IPPS/LTCH PPS proposed rule that the commenters recommended
we consider revising from Non-O.R. to O.R. We note that we were unable
to fully reevaluate the complete list for FY 2018, but we plan to
conduct a review for FY 2019. Based upon our review, and upon further
consideration of whether these procedures would be performed in an O.R.
setting, we are revising the designation of the new procedure codes in
the following table from non-O.R. to O.R.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
00H03YZ................... Insertion of Other Device into Brain,
Percutaneous Approach.
00H04YZ................... Insertion of Other Device into Brain,
Percutaneous Endoscopic Approach.
00H63YZ................... Insertion of Other Device into Cerebral
Ventricle, Percutaneous Approach.
00H64YZ................... Insertion of Other Device into Cerebral
Ventricle, Percutaneous Endoscopic
Approach.
00HU0YZ................... Insertion of Other Device into Spinal Canal,
Open Approach.
00HV0YZ................... Insertion of Other Device into Spinal Cord,
Open Approach.
00HV3YZ................... Insertion of Other Device into Spinal Cord,
Percutaneous Approach.
00HV4YZ................... Insertion of Other Device into Spinal Cord,
Percutaneous Endoscopic Approach.
02H43YZ................... Insertion of Other Device into Coronary
Vein, Percutaneous Approach.
02H44YZ................... Insertion of Other Device into Coronary
Vein, Percutaneous Endoscopic Approach.
02H63YZ................... Insertion of Other Device into Right Atrium,
Percutaneous Approach.
02H64YZ................... Insertion of Other Device into Right Atrium,
Percutaneous Endoscopic Approach.
02H73YZ................... Insertion of Other Device into Left Atrium,
Percutaneous Approach.
02H74YZ................... Insertion of Other Device into Left Atrium,
Percutaneous Endoscopic Approach.
02HA3YZ................... Insertion of Other Device into Heart,
Percutaneous Approach.
02HA4YZ................... Insertion of Other Device into Heart,
Percutaneous Endoscopic Approach.
02HK3YZ................... Insertion of Other Device into Right
Ventricle, Percutaneous Approach.
02HK4YZ................... Insertion of Other Device into Right
Ventricle, Percutaneous Endoscopic
Approach.
02HL3YZ................... Insertion of Other Device into Left
Ventricle, Percutaneous Approach.
02HL4YZ................... Insertion of Other Device into Left
Ventricle, Percutaneous Endoscopic
Approach.
02HN3YZ................... Insertion of Other Device into Pericardium,
Percutaneous Approach.
02HN4YZ................... Insertion of Other Device into Pericardium,
Percutaneous Endoscopic Approach.
02HP0YZ................... Insertion of Other Device into Pulmonary
Trunk, Open Approach.
02HP3YZ................... Insertion of Other Device into Pulmonary
Trunk, Percutaneous Approach.
02HP4YZ................... Insertion of Other Device into Pulmonary
Trunk, Percutaneous Endoscopic Approach.
02HQ3YZ................... Insertion of Other Device into Right
Pulmonary Artery, Percutaneous Approach.
02HQ4YZ................... Insertion of Other Device into Right
Pulmonary Artery, Percutaneous Endoscopic
Approach.
[[Page 38059]]
02HR3YZ................... Insertion of Other Device into Left
Pulmonary Artery, Percutaneous Approach.
02HR4YZ................... Insertion of Other Device into Left
Pulmonary Artery, Percutaneous Endoscopic
Approach.
02HS3YZ................... Insertion of Other Device into Right
Pulmonary Vein, Percutaneous Approach.
02HS4YZ................... Insertion of Other Device into Right
Pulmonary Vein, Percutaneous Endoscopic
Approach.
02HT3YZ................... Insertion of Other Device into Left
Pulmonary Vein, Percutaneous Approach.
02HT4YZ................... Insertion of Other Device into Left
Pulmonary Vein, Percutaneous Endoscopic
Approach.
02HV3YZ................... Insertion of Other Device into Superior Vena
Cava, Percutaneous Approach.
02HV4YZ................... Insertion of Other Device into Superior Vena
Cava, Percutaneous Endoscopic Approach.
02HW0YZ................... Insertion of Other Device into Thoracic
Aorta, Descending, Open Approach.
02HW3YZ................... Insertion of Other Device into Thoracic
Aorta, Descending, Percutaneous Approach.
02HW4YZ................... Insertion of Other Device into Thoracic
Aorta, Descending, Percutaneous Endoscopic
Approach.
07HK0YZ................... Insertion of Other Device into Thoracic
Duct, Open Approach.
07HK4YZ................... Insertion of Other Device into Thoracic
Duct, Percutaneous Endoscopic Approach.
07HL0YZ................... Insertion of Other Device into Cisterna
Chyli, Open Approach.
07HL4YZ................... Insertion of Other Device into Cisterna
Chyli, Percutaneous Endoscopic Approach.
07HM0YZ................... Insertion of Other Device into Thymus, Open
Approach.
07HM4YZ................... Insertion of Other Device into Thymus,
Percutaneous Endoscopic Approach.
07HN0YZ................... Insertion of Other Device into Lymphatic,
Open Approach.
07HP0YZ................... Insertion of Other Device into Spleen, Open
Approach.
09HY0YZ................... Insertion of Other Device into Sinus, Open
Approach.
0BH04YZ................... Insertion of Other Device into
Tracheobronchial Tree, Percutaneous
Endoscopic Approach.
0BH14YZ................... Insertion of Other Device into Trachea,
Percutaneous Endoscopic Approach.
0BHK4YZ................... Insertion of Other Device into Right Lung,
Percutaneous Endoscopic Approach.
0BHK8YZ................... Insertion of Other Device into Right Lung,
Via Natural or Artificial Opening
Endoscopic.
0BHL4YZ................... Insertion of Other Device into Left Lung,
Percutaneous Endoscopic Approach.
0BHL8YZ................... Insertion of Other Device into Left Lung,
Via Natural or Artificial Opening
Endoscopic.
0BHQ4YZ................... Insertion of Other Device into Pleura,
Percutaneous Endoscopic Approach.
0BHQ8YZ................... Insertion of Other Device into Pleura, Via
Natural or Artificial Opening Endoscopic.
0BHT4YZ................... Insertion of Other Device into Diaphragm,
Percutaneous Endoscopic Approach.
0BPK4YZ................... Removal of Other Device from Right Lung,
Percutaneous Endoscopic Approach.
0BPK8YZ................... Removal of Other Device from Right Lung, Via
Natural or Artificial Opening Endoscopic.
0BPL4YZ................... Removal of Other Device from Left Lung,
Percutaneous Endoscopic Approach.
0BPL8YZ................... Removal of Other Device from Left Lung, Via
Natural or Artificial Opening Endoscopic.
0BPQ0YZ................... Removal of Other Device from Pleura, Open
Approach.
0BPQ4YZ................... Removal of Other Device from Pleura,
Percutaneous Endoscopic Approach.
0BPQ8YZ................... Removal of Other Device from Pleura, Via
Natural or Artificial Opening Endoscopic.
0BPT4YZ................... Removal of Other Device from Diaphragm,
Percutaneous Endoscopic Approach.
0BWK4YZ................... Revision of Other Device in Right Lung,
Percutaneous Endoscopic Approach.
0BWK8YZ................... Revision of Other Device in Right Lung, Via
Natural or Artificial Opening Endoscopic.
0BWL4YZ................... Revision of Other Device in Left Lung,
Percutaneous Endoscopic Approach.
0BWL8YZ................... Revision of Other Device in Left Lung, Via
Natural or Artificial Opening Endoscopic.
0BWQ4YZ................... Revision of Other Device in Pleura,
Percutaneous Endoscopic Approach.
0BWQ8YZ................... Revision of Other Device in Pleura, Via
Natural or Artificial Opening Endoscopic.
0BWT4YZ................... Revision of Other Device in Diaphragm,
Percutaneous Endoscopic Approach.
0HPT0YZ................... Removal of Other Device from Right Breast,
Open Approach.
0HPU0YZ................... Removal of Other Device from Left Breast,
Open Approach.
0HWT0YZ................... Revision of Other Device in Right Breast,
Open Approach.
0HWU0YZ................... Revision of Other Device in Left Breast,
Open Approach.
0JHS0YZ................... Insertion of Other Device into Head and Neck
Subcutaneous Tissue and Fascia, Open
Approach.
0JHT0YZ................... Insertion of Other Device into Trunk
Subcutaneous Tissue and Fascia, Open
Approach.
0JHV0YZ................... Insertion of Other Device into Upper
Extremity Subcutaneous Tissue and Fascia,
Open Approach.
0JHW0YZ................... Insertion of Other Device into Lower
Extremity Subcutaneous Tissue and Fascia,
Open Approach.
0TH58YZ................... Insertion of Other Device into Kidney, Via
Natural or Artificial Opening Endoscopic.
0TH98YZ................... Insertion of Other Device into Ureter, Via
Natural or Artificial Opening Endoscopic.
0THB8YZ................... Insertion of Other Device into Bladder, Via
Natural or Artificial Opening Endoscopic.
0TP58YZ................... Removal of Other Device from Kidney, Via
Natural or Artificial Opening Endoscopic.
0TW98YZ................... Revision of Other Device in Ureter, Via
Natural or Artificial Opening Endoscopic.
0TWB8YZ................... Revision of Other Device in Bladder, Via
Natural or Artificial Opening Endoscopic.
------------------------------------------------------------------------
After consideration of the public comments that we received, we are
finalizing the designation of the procedure codes listed in the table
above from non-O.R. to O.R., effective October 1, 2017.
We note that, historically, when new procedure codes were created,
they were proposed to be given the same O.R. designation as their
predecessor code. However, with the transition from ICD-9 to ICD-10,
the determination of when a procedure code should be designated as an
O.R. procedure has become a much more complex task. This is, in part,
due to the number of various approaches available in the ICD-10-PCS
classification. While we have typically evaluated procedures on the
basis of whether or not they would be performed in an operating room,
we believe that there may be other factors to consider, particularly
with the implementation of ICD-10. Therefore, we are soliciting
comments on what factors or criteria to consider in determining whether
a procedure should be designated as an O.R. procedure in the ICD-10-PCS
[[Page 38060]]
classification system. We encourage commenters to submit comments via
the CMS MS-DRG Classification Change Requests Mailbox located at
MSDRGClassificationChange@cms.hhs.gov by November 1, 2017 for FY 2019
consideration.
We are also making available on the CMS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/ the following final tables associated with
this final rule:
Table 6A.--New Diagnosis Codes-FY 2018;
Table 6B.--New Procedure Codes-FY 2018;
Table 6C.--Invalid Diagnosis Codes-FY 2018;
Table 6D.--Invalid Procedure Codes-FY 2018;
Table 6E.--Revised Diagnosis Code Titles-FY 2018;
Table 6F.--Revised Procedure Code Titles-FY 2018;
Table 6G.1.--Secondary Diagnosis Order Additions to the CC
Exclusions List--FY 2018;
Table 6G.2.--Principal Diagnosis Order Additions to the CC
Exclusions List--FY 2018;
Table 6H.1.--Secondary Diagnosis Order Deletions to the CC
Exclusions List--FY 2018;
Table 6H.2.--Principal Diagnosis Order Deletions to the CC
Exclusions List--FY 2018;
Table 6I.--Complete MCC List--FY 2018;
Table 6I.1.--Additions to the MCC List-FY 2018;
Table 6I.2.-Deletions to the MCC List--FY 2018;
Table 6J.--Complete CC List--FY 2018;
Table 6J.1.--Additions to the CC List-FY 2018;
Table 6J.2.--Deletions to the CC List -FY 2018;
Table 6K.--Complete List of CC Exclusions-FY 2018;
Table 6L.--Principal Diagnosis Is Its Own MCC List-FY
2018; and
Table 6M.--Principal Diagnosis Is Its Own CC List-FY 2018.
13. Comprehensive Review of CC List for FY 2019
In the FY 2008 IPPS final rule (72 FR 47153 through 47175), we
discussed our efforts to better recognize severity of illness which
began with a comprehensive review of the CC list and, ultimately, the
implementation of the MS-DRGs. Similar to the analysis that was
performed at that time, we are providing the public with notice of our
plans to conduct a comprehensive review of the CC and MCC lists for FY
2019.
As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19849), as a result of the time that has elapsed since that review and
changes to how inpatient care is currently delivered, we plan to
analyze if further refinements to these lists are warranted. For
example, over the past several years, there has been a steady increase
in the proportion of cases grouping to the MS-DRGs with an MCC severity
level than had previously occurred. Our evaluation will assist in
determining if the conditions designated as an MCC continue to
represent significant increases in resource utilization that support
the MCC designation.
We currently utilize a statistical algorithm to determine the
impact on resource use of each secondary diagnosis. Each diagnosis for
which Medicare data are available is evaluated to determine its impact
on resource use and to determine the most appropriate CC subclass (non-
CC, CC, or MCC) assignment. In order to make this determination, the
average costs for each subset of cases is compared to the expected
costs for cases in that subset. The following format is used to
evaluate each diagnosis:
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Code Diagnosis Cnt1 C1 Cnt2 C2 Cnt3 C3
----------------------------------------------------------------------------------------------------------------
Count (Cnt) is the number of patients in each subset and C1, C2,
and C3 are a measure of the impact on resource use of patients in each
of the subsets. The C1, C2, and C3 values are a measure of the ratio of
average costs for patients with these conditions to the expected
average costs across all cases. The C1 value reflects a patient with no
other secondary diagnosis or with all other secondary diagnoses that
are non-CCs. The C2 value reflects a patient with at least one other
secondary diagnosis that is a CC but none that is an MCC. The C3 value
reflects a patient with at least one other secondary diagnosis that is
an MCC. A value close to 1.0 in the C1 field would suggest that the
code produces the same expected value as a non-CC diagnosis. That is,
average costs for the case are similar to the expected average costs
for that subset and the diagnosis is not expected to increase resource
usage. A higher value in the C1 (or C2 and C3) field suggests more
resource usage is associated with the diagnosis and an increased
likelihood that it is more like a CC or major CC than a non-CC. Thus, a
value close to 2.0 suggests the condition is more like a CC than a non-
CC but not as significant in resource usage as an MCC. A value close to
3.0 suggests the condition is expected to consume resources more
similar to an MCC than a CC or non-CC. For example, a C1 value of 1.8
for a secondary diagnosis means that for the subset of patients who
have the secondary diagnosis and have either no other secondary
diagnosis present, or all the other secondary diagnoses present are
non-CCs, the impact on resource use of the secondary diagnoses is
greater than the expected value for a non-CC by an amount equal to 80
percent of the difference between the expected value of a CC and a non-
CC (that is, the impact on resource use of the secondary diagnosis is
closer to a CC than a non-CC).
We invited public comments regarding other possible ways we can
incorporate meaningful indicators of clinical severity.
We did not receive any public comments offering suggestions on
alternate ways to incorporate meaningful indicators of clinical
severity. Therefore, we expect to continue to utilize this same
statistical algorithm to determine the impact on resource use of each
secondary diagnosis to conduct our comprehensive review of the CC and
MCC lists for FY 2019.
14. Review of Procedure Codes in MS DRGs 981 Through 983; 984 Through
986; and 987 Through 989
Each year, we review cases assigned to MS-DRGs 981, 982, and 983
(Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC,
with CC, and without CC/MCC, respectively); MS-DRGs 984, 985, and 986
(Prostatic O.R. Procedure Unrelated to Principal Diagnosis with MCC,
with CC, and without CC/MCC, respectively); and MS-DRGs 987, 988, and
989 (Nonextensive O.R. Procedure Unrelated to Principal Diagnosis with
MCC, with CC, and without CC/MCC, respectively) to determine whether it
would be appropriate to change the procedures assigned among these MS-
DRGs. MS-DRGs 981 through 983, 984 through 986, and 987 through 989 are
reserved for those cases in which none of the O.R. procedures performed
are related to the principal diagnosis. These MS-DRGs
[[Page 38061]]
are intended to capture atypical cases, that is, those cases not
occurring with sufficient frequency to represent a distinct,
recognizable clinical group.
In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19849), we stated
that under the ICD-10 MS-DRGs Version 34, MS-DRGs 984 through 986 are
assigned when one or more of the procedures described by ICD-10-PCS
codes in Table 6P.2. that was associated with the FY 2018 proposed rule
(which is available via the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) are performed and are unrelated to the
principal diagnosis. All remaining O.R. procedures are assigned to MS-
DRGs 981 through 983 and 987 through 989, with MS-DRGs 987 through 989
assigned to those discharges in which the only procedures performed are
nonextensive procedures that are unrelated to the principal diagnosis.
We refer the reader to the FY 2017 IPPS/LTCH PPS final rule (81 FR
56847 through 56848) for a discussion of the movement and redesignation
of procedure codes from MS-DRGs 984 through 986 related to the
transition of the ICD-10 MS-DRGs.
Our review of MedPAR claims data showed that there are no cases
that merited movement or should logically be reassigned from ICD-10 MS-
DRGs 984 through 986 to any of the other MDCs for FY 2018. Therefore,
in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19849 through 19850),
for FY 2018, we did not propose to change the procedures assigned among
these MS-DRGs. We invited public comments on our proposal to maintain
the current structure of these MS-DRGs.
Comment: Commenters supported the proposal to maintain the current
structure of MS-DRGs 984 through 986 and not to reassign or change the
procedures assigned among these MS-DRGs to other MDCs.
Response: We appreciate the commenters' support.
After consideration of the public comments that we received, we are
finalizing our proposal to maintain the current structure of MS-DRGs
984 through 986 (Prostatic O.R. Procedure Unrelated to Principal
Diagnosis with MCC, with CC, and without CC/MCC, respectively) and not
to reassign or change the procedures assigned among these MS-DRGs to
other MDCs for ICD-10 MS-DRGs Version 35, effective October 1, 2017.
a. Moving Procedure Codes From MS-DRGs 981 Through 983 or MS-DRGs 987
Through 989 Into MDCs
We annually conduct a review of procedures producing assignment to
MS-DRGs 981 through 983 (Extensive O.R. Procedure Unrelated to
Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) or MS-DRGs 987 through 989 (Nonextensive O.R. Procedure
Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) on the basis of volume, by procedure, to see if it would
be appropriate to move procedure codes out of these MS-DRGs into one of
the surgical MS-DRGs for the MDC into which the principal diagnosis
falls. The data are arrayed in two ways for comparison purposes. We
look at a frequency count of each major operative procedure code. We
also compare procedures across MDCs by volume of procedure codes within
each MDC.
We identify those procedures occurring in conjunction with certain
principal diagnoses with sufficient frequency to justify adding them to
one of the surgical MS-DRGs for the MDC in which the diagnosis falls.
As we indicated in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19850), upon review of the claims data from the December 2016 update of
the FY 2016 MedPAR file, we did not find any cases that merited
movement or that should logically be assigned to any of the other MDCs.
Therefore, for FY 2018, we did not propose to remove any procedures
from MS-DRGs 981 through 983 or MS-DRGs 987 through 989 into one of the
surgical MS-DRGs for the MDC into which the principal diagnosis is
assigned. We invited public comments on our proposal to maintain the
current structure of these MS-DRGs.
Comment: Commenters supported the proposal to maintain the current
structure of MS-DRGs 981 through 983 and MS-DRGs 987 through 989.
Response: We appreciate the commenters' support.
After consideration of the public comments that we received, we are
finalizing our proposal to not remove any procedures from MS-DRGs 981
through 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis
with MCC, with CC, and without CC/MCC, respectively) or MS-DRGs 987
through 989 (Nonextensive O.R. Procedure Unrelated to Principal
Diagnosis with MCC, with CC, and without CC/MCC, respectively) into one
of the surgical MS-DRGs for the MDC into which the principal diagnosis
is assigned for ICD-10 MS-DRGs Version 35, effective October 1, 2017.
b. Reassignment of Procedures Among MS-DRGs 981 Through 983, 984
Through 986, and 987 Through 989
We also review the list of ICD-10-PCS procedures that, when in
combination with their principal diagnosis code, result in assignment
to MS-DRGs 981 through 983, 984 through 986, or 987 through 989, to
ascertain whether any of those procedures should be reassigned from one
of those three groups of MS-DRGs to another of the three groups of MS-
DRGs based on average costs and the length of stay. We look at the data
for trends such as shifts in treatment practice or reporting practice
that would make the resulting MS-DRG assignment illogical. If we find
these shifts, we would propose to move cases to keep the MS-DRGs
clinically similar or to provide payment for the cases in a similar
manner. Generally, we move only those procedures for which we have an
adequate number of discharges to analyze the data.
Based on the results of our review of the December 2016 update of
the FY 2016 MedPAR file, in the FY 2018 IPPS/LTCH PPS proposed rule (82
FR 19850), we proposed to reassign the procedure codes currently
assigned to MS-DRGs 984 through 986 (Prostatic O.R. Procedure Unrelated
to Principal Diagnosis with MCC, with CC and without CC/MCC,
respectively) to MS-DRGs 987 through 989 (Non-extensive O.R. Procedure
Unrelated to Principal Diagnosis with MCC, with CC and without CC/MCC,
respectively). As shown in the table below, we found a total of 1,001
cases in MS-DRGs 984 through 986 with an average length-of-stay of 7.5
days and average costs of $16,539. In MS-DRGs 987 through 989, we found
a total of 17,772 cases, with an average length of stay of 7.5 days and
average costs of $16,193.
[[Page 38062]]
O.R. Procedures Unrelated to Principal Diagnosis
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 984, 985 and 986 (Prostatic O.R. Procedure Unrelated to 1,001 7.5 $16,539
Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively)..................................................
MS-DRGs 987, 988 and 989 (Non[dash]extensive O.R. Procedure 17,772 7.5 16,193
Unrelated to Principal Diagnosis with MCC, with CC, and without
CC/MCC, respectively)..........................................
----------------------------------------------------------------------------------------------------------------
The claims data demonstrate that it is no longer necessary to
maintain a separate set of MS-DRGs specifically for the prostatic O.R.
procedures. The average length of stay of 7.5 days is identical in both
sets of MS-DRGs and the average costs are very similar with a
difference of only $346. As we discussed in the proposed rule, our
clinical advisors reviewed the data and support movement of these 1,001
cases into the nonextensive O.R. procedures MS-DRGs. They noted that
treatment practices have shifted since the inception of the prostatic
O.R. procedures grouping and the average costs are in alignment.
Therefore, for FY 2018, we proposed to reassign the prostatic O.R.
procedure codes from MS-DRGs 984 through 986 to MS-DRGs 987 through 989
and to delete MS-DRGs 984, 985 and 986 because they would no longer be
needed as a result of this proposed movement. We invited public
comments on our proposals.
Comment: Commenters supported the proposal to reassign the
prostatic O.R. procedure codes from MS-DRGs 984 through 986 to MS-DRGs
987 through 989 and to delete MS-DRGs 984, 985 and 986.
Response: We appreciate the commenters' support.
After consideration of the public comments that we received, we are
finalizing our proposal to reassign the prostatic O.R. procedure codes
from MS-DRGs 984 through 986 to MS-DRGs 987 through 989 (Non-extensive
O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC and
without CC/MCC, respectively) and to delete MS-DRGs 984, 985 and 986
(Prostatic O.R. Procedure Unrelated to Principal Diagnosis with MCC,
with CC and without CC/MCC, respectively) for ICD-10 MS-DRGs Version
35, effective October 1, 2017.
15. Changes to the ICD-10-CM and ICD-10-PCS Coding Systems
In September 1985, the ICD-9-CM Coordination and Maintenance
Committee was formed. This is a Federal interdepartmental committee,
co-chaired by the National Center for Health Statistics (NCHS), the
Centers for Disease Control and Prevention (CDC), and CMS, charged with
maintaining and updating the ICD-9-CM system. The final update to ICD-
9-CM codes was made on October 1, 2013. Thereafter, the name of the
Committee was changed to the ICD-10 Coordination and Maintenance
Committee, effective with the March 19-20, 2014 meeting. The ICD-10
Coordination and Maintenance Committee addresses updates to the ICD-10-
CM and ICD-10-PCS coding systems. The Committee is jointly responsible
for approving coding changes, and developing errata, addenda, and other
modifications to the coding systems to reflect newly developed
procedures and technologies and newly identified diseases. The
Committee is also responsible for promoting the use of Federal and non-
Federal educational programs and other communication techniques with a
view toward standardizing coding applications and upgrading the quality
of the classification system.
The official list of ICD-9-CM diagnosis and procedure codes by
fiscal year can be found on the CMS Web site at: https://cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/codes.html. The official
list of ICD-10-CM and ICD-10-PCS codes can be found on the CMS Web site
at: https://www.cms.gov/Medicare/Coding/ICD10/.
The NCHS has lead responsibility for the ICD-10-CM and ICD-9-CM
diagnosis codes included in the Tabular List and Alphabetic Index for
Diseases, while CMS has lead responsibility for the ICD-10-PCS and ICD-
9-CM procedure codes included in the Tabular List and Alphabetic Index
for Procedures.
The Committee encourages participation in the previously mentioned
process by health-related organizations. In this regard, the Committee
holds public meetings for discussion of educational issues and proposed
coding changes. These meetings provide an opportunity for
representatives of recognized organizations in the coding field, such
as the American Health Information Management Association (AHIMA), the
American Hospital Association (AHA), and various physician specialty
groups, as well as individual physicians, health information management
professionals, and other members of the public, to contribute ideas on
coding matters. After considering the opinions expressed at the public
meetings and in writing, the Committee formulates recommendations,
which then must be approved by the agencies.
The Committee presented proposals for coding changes for
implementation in FY 2018 at a public meeting held on September 13-14,
2016, and finalized the coding changes after consideration of comments
received at the meetings and in writing by November 13, 2016.
The Committee held its 2017 meeting on March 7-8, 2017. The
deadline for submitting comments on these code proposals was April 7,
2017. It was announced at this meeting that any new ICD-10-CM/PCS codes
for which there was consensus of public support and for which complete
tabular and indexing changes would be made by May 2017 would be
included in the October 1, 2017 update to ICD-10-CM/ICD-10-PCS. As
discussed in earlier sections of the preamble of the proposed rule and
this final rule, there are new, revised, and deleted ICD-10-CM
diagnosis codes and ICD-10-PCS procedure codes that are captured in
Table 6A.--New Diagnosis Codes, Table 6B.--New Procedure Codes, Table
6C.--Invalid Diagnosis Codes, Table 6D.--Invalid Procedure Codes, Table
6E.--Revised Diagnosis Code Titles, and Table 6F.--Revised Procedure
Code Titles for the proposed rule and this final rule, which are
available via the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/.
Because of the length of these tables, they are not published in the
Addendum to this final rule. Rather, they are available via the
Internet as discussed in section VI. of the Addendum to this final
rule.
We note that after publication of the FY 2018 IPPS/LTCH PPS
proposed rule, we were notified by the CDC of changes to the FY 2018
ICD-10-CM diagnosis codes that were listed in Table 6A.--New Diagnosis
Codes and Table 6C.-- Invalid Diagnosis Codes that were
[[Page 38063]]
associated with the proposed rule. Specifically, ICD-10-CM diagnosis
code K61.3 (Ischiorectal abscess) was listed in Table 6C. as an invalid
diagnosis, and diagnosis codes K61.31 (Horseshoe abscess) and K61.32
(Ischiorectal abscess, NOS) were listed in Table 6A. as new diagnosis
codes. The CDC informed us that they reversed their decision with
respect to these codes. Therefore, diagnosis codes K61.31 and K61.32
are not being created for FY 2018 and are not reflected in Table 6A.--
New Diagnosis Codes associated with this FY 2018 IPPS/LTCH PPS final
rule. In addition, diagnosis code K61.3 is no longer reflected in Table
6C. associated with this final rule as an invalid diagnosis. Diagnosis
code K61.3 will continue to be a valid code for FY 2018 in the ICD-10-
CM classification.
The CDC also informed us of changes to diagnosis code K61.5
(Supralevator abscess). This diagnosis code was listed as a new
diagnosis code in Table 6A.--New Diagnosis Codes that was associated
with the proposed rule. However, this decision was also reversed.
Therefore, diagnosis code K61.5 is not reflected in Table 6A.
associated with this FY 2018 IPPS/LTCH PPS final rule and will not be
reflected in the ICD-10-CM classification.
We also note that after publication of the FY 2018 IPPS/LTCH PPS
proposed rule, the CDC revised the title for diagnosis code O00.212
from ``Left ovarian pregnancy without intrauterine pregnancy'' to
``Left ovarian pregnancy with intrauterine pregnancy''. The description
of the code title changed from ``without'' to ``with'' for this
diagnosis code. This change will not be reflected in Table 6E.--Revised
Diagnosis Code Titles because it is a new diagnosis code effective FY
2018. Rather, the corrected code title description will appear in Table
6A.--New Diagnosis Codes associated with this FY 2018 IPPS/LTCH PPS
final rule. Furthermore, the CDC issued an ICD-10-CM Errata on June 27,
2017 regarding this code title change for diagnosis code O00.212. The
Errata document is available via the Internet on the CMS Web site at:
https://www.cms.gov/Medicare/Coding/ICD10/2018-ICD-10-CM-and-GEMs.html.
Live Webcast recordings of the discussions of procedure codes at
the Committee's September 13-14, 2016 meeting and March 7-8, 2017
meeting can be obtained from the CMS Web site at: https://cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/?redirect/icd9ProviderDiagnosticCodes/03_meetings.asp. The minutes of the
discussions of diagnosis codes at the September 13-14, 2016 meeting and
March 7-8, 2017 meeting can be found at: https://www.cdc.gov/nchs/icd/icd10cm_maintenance.html. These Web sites also provide detailed
information about the Committee, including information on requesting a
new code, attending a Committee meeting, and timeline requirements and
meeting dates.
We encourage commenters to address suggestions on coding issues
involving diagnosis codes to: Donna Pickett, Co-Chairperson, ICD-10
Coordination and Maintenance Committee, NCHS, Room 2402, 3311 Toledo
Road, Hyattsville, MD 20782. Comments may be sent by Email to:
nchsicd10cm@cdc.gov.
Questions and comments concerning the procedure codes should be
addressed to: Patricia Brooks, Co-Chairperson, ICD-10 Coordination and
Maintenance Committee, CMS, Center for Medicare Management, Hospital
and Ambulatory Policy Group, Division of Acute Care, C4-08-06, 7500
Security Boulevard, Baltimore, MD 21244-1850. Comments may be sent by
Email to: ICDProcedureCodeRequest@cms.hhs.gov.
In the September 7, 2001 final rule implementing the IPPS new
technology add-on payments (66 FR 46906), we indicated we would attempt
to include proposals for procedure codes that would describe new
technology discussed and approved at the Spring meeting as part of the
code revisions effective the following October.
Section 503(a) of Public Law 108-173 included a requirement for
updating diagnosis and procedure codes twice a year instead of a single
update on October 1 of each year. This requirement was included as part
of the amendments to the Act relating to recognition of new technology
under the IPPS. Section 503(a) amended section 1886(d)(5)(K) of the Act
by adding a clause (vii) which states that the Secretary shall provide
for the addition of new diagnosis and procedure codes on April 1 of
each year, but the addition of such codes shall not require the
Secretary to adjust the payment (or diagnosis-related group
classification) until the fiscal year that begins after such date. This
requirement improves the recognition of new technologies under the IPPS
system by providing information on these new technologies at an earlier
date. Data will be available 6 months earlier than would be possible
with updates occurring only once a year on October 1.
While section 1886(d)(5)(K)(vii) of the Act states that the
addition of new diagnosis and procedure codes on April 1 of each year
shall not require the Secretary to adjust the payment, or DRG
classification, under section 1886(d) of the Act until the fiscal year
that begins after such date, we have to update the DRG software and
other systems in order to recognize and accept the new codes. We also
publicize the code changes and the need for a mid-year systems update
by providers to identify the new codes. Hospitals also have to obtain
the new code books and encoder updates, and make other system changes
in order to identify and report the new codes.
The ICD-10 (previously the ICD-9-CM) Coordination and Maintenance
Committee holds its meetings in the spring and fall in order to update
the codes and the applicable payment and reporting systems by October 1
of each year. Items are placed on the agenda for the Committee meeting
if the request is received at least 2 months prior to the meeting. This
requirement allows time for staff to review and research the coding
issues and prepare material for discussion at the meeting. It also
allows time for the topic to be publicized in meeting announcements in
the Federal Register as well as on the CMS Web site. Final decisions on
code title revisions are currently made by March 1 so that these titles
can be included in the IPPS proposed rule. A complete addendum
describing details of all diagnosis and procedure coding changes, both
tabular and index, is published on the CMS and NCHS Web sites in June
of each year. Publishers of coding books and software use this
information to modify their products that are used by health care
providers. This 5-month time period has proved to be necessary for
hospitals and other providers to update their systems.
A discussion of this timeline and the need for changes are included
in the December 4-5, 2005 ICD-9-CM Coordination and Maintenance
Committee Meeting minutes. The public agreed that there was a need to
hold the fall meetings earlier, in September or October, in order to
meet the new implementation dates. The public provided comment that
additional time would be needed to update hospital systems and obtain
new code books and coding software. There was considerable concern
expressed about the impact this April update would have on providers.
In the FY 2005 IPPS final rule, we implemented section
1886(d)(5)(K)(vii) of the Act, as added by section 503(a) of Public Law
108-173, by developing a mechanism for approving, in time for the April
update, diagnosis and procedure code revisions needed to describe new
technologies and medical services for purposes of the new technology
add-on payment process. We
[[Page 38064]]
also established the following process for making these determinations.
Topics considered during the Fall ICD-10 (previously ICD-9-CM)
Coordination and Maintenance Committee meeting are considered for an
April 1 update if a strong and convincing case is made by the requester
at the Committee's public meeting. The request must identify the reason
why a new code is needed in April for purposes of the new technology
process. The participants at the meeting and those reviewing the
Committee meeting summary report are provided the opportunity to
comment on this expedited request. All other topics are considered for
the October 1 update. Participants at the Committee meeting are
encouraged to comment on all such requests. There were no requests
approved for an expedited April l, 2017 implementation of a code at the
September 13-14, 2016 Committee meeting. Therefore, there were no new
codes implemented on April 1, 2017.
ICD-9-CM addendum and code title information is published on the
CMS Web site at: https://www.cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/?redirect/icd9ProviderDiagnosticCodes/01overview.asp#TopofPage. ICD-10-CM and
ICD-10-PCS addendum and code title information is published on the CMS
Web site at: https://www.cms.gov/Medicare/Coding/ICD10/.
Information on ICD-10-CM diagnosis codes, along with the Official ICD-
10-CM Coding Guidelines, can also be found on the CDC Web site at:
https://www.cdc.gov/nchs/icd/icd10.htm. Information on new, revised, and
deleted ICD-10-CM/ICD-10-PCS codes is also provided to the AHA for
publication in the Coding Clinic for ICD-10. AHA also distributes
information to publishers and software vendors.
CMS also sends copies of all ICD-10-CM and ICD-10-PCS coding
changes to its Medicare contractors for use in updating their systems
and providing education to providers.
The code titles are adopted as part of the ICD-10 (previously ICD-
9-CM) Coordination and Maintenance Committee process. Therefore,
although we publish the code titles in the IPPS proposed and final
rules, they are not subject to comment in the proposed or final rules.
The following chart shows the number of ICD-10-CM and ICD-10-PCS
codes and code changes since FY 2016 when ICD-10 was implemented.
Total Number of Codes and Changes in Total Number of Codes per Fiscal
Year ICD-10-CM and ICD-10-PCS Codes
------------------------------------------------------------------------
Fiscal year Number Change
------------------------------------------------------------------------
FY 2016
ICD-10-CM..................................... 69,823 ...........
ICD-10-PCS.................................... 71,974 ...........
FY 2017
ICD-10-CM..................................... 71,486 +1,663
ICD-10-PCS.................................... 75,789 +3,815
FY 2018
ICD-10-CM..................................... 71,704 +218
ICD-10-PCS.................................... 78,705 +2,916
------------------------------------------------------------------------
As mentioned previously, the public is provided the opportunity to
comment on any requests for new diagnosis or procedure codes discussed
at the ICD-10 Coordination and Maintenance Committee meeting.
At the September 12-13, 2016 and March 7-8, 2017 Committee
meetings, we discussed any requests we had received for new ICD-10-CM
diagnosis codes and ICD-10-PCS procedure codes that were to be
implemented on October 1, 2017. We invited public comments on any code
requests discussed at the September 12-13, 2016 and March 7-8, 2017
Committee meetings for implementation as part of the October 1, 2017
update. The deadline for commenting on code proposals discussed at the
September 12-13, 2016 Committee meeting was November 13, 2016. The
deadline for commenting on code proposals discussed at the March 7-8,
2017 Committee meeting was April 7, 2017.
Comment: One commenter stated that coding updates interfere with
consistent clinical vocabulary maintenance. The commenter pointed to
ICD-10-PCS code updates for FY 2018 which involve the addition of
specificity beyond what was included in the 2017 version of ICD-10-PCS.
The commenter stated that a core principle of clinical vocabulary
maintenance is that the meaning of a code should not change over time.
The commenter acknowledged that deadline for submitting comments on
code proposals for the FY 2018 ICD-10-PCS had passed. The commenter
stated that clinical vocabulary maintenance should be a primary
consideration of the ICD-10 Coordination and Maintenance Committee
before any further coding updates are proposed. The commenter looked
forward to working with the ICD-10 Coordination and Maintenance
Committee meeting on future code updates.
Response: CMS and CDC welcome the participation of the public at
the ICD-10 Coordination and Maintenance Committee meetings. CMS and CDC
encourage comments on any ICD-10-CM and ICD-10-PCS code updates
presented at the meetings. The ICD-10-CM and ICD-10-PCS coding systems
are not clinical vocabularies. The coding systems do not attempt to
clarify or standardize how physicians describe clinical conditions or
procedures. The ICD-10-CM and ICD-10-PCS coding systems are clinical
classification systems. Classification systems arrange and organize
like or related clinical conditions and procedures. The coding systems
assign codes to capture diagnoses and procedures as documented by
physicians. This can involve multiple diagnosis and procedure terms
being captured in a single code. It is recognized that not all
physicians use consistent terminology for identifying a condition or
procedure. The coding systems recognize this fact and develop codes
which capture this group of similar terms into a single code. The
coding systems should not be viewed as a means to standardize medical
terminology.
In response to public requests for updates to ICD-10-CM and ICD-10-
PCS, the ICD-10 Coordination and Maintenance Committee presents the
requested code updates and then solicits comments prior to making those
updates. The ICD-9-CM and ICD-10 coding systems have been updated
through the Coordination and Maintenance Committee since 1985, making
updates to the coding systems that capture advances in medicine and
changes in medical practices. The Committee will continue to meet to
allow the public to provide comments on any requests to update the ICD-
10-CM and ICD-10-PCS coding systems.
Comment: One commenter stated that it was a strong supporter of the
conversion from ICD-9-CM to ICD-10-CM, including the creation of the
new Section ``X'' codes to identify new medical services and
technologies, because the newer, more robust coding system will allow
for recognition of more technologies, procedures, and variations in
patients' conditions on Medicare claims, which in turn will support
greater specificity in MS-DRGs. However, the commenter asked that CMS
provide additional information about how the ``X'' codes will be used
and applied.
Response: We encourage the public to participate in the ICD-10
Coordination and Maintenance Committee meetings to offer comments on
code updates. Any new codes that are finalized prior to the IPPS/LTCH
PPS proposed rules, including ICD-10-PCS ``X'' codes, are included in
the Table 6 series in the
[[Page 38065]]
IPPS/LTCH PPS proposed rule along with their proposed MS-DRG
classifications. The public is offered the opportunity to comment on
those MS-DRG classifications. Any new codes that are finalized after
the IPPS/LTCH PPS proposed rule are included in the IPPS/LTCH PPS final
rule along with their MS-DRG classifications. We refer the commenter to
section II.H. of the preamble of this final rule for additional
discussion of the section ``X'' codes.
16. Replaced Devices Offered Without Cost or With a Credit
a. Background
In the FY 2008 IPPS final rule with comment period (72 FR 47246
through 47251), we discussed the topic of Medicare payment for devices
that are replaced without cost or where credit for a replaced device is
furnished to the hospital. We implemented a policy to reduce a
hospital's IPPS payment for certain MS-DRGs where the implantation of a
device that has been recalled determined the base MS-DRG assignment. At
that time, we specified that we will reduce a hospital's IPPS payment
for those MS-DRGs where the hospital received a credit for a replaced
device equal to 50 percent or more of the cost of the device.
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51556 through
51557), we clarified this policy to state that the policy applies if
the hospital received a credit equal to 50 percent or more of the cost
of the replacement device and issued instructions to hospitals
accordingly.
b. Changes for FY 2018
In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19852 through
19853), for FY 2018, we did not propose to add any MS-DRGs to the
policy for replaced devices offered without cost or with a credit. We
proposed to continue to include the existing MS-DRGs currently subject
to the policy as displayed in a table in the proposed rule.
In the proposed rule, we solicited public comments on our proposal
to continue to include the existing MS-DRGs currently subject to the
policy for replaced devices offered without cost or with credit and to
not add any additional MS-DRGs to the policy. We noted that, as
discussed in section II.F.2.b. and in section II.F.5.a. of the preamble
of the proposed rule, we proposed to revise the titles for MS-DRG 023
and MS-DRGs 469 and 470. We referred readers to those discussions of
the specific proposed MS-DRG titles. We did not receive any public
comments opposing our proposal to continue to include the existing MS-
DRGs currently subject to the policy and to not add any additional MS-
DRGs. Therefore, we are finalizing the list of MS-DRGs displayed in the
table in the proposed rule and below, with conforming changes to the
finalized titles for MS-DRGs 023, 469, and 470, that will be subject to
the replaced devices offered without cost or with a credit policy,
effective October 1, 2017. As we indicated in the proposed rule, we
also will issue this final list of MS-DRGs subject to the payment
policy for devices provided at no cost or with a credit for FY 2018 to
providers through guidance and instructions in the form of a Change
Request (CR).
----------------------------------------------------------------------------------------------------------------
MDC MS-DRG MS-DRG title
----------------------------------------------------------------------------------------------------------------
Pre-MDC................................... 001 Heart Transplant or Implant of Heart Assist
System with MCC.
Pre-MDC................................... 002 Heart Transplant or Implant of Heart Assist
System without MCC.
1......................................... 023 Craniotomy with Major Device Implant or Acute CNS
Principal Diagnosis with MCC or Chemotherapy
Implant or Epilepsy with Neurostimulator.
1......................................... 024 Craniotomy with Major Device Implant or Acute
Complex CNS Principal Diagnosis without MCC.
1......................................... 025 Craniotomy & Endovascular Intracranial Procedures
with MCC.
1......................................... 026 Craniotomy & Endovascular Intracranial Procedures
with CC.
1......................................... 027 Craniotomy & Endovascular Intracranial Procedures
without CC/MCC.
1......................................... 040 Peripheral, Cranial Nerve & Other Nervous System
Procedures with MCC.
1......................................... 041 Peripheral, Cranial Nerve & Other Nervous System
Procedures with CC or Peripheral
Neurostimulator.
1......................................... 042 Peripheral, Cranial Nerve & Other Nervous System
Procedures without CC/MCC.
3......................................... 129 Major Head & Neck Procedures with CC/MCC or Major
Device.
3......................................... 130 Major Head & Neck Procedures without CC/MCC.
5......................................... 215 Other Heart Assist System Implant.
5......................................... 216 Cardiac Valve & Other Major Cardiothoracic
Procedure with Cardiac Catheterization with MCC.
5......................................... 217 Cardiac Valve & Other Major Cardiothoracic
Procedure with Cardiac Catheterization with CC.
5......................................... 218 Cardiac Valve & Other Major Cardiothoracic
Procedure with Cardiac Catheterization without
CC/MCC.
5......................................... 219 Cardiac Valve & Other Major Cardiothoracic
Procedure without Cardiac Catheterization with
MCC.
5......................................... 220 Cardiac Valve & Other Major Cardiothoracic
Procedure without Cardiac Catheterization with
CC.
5......................................... 221 Cardiac Valve & Other Major Cardiothoracic
Procedure without Cardiac Catheterization
without CC/MCC.
5......................................... 222 Cardiac Defibrillator Implant with Cardiac
Catheterization with AMI/Heart Failure/Shock
with MCC.
5......................................... 223 Cardiac Defibrillator Implant with Cardiac
Catheterization with AMI/Heart Failure/Shock
without MCC.
5......................................... 224 Cardiac Defibrillator Implant with Cardiac
Catheterization without AMI/Heart Failure/Shock
with MCC.
5......................................... 225 Cardiac Defibrillator Implant with Cardiac
Catheterization without AMI/Heart Failure/Shock
without MCC.
5......................................... 226 Cardiac Defibrillator Implant without Cardiac
Catheterization with MCC.
5......................................... 227 Cardiac Defibrillator Implant without Cardiac
Catheterization without MCC.
5......................................... 242 Permanent Cardiac Pacemaker Implant with MCC.
5......................................... 243 Permanent Cardiac Pacemaker Implant with CC.
5......................................... 244 Permanent Cardiac Pacemaker Implant without CC/
MCC.
5......................................... 245 AICD Generator Procedures.
5......................................... 258 Cardiac Pacemaker Device Replacement with MCC.
5......................................... 259 Cardiac Pacemaker Device Replacement without MCC.
5......................................... 260 Cardiac Pacemaker Revision Except Device
Replacement with MCC.
5......................................... 261 Cardiac Pacemaker Revision Except Device
Replacement with CC.
5......................................... 262 Cardiac Pacemaker Revision Except Device
Replacement without CC/MCC.
5......................................... 265 AICD Lead Procedures.
5......................................... 266 Endovascular Cardiac Valve Replacement with MCC.
5......................................... 267 Endovascular Cardiac Valve Replacement without
MCC.
[[Page 38066]]
5......................................... 268 Aortic and Heart Assist Procedures Except
Pulsation Balloon with MCC.
5......................................... 269 Aortic and Heart Assist Procedures Except
Pulsation Balloon without MCC.
5......................................... 270 Other Major Cardiovascular Procedures with MCC.
5......................................... 271 Other Major Cardiovascular Procedures with CC.
5......................................... 272 Other Major Cardiovascular Procedures without CC/
MCC.
8......................................... 461 Bilateral or Multiple Major Joint Procedures Of
Lower Extremity with MCC.
8......................................... 462 Bilateral or Multiple Major Joint Procedures of
Lower Extremity without MCC.
8......................................... 466 Revision of Hip or Knee Replacement with MCC.
8......................................... 467 Revision of Hip or Knee Replacement with CC.
8......................................... 468 Revision of Hip or Knee Replacement without CC/
MCC.
8......................................... 469 Major Hip and Knee Joint Replacement or
Reattachment of Lower Extremity with MCC or
Total Ankle Replacement.
8......................................... 470 Major Hip and Knee Joint Replacement or
Reattachment of Lower Extremity without MCC.
----------------------------------------------------------------------------------------------------------------
17. Other Policy Changes: Other Operating Room (O.R.) and Non-O.R.
Issues
a. O.R. Procedures to Non-O.R. Procedures
As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19853), we have continued our efforts to address the recommendations
for consideration that we received in response to some of the proposals
set forth in the FY 2017 IPPS/LTCH PPS proposed rule pertaining to
changing the designation of ICD-10-PCS procedure codes from O.R.
procedures to non-O.R. procedures. As we stated in the FY 2017 IPPS/
LTCH PPS final rule (81 FR 56871), we received requests and
recommendations for over 800 procedure codes that we were not able to
fully evaluate and finalize for FY 2017. We discuss these requests and
recommendations below.
As discussed in the proposed rule, we also are addressing separate
requests that we received regarding changing the designation of
specific ICD-10-PCS procedure codes. For each group summarized below,
the detailed lists of procedure codes are shown in Tables 6P.4a.
through 6P.4p. (ICD-10-CM and ICD-10-PCS Code Designations, MCE and MS-
DRG Changes--FY 2018) associated with the FY 2018 proposed rule and
this final rule (which are available via the Internet on the CMS Web
site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/).
Comment: Some commenters expressed concern with the proposed
changes from O.R. procedures to non-O.R. procedures for such a large
number of procedure codes without having more detailed analysis of the
impact to specific MS-DRGs. The commenters stated that many of the
proposed changes for FY 2018 go beyond last year's changes when the
changes from O.R. procedures to non-O.R. procedures were done for
purposes of replicating the logic of the ICD-9 MS-DRGs.
Response: We acknowledge the concerns of the commenters regarding
the volume of proposed changes for procedures to be redesignated from
O.R. to non-O.R. As we stated in the FY 2018 IPPS/LTCH PPS proposed
rule, we continued our efforts to address the recommendations that we
received in response to some of the proposals set forth in the FY 2017
IPPS/LTCH PPS proposed rule pertaining to changing the designation of
ICD-10-PCS procedure codes from O.R. procedures to non-O.R. procedures.
We noted that those recommendations were for over 800 procedure codes
that we were not able to fully evaluate and finalize for FY 2017.
Therefore, we discussed the proposed changes for FY 2018.
The commenters are correct that the proposed changes for FY 2018 go
beyond the FY 2017 proposed (and finalized) MS-DRG updates to change
the designation of procedure codes from O.R. to non-O.R. that were done
for purposes of replicating the logic of the ICD-9 MS-DRGs. We stated
in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56790) that some of the
issues evaluated for the FY 2017 MS-DRGs update continued to relate to
the need for the ICD-10 MS-DRGs to accurately replicate the logic of
the ICD-9-CM based version of the MS-DRGs. We noted that replication
was important because both the logic for the MS-DRGs and the data
source used to calculate and develop the relative payment weights were
based on the same MedPAR claims data. We further noted that the logic
for the proposed and final FY 2017 ICD-10 MS-DRGs was based upon the FY
2015 ICD-9-CM MedPAR claims data, which was also the data source used
to calculate and develop the FY 2017 relative payment weights. However,
for FY 2018 and future fiscal years, we are no longer replicating the
ICD-9 MS-DRGs. As discussed in the FY 2018 IPPS/LTCH PPS proposed rule
and this final rule, we are using ICD-10 coded claims data for the
first time to propose changes to the ICD-10 MS-DRG classifications and
to compute the relative weights. Therefore, our proposals and final
policies for FY 2018 are based solely on the ICD-10 claims data from
the FY 2016 MedPAR file.
As such, procedures that were designated as O.R. under ICD-9 will
not necessarily be appropriate to designate as O.R. under ICD-10.
Conversely, procedures that were not designated as O.R. under ICD-9 may
be appropriate to designate as O.R. under ICD-10. As discussed
elsewhere in this final rule, with the transition from ICD-9 to ICD-10,
the determination of when a procedure code should be designated as an
O.R. procedure has become a much more complex task. This is, in part,
due to the number of various approaches available in the ICD-10-PCS
classification, as well as changes in medical practice. While we have
typically evaluated procedures on the basis of whether or not they
would be performed in an operating room, we believe that there may be
other factors to consider with regard to resource utilization,
particularly with the implementation of ICD-10. Therefore, we are
soliciting comments on what factors or criteria to consider in
determining whether a procedure is designated as an O.R. procedure in
the ICD-10-PCS classification system for FY 2019 consideration.
Commenters should submit their recommendations to the following email
address: MSDRGClassificationChange@cms.hhs.gov by November 1, 2017.
(1) Percutaneous/Diagnostic Drainage
One commenter identified 135 ICD-10-PCS procedure codes describing
procedures involving percutaneous diagnostic and therapeutic drainage
of central nervous system, vascular and other body sites that generally
would not require the resources of an operating room and can be
performed at the bedside. The list includes procedure codes that
describe procedures
[[Page 38067]]
involving drainage with or without placement of a drainage device. We
stated in the proposed rule that we agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19853), we
proposed that the 135 ICD-10-PCS procedure codes listed in Table 6P.4a.
associated with the proposed rule (which is available via the Internet
on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) be designated as non-O.R.
procedures. We invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the 135 procedure codes describing percutaneous
diagnostic and therapeutic drainage of central nervous system, vascular
and other body sites. However, one commenter disagreed with
reclassifying procedure codes 009330Z (Drainage of Epidural Space with
Drainage Device, Percutaneous Approach) and 00933ZZ (Drainage of
Epidural Space, Percutaneous Approach) to non-O.R. procedures.
According to the commenter, these two codes are assigned for
percutaneous burr hole drainage of acute traumatic and nontraumatic
intracranial epidural hematomas, and for drainage of intracranial
epidural abscesses. The commenter noted that, although percutaneous
burr hole drainages are performed through smaller openings in the skull
than open burr hole drainages, they require drilling through the skull
under sterile technique and anesthesia for pain control. The commenter
also noted that similar procedure codes such as 009430Z (Drainage of
Subdural Space with Drainage Device, Percutaneous Approach) and 00943ZZ
(Drainage of Subdural Space, Percutaneous Approach) are currently
classified as O.R. procedures.
Response: We appreciate the commenters' support. In response to the
commenter who disagreed with reclassifying procedure codes 009330Z and
00933ZZ to non-O.R. procedures, upon further review and consideration,
for the reasons the commenter pointed out and consistent with the
current designation of procedure codes 009430Z and 00943ZZ, which are
classified as O.R. procedures, we believe it is appropriate to maintain
the current O.R. designation of procedure codes 009330Z and 00933ZZ.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of 133 ICD-10-PCS
procedure codes listed in Table 6P.4a. associated with this final rule
(which is available via the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/ from O.R. procedures to non-O.R.
procedures, effective October 1, 2017. We also are finalizing the
designation of procedure codes 009330Z and 00933ZZ to remain O.R.
procedures for FY 2018. We note that, as shown in Table 6F.--Revised
Procedure Code Titles associated with this final rule, the titles for
procedure codes 009330Z, 00933ZZ, 009430Z and 00943ZZ are revised to
include the term ``intracranial.'' Effective October 1, 2017, the title
of ICD-10-PCS procedure code 009330Z is revised to read ``Drainage of
Intracranial Epidural Space with Drainage Device, Percutaneous
Approach''; the title of ICD-10-PCS procedure code 00933ZZ is revised
to read ``Drainage of Intracranial Epidural Space, Percutaneous
Approach''; the title of ICD-10-PCS procedure code 009430Z is revised
to read ``Drainage of Intracranial Subdural Space with Drainage Device,
Percutaneous Approach''; and the title of ICD-10-PCS procedure code
00943ZZ is revised to read ``Drainage of Intracranial Subdural Space,
Percutaneous Approach''.
(2) Percutaneous Insertion of Intraluminal or Monitoring Device
One commenter identified 28 ICD-10-PCS procedure codes describing
procedures involving the percutaneous insertion of intraluminal and
monitoring devices into central nervous system and other cardiovascular
body parts that generally would not require the resources of an
operating room and can be performed at the bedside. We stated in the
proposed rule that we agreed with the commenter. Therefore, in the FY
2018 IPPS/LTCH PPS proposed rule (82 FR 19853), we proposed that the 28
ICD-10-PCS procedure codes listed in Table 6P.4b. associated with the
proposed rule (which is available via the Internet on the CMS Web site
at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) be designated as non-O.R. procedures. We
invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the 28 procedure codes describing percutaneous insertion
of intraluminal or monitoring devices into central nervous system and
other cardiovascular body parts. However, one commenter disagreed with
changing the designation for 15 of the 28 listed procedure codes. The
commenter disagreed with changing the designation for ICD-10-PCS
procedure codes 00H032Z (Insertion of Monitoring Device into Brain,
Percutaneous Approach) and 00H632Z (Insertion of Monitoring Device into
Cerebral Ventricle, Percutaneous Approach). According to the commenter,
these two codes are assigned for inserting a monitoring device into the
brain or cerebral ventricle by a percutaneous burr hole which is most
often performed in the O.R. setting under sterile technique and
requires anesthesia for pain control. In addition, the commenter
disagreed with changing the designation for the following 13 ICD-10-PCS
procedure codes. The commenter stated that these intravascular
procedures are performed in specialized vascular suites and involve
insertion of a filter into the vena cava for prevention of pulmonary
emboli or the insertion of vascular stents for conditions such as
stenosis and other types of intraluminal devices into the great vessels
and are significant procedures that warrant an O.R. designation.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
02H43DZ................... Insertion of intraluminal device into
coronary vein, percutaneous approach.
02H63DZ................... Insertion of intraluminal device into right
atrium, percutaneous approach.
02H73DZ................... Insertion of intraluminal device into left
atrium, percutaneous approach.
02HK3DZ................... Insertion of intraluminal device into right
ventricle, percutaneous approach.
02HL3DZ................... Insertion of intraluminal device into left
ventricle, percutaneous approach.
02HP3DZ................... Insertion of intraluminal device into
pulmonary trunk, percutaneous approach.
02HQ3DZ................... Insertion of intraluminal device into right
pulmonary artery, percutaneous approach.
02HR3DZ................... Insertion of intraluminal device into left
pulmonary artery, percutaneous approach.
02HS3DZ................... Insertion of intraluminal device into right
pulmonary vein, percutaneous approach.
02HT3DZ................... Insertion of intraluminal device into left
pulmonary vein, percutaneous approach.
02HV3DZ................... Insertion of intraluminal device into
superior vena cava, percutaneous approach.
[[Page 38068]]
02HW3DZ................... Insertion of intraluminal device into
thoracic aorta, percutaneous approach.
06H03DZ................... Insertion of intraluminal device into
inferior vena cava, percutaneous approach.
------------------------------------------------------------------------
Response: We appreciate the commenters' support. In response to the
commenter who disagreed with changing the designation for 15 of the 28
procedure codes, upon further review and consideration, we agree that
the status of the above list of procedure codes, in addition to the two
procedure codes discussed earlier in this section (00H032Z and 00H632Z)
should be maintained as O.R. procedures due to the indications for
which these procedures may be performed and the risks involved.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of 13 ICD-10-PCS
procedure codes listed in Table 6P.4b. associated with this final rule
(which is available via the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) from O.R. procedures to non-O.R.
procedures, effective October 1, 2017. We also are finalizing
maintaining the designation of ICD-10-PCS procedure codes 00H032Z
(Insertion of Monitoring Device into Brain, Percutaneous Approach) and
00H632Z (Insertion of Monitoring Device into Cerebral Ventricle,
Percutaneous Approach) and the list of procedure codes shown in the
table above as O.R. procedures, effective October 1, 2017.
(3) Percutaneous Removal of Drainage, Infusion, Intraluminal or
Monitoring Device
One commenter identified 22 ICD-10-PCS procedure codes that
describe procedures involving the percutaneous removal of drainage,
infusion, intraluminal and monitoring devices from central nervous
system and other vascular body parts that generally would not require
the resources of an operating room and can be performed at the bedside.
We agreed with the commenter. Therefore, in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19854), we proposed that the 22 ICD-10-PCS
procedure codes listed in Table 6P.4c. associated with the proposed
rule (which is available via the Internet on the CMS Web site at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) be designated as non-O.R. procedures. We
invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of 22 ICD-10-PCS procedure codes describing the
percutaneous removal of drainage, infusion, intraluminal and monitoring
devices from central nervous system and other vascular body parts.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the 22 ICD-10-PCS
procedure codes listed in Table 6P.4c. associated with the proposed
rule and this final rule (which is available via the Internet on the
CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/ from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
(4) External Removal of Cardiac or Neurostimulator Lead
One commenter identified four ICD-10-PCS procedure codes that
describe procedures involving the external removal of cardiac leads
from the heart and neurostimulator leads from central nervous system
body parts that generally would not require the resources of an
operating room and can be performed at the bedside. These four ICD-10-
PCS codes are shown in the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
00P6XMZ................... Removal of neurostimulator lead from
cerebral ventricle, external approach.
00PEXMZ................... Removal of neurostimulator lead from cranial
nerve, external approach.
01PYXMZ................... Removal of neurostimulator lead from
peripheral nerve, external approach.
02PAXMZ................... Removal of cardiac lead from heart, external
approach.
------------------------------------------------------------------------
We agreed with the commenter. Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19854), we proposed that the four ICD-10-PCS
procedure codes shown in the table above be designated as non-O.R.
procedures. We invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of four ICD-10-PCS procedure codes that describe the
external removal of cardiac leads from the heart and neurostimulator
leads from central nervous system body parts.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the four ICD-10-
PCS procedure codes shown in the table above from O.R. procedures to
non-O.R. procedures, effective October 1, 2017.
(5) Percutaneous Revision of Drainage, Infusion, Intraluminal or
Monitoring Device
One commenter identified 28 ICD-10-PCS procedure codes that
describe procedures involving the percutaneous revision of drainage,
infusion, intraluminal and monitoring devices for vascular and heart
and great vessel body parts that generally would not require the
resources of an operating room and can be performed at the bedside. We
agreed with the commenter. Therefore, in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19854), we proposed that the 28 ICD-10-PCS
procedure codes listed in Table 6P.4d. associated with the proposed
rule (which is available via the Internet on the CMS Web site at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) be designated as non-O.R. procedures. We
invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of 28 ICD-10-PCS procedure codes that describe the
percutaneous revision of drainage, infusion, intraluminal and
monitoring devices for vascular and heart and great vessel body parts.
Response: We appreciate the commenters' support.
[[Page 38069]]
After consideration of the public comments we received, we are
finalizing our proposal to change the designation for the 28 ICD-10-PCS
procedure codes listed in Table 6P.4d. associated with the proposed
rule and this final rule (which is available via the Internet on the
CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
(6) Percutaneous Destruction
One commenter identified two ICD-10-PCS procedure codes that
describe procedures involving the percutaneous destruction of retina
body parts that generally would not require the resources of an
operating room and can be performed at the bedside. These two ICD-10-
PCS codes are shown in the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
085E3ZZ................... Destruction of right retina, percutaneous
approach.
085F3ZZ................... Destruction of left retina, percutaneous
approach.
------------------------------------------------------------------------
We agreed with the commenter. Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19854), we proposed that the two ICD-10-PCS
procedure codes shown in the table above be designated as non-O.R.
procedures. We invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of two ICD-10-PCS procedure codes that describe the
percutaneous destruction of retina body parts.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the two ICD-10-PCS
procedure codes shown in the table above from O.R. procedures to non-
O.R. procedures, effective October 1, 2017.
(7) External/Diagnostic Drainage
One commenter identified 20 ICD-10-PCS procedure codes that
describe procedures involving external drainage for structures of the
eye that generally would not require the resources of an operating room
and can be performed at the bedside. We agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19854), we
proposed that the 20 ICD-10-PCS procedure codes listed in Table 6P.4e.
associated with the proposed rule (which is available via the Internet
on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) be designated as non-O.R.
procedures. We invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of 20 ICD-10-PCS procedure codes that describe external
drainage for structures of the eye.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation for the 20 ICD-10-PCS
procedure codes listed in Table 6P.4e. associated with the proposed
rule and this final rule (which is available via the Internet on the
CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
(8) External Extirpation
One commenter identified four ICD-10-PCS procedure codes that
describe procedures involving external extirpation of matter from eye
structures that generally would not require the resources of an
operating room and can be performed at the bedside. These four ICD-10-
PCS codes are shown in the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
08C0XZZ................... Extirpation of matter from right eye,
external approach.
08C1XZZ................... Extirpation of matter from left eye,
external approach.
08CSXZZ................... Extirpation of matter from right
conjunctiva, external approach.
08CTXZZ................... Extirpation of matter from left conjunctiva,
external approach.
------------------------------------------------------------------------
We agreed with the commenter. Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19854 through 19855), we proposed that the
four ICD-10-PCS procedure codes shown in the table above be designated
as non-O.R. procedures. We invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the four ICD-10-PCS procedure codes shown in the table
above that describe procedures involving external extirpation of matter
from eye structures.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the four ICD-10-
PCS procedure codes shown in the table above from O.R. procedures to
non-O.R. procedures, effective October 1, 2017.
(9) External Removal of Radioactive Element or Synthetic Substitute
One commenter identified three ICD-10-PCS procedure codes that
describe procedures involving the external removal of radioactive or
synthetic substitutes from the eye that generally would not require the
resources of an operating room and can be performed at the bedside.
These three ICD-10-PCS codes are shown in the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
08P0X1Z................... Removal of radioactive element from right
eye, external approach.
08P0XJZ................... Removal of synthetic substitute from right
eye, external approach.
08P1XJZ................... Removal of synthetic substitute from left
eye, external approach.
------------------------------------------------------------------------
[[Page 38070]]
We agreed with the commenter. Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19855), we proposed that the three ICD-10-PCS
procedure codes shown in the table above be designated as non-O.R.
procedures. We invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the three ICD-10-PCS procedure codes shown in the table
above that describe the external removal of radioactive or synthetic
substitutes from the eye.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the three ICD-10-
PCS procedure codes shown in the table above from O.R. procedures to
non-O.R. procedures, effective October 1, 2017.
(10) Endoscopic/Transorifice Diagnostic Drainage
One commenter identified eight ICD-10-PCS procedure codes that
describe procedures involving endoscopic/transorifice (via natural or
artificial opening) drainage of ear structures that generally would not
require the resources of an operating room and can be performed at the
bedside. These eight ICD-10-PCS codes are shown in the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
09977ZX................... Drainage of right tympanic membrane, via
natural or artificial opening, diagnostic.
09978ZX................... Drainage of right tympanic membrane, via
natural or artificial opening endoscopic,
diagnostic.
09987ZX................... Drainage of left tympanic membrane, via
natural or artificial opening, diagnostic.
09988ZX................... Drainage of left tympanic membrane, via
natural or artificial opening endoscopic,
diagnostic.
099F7ZX................... Drainage of right eustachian tube, via
natural or artificial opening, diagnostic.
099F8ZX................... Drainage of right eustachian tube, via
natural or artificial opening endoscopic,
diagnostic.
099G7ZX................... Drainage of left eustachian tube, via
natural or artificial opening, diagnostic.
099G8ZX................... Drainage of left eustachian tube, via
natural or artificial opening endoscopic,
diagnostic.
------------------------------------------------------------------------
We stated in the proposed rule that we agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19855), we
proposed that the eight ICD-10-PCS procedure codes shown in the table
above be designated as non-O.R. procedures. We invited public comments
on our proposal.
Comment: Commenters supported the proposal to change the
designation of the eight ICD-10-PCS procedure codes shown in the table
above that describe drainage of ear structures.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the eight ICD-10-
PCS procedure codes shown in the table above from O.R. procedures to
non-O.R. procedures, effective October 1, 2017.
(11) External Release
One commenter identified four ICD-10-PCS procedure codes that
describe procedures involving the external release of ear structures
that generally would not require the resources of an operating room and
can be performed at the bedside. These four ICD-10-PCS codes are shown
in the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
09N0XZZ................... Release right external ear, external
approach.
09N1XZZ................... Release left external ear, external
approach.
09N3XZZ................... Release right external auditory canal,
external approach.
09N4XZZ................... Release left external auditory canal,
external approach.
------------------------------------------------------------------------
We agreed with the commenter. Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19855), we proposed that the four ICD-10-PCS
procedure codes shown in the table above be designated as non-O.R.
procedures. We invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the four ICD-10-PCS procedure codes shown in the table
above that describe external release of ear structures.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the four ICD-10-
PCS procedure codes shown in the table above from O.R. procedures to
non-O.R. procedures, effective October 1, 2017.
(12) External Repair
One commenter identified three ICD-10-PCS procedure codes that
describe procedures involving the external repair of body parts that
generally would not require the resources of an operating room and can
be performed at the bedside. These three ICD-10-PCS codes are shown in
the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
09QKXZZ................... Repair nose, external approach.
0CQ4XZZ................... Repair buccal mucosa, external approach.
0CQ7XZZ................... Repair tongue, external approach.
------------------------------------------------------------------------
We agreed with the commenter. Therefore, in the FY 2019 IPPS/LTCH
PPS proposed rule (82 FR 19855), we proposed that the three ICD-10-PCS
procedure codes shown in the table above be designated as non-O.R.
procedures. We invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the three ICD-10-PCS procedure codes shown in the table
above that describe
[[Page 38071]]
external repair of body parts of various structures.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the three ICD-10-
PCS procedure codes shown in the table above from O.R. procedures to
non-O.R. procedures, effective October 1, 2017.
(13) Endoscopic/Transorifice Destruction
One commenter identified eight ICD-10-PCS procedure codes that
describe procedures involving the endoscopic/transorifice destruction
of respiratory system body parts that generally would not require the
resources of an operating room and can be performed at the bedside.
These eight ICD-10-PCS codes are shown in the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0B538ZZ................... Destruction of right main bronchus, via
natural or artificial opening endoscopic.
0B548ZZ................... Destruction of right upper lobe bronchus,
via natural or artificial opening
endoscopic.
0B558ZZ................... Destruction of right middle lobe bronchus,
via natural or artificial opening
endoscopic.
0B568ZZ................... Destruction of right lower lobe bronchus,
via natural or artificial opening
endoscopic.
0B578ZZ................... Destruction of left main bronchus, via
natural or artificial opening endoscopic.
0B588ZZ................... Destruction of left upper lobe bronchus, via
natural or artificial opening endoscopic.
0B598ZZ................... Destruction of lingula bronchus, via natural
or artificial opening endoscopic.
0B5B8ZZ................... Destruction of left lower lobe bronchus, via
natural or artificial opening endoscopic.
------------------------------------------------------------------------
We stated in the proposed rule that we agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19855
through 19856), we proposed that the eight ICD-10-PCS procedure codes
shown in the table above be designated as non-O.R. procedures. We
invited public comments on our proposal.
Comment: Some commenters agreed with the proposal to change the
designation of the eight ICD-10-PCS procedure codes that describe
procedures involving the endoscopic/transorifice destruction of
respiratory system body parts from O.R. procedures to non-O.R.
procedures. However, other commenters disagreed with the proposal.
These commenters believed that these procedures do, in fact, require
the resources of an operating room and stated that the suggestion that
these procedures can be performed at the bedside is clinically
inaccurate and misrepresents the nature of these procedures. According
to the commenters, the only instances in which these procedures would
be performed at the bedside would be if the patient was in the
intensive care unit and in emergent need of care. Otherwise, the
commenters indicated that providing these services at the patient's
bedside would not be appropriate. Commenters also noted that the
patients who undergo the above procedures typically have poor
respiratory function that requires treatment within an O.R. setting for
clinical and safety purposes. In addition, the commenters reported that
the administration of anesthesia during these procedures is critically
important. The commenters conducted an in-depth analysis to determine
the impact of the proposed change and noted that the resource
utilization associated with the inpatient claims reporting these
procedures more closely aligns with surgical MS-DRGs versus medical MS-
DRGs.
Response: We appreciate the commenters' support. In response to the
commenters who disagreed with changing the designation of the eight
ICD-10-PCS procedure codes that describe the endoscopic/transorifice
destruction of respiratory system body parts, we appreciate the
thorough review and analysis conducted in response to our solicitation
for comments on the proposal. Upon further review and consideration, we
agree that these procedures warrant an O.R. setting and assignment to
surgical MS-DRGs.
After consideration of the public comments we received, we are not
finalizing our proposal to change the designation of the eight ICD-10-
PCS procedure codes shown in the table above from O.R. procedures to
non-O.R. procedures. The eight procedure codes shown in the table above
will maintain their O.R. designation for FY 2018.
(14) Endoscopic/Transorifice Drainage
One commenter identified 40 ICD-10-PCS procedure codes that
describe procedures involving endoscopic/transorifice (via natural or
artificial opening) drainage of respiratory system body parts that
generally would not require the resources of an operating room and can
be performed at the bedside. We agreed with the commenter. Therefore,
in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19856), we proposed
that the 40 ICD-10-PCS procedure codes listed in Table 6P.4f.
associated with the proposed rule (which is available via the Internet
on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) be designated as non-O.R.
procedures. We invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the 40 ICD-10-PCS procedure codes that describe
endoscopic/transorifice (via natural or artificial opening) drainage of
respiratory system body parts.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the 40 ICD-10-PCS
procedure codes listed in Table 6P.4f. associated with the proposed
rule and this final rule (which is available via the Internet on the
CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
(15) Endoscopic/Transorifice Extirpation
One commenter identified nine ICD-10-PCS procedure codes that
describe procedures involving endoscopic/transorifice extirpation of
matter from respiratory system body parts that generally would not
require the resources of an operating room and can be performed at the
bedside. These nine ICD-10-PCS codes are shown in the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0BCC8ZZ................... Extirpation of matter from right upper lung
lobe, via natural or artificial opening
endoscopic.
[[Page 38072]]
0BCD8ZZ................... Extirpation of matter from right middle lung
lobe, via natural or artificial opening
endoscopic.
0BCF8ZZ................... Extirpation of matter from right lower lung
lobe, via natural or artificial opening
endoscopic.
0BCG8ZZ................... Extirpation of matter from left upper lung
lobe, via natural or artificial opening
endoscopic.
0BCH8ZZ................... Extirpation of matter from lung lingula, via
natural or artificial opening endoscopic.
0BCJ8ZZ................... Extirpation of matter from left lower lung
lobe, via natural or artificial opening
endoscopic.
0BCK8ZZ................... Extirpation of matter from right lung, via
natural or artificial opening endoscopic.
0BCL8ZZ................... Extirpation of matter from left lung, via
natural or artificial opening endoscopic.
0BCM8ZZ................... Extirpation of matter from bilateral lungs,
via natural or artificial opening
endoscopic.
------------------------------------------------------------------------
We stated in the proposed rule that we agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19856), we
proposed that the nine ICD-10-PCS procedure codes shown in the table
above be designated as non-O.R. procedures. We invited public comments
on our proposal.
Comment: Commenters supported the proposal to change the
designation of the nine ICD-10-PCS procedure codes that describe
endoscopic/transorifice extirpation of matter from respiratory system
body parts. However, one commenter disagreed with the proposal.
According to the commenter, the codes describe endoscopic procedures
performed on the lung and are more invasive in comparison to
endobronchial procedures and they require specialized equipment. The
commenter also noted that time, skill, and duration of sedation are
increased for endoscopic lung procedures versus procedures performed on
the bronchus (endobronchial).
Response: We appreciate the commenters' support. In response to the
commenter who disagreed with our proposal, upon further review and
consideration, we agree that these procedure codes warrant an O.R.
setting.
After consideration of the public comments we received, we are not
finalizing our proposal to designate the nine ICD-10-PCS procedure
codes shown in the table above as non-O.R. procedures. These procedure
codes will remain designated as O.R. procedures for FY 2018.
(16) Endoscopic/Transorifice Fragmentation
One commenter identified 16 ICD-10-PCS procedure codes that
describe procedures involving endoscopic/transorifice fragmentation of
respiratory system body parts that generally would not require the
resources of an operating room and can be performed at the bedside.
These 16 ICD-10-PCS codes are shown in the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0BF37ZZ................... Fragmentation in right main bronchus, via
natural or artificial opening.
0BF38ZZ................... Fragmentation in right main bronchus, via
natural or artificial opening endoscopic.
0BF47ZZ................... Fragmentation in right upper lobe bronchus,
via natural or artificial opening.
0BF48ZZ................... Fragmentation in right upper lobe bronchus,
via natural or artificial opening
endoscopic.
0BF57ZZ................... Fragmentation in right middle lobe bronchus,
via natural or artificial opening.
0BF58ZZ................... Fragmentation in right middle lobe bronchus,
via natural or artificial opening
endoscopic.
0BF67ZZ................... Fragmentation in right lower lobe bronchus,
via natural or artificial opening.
0BF68ZZ................... Fragmentation in right lower lobe bronchus,
via natural or artificial opening
endoscopic.
0BF77ZZ................... Fragmentation in left main bronchus, via
natural or artificial opening.
0BF78ZZ................... Fragmentation in left main bronchus, via
natural or artificial opening endoscopic.
0BF87ZZ................... Fragmentation in left upper lobe bronchus,
via natural or artificial opening.
0BF88ZZ................... Fragmentation in left upper lobe bronchus,
via natural or artificial opening
endoscopic.
0BF97ZZ................... Fragmentation in lingula bronchus, via
natural or artificial opening.
0BF98ZZ................... Fragmentation in lingula bronchus, via
natural or artificial opening endoscopic.
0BFB7ZZ................... Fragmentation in left lower lobe bronchus,
via natural or artificial opening.
0BFB8ZZ................... Fragmentation in left lower lobe bronchus,
via natural or artificial opening
endoscopic.
------------------------------------------------------------------------
We agreed with the commenter. Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19856 through 19857), we proposed that the 16
ICD-10-PCS procedure codes shown in the table above be designated as
non-O.R. procedures. We invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the16 ICD-10-PCS procedure codes that describe
endoscopic/transorifice fragmentation of respiratory system body parts.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the 16 ICD-10-PCS
procedure codes shown in the table above from O.R. procedures to non-
O.R. procedures, effective October 1, 2017.
(17) Endoscopic/Transorifice Insertion of Intraluminal Device
One commenter identified two ICD-10-PCS procedure codes that
describe procedures involving an endoscopic/transorifice (via natural
or artificial opening) insertion of intraluminal devices into
respiratory system body parts that generally would not require the
resources of an operating room and can be performed at the bedside.
These two ICD-10-PCS codes are shown in the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0BH17DZ................... Insertion of intraluminal device into
trachea, via natural or artificial opening.
0BH18DZ................... Insertion of intraluminal device into
trachea, via natural or artificial opening
endoscopic.
------------------------------------------------------------------------
[[Page 38073]]
We agreed with the commenter. Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19857), we proposed that the two ICD-10-PCS
procedure codes shown in the table above be designated non-O.R.
procedures. We invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the two ICD-10-PCS procedure codes that describe an
endoscopic/transorifice (via natural or artificial opening) insertion
of intraluminal devices into respiratory system body parts.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the two ICD-10-PCS
procedure codes shown in the table above from O.R. procedures to non-
O.R. procedures, effective October 1, 2017.
(18) Endoscopic/Transorifice Removal of Radioactive Element
One commenter identified two ICD-10-PCS procedure codes that
describe procedures involving the endoscopic/transorifice removal of
radioactive elements from respiratory system body parts that generally
would not require the resources of an operating room and can be
performed at the bedside. These two ICD-10-PCS codes are shown in the
table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0BPK71Z................... Removal of radioactive element from right
lung, via natural or artificial opening.
0BPK81Z................... Removal of radioactive element from right
lung, via natural or artificial opening
endoscopic.
------------------------------------------------------------------------
We agreed with the commenter. Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19857), we proposed that the two ICD-10-PCS
procedure codes shown in the table above be designated as non-O.R.
procedures. We invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the two ICD-10-PCS procedure codes that describe
procedures involving the endoscopic/transorifice removal of radioactive
elements from respiratory system body parts. However, one commenter
disagreed with the proposal and asserted that endoscopic procedures
performed on the lung are more invasive than endobronchial procedures.
Response: We appreciate the commenters' support. In response to the
commenter who disagreed with our proposal, we recognize that endoscopic
procedures performed on the lung may be considered more invasive than
endobronchial procedures. However, according to the American Cancer
Society, in most cases, anesthesia is not needed when the applicator
and/or radioactive implant is removed, as it is usually done in the
hospital room.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of ICD-10-PCS
procedure codes 0BPK71Z and 0BPK81Z from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
(19) Endoscopic/Transorifice Revision of Drainage, Infusion,
Intraluminal or Monitoring Device
One commenter identified 18 ICD-10-PCS procedure codes that
describe procedures involving the revision of drainage, infusion,
intraluminal, or monitoring devices from respiratory system body parts
that generally would not require the resources of an operating room and
can be performed at the bedside. We agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19857), we
proposed that the 18 ICD-10-PCS procedure codes listed in Table 6P.4g.
associated with the proposed rule (which is available via the Internet
on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) be designated as non-O.R.
procedures. We invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the 18 ICD-10-PCS procedure codes that describe
procedures involving the revision of drainage, infusion, intraluminal,
or monitoring devices from respiratory system body parts. However, one
commenter disagreed with the proposal and recommended that CMS maintain
an O.R. designation of 12 of the 18 proposed codes. The commenter
stated that, although it is uncertain how often a device within the
lung would be revised versus removed and replaced, endoscopic
procedures performed on the lung are more invasive than endobronchial
procedures.
Response: We appreciate the commenters' support. In response to the
commenter who disagreed with 12 of the 18 procedure codes in our
proposal, we still believe our proposal is appropriate, given that
there are a wide range of procedures that may be performed and are
described as a revision of a drainage, infusion, intraluminal, or
monitoring device in the lung and generally do not require the
resources of an operating room.
After consideration of the public comments we received, we are
finalizing our proposal to designate the 18 ICD-10-PCS procedure codes
listed in Table 6P.4g. associated with the proposed rule and this final
rule (which is available via the Internet on the CMS Web site at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) as non-O.R. procedures, effective October
1, 2017.
(20) Endoscopic/Transorifice Excision
One commenter identified one ICD-10-PCS procedure code that
describes the procedure involving endoscopic/transorifice (via natural
or artificial opening) excision of the digestive system body parts that
generally would not require the resources of an operating room and can
be performed at the bedside. This code is 0DBQ8ZZ (Excision of anus,
via natural or artificial opening endoscopic). We agreed with the
commenter. Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19857), we proposed that ICD-10-PCS procedure code 0DBQ8ZZ be
designated as a non-O.R. procedure. We invited public comments on our
proposal.
Comment: Commenters supported the proposal to change the
designation of ICD-10-PCS procedure code 0DBQ8ZZ.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of ICD-10-PCS
procedure code 0DBQ8ZZ (Excision of anus, via natural or artificial
opening endoscopic) from an O.R. procedure to a non-O.R. procedure,
effective October 1, 2017.
(21) Endoscopic/Transorifice Insertion
One commenter identified two ICD-10-PCS procedure codes that
describe procedures involving the endoscopic/transorifice (via natural
or artificial opening) insertion of intraluminal device into the
stomach that generally would not require the resources of an operating
room and can be performed at
[[Page 38074]]
the bedside. These two ICD-10-PCS codes are shown in the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0DH67DZ................... Insertion of intraluminal device into
stomach, via natural or artificial opening.
0DH68DZ................... Insertion of intraluminal device into
stomach, via natural or artificial opening
endoscopic.
------------------------------------------------------------------------
We agreed with the commenter. Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19857), we proposed that the two ICD-10-PCS
procedure codes shown in the table above be designated as non-O.R.
procedures. We invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the two ICD-10-PCS procedure codes that describe the
endoscopic/transorifice (via natural or artificial opening) insertion
of intraluminal device into the stomach.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the two ICD-10-PCS
procedure codes shown in the table above from O.R. procedures to non-
O.R. procedures, effective October 1, 2017.
(22) Endoscopic/Transorifice Removal
One commenter identified six ICD-10-PCS procedure codes that
describe procedures involving endoscopic/transorifice (via natural or
artificial opening) removal of feeding devices that generally would not
require the resources of an operating room and can be performed at the
bedside. These six ICD-10-PCS codes are shown in the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0DP07UZ................... Removal of feeding device from upper
intestinal tract, via natural or artificial
opening.
0DP08UZ................... Removal of feeding device from upper
intestinal tract, via natural or artificial
opening endoscopic.
0DP67UZ................... Removal of feeding device from stomach, via
natural or artificial opening.
0DP68UZ................... Removal of feeding device from stomach, via
natural or artificial opening endoscopic.
0DPD7UZ................... Removal of feeding device from lower
intestinal tract, via natural or artificial
opening.
0DPD8UZ................... Removal of feeding device from lower
intestinal tract, via natural or artificial
opening endoscopic.
------------------------------------------------------------------------
We agreed with the commenter. Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19857 through 19858), we proposed that the six
ICD-10-PCS procedure codes shown in the table above be designated as
non-O.R. procedures. We invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the six ICD-10-PCS procedure codes that describe the
endoscopic/transorifice (via natural or artificial opening) removal of
feeding devices.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the six ICD-10-PCS
procedure codes shown in the table above from O.R. procedures to non-
O.R. procedures, effective October 1, 2017.
(23) External Reposition
One commenter identified two ICD-10-PCS procedure codes that
describe procedures involving external reposition of gastrointestinal
body parts that generally would not require the resources of an
operating room and can be performed at the bedside. These two ICD-10-
PCS codes are shown in the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0DS5XZZ................... Reposition esophagus, external approach.
0DSQXZZ................... Reposition anus, external approach.
------------------------------------------------------------------------
We agreed with the commenter. Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19858), we proposed that the two ICD-10-PCS
procedure codes shown in the table above be designated as non-O.R.
procedures. We invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the two ICD-10-PCS procedure codes that describe the
external reposition of gastrointestinal body parts.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the two ICD-10-PCS
procedure codes shown in the table above from O.R. procedures to non-
O.R. procedures, effective October 1, 2017.
(24) Endoscopic/Transorifice Drainage
One commenter identified eight ICD-10-PCS procedure codes that
describe procedures involving endoscopic/transorifice (via natural or
artificial opening) drainage of hepatobiliary system and pancreatic
body parts that generally would not require the resources of an
operating room and can be performed at the bedside. These eight ICD-10-
PCS codes are shown in the table below.
[[Page 38075]]
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0F9580Z................... Drainage of right hepatic duct with drainage
device, via natural or artificial opening
endoscopic.
0F958ZZ................... Drainage of right hepatic duct, via natural
or artificial opening endoscopic.
0F9680Z................... Drainage of left hepatic duct with drainage
device, via natural or artificial opening
endoscopic.
0F968ZZ................... Drainage of left hepatic duct, via natural
or artificial opening endoscopic.
0F9880Z................... Drainage of cystic duct with drainage
device, via natural or artificial opening
endoscopic.
0F988ZZ................... Drainage of cystic duct, via natural or
artificial opening endoscopic.
0F9D8ZZ................... Drainage of pancreatic duct, via natural or
artificial opening endoscopic.
0F9F8ZZ................... Drainage of accessory pancreatic duct, via
natural or artificial opening endoscopic.
------------------------------------------------------------------------
We agreed with the commenter. Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19858), we proposed that the eight ICD-10-PCS
procedure codes shown in the table above be designated as non-O.R.
procedures. We invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the eight ICD-10-PCS procedure codes that describe
endoscopic/transorifice (via natural or artificial opening) drainage of
hepatobiliary system and pancreatic body parts.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the eight ICD-10-
PCS procedure codes shown in the table above from O.R. procedures to
non-O.R. procedures, effective October 1, 2017.
(25) Endoscopic/Transorifice Fragmentation
One commenter identified two ICD-10-PCS procedure codes that
describe procedures involving endoscopic/transorifice (via natural or
artificial opening) fragmentation of hepatobiliary system and
pancreatic body parts that generally would not require the resources of
an operating room and can be performed at the bedside. These two ICD-
10-PCS codes are shown in the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0FFD8ZZ................... Fragmentation in pancreatic duct, via
natural or artificial opening endoscopic.
0FFF8ZZ................... Fragmentation in accessory pancreatic duct,
via natural or artificial opening
endoscopic.
------------------------------------------------------------------------
We agreed with the commenter. Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19858), we proposed that the two ICD-10-PCS
procedure codes shown in the table above be designated as non-O.R.
procedures. We invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the two ICD-10-PCS procedure codes that describe
endoscopic/transorifice (via natural or artificial opening)
fragmentation of hepatobiliary system and pancreatic body parts.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the two ICD-10-PCS
procedure codes shown in the table above from O.R. procedures to non-
O.R. procedures, effective October 1, 2017.
(26) Percutaneous Alteration
One commenter identified three ICD-10-PCS procedure codes that
describe procedures involving percutaneous alteration of the breast
that generally would not require the resources of an operating room and
can be performed at the bedside. These three ICD-10-PCS codes are shown
in the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0H0T3JZ................... Alteration of right breast with synthetic
substitute, percutaneous approach.
0H0U3JZ................... Alteration of left breast with synthetic
substitute, percutaneous approach.
0H0V3JZ................... Alteration of bilateral breast with
synthetic substitute, percutaneous
approach.
------------------------------------------------------------------------
We agreed with the commenter. Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19858 through 19859), we proposed that the
three ICD-10-PCS procedure codes shown in the table above be designated
as non-O.R. procedures. We invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the three ICD-10-PCS procedure codes that describe
percutaneous alteration of the breast.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the three ICD-10-
PCS procedure codes shown in the table above from O.R. procedures to
non-O.R. procedures, effective October 1, 2017.
(27) External Division and Excision of Skin
One commenter identified 41 ICD-10-PCS procedure codes that
describe procedures involving external division and excision of the
skin for body parts that generally would not require the resources of
an operating room and can be performed at the bedside. We agreed with
the commenter. Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule
(82 FR 19859), we proposed that the 41 ICD-10-PCS procedure codes
listed in Table 6P.4h. associated with the proposed rule (which is
available via the Internet on the CMS Web site at: https://www.cms.gov/
Medicare/Medicare-Fee-for-Service-Payment/
[[Page 38076]]
AcuteInpatientPPS/) be designated as non-O.R. procedures. We
invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the 41 ICD-10-PCS procedure codes that describe external
division and excision of the skin for body parts.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the 41 ICD-10-PCS
procedure codes listed in Table 6P.4h. associated with the proposed
rule and this final rule (which is available via the Internet on the
CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
(28) External Excision of Breast
One commenter identified six ICD-10-PCS procedure codes that
describe procedures involving external excision of the breast that they
believed would generally not require the resources of an operating room
and can be performed at the bedside. These six ICD-10-PCS codes are
shown in the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0HBTXZZ................... Excision of right breast, external approach.
0HBUXZZ................... Excision of left breast, external approach.
0HBVXZZ................... Excision of bilateral breast, external
approach.
0HBWXZZ................... Excision of right nipple, external approach.
0HBXXZZ................... Excision of left nipple, external approach.
0HBYXZZ................... Excision of supernumerary breast, external
approach.
------------------------------------------------------------------------
We disagreed with the commenter because these procedure codes
describe various types of surgery performed on the breast or nipple
(for example, partial mastectomy) that would typically involve the use
of general anesthesia. Therefore, in the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 19859), we proposed that the six ICD-10-PCS procedure codes
shown in the table above remain designated as O.R. procedures. We
invited public comments on our proposal.
Comment: Commenters supported the proposal to maintain the current
designation of the six ICD-10-PCS procedure codes that describe
external excision of the breast. However, one commenter disagreed
specifically with the example of a partial mastectomy utilizing an
external approach. The commenter stated that the breast itself includes
glandular and ductal tissue, although it is assigned with skin to
Section 0H in the Medical and Surgical section of the ICD-10-PCS
classification. Therefore, according to the commenter, by definition, a
partial mastectomy, which involves excision of glandular/ductal tissue,
cannot be performed by an external approach because glandular tissue
cannot be removed through direct action upon the skin or mucous
membrane.
Response: We appreciate the commenters' support. In response to the
commenter who noted the example of a partial mastectomy that cannot be
performed by an external approach, we agree that the example may not
have been an appropriate illustration of an external approach according
to the ICD-10-PCS definitions. A more appropriate example would be an
excision of lesion of breast for the external approach. As the
commenter pointed out, the breast itself includes glandular and ductal
tissue, although it is assigned with skin to Chapter 0H. Because the
code title description does not specifically include the term ``skin,''
it can lead to confusion. We believe this area in the classification
may benefit from further review to determine if modifications are
warranted, in which case any proposals would be presented at a future
ICD-10 Coordination and Maintenance Committee meeting.
After consideration of the public comments we received, we are
finalizing our proposal to maintain the six ICD-10-PCS procedure codes
shown in the table above as O.R. procedures for FY 2018.
(29) Percutaneous Supplement
One commenter identified three ICD-10-PCS procedure codes that
describe procedures involving percutaneous supplement of the breast
with synthetic substitute that generally would not require the
resources of an operating room and can be performed at the bedside.
These three ICD-10-PCS codes are shown in the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0HUT3JZ................... Supplement right breast with synthetic
substitute, percutaneous approach.
0HUU3JZ................... Supplement left breast with synthetic
substitute, percutaneous approach.
0HUV3JZ................... Supplement bilateral breast with synthetic
substitute, percutaneous approach.
------------------------------------------------------------------------
We agreed with the commenter. Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19859), we proposed that the three ICD-10-PCS
procedure codes shown in the table above be designated as non-O.R.
procedures. We invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the three ICD-10-PCS procedure codes that describe
percutaneous supplement of the breast with synthetic substitute.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the three ICD-10-
PCS procedure codes shown in the table above from O.R. procedures to
non-O.R. procedures, effective October 1, 2017.
(30) Open Drainage
One commenter identified 25 ICD-10-PCS procedure codes that
describe procedures involving open drainage of subcutaneous tissue and
fascia body parts that generally would not require the resources of an
operating room and can be performed at the bedside. The list includes
procedure codes for drainage with or without placement of a drainage
device. We stated in the
[[Page 38077]]
proposed rule that we agreed with the commenter. Therefore, in the FY
2018 IPPS/LTCH PPS proposed rule (82 FR 19859), we proposed that the 25
ICD-10-PCS procedure codes listed in Table 6P.4i. associated with the
proposed rule (which is available via the Internet on the CMS Web site
at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) be designated as non-O.R. procedures. We
invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the 25 ICD-10-PCS procedure codes that describe
procedures involving open drainage of subcutaneous tissue and fascia
body parts. However, one commenter disagreed with changing the
designation for 22 of the 25 procedure codes in the proposal from O.R.
to non-O.R. This commenter agreed with the proposal to change the
designation for 3 of the 25 procedure codes because these codes
specifically describe the objective of placing a drainage device. The
commenter noted that the other procedures described by the 22 procedure
codes are performed on deeper subcutaneous tissue and fascia, are more
invasive, and are most often performed in the O.R. setting under
general anesthesia. According to the commenter, these codes are
assigned when the primary objective of the procedure is to incise
through the skin into the subcutaneous tissue and/or fascia in order to
drain and clean out an abscess or hematoma (fluid collection). The
commenter also noted that CMS disagreed with the recommendation to
reclassify open extraction of subcutaneous tissue and fascia to non-
O.R. procedures as discussed with regard to Table 6P.4k associated with
the FY 2018 IPPS/LTCH PPS proposed rule and for the same reasons, the
commenter believed that open drainage of subcutaneous tissue and fascia
should not be changed from an O.R. procedure to a non-O.R. procedure.
Response: We appreciate the commenters' support. In response to the
commenter who noted that the procedures described by the 22 procedure
codes are performed on deeper subcutaneous tissue and fascia, are more
invasive, and are most often performed in the O.R. setting under
general anesthesia, upon further review and consideration, we agree
that it is appropriate to maintain the designation of the procedure
codes as O.R. procedures.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the following
three ICD-10-PCS procedure codes that were listed in Table 6P.4i.
associated with the proposed rule (which is available via the Internet
on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) from O.R. procedures to
non-O.R. procedures, effective October 1, 2017.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0J9100Z................... Drainage of Face Subcutaneous Tissue and
Fascia with Drainage Device, Open Approach.
0J9J00Z................... Drainage of Right Hand Subcutaneous Tissue
and Fascia with Drainage Device, Open
Approach.
0J9K00Z................... Drainage of Left Hand Subcutaneous Tissue
and Fascia with Drainage Device, Open
Approach.
------------------------------------------------------------------------
We are not finalizing our proposal to change the designation for
the remaining 22 ICD-10-PCS procedure codes that were listed in Table
6P.4i. associated with the proposed rule (which is available via the
Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) from O.R.
procedures to non-O.R. procedures. Rather, these codes will maintain
their O.R. designation for FY 2018.
(31) Percutaneous Drainage
One commenter identified two ICD-10-PCS procedure codes that
describe procedures involving percutaneous drainage of subcutaneous
tissue and fascia body parts that generally would not require the
resources of an operating room and can be performed at the bedside.
These two ICD-10-PCS codes are shown in the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0J9J3ZZ................... Drainage of right hand subcutaneous tissue
and fascia, percutaneous approach.
0J9K3ZZ................... Drainage of left hand subcutaneous tissue
and fascia, percutaneous approach.
------------------------------------------------------------------------
We agreed with the commenter. Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19859), we proposed that the two ICD-10-PCS
procedure codes shown in the table above be designated as non-O.R.
procedures. We invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the two ICD-10-PCS procedure codes that describe
percutaneous drainage of subcutaneous tissue and fascia body parts.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the two ICD-10-PCS
procedure codes shown in the table above from O.R. procedures to non-
O.R. procedures, effective October 1, 2017.
(32) Percutaneous Extraction
One commenter identified 22 ICD-10-PCS procedure codes that
describe procedures involving percutaneous extraction of subcutaneous
tissue and fascia body parts that generally would not require the
resources of an operating room and can be performed at the bedside. We
agreed with the commenter. Therefore, in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19859 through 19860), we proposed that the 22 ICD-
10-PCS procedure codes listed in Table 6P.4j. associated with the
proposed rule (which is available via the Internet on the CMS Web site
at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) be designated as non-O.R. procedures. We
invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the 22 ICD-10-PCS procedure codes that describe
percutaneous extraction of
[[Page 38078]]
subcutaneous tissue and fascia body parts.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the 22 ICD-10-PCS
procedure codes listed in Table 6P.4j. associated with the proposed
rule and this final rule (which is available via the Internet on the
CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
(33) Open Extraction
One commenter identified 22 ICD-10-PCS procedure codes that
describe procedures involving open extraction of subcutaneous tissue
and fascia body parts that the commenter believed would generally not
require the resources of an operating room and can be performed at the
bedside. We stated in the proposed rule that we disagreed with the
commenter because these codes describe procedures that utilize an open
approach and are being performed on the skin and subcutaneous tissue.
Depending on the medical reason for the open extraction, the procedures
may require an O.R. setting. Therefore, in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19860), we proposed that the 22 ICD-10-PCS
procedure codes listed in Table 6P.4k. associated with the proposed
rule (which is available via the Internet on the CMS Web site at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) remain designated as O.R. procedures. We
invited public comments on our proposal.
Comment: Commenters supported the proposal to maintain the
designation of the 22 ICD-10-PCS procedure codes that describe open
extraction of subcutaneous tissue and fascia body parts.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to maintain the 22 ICD-10-PCS procedure codes
listed in Table 6P.4k. associated with the proposed rule and this final
rule (which is available via the Internet on the CMS Web site at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) as O.R. procedures for FY 2018.
(34) Percutaneous and Open Repair
One commenter identified 44 ICD-10-PCS procedure codes that
describe procedures involving percutaneous and open repair of
subcutaneous tissue and fascia body parts that generally would not
require the resources of an operating room and can be performed at the
bedside. We stated in the proposed rule that we agreed with the
commenter. Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19860), we proposed that the 44 ICD-10-PCS procedure codes listed in
Table 6P.4l. associated with the proposed rule (which is available via
the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) be
designated as non-O.R. procedures. We invited public comments on our
proposal.
Comment: Commenters supported the proposal to change the
designation of 44 ICD-10-PCS procedure codes that describe percutaneous
and open repair of subcutaneous tissue and fascia body parts from O.R.
to non-O.R. However, one commenter disagreed with changing the
designation of 22 of the 44 procedure codes. The commenter stated that
open repair of deeper subcutaneous tissue and fascia is much more
invasive and often performed in the O.R. setting under general
anesthesia. The commenter noted that patients who are admitted to the
inpatient setting following trauma often have multiple traumatic
injuries whereby extensive wound lacerations often require the O.R.
setting for complex repair and debridement under anesthesia.
Response: We appreciate the commenters' support. In response to the
commenter who disagreed with the proposal to change the designation of
22 of the 44 procedure codes, we agree that open repair of deeper
subcutaneous tissue and fascia is much more invasive and may be
performed in the O.R. setting under general anesthesia.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation for 22 procedure
codes that describe percutaneous repair of subcutaneous tissue and
fascia body parts listed in Table 6P.4l. associated with this final
rule (which is available via the Internet on the CMS Web site at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) from O.R. procedures to non-O.R.
procedures, effective October 1, 2017. We are not finalizing our
proposal to change the designation for the other 22 procedure codes
that describe open repair of subcutaneous tissue and fascia body parts
from O.R. procedures to non-O.R. procedures. Rather, they will maintain
their O.R. designation for FY 2018.
(35) External Release
One commenter identified 28 ICD-10-PCS procedure codes that
describe procedures involving external release of bursa and ligament
body parts that generally would not require the resources of an
operating room and can be performed at the bedside. We agreed with the
commenter. Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19860), we proposed that the 28 ICD-10-PCS procedure codes listed in
Table 6P.4m. associated with the proposed rule (which is available via
the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) be
designated as non-O.R. procedures. We invited public comments on our
proposal.
Comment: Commenters supported the proposal to change the
designation of the 28 ICD-10-PCS procedure codes that describe
procedures involving external release of bursa and ligament body parts.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the 28 ICD-10-PCS
procedure codes listed in Table 6P.4m. associated with the proposed
rule and this final rule (which is available via the Internet on the
CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
(36) External Repair
One commenter identified 135 ICD-10-PCS procedure codes that
describe procedures involving external repair of various bones and
joints. We stated in the proposed rule that we believed that these
procedures generally would not be performed in the operating room. In
the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19860), we proposed that
the 135 ICD-10-PCS procedure codes listed in Table 6P.4n. associated
with the proposed rule (which is available via the Internet on the CMS
Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) be designated as non-O.R.
procedures. We invited public comments on our proposal.
[[Page 38079]]
Comment: Commenters supported the proposal to change the
designation of the 135 ICD-10-PCS procedure codes that describe
external repair of various bones and joints.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the 135 ICD-10-PCS
procedure codes listed in Table 6P.4n. associated with the proposed
rule and this final rule (which is available via the Internet on the
CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
(37) External Reposition
One commenter identified 14 ICD-10-PCS procedure codes that
describe procedures involving external reposition of various bones.
These 14 ICD-10-PCS codes are shown in the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0NS0XZZ................... Reposition skull, external approach.
0NS1XZZ................... Reposition right frontal bone, external
approach.
0NS2XZZ................... Reposition left frontal bone, external
approach.
0NS3XZZ................... Reposition right parietal bone, external
approach.
0NS4XZZ................... Reposition left parietal bone, external
approach.
0NS5XZZ................... Reposition right temporal bone, external
approach.
0NS6XZZ................... Reposition left temporal bone, external
approach.
0NS7XZZ................... Reposition right occipital bone, external
approach.
0NS8XZZ................... Reposition left occipital bone, external
approach.
0PS3XZZ................... Reposition cervical vertebra, external
approach.
0PS4XZZ................... Reposition thoracic vertebra, external
approach.
0QS0XZZ................... Reposition lumbar vertebra, external
approach.
0QS1XZZ................... Reposition sacrum, external approach.
0QSSXZZ................... Reposition coccyx, external approach.
------------------------------------------------------------------------
We stated in the proposed rule that we believed that these
procedures generally would not be performed in the operating room.
Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19860), we
proposed that the 14 ICD-10-PCS procedure codes shown in the table
above be designated as non-O.R. procedures. We invited public comments
on our proposal.
Comment: Commenters supported the proposal to change the
designation of the 14 ICD-10-PCS procedure codes that describe
procedures involving external reposition of various bones.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the 14 ICD-10-PCS
procedure codes shown in the table above from O.R. procedures to non-
O.R. procedures, effective October 1, 2017. We note that, effective
October 1, 2017, the code titles for procedure code 0NS1XZZ (Reposition
right frontal bone, external approach) and procedure code 0NS7XZZ
(Reposition right occipital bone, external approach) have been revised
as reflected in Table 6F.--Revised Procedure Code Titles, and procedure
codes 0NS2XZZ (Reposition left frontal bone, external approach) and
0NS8XZZ (Reposition left occipital bone, external approach) have been
deleted as reflected in Table 6D. --Invalid Procedure Codes associated
with this final rule (which is available via the Internet on the CMS
Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/).
(38) Endoscopic/Transorifice Dilation
One commenter identified eight ICD-10-PCS procedure codes that
describe procedures involving endoscopic/transorifice (via natural or
artificial opening) dilation of urinary system body parts that
generally would not require the resources of an operating room and can
be performed at the bedside. These eight ICD-10-PCS codes are shown in
the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0T767ZZ................... Dilation of right ureter, via natural or
artificial opening.
0T768ZZ................... Dilation of right ureter, via natural or
artificial opening endoscopic.
0T777ZZ................... Dilation of left ureter, via natural or
artificial opening.
0T778ZZ................... Dilation of left ureter, via natural or
artificial opening endoscopic.
0T7B7DZ................... Dilation of bladder with intraluminal
device, via natural or artificial opening.
0T7B7ZZ................... Dilation of bladder, via natural or
artificial opening.
0T7B8DZ................... Dilation of bladder with intraluminal
device, via natural or artificial opening
endoscopic.
0T7B8ZZ................... Dilation of bladder, via natural or
artificial opening endoscopic.
------------------------------------------------------------------------
We stated in the proposed rule that we agreed with the commenter.
Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19860
through 19861), we proposed that the eight ICD-10-PCS procedure codes
shown in the table above be designated as non-O.R. procedures. We
invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the eight ICD-10-PCS procedure codes that describe
procedures involving endoscopic/transorifice (via natural or artificial
opening) dilation of urinary system body parts. However, one commenter
disagreed with changing the designation for four of the eight procedure
codes. These four codes are shown in the table below:
[[Page 38080]]
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0T768ZZ................... Dilation of right ureter, via natural or
artificial opening endoscopic.
0T778ZZ................... Dilation of left ureter, via natural or
artificial opening endoscopic.
0T7B8DZ................... Dilation of bladder with intraluminal
device, via natural or artificial opening
endoscopic.
0T7B8ZZ................... Dilation of bladder, via natural or
artificial opening endoscopic.
------------------------------------------------------------------------
According to the commenter, these four endoscopic procedures
typically require the use of the operating room or a dedicated suite
with specialized equipment and anesthesia.
Response: We appreciate the commenters' support. In response to the
commenter who disagreed with changing the designation for four of the
eight procedure codes that are displayed above, upon further review and
consideration, we agree that these four procedures are appropriate to
designate as O.R. procedures for the reasons provided by the commenter.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation for four ICD-10-PCS
procedure codes describing a transorifice (via natural or artificial
opening) approach for dilation of urinary system body parts from O.R.
procedures to non-O.R. procedures as shown in the table below,
effective October 1, 2017.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0T767ZZ................... Dilation of right ureter, via natural or
artificial opening.
0T777ZZ................... Dilation of left ureter, via natural or
artificial opening.
0T7B7DZ................... Dilation of bladder with intraluminal
device, via natural or artificial opening.
0T7B7ZZ................... Dilation of bladder, via natural or
artificial opening.
------------------------------------------------------------------------
We are not finalizing our proposal to change the designation of
four procedure codes (0T768ZZ, 0T778ZZ, 0T7B8DZ, and 0T7B8ZZ) that
describe endoscopic dilation of urinary system body parts from O.R.
procedures to non-O.R. procedures. Rather, they will maintain their O.R
designation for FY 2018.
(39) Endoscopic/Transorifice Excision
One commenter identified three ICD-10-PCS procedure codes that
describe procedures involving endoscopic/transorifice (via natural or
artificial opening) excision of urinary system body parts that the
commenter believed would generally not require the resources of an
operating room and can be performed at the bedside. These three ICD-10-
PCS codes are shown in the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0TBD7ZZ................... Excision of urethra, via natural or
artificial opening.
0TBD8ZZ................... Excision of urethra, via natural or
artificial opening endoscopic.
0TBDXZZ................... Excision of urethra, external approach.
------------------------------------------------------------------------
We disagreed with the commenter because, depending on the medical
reason for the excision, the procedures may require an O.R. setting.
Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19861), we
proposed that the three ICD-10-PCS procedure codes shown in the table
above remain designated as O.R. procedures. We invited public comments
on our proposal.
Comment: Commenters supported the proposal to maintain the
designation for three ICD-10-PCS procedure codes that describe an
endoscopic/transorifice (via natural or artificial opening) excision of
urinary system body parts.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal for the three ICD-10-PCS procedure codes shown
in the table above to maintain the O.R. designation for FY 2018.
(40) External/Transorifice Repair
One commenter identified three ICD-10-PCS procedure codes that
describe procedures involving external and transorifice (via natural or
artificial opening) repair of the vagina body part that generally would
not require the resources of an operating room and can be performed at
the bedside. These three ICD-10-PCS codes are shown in the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
0UQG7ZZ................... Repair vagina, via natural or artificial
opening.
0UQGXZZ................... Repair vagina, external approach.
0UQMXZZ................... Repair vulva, external approach.
------------------------------------------------------------------------
We agreed with the commenter. Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19861), we proposed that these three ICD-10-
PCS procedure codes shown in the table above be designated as non-O.R.
procedures. We invited public comments on our proposal.
[[Page 38081]]
Comment: Commenters supported the proposal to change the
designation for three ICD-10-PCS procedure codes that describe external
and transorifice (via natural or artificial opening) repair of the
vagina body part.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal for the three ICD-10-PCS procedure codes shown
in the table above to change the designation from O.R. procedures to
non-O.R. procedures, effective October 1, 2017.
(41) Percutaneous Transfusion
One commenter identified 20 ICD-10-PCS procedure codes that
describe procedures involving percutaneous transfusion of bone marrow
and stem cells that generally would not require the resources of an
operating room and can be performed at the bedside. We agreed with the
commenter. Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19861), we proposed that the 20 ICD-10-PCS procedure codes listed in
Table 6P.4o. associated with the proposed rule (which is available via
the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) be
designated as non-O.R. procedures. We invited public comments on our
proposal.
Comment: Numerous commenters expressed concern with the proposal
that involved 20 ICD-10-PCS procedure codes describing percutaneous
transfusion of bone marrow and stem cells. The commenters agreed that,
clinically, the proposal to designate these procedures as non-O.R. is
appropriate. However, the commenters objected to the notion that these
procedures would be reassigned to medical MS-DRGs with lower payment
rates as a result of the proposal. The commenters urged CMS to maintain
the current Pre-MDC logic for patients undergoing bone marrow
transplants and to maintain their respective MS-DRG assignments to MS-
DRG 014 (Allogeneic Bone Marrow Transplant); MS-DRG 016 (Autologous
Bone Marrow Transplant with CC/MCC and MS-DRG 017 (Autologous Bone
Marrow Transplant without CC/MCC).
Response: We acknowledge the concerns of the commenters. We agree
that it is important to maintain the current Pre-MDC logic for these
procedures while also appropriately designating them as non-O.R.
procedures.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation for the 20 ICD 10-PCS
procedure codes listed in Table 6P.4o. associated with the proposed
rule and this final rule (which is available via the Internet on the
CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) from O.R. procedures to non-O.R.
procedures, effective October 1, 2017, and maintaining their assignment
to the Pre-MDC MS-DRGs 014, 016, and 017 for FY 2018.
(42) External/Percutaneous/Transorifice Introduction
One commenter identified 51 ICD-10-PCS procedure codes that
describe procedures involving external, percutaneous and transorifice
(via natural or artificial opening) introduction of substances that
generally would not require the resources of an operating room and can
be performed at the bedside. We agreed with the commenter. Therefore,
in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19861), we proposed
that the 51 ICD-10-PCS procedure codes listed in Table 6P.4p.
associated with the proposed rule (which is available via the Internet
on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) be designated as non-O.R.
procedures. We invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the 51 ICD-10-PCS procedure codes that describe
procedures involving external, percutaneous and transorifice (via
natural or artificial opening) introduction of substances.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the 51 ICD-10-PCS
procedure codes listed in Table 6P.4p. associated with the proposed
rule and this final rule (which is available via the Internet on the
CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) from O.R. procedures to non-O.R.
procedures, effective October 1, 2017.
(43) Percutaneous/Diagnostic and Endoscopic/Transorifice Irrigation,
Measurement and Monitoring
One commenter identified 15 ICD-10-PCS procedure codes that
describe procedures involving percutaneous/diagnostic and endoscopic/
transorifice (via natural or artificial opening) irrigation,
measurement and monitoring of structures, pressures and flow that
generally would not require the resources of an operating room and can
be performed at the bedside. These 15 ICD-10-PCS codes are shown in the
table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
3E1N38X................... Irrigation of male reproductive using
irrigating substance, percutaneous
approach, diagnostic.
3E1N38Z................... Irrigation of male reproductive using
irrigating substance, percutaneous
approach.
3E1N78X................... Irrigation of male reproductive using
irrigating substance, via natural or
artificial opening, diagnostic.
3E1N78Z................... Irrigation of male reproductive using
irrigating substance, via natural or
artificial opening.
3E1N88X................... Irrigation of male reproductive using
irrigating substance, via natural or
artificial opening endoscopic, diagnostic.
3E1N88Z................... Irrigation of male reproductive using
irrigating substance, via natural or
artificial opening endoscopic.
4A0635Z................... Measurement of lymphatic flow, percutaneous
approach.
4A063BZ................... Measurement of lymphatic pressure,
percutaneous approach.
4A0C35Z................... Measurement of biliary flow, percutaneous
approach.
4A0C3BZ................... Measurement of biliary pressure,
percutaneous approach.
4A0C75Z................... Measurement of biliary flow, via natural or
artificial opening.
4A0C7BZ................... Measurement of biliary pressure, via natural
or artificial opening.
4A0C85Z................... Measurement of biliary flow, via natural or
artificial opening endoscopic.
4A1635Z................... Monitoring of lymphatic flow, percutaneous
approach.
4A163BZ................... Monitoring of lymphatic pressure,
percutaneous approach.
------------------------------------------------------------------------
[[Page 38082]]
We agreed with the commenter. Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19861 through 19862), we proposed that the 15
ICD-10-PCS procedure codes shown in the table above be designated as
non-O.R. procedures. We invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the 15 ICD-10-PCS procedure codes that describe
procedures involving percutaneous/diagnostic and endoscopic/
transorifice (via natural or artificial opening) irrigation,
measurement and monitoring of structures, pressures and flow.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the 15 ICD-10-PCS
procedure codes shown in the table above from O.R. procedures to non-
O.R. procedures, effective October 1, 2017.
(44) Imaging
One commenter identified six ICD-10-PCS procedure codes that
describe procedures involving imaging with contrast of hepatobiliary
system body parts that generally would not require the resources of an
operating room and can be performed at the bedside. These six ICD-10-
PCS codes are shown in the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
BF030ZZ................... Plain radiography of gallbladder and bile
ducts using high osmolar contrast.
BF031ZZ................... Plain radiography of gallbladder and bile
ducts using low osmolar contrast.
BF03YZZ................... Plain radiography of gallbladder and bile
ducts using other contrast.
BF0C0ZZ................... Plain radiography of hepatobiliary system,
all using high osmolar contrast.
BF0C1ZZ................... Plain radiography of hepatobiliary system,
all using low osmolar contrast.
BF0CYZZ................... Plain radiography of hepatobiliary system,
all using other contrast.
------------------------------------------------------------------------
We agreed with the commenter. Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19862), we proposed that the six ICD-10-PCS
procedure codes shown in the table above be designated as non-O.R.
procedures. We invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the six ICD-10-PCS procedure codes that describe imaging
with contrast of hepatobiliary system body parts.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the six ICD-10-PCS
procedure codes shown in the table above from O.R. procedures to non-
O.R. procedures, effective October 1, 2017.
(45) Prosthetics
One commenter identified five ICD-10-PCS procedure codes that
describe procedures involving the fitting and use of prosthetics and
assistive devices that would not require the resources of an operating
room. These five ICD-10-PCS codes are shown in the table below.
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
F0DZ8ZZ................... Prosthesis device fitting.
F0DZ9EZ................... Assistive, adaptive, supportive or
protective devices device fitting using
orthosis.
F0DZ9FZ................... Assistive, adaptive, supportive or
protective devices device fitting using
assistive, adaptive, supportive or
protective equipment.
F0DZ9UZ................... Assistive, adaptive, supportive or
protective devices device fitting using
prosthesis.
F0DZ9ZZ................... Assistive, adaptive, supportive or
protective devices device fitting.
------------------------------------------------------------------------
We agreed with the commenter. Therefore, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19862), we proposed that the five ICD-10-PCS
procedure codes shown in the table above be designated as non-O.R.
procedures. We invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of the five ICD-10-PCS procedure codes that describe the
fitting and use of prosthetics and assistive devices.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the five ICD-10-
PCS procedure codes shown in the table above from O.R. procedures to
non-O.R. procedures, effective October 1, 2017.
b. Revision of Neurostimulator Generator
We received a request to review three ICD-10-PCS procedure codes
that describe procedures for revision of a neurostimulator generator
that are currently designated as O.R. procedures and assigned to MS-
DRGs 252, 253 and 254 (Other Vascular Procedures with MCC, with CC and
without CC/MCC, respectively). The three codes are 0JWT0MZ (Revision of
stimulator generator in trunk subcutaneous tissue and fascia, open
approach), 0JWT3MZ (Revision of stimulator generator in trunk
subcutaneous tissue and fascia, percutaneous approach), and 0JWTXMZ
(Revision of stimulator generator in trunk subcutaneous tissue and
fascia, external approach).
The requester expressed concern with the MS-DRG assignments and
noted that although these codes are used to report revision of a
carotid sinus stimulator pulse generator and appropriately assigned to
MS-DRGs 252, 253 and 254 in MDC 5 (Diseases and Disorders of the
Circulatory System), they also are very frequently used for the
revision of the more common (for example, gastric, intracranial, sacral
and spinal) neurostimulator generators that would generally not require
the resources of an operating room.
The requestor also stated that the indication for revision of a
neurostimulator generator is typically due to a complication, which
would be reflected in a complication code such as ICD-10-CM diagnosis
code T85.734A (Infection and inflammatory reaction
[[Page 38083]]
due to implanted electronic neurostimulator, generator, initial
encounter) or T85.890A (Other specified complication of nervous system
prosthetic devices, implants and grafts, initial encounter). Because
both of these diagnosis codes are assigned to MDC 1 (Diseases and
Disorders of the Nervous System), when either code is reported in
combination with one of the three procedure codes that describe
revision of neurostimulator generator codes (currently assigned to MDC
5 (Diseases and Disorders of the Circulatory System)), the resulting
MS-DRG assignment is to MS-DRGs 981, 982 and 983 (Extensive O.R.
Procedure Unrelated to Principal Diagnosis with MCC, with CC and
without CC/MCC, respectively).
The requestor presented the following three options for
consideration.
Reclassify the ICD-10-PCS procedure codes from O.R.
Procedures to non-O.R. procedures that affect MS-DRG assignment only in
MDC 5. The requestor stated that, under this option, the procedure
codes would continue to appropriately group to MDC 5 when representing
cases involving carotid sinus stimulators and the other types of
neurostimulator cases would appropriately group to medical MS-DRGs.
Add the ICD-10-PCS procedure codes to MDC 1, such as to
MS-DRGs 040, 041 and 042 (Peripheral, Cranial Nerve and Other Nervous
System Procedures with MCC, with CC or Peripheral Neurostimulator and
without CC/MCC, respectively) under MDC 1. The requestor stated that
this option would resolve the inconsistency between a revision of a
carotid sinus stimulator generator being classified as an O.R.
procedure, while the other comparable procedures involving a revision
of a regular neurostimulator generator are not. The requestor also
stated that this option would preclude cases being assigned to MS-DRGs
981 through 983.
Stop classifying the ICD-10-PCS procedure codes as O.R.
procedures entirely. The requestor stated that, under this option, all
cases would then group to medical MS-DRGs, regardless of the type of
neurostimulator generator.
As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19862 through 19863), we analyzed claims data for the three revision of
neurostimulator generator procedure codes from the December 2016 update
of the FY 2016 MedPAR file and identified cases under MDC 1 in MS-DRGs
025, 026, and 027 (Craniotomy and Endovascular Intracranial Procedures
with MCC, with CC and without CC/MCC, respectively); MS-DRGs 029 and
030 (Spinal Procedures with CC or Neurostimulators and Spinal
Procedures without CC/MCC, respectively); and MS-DRGs 041 and 042
(Peripheral, Cranial Nerve and Other Nervous System Procedures with CC
or Peripheral Neurostimulator and without CC/MCC, respectively). We
also identified cases in MS-DRGs 982 and 983 (Extensive O.R. Procedure
Unrelated to Principal Diagnosis with CC and without CC/MCC,
respectively). Lastly, we identified cases under MDC 5 in MS-DRGs 252,
253 and 254 (Other Vascular Procedures with MCC, with CC and without
CC/MCC, respectively). Our findings are shown in the table below.
MS-DRGs for Revision of Neurostimulator Generator
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 025--All cases........................................... 18,442 9.1 $29,984
MS-DRG 025--Cases with revision of neurostimulator generator.... 1 12.0 73,716
MS-DRG 026--All cases........................................... 8,415 5.6 21,557
MS-DRG 026--Cases with revision of neurostimulator generator.... 1 6.0 4,537
MS-DRG 027--All cases........................................... 10,089 2.9 17,320
MS-DRG 027--Cases with revision of neurostimulator generator.... 4 1.8 13,906
MS-DRG 029--All cases........................................... 3,192 5.9 23,145
MS-DRG 029--Cases with revision of neurostimulator generator.... 6 3.5 32,799
MS-DRG 030--All cases........................................... 1,933 2.9 14,901
MS-DRG 030--Cases with revision of neurostimulator generator.... 11 2.2 18,294
MS-DRG 041--All cases........................................... 5,154 5.5 16,633
MS-DRG 041--Cases with revision of neurostimulator generator.... 1 1.0 14,145
MS-DRG 042--All cases........................................... 2,099 3.2 13,725
MS-DRG 042--Cases with revision of neurostimulator generator.... 2 2.0 28,587
MS-DRG 982--All cases........................................... 15,216 6.6 17,341
MS-DRG 982--Cases with revision of neurostimulator generator.... 11 3.0 15,336
MS-DRG 983--All cases........................................... 3,508 3.2 11,627
MS-DRG 983--Cases with revision of neurostimulator generator.... 9 4.2 19,951
MS-DRG 252--All cases........................................... 33,817 7.6 23,384
MS-DRG 252--Cases with revision of neurostimulator generator.... 1 7.0 18,740
MS-DRG 253--All cases........................................... 27,456 5.5 18,519
MS-DRG 253--Cases with revision of neurostimulator generator.... 7 2.4 19,078
MS-DRG 254--All cases........................................... 13,036 2.9 13,253
MS-DRG 254--Cases with revision of neurostimulator generator.... 3 3.0 11,981
----------------------------------------------------------------------------------------------------------------
As shown in the table above, the overall volume of cases reporting
revision of neurostimulator generator is low, with a total of only 57
cases found across all of the MS-DRGs reviewed. The average length of
stay for these cases reporting revision of neurostimulator generators
is, in most cases, consistent with the average length of stay for all
cases in the respective MS-DRG, with the majority having an average
length of stay below the average length of stay of all cases in the
respective MS-DRG. Finally, the average costs for cases reporting
revision of neurostimulator generator reflect a wide range, with a low
of $4,537 in MS-DRG 026 to a high of $73,716 in MS-DRG 025. It is clear
that, for MS-DRG 025 where the average costs of all cases were $29,984
and the average costs of the one case reporting revision of a
neurostimulator generator was $73,716, this is an atypical case. It is
also clear from the data that there were other procedures reported on
the claims where a procedure code for a revision of a neurostimulator
generator was assigned due to the various MS-DRG assignments.
[[Page 38084]]
We stated in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19862
and 19863) that after review of the claims data and discussion with our
clinical advisors, we agreed with and supported the requestor's first
option--to reclassify the three ICD-10-PCS procedure codes for revision
of neurostimulator generators from O.R. procedures to non-O.R.
procedures that affect the assignment for MS-DRGs 252, 253 and 254 to
account for the subset of patients undergoing revision of a carotid
sinus neurostimulator generator specifically. In cases where one of the
more common (for example, gastric, intracranial, sacral and spinal)
neurostimulator generators are undergoing revision, in the absence of
another O.R. procedure, these cases would group to a medical MS-DRG. We
invited public comments on our proposal.
Comment: Commenters supported the proposal to reclassify the
procedures described by ICD-10-PCS procedure codes 0JWT0MZ, 0JWT3MZ,
and 0JWTXMZ from O.R. procedures to non-O.R. procedures that affect the
assignment for MS-DRGs 252, 253 and 254. One commenter agreed with
reclassifying procedures described by ICD-10-PCS procedure codes
0JWT3MZ and 0JWTXMZ from O.R. procedures to non-O.R. procedures.
However, this commenter disagreed with reclassifying the procedure
described by procedure code 0JWT0MZ and stated that the procedure
utilizes an open approach and may require an O.R. setting. The
commenter suggested that the procedure code should be retained as an
O.R. designation to group to surgical MS-DRGs.
Response: We appreciate the commenters' support. In response to the
commenter who disagreed with reclassifying the procedure described by
procedure code 0JWT0MZ from an O.R. procedure to a non-O.R. procedure,
we note that, as discussed earlier, the three ICD-10-PCS procedure
codes would be classified as non-O.R. procedures that affect MS-DRGs
252, 253, and 254 for revision of carotid sinus neurostimulator
generators. We also noted that the volume of cases reporting revision
of neurostimulator generator is low, with a total of only 57 cases
found across all of the MS-DRGs reviewed. The initial requestor pointed
out that these three procedure codes are very frequently used for the
revision of the more common (for example, gastric, intracranial,
sacral, and spinal) neurostimulator generators that would generally not
require the resources of an operating room. Therefore, we believe it is
appropriate to classify the three procedure codes as non-O.R.
procedures affecting MS-DRGs 252, 253, and 254 specifically.
After consideration of the public comments we received, we are
finalizing our proposal to reclassify the procedures described by ICD-
10-PCS procedure codes 0JWT0MZ (Revision of stimulator generator in
trunk subcutaneous tissue and fascia, open approach), 0JWT3MZ (Revision
of stimulator generator in trunk subcutaneous tissue and fascia,
percutaneous approach), and 0JWTXMZ (Revision of stimulator generator
in trunk subcutaneous tissue and fascia, external approach) from O.R.
procedures to non-O.R. procedures that affect the assignment for MS-
DRGs 252, 253, and 254 to account for the subset of patients undergoing
revision of a carotid sinus neurostimulator generator, effective
October 1, 2017.
c. External Repair of Hymen
We received a request to examine ICD-10-PCS procedure code 0UQKXZZ
(Repair Hymen, External Approach). This procedure code is currently
designated as an O.R. procedure in MS-DRGs 746 and 747 (Vagina, Cervix
and Vulva Procedures with CC/MCC and without CC/MCC, respectively)
under MDC 13. The requestor provided examples and expressed concern
that procedure code 0UQKXZZ was assigned to MS-DRG 987 (Non-Extensive
O.R. Procedures Unrelated to Principal Diagnosis with MCC) when
reported on a maternal delivery claim. The requestor noted that when a
similar code was reported with an external approach (for example,
procedure code 0UQMXZZ (Repair vulva, external approach)), the case was
appropriately assigned to MS-DRG 774 (Vaginal Delivery with
Complicating Diagnosis). The requestor stated that the physician
documentation was simply more specific to the location of the repair
and this should not affect assignment to one of the MS-DRGs for vaginal
delivery.
As we discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19863 through 19864), we reviewed claims data involving the examples
provided by the requestor involving ICD-10-PCS procedure code 0UQKXZZ
(Repair hymen, external approach). Our clinical advisors agreed with
the requestor that reporting of this procedure code should not affect
assignment to one of the MS-DRGs for vaginal delivery. We stated that,
as discussed in section II.F.15.a. of the preamble of the proposed
rule, we were proposing to change the designation for a number of
procedure codes from O.R. procedures to non-O.R. procedures. Included
in that proposal were ICD-10-PCS procedure codes 0UQGXZZ (Repair
vagina, external approach) and 0UQMXZZ (Repair vulva, external
approach). Consistent with the change in designation for these
procedure codes, we also proposed to designate ICD-10-PCS procedure
code 0UQKXZZ (Repair hymen, external approach) as a non-O.R. procedure.
The procedure by itself would generally not require the resources of an
operating room. If the procedure is performed following a vaginal
delivery, it is the vaginal delivery procedure code 10E0XZZ (Delivery
of products of conception) that determines the MS-DRG assignment
because this code is designated as a non-O.R. procedure affecting the
MS-DRG.
Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19864), we proposed to change the designation of ICD-10-PCS procedure
code 0UQKXZZ (Repair hymen, external approach) to a non-O.R. procedure.
We stated that this redesignation will enable more appropriate MS-DRG
assignment for these cases by eliminating erroneous assignment to MS-
DRGs 987 through 989. We invited public comments on our proposal.
Comment: Commenters supported the proposal to change the
designation of ICD-10-PCS procedure code 0UQKXZZ from an O.R. procedure
to a non-O.R. procedure.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of ICD-10-PCS
procedure code 0UQKXZZ (Repair hymen, external approach) from an O.R.
procedure to a non-O.R. procedure, effective October 1, 2017.
d. Non-O.R. Procedures in MDC 17 (Myeloproliferative Diseases and
Disorders, Poorly Differentiated Neoplasms)
Under MDC 17 (Myeloproliferative Diseases and Disorders, Poorly
Differentiated Neoplasms), there are 11 surgical MS-DRGs. Of these 11
surgical MS-DRGs, there are 5 MS-DRGs containing GROUPER logic that
includes ICD-10-PCS procedure codes designated as O.R. procedures as
well as non-O.R. procedures that affect the MS-DRG. These five MS-DRGs
are MS-DRGs 823, 824, and 825 (Lymphoma and Non-Acute Leukemia with
Other O.R. Procedure with MCC, with CC and without CC/MCC,
respectively) and MS-DRGs 829 and 830 (Myeloproliferative Disorders or
Poorly Differentiated Neoplasms with Other O.R. Procedure with CC/MCC
and without CC/MCC, respectively). We
[[Page 38085]]
refer the reader to the ICD-10 Version 34 MS-DRG Definitions Manual
which is available via the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2017-IPPS-Final-Rule-Home-Page-Items/FY2017-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending for the
complete list of ICD-10-PCS procedure codes assigned to these five MS-
DRGs under MDC 17.
We reviewed the list of 244 ICD-10-PCS non-O.R. procedure codes
currently assigned to these 5 MS-DRGs. Of these 244 procedure codes, we
determined that 55 of the procedure codes do not warrant being
designated as non-O.R. procedures that affect these MS-DRGs because
they describe procedures that would generally not require a greater
intensity of resources for facilities to manage the cases included in
the definition (logic) of these MS-DRGs. Therefore, in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR 19864), we proposed that the 55 ICD-
10-PCS procedure codes listed in Table 6P.3c. associated with the
proposed rule (which is available via the Internet on the CMS Web site
at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) be removed from the logic for MS-DRGs
823, 824, 825, 829, and 830 as non-O.R. procedures affecting the MS-
DRG. We also proposed to revise the titles for these five MS-DRGs by
deleting the reference to ``O.R.'' in the title. Specifically, we
proposed to revise the titles for MS-DRGs 823, 824, and 825 to
``Lymphoma and Non-Acute Leukemia with Other Procedure with MCC, with
CC and without CC/MCC'', respectively, and we proposed to revise the
titles for MS-DRGs 829 and 830 to ``Myeloproliferative Disorders or
Poorly Differentiated Neoplasms with Other Procedure with CC/MCC and
without CC/MCC'', respectively. We invited public comments on our
proposals.
Comment: Commenters supported the proposal to remove the 55 ICD-10-
PCS procedure codes listed in Table 6P.3c. associated with the proposed
rule from the logic for MS-DRGs 823, 824, 825, 829, and 830 as non-O.R.
procedures affecting the MS-DRG. Commenters also supported the proposal
to revise the titles for MS-DRGs 823, 824, and 825, as well as for MS-
DRGs 829 and 830.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to remove the 55 ICD-10-PCS procedure codes
listed in Table 6P.3c. associated with the proposed rule and this final
rule (which is available via the Internet on the CMS Web site at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/) from the logic for MS-DRGs 823, 824, 825,
829, and 830 as non-O.R. procedures affecting the MS-DRG, effective
October 1, 2017. We also are finalizing our proposal to revise the
titles for MS-DRGs 823, 824, and 825 to ``Lymphoma and Non-Acute
Leukemia with Other Procedure with MCC, with CC and without CC/MCC'',
respectively, and to revise the titles for MS-DRGs 829 and 830 to
``Myeloproliferative Disorders or Poorly Differentiated Neoplasms with
Other Procedure with CC/MCC and without CC/MCC'', respectively,
effective October 1, 2017.
G. Recalibration of the FY 2018 MS-DRG Relative Weights
1. Data Sources for Developing the Relative Weights
In developing the FY 2018 system of weights, in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19864), we proposed to use two data
sources: Claims data and cost report data. As in previous years, the
claims data source is the MedPAR file. This file is based on fully
coded diagnostic and procedure data for all Medicare inpatient hospital
bills. The FY 2016 MedPAR data used in this final rule include
discharges occurring on October 1, 2015, through September 30, 2016,
based on bills received by CMS through March 31, 2017, from all
hospitals subject to the IPPS and short-term, acute care hospitals in
Maryland (which at that time were under a waiver from the IPPS). The FY
2016 MedPAR file used in calculating the relative weights includes data
for approximately 9,647,256 Medicare discharges from IPPS providers.
Discharges for Medicare beneficiaries enrolled in a Medicare Advantage
managed care plan are excluded from this analysis. These discharges are
excluded when the MedPAR ``GHO Paid'' indicator field on the claim
record is equal to ``1'' or when the MedPAR DRG payment field, which
represents the total payment for the claim, is equal to the MedPAR
``Indirect Medical Education (IME)'' payment field, indicating that the
claim was an ``IME only'' claim submitted by a teaching hospital on
behalf of a beneficiary enrolled in a Medicare Advantage managed care
plan. In addition, the March 31, 2017 update of the FY 2016 MedPAR file
complies with version 5010 of the X12 HIPAA Transaction and Code Set
Standards, and includes a variable called ``claim type.'' Claim type
``60'' indicates that the claim was an inpatient claim paid as fee-for-
service. Claim types ``61,'' ``62,'' ``63,'' and ``64'' relate to
encounter claims, Medicare Advantage IME claims, and HMO no-pay claims.
Therefore, the calculation of the relative weights for FY 2018 also
excludes claims with claim type values not equal to ``60.'' The data
exclude CAHs, including hospitals that subsequently became CAHs after
the period from which the data were taken. We note that the FY 2018
relative weights are based on the ICD-10-CM diagnoses and ICD-10-PCS
procedure codes from the FY 2016 MedPAR claims data, grouped through
the ICD-10 version of the FY 2018 GROUPER (Version 35).
The second data source used in the cost-based relative weighting
methodology is the Medicare cost report data files from the HCRIS.
Normally, we use the HCRIS dataset that is 3 years prior to the IPPS
fiscal year. Specifically, we are using cost report data from the March
31, 2017 update of the FY 2015 HCRIS for calculating the final FY 2018
cost-based relative weights.
2. Methodology for Calculation of the Relative Weights
As we explain in section II.E.2. of the preamble of this final
rule, we are calculating the FY 2018 relative weights based on 19 CCRs,
as we did for FY 2017. The methodology we used to calculate the FY 2018
MS-DRG cost-based relative weights based on claims data in the FY 2016
MedPAR file and data from the FY 2015 Medicare cost reports is as
follows:
To the extent possible, all the claims were regrouped
using the FY 2018 MS-DRG classifications discussed in sections II.B.
and II.F. of the preamble of this final rule.
The transplant cases that were used to establish the
relative weights for heart and heart-lung, liver and/or intestinal, and
lung transplants (MS-DRGs 001, 002, 005, 006, and 007, respectively)
were limited to those Medicare-approved transplant centers that have
cases in the FY 2016 MedPAR file. (Medicare coverage for heart, heart-
lung, liver and/or intestinal, and lung transplants is limited to those
facilities that have received approval from CMS as transplant centers.)
Organ acquisition costs for kidney, heart, heart-lung,
liver, lung, pancreas, and intestinal (or multivisceral organs)
transplants continue to be paid on a reasonable cost basis. Because
these acquisition costs are paid separately from the prospective
payment rate, it is
[[Page 38086]]
necessary to subtract the acquisition charges from the total charges on
each transplant bill that showed acquisition charges before computing
the average cost for each MS-DRG and before eliminating statistical
outliers.
Claims with total charges or total lengths of stay less
than or equal to zero were deleted. Claims that had an amount in the
total charge field that differed by more than $30.00 from the sum of
the routine day charges, intensive care charges, pharmacy charges,
implantable devices charges, supplies and equipment charges, therapy
services charges, operating room charges, cardiology charges,
laboratory charges, radiology charges, other service charges, labor and
delivery charges, inhalation therapy charges, emergency room charges,
blood and blood products charges, anesthesia charges, cardiac
catheterization charges, CT scan charges, and MRI charges were also
deleted.
At least 92.2 percent of the providers in the MedPAR file
had charges for 14 of the 19 cost centers. All claims of providers that
did not have charges greater than zero for at least 14 of the 19 cost
centers were deleted. In other words, a provider must have no more than
five blank cost centers. If a provider did not have charges greater
than zero in more than five cost centers, the claims for the provider
were deleted.
Statistical outliers were eliminated by removing all cases
that were beyond 3.0 standard deviations from the geometric mean of the
log distribution of both the total charges per case and the total
charges per day for each MS-DRG.
Effective October 1, 2008, because hospital inpatient
claims include a POA indicator field for each diagnosis present on the
claim, only for purposes of relative weight-setting, the POA indicator
field was reset to ``Y'' for ``Yes'' for all claims that otherwise have
an ``N'' (No) or a ``U'' (documentation insufficient to determine if
the condition was present at the time of inpatient admission) in the
POA field.
Under current payment policy, the presence of specific HAC codes,
as indicated by the POA field values, can generate a lower payment for
the claim. Specifically, if the particular condition is present on
admission (that is, a ``Y'' indicator is associated with the diagnosis
on the claim), it is not a HAC, and the hospital is paid for the higher
severity (and, therefore, the higher weighted MS-DRG). If the
particular condition is not present on admission (that is, an ``N''
indicator is associated with the diagnosis on the claim) and there are
no other complicating conditions, the DRG GROUPER assigns the claim to
a lower severity (and, therefore, the lower weighted MS-DRG) as a
penalty for allowing a Medicare inpatient to contract a HAC. While the
POA reporting meets policy goals of encouraging quality care and
generates program savings, it presents an issue for the relative
weight-setting process. Because cases identified as HACs are likely to
be more complex than similar cases that are not identified as HACs, the
charges associated with HAC cases are likely to be higher as well.
Therefore, if the higher charges of these HAC claims are grouped into
lower severity MS-DRGs prior to the relative weight-setting process,
the relative weights of these particular MS-DRGs would become
artificially inflated, potentially skewing the relative weights. In
addition, we want to protect the integrity of the budget neutrality
process by ensuring that, in estimating payments, no increase to the
standardized amount occurs as a result of lower overall payments in a
previous year that stem from using weights and case-mix that are based
on lower severity MS-DRG assignments. If this would occur, the
anticipated cost savings from the HAC policy would be lost.
To avoid these problems, we reset the POA indicator field to ``Y''
only for relative weight-setting purposes for all claims that otherwise
have an ``N'' or a ``U'' in the POA field. This resetting ``forced''
the more costly HAC claims into the higher severity MS-DRGs as
appropriate, and the relative weights calculated for each MS-DRG more
closely reflect the true costs of those cases.
In addition, in the FY 2013 IPPS/LTCH PPS final rule, for FY 2013
and subsequent fiscal years, we finalized a policy to treat hospitals
that participate in the Bundled Payments for Care Improvement (BPCI)
initiative the same as prior fiscal years for the IPPS payment modeling
and ratesetting process without regard to hospitals' participation
within these bundled payment models (that is, as if hospitals were not
participating in those models under the BPCI initiative). The BPCI
initiative, developed under the authority of section 3021 of the
Affordable Care Act (codified at section 1115A of the Act), is
comprised of four broadly defined models of care, which link payments
for multiple services beneficiaries receive during an episode of care.
Under the BPCI initiative, organizations enter into payment
arrangements that include financial and performance accountability for
episodes of care. For FY 2018, as we proposed, we are continuing to
include all applicable data from subsection (d) hospitals participating
in BPCI Models 1, 2, and 4 in our IPPS payment modeling and ratesetting
calculations. We refer readers to the FY 2013 IPPS/LTCH PPS final rule
for a complete discussion on our final policy for the treatment of
hospitals participating in the BPCI initiative in our ratesetting
process. For additional information on the BPCI initiative, we refer
readers to the CMS' Center for Medicare and Medicaid Innovation's Web
site at: https://innovation.cms.gov/initiatives/Bundled-Payments/ and to section IV.H.4. of the preamble of the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53341 through 53343).
The charges for each of the 19 cost groups for each claim were
standardized to remove the effects of differences in area wage levels,
IME and DSH payments, and for hospitals located in Alaska and Hawaii,
the applicable cost-of-living adjustment. Because hospital charges
include charges for both operating and capital costs, we standardized
total charges to remove the effects of differences in geographic
adjustment factors, cost-of-living adjustments, and DSH payments under
the capital IPPS as well. Charges were then summed by MS-DRG for each
of the 19 cost groups so that each MS-DRG had 19 standardized charge
totals. Statistical outliers were then removed. These charges were then
adjusted to cost by applying the national average CCRs developed from
the FY 2015 cost report data.
The 19 cost centers that we used in the relative weight calculation
are shown in the following table. The table shows the lines on the cost
report and the corresponding revenue codes that we used to create the
19 national cost center CCRs. In the FY 2018 IPPS/LTCH PPS proposed
rule, we stated that if stakeholders have comments about the groupings
in this table, we may consider those comments as we finalize our
policy. However, we did not receive any comments on the groupings in
this table, and therefore, we are finalizing the groupings as proposed.
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3. Development of National Average CCRs
We developed the national average CCRs as follows:
Using the FY 2015 cost report data, we removed CAHs, Indian Health
Service hospitals, all-inclusive rate hospitals, and cost reports that
represented time periods of less than 1 year (365 days). We included
hospitals located in Maryland because we include their charges in our
claims database. We then created CCRs for each provider for each cost
center (see prior table for line items used in the calculations) and
removed any CCRs that were greater than 10 or less than 0.01. We
normalized the departmental CCRs by dividing the CCR for each
department by the total CCR for the hospital for the purpose of
trimming the data. We then took the logs of the normalized cost center
CCRs and removed any cost center CCRs where the log of the cost center
CCR was greater or less than the mean log plus/minus 3 times the
standard deviation for the log of that
[[Page 38103]]
cost center CCR. Once the cost report data were trimmed, we calculated
a Medicare-specific CCR. The Medicare-specific CCR was determined by
taking the Medicare charges for each line item from Worksheet D-3 and
deriving the Medicare-specific costs by applying the hospital-specific
departmental CCRs to the Medicare-specific charges for each line item
from Worksheet D-3. Once each hospital's Medicare-specific costs were
established, we summed the total Medicare-specific costs and divided by
the sum of the total Medicare-specific charges to produce national
average, charge-weighted CCRs.
After we multiplied the total charges for each MS-DRG in each of
the 19 cost centers by the corresponding national average CCR, we
summed the 19 ``costs'' across each MS-DRG to produce a total
standardized cost for the MS-DRG. The average standardized cost for
each MS-DRG was then computed as the total standardized cost for the
MS-DRG divided by the transfer-adjusted case count for the MS-DRG. The
average cost for each MS-DRG was then divided by the national average
standardized cost per case to determine the relative weight.
The FY 2018 cost-based relative weights were then normalized by an
adjustment factor of 1.737382 so that the average case weight after
recalibration was equal to the average case weight before
recalibration. The normalization adjustment is intended to ensure that
recalibration by itself neither increases nor decreases total payments
under the IPPS, as required by section 1886(d)(4)(C)(iii) of the Act.
The 19 national average CCRs for FY 2018 are as follows:
------------------------------------------------------------------------
Group CCR
------------------------------------------------------------------------
Routine Days............................................ 0.458
Intensive Days.......................................... 0.373
Drugs................................................... 0.194
Supplies & Equipment.................................... 0.297
Implantable Devices..................................... 0.332
Therapy Services........................................ 0.321
Laboratory.............................................. 0.120
Operating Room.......................................... 0.191
Cardiology.............................................. 0.112
Cardiac Catheterization................................. 0.117
Radiology............................................... 0.153
MRIs.................................................... 0.079
CT Scans................................................ 0.038
Emergency Room.......................................... 0.171
Blood and Blood Products................................ 0.322
Other Services.......................................... 0.365
Labor & Delivery........................................ 0.412
Inhalation Therapy...................................... 0.169
Anesthesia.............................................. 0.089
------------------------------------------------------------------------
Since FY 2009, the relative weights have been based on 100 percent
cost weights based on our MS-DRG grouping system.
When we recalibrated the DRG weights for previous years, we set a
threshold of 10 cases as the minimum number of cases required to
compute a reasonable weight. In the FY 2018 IPPS/LTCH PPS proposed
rule, we proposed to use that same case threshold in recalibrating the
MS-DRG relative weights for FY 2018. Using data from the March 2017
update of the FY 2016 MedPAR file, there are 7 MS-DRGs that contain
fewer than 10 cases. We note that two MS-DRGs that were included as
low-volume MS-DRGs in the proposed rule, MS-DRG 016 (Autologous Bone
Marrow Transplant with CC/MCC) and MS-DRG 017 (Autologous Bone Marrow
Transplant without CC/MCC), are no longer included in this list
because, as discussed in section II.F.17.a. of the preamble of this
final rule, we are maintaining the current Pre-MDC logic for the
procedures assigned to those MS-DRGs in FY 2018. For FY 2018, because
we do not have sufficient MedPAR data to set accurate and stable cost
relative weights for these low-volume MS-DRGs, we proposed to compute
relative weights for the low-volume MS-DRGs by adjusting their FY 2017
relative weights by the percentage change in the average weight of the
cases in other MS-DRGs. The crosswalk table based on data from the
December 2016 update of the FY 2016 MedPAR file was included in the
proposed rule. We invited public comments on our proposals.
Comment: Some commenters requested a transition period for
substantial reductions in relative weights in order to facilitate
payment stability. Specifically, some commenters asked CMS to establish
a cap of 10 percent for the degree to which a payment weight may
decline in FY 2018 relative to FY 2017. Other commenters also suggested
the possibility of a phase-in or multi-year transition period in cases
of substantial fluctuation of payment rates. Commenters suggested that
large decreases appear to result from the transition from ICD-9 coding
to ICD-10 coding in the claims data used to establish the relative
weights. These commenters also expressed concern that the proposed
weights for MS-DRGs with significant reductions in relative weights
would be too low to cover the costs of caring for patients, while other
commenters expressed concern about access to such services.
Commenters also indicated that the reductions to MS-DRG relative
weights resulting from the transition from ICD-9 coding to ICD-10
coding are in contrast to the goal of ICD-10 to accurately replicate
ICD-9 assignments and avoid unintended payment redistribution. One
commenter asserted that because IPPS is a prospective payment system,
the future claims data should result in an upward adjustment to these
MS-DRGs for FY 2019. The commenter believed that hospitals should not
be penalized as significantly while the FY 2018 rates are in effect.
Response: In considering these public comments, we examined the MS-
DRGs with proposed relative weights that were significantly lower than
the FY 2017 relative weights. While we do not believe it is normally
appropriate to address relative weight fluctuations that appear to be
driven by changes in the underlying data, in this particular
circumstance, we share the commenters' concern that, for a limited
number of MS-DRGs, this may be more extensively related to the
implementation of ICD-10 coding and believe this issue requires further
analysis. In the interim, in response to these comments, we are
adopting a temporary one-time measure for FY 2018 for MS-DRGs where the
relative weight would have declined by more than 20 percent from the FY
2017 relative weight. We believe this policy is consistent with our
general authority to assign and update appropriate weighting factors
under sections 1886(d)(4)(B) and (C) of the Act. Specifically, for
these MS-DRGs, the relative weight will be set at 80 percent of the FY
2017 final relative weight, and we will revisit this issue in the FY
2019 rulemaking when additional ICD-10 claims data become available. We
believe that 20 percent strikes an appropriate balance between
addressing concerns that the relative weight changes for some MS-DRGs
may be more extensively related to the implementation of ICD-10 and the
fact that historically we occasionally have had appropriate relative
weight changes of this magnitude. Further analysis and data will enable
us to better determine the appropriateness of these changes, given the
unique circumstances of the ICD-10 implementation.
After consideration of the public comments we received, we are
finalizing our proposal, with the modification for recalibrating the
MS-DRG relative weights for FY 2018 at 80 percent of the FY 2017 final
relative weights, for those MS-DRGs where the relative weight would
have declined by more than 20 percent from the FY 2017 relative weight.
The crosswalk table for the low-volume MS-DRGs is shown below.
[[Page 38104]]
------------------------------------------------------------------------
Low-volume MS-DRG MS-DRG title Crosswalk to MS-DRG
------------------------------------------------------------------------
789................... Neonates, Died or Final FY 2017 relative
Transferred to weight (adjusted by
Another Acute Care percent change in
Facility. average weight of the
cases in other MS-DRGs).
790................... Extreme Immaturity or Final FY 2017 relative
Respiratory Distress weight (adjusted by
Syndrome, Neonate. percent change in
average weight of the
cases in other MS-DRGs).
791................... Prematurity with Final FY 2017 relative
Major Problems. weight (adjusted by
percent change in
average weight of the
cases in other MS-DRGs).
792................... Prematurity without Final FY 2017 relative
Major Problems. weight (adjusted by
percent change in
average weight of the
cases in other MS-DRGs).
793................... Full-Term Neonate Final FY 2017 relative
with Major Problems. weight (adjusted by
percent change in
average weight of the
cases in other MS-DRGs).
794................... Neonate with Other Final FY 2017 relative
Significant Problems. weight (adjusted by
percent change in
average weight of the
cases in other MS-DRGs).
795................... Normal Newborn....... Final FY 2017 relative
weight (adjusted by
percent change in
average weight of the
cases in other MS-DRGs).
------------------------------------------------------------------------
H. Add-On Payments for New Services and Technologies for FY 2018
1. Background
Sections 1886(d)(5)(K) and (L) of the Act establish a process of
identifying and ensuring adequate payment for new medical services and
technologies (sometimes collectively referred to in this section as
``new technologies'') under the IPPS. Section 1886(d)(5)(K)(vi) of the
Act specifies that a medical service or technology will be considered
new if it meets criteria established by the Secretary after notice and
opportunity for public comment. Section 1886(d)(5)(K)(ii)(I) of the Act
specifies that a new medical service or technology may be considered
for new technology add-on payment if, based on the estimated costs
incurred with respect to discharges involving such service or
technology, the DRG prospective payment rate otherwise applicable to
such discharges under this subsection is inadequate. We note that,
beginning with discharges occurring in FY 2008, CMS transitioned from
CMS-DRGs to MS-DRGs.
The regulations at 42 CFR 412.87 implement these provisions and
specify three criteria for a new medical service or technology to
receive the additional payment: (1) The medical service or technology
must be new; (2) the medical service or technology must be costly such
that the DRG rate otherwise applicable to discharges involving the
medical service or technology is determined to be inadequate; and (3)
the service or technology must demonstrate a substantial clinical
improvement over existing services or technologies. Below we highlight
some of the major statutory and regulatory provisions relevant to the
new technology add-on payment criteria, as well as other information.
For a complete discussion on the new technology add-on payment
criteria, we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76
FR 51572 through 51574).
Under the first criterion, as reflected in Sec. 412.87(b)(2), a
specific medical service or technology will be considered ``new'' for
purposes of new medical service or technology add-on payments until
such time as Medicare data are available to fully reflect the cost of
the technology in the MS-DRG weights through recalibration. We note
that we do not consider a service or technology to be new if it is
substantially similar to one or more existing technologies. That is,
even if a technology receives a new FDA approval or clearance, it may
not necessarily be considered ``new'' for purposes of new technology
add-on payments if it is ``substantially similar'' to a technology that
was approved or cleared by FDA and has been on the market for more than
2 to 3 years. In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR
43813 through 43814), we established criteria for evaluating whether a
new technology is substantially similar to an existing technology,
specifically: (1) Whether a product uses the same or a similar
mechanism of action to achieve a therapeutic outcome; (2) whether a
product is assigned to the same or a different MS-DRG; and (3) whether
the new use of the technology involves the treatment of the same or
similar type of disease and the same or similar patient population. If
a technology meets all three of these criteria, it would be considered
substantially similar to an existing technology and would not be
considered ``new'' for purposes of new technology add-on payments. For
a detailed discussion of the criteria for substantial similarity, we
refer readers to the FY 2006 IPPS final rule (70 FR 47351 through
47352), and the FY 2010 IPPS/LTCH PPS final rule (74 FR 43813 through
43814).
Under the second criterion, Sec. 412.87(b)(3) further provides
that, to be eligible for the add-on payment for new medical services or
technologies, the MS-DRG prospective payment rate otherwise applicable
to discharges involving the new medical service or technology must be
assessed for adequacy. Under the cost criterion, consistent with the
formula specified in section 1886(d)(5)(K)(ii)(I) of the Act, to assess
the adequacy of payment for a new technology paid under the applicable
MS-DRG prospective payment rate, we evaluate whether the charges for
cases involving the new technology exceed certain threshold amounts.
Table 10 that was released with the FY 2017 IPPS/LTCH PPS final rule
contains the final thresholds that we used to evaluate applications for
new medical service and new technology add-on payments for FY 2018. We
refer readers to the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2017-IPPS-Final-Rule-Home-Page-Items/FY2017-IPPS-Final-Rule-Tables.html to download and
view Table 10.
In the September 7, 2001 final rule that established the new
technology add-on payment regulations (66 FR 46917), we discussed the
issue of whether the Health Insurance Portability and Accountability
Act (HIPAA) Privacy Rule at 45 CFR parts 160 and 164 applies to claims
information that providers submit with applications for new medical
service and new technology add-on payments. We refer readers to the FY
2012 IPPS/LTCH PPS final rule (76 FR 51573) for complete information on
this issue.
Under the third criterion, Sec. 412.87(b)(1) of our existing
regulations provides that a new technology is an appropriate candidate
for an additional payment when it represents an advance that
substantially improves, relative to technologies previously available,
the diagnosis or treatment of Medicare beneficiaries. For example, a
new technology represents a substantial
[[Page 38105]]
clinical improvement when it reduces mortality, decreases the number of
hospitalizations or physician visits, or reduces recovery time compared
to the technologies previously available. (We refer readers to the
September 7, 2001 final rule for a more detailed discussion of this
criterion (66 FR 46902).)
The new medical service or technology add-on payment policy under
the IPPS provides additional payments for cases with relatively high
costs involving eligible new medical services or technologies, while
preserving some of the incentives inherent under an average-based
prospective payment system. The payment mechanism is based on the cost
to hospitals for the new medical service or technology. Under Sec.
412.88, if the costs of the discharge (determined by applying cost-to-
charge ratios (CCRs) as described in Sec. 412.84(h)) exceed the full
DRG payment (including payments for IME and DSH, but excluding outlier
payments), Medicare will make an add-on payment equal to the lesser of:
(1) 50 percent of the estimated costs of the new technology or medical
service (if the estimated costs for the case including the new
technology or medical service exceed Medicare's payment); or (2) 50
percent of the difference between the full DRG payment and the
hospital's estimated cost for the case. Unless the discharge qualifies
for an outlier payment, the additional Medicare payment is limited to
the full MS-DRG payment plus 50 percent of the estimated costs of the
new technology or new medical service.
Section 503(d)(2) of Public Law 108-173 provides that there shall
be no reduction or adjustment in aggregate payments under the IPPS due
to add-on payments for new medical services and technologies.
Therefore, in accordance with section 503(d)(2) of Public Law 108-173,
add-on payments for new medical services or technologies for FY 2005
and later years have not been subjected to budget neutrality.
In the FY 2009 IPPS final rule (73 FR 48561 through 48563), we
modified our regulations at Sec. 412.87 to codify our longstanding
practice of how CMS evaluates the eligibility criteria for new medical
service or technology add-on payment applications. That is, we first
determine whether a medical service or technology meets the newness
criterion, and only if so, do we then make a determination as to
whether the technology meets the cost threshold and represents a
substantial clinical improvement over existing medical services or
technologies. We amended Sec. 412.87(c) to specify that all applicants
for new technology add-on payments must have FDA approval or clearance
for their new medical service or technology by July 1 of each year
prior to the beginning of the fiscal year that the application is being
considered.
The Council on Technology and Innovation (CTI) at CMS oversees the
agency's cross-cutting priority on coordinating coverage, coding and
payment processes for Medicare with respect to new technologies and
procedures, including new drug therapies, as well as promoting the
exchange of information on new technologies and medical services
between CMS and other entities. The CTI, composed of senior CMS staff
and clinicians, was established under section 942(a) of Public Law 108-
173. The Council is co-chaired by the Director of the Center for
Clinical Standards and Quality (CCSQ) and the Director of the Center
for Medicare (CM), who is also designated as the CTI's Executive
Coordinator.
The specific processes for coverage, coding, and payment are
implemented by CM, CCSQ, and the local Medicare Administrative
Contractors (MACs) (in the case of local coverage and payment
decisions). The CTI supplements, rather than replaces, these processes
by working to assure that all of these activities reflect the agency-
wide priority to promote high-quality, innovative care. At the same
time, the CTI also works to streamline, accelerate, and improve
coordination of these processes to ensure that they remain up to date
as new issues arise. To achieve its goals, the CTI works to streamline
and create a more transparent coding and payment process, improve the
quality of medical decisions, and speed patient access to effective new
treatments. It is also dedicated to supporting better decisions by
patients and doctors in using Medicare-covered services through the
promotion of better evidence development, which is critical for
improving the quality of care for Medicare beneficiaries.
To improve the understanding of CMS' processes for coverage,
coding, and payment and how to access them, the CTI has developed an
``Innovator's Guide'' to these processes. The intent is to consolidate
this information, much of which is already available in a variety of
CMS documents and in various places on the CMS Web site, in a user-
friendly format. This guide was published in 2010 and is available on
the CMS Web site at: https://www.cms.gov/CouncilonTechInnov/Downloads/InnovatorsGuide5_10_10.pdf.
As we indicated in the FY 2009 IPPS final rule (73 FR 48554), we
invite any product developers or manufacturers of new medical services
or technologies to contact the agency early in the process of product
development if they have questions or concerns about the evidence that
would be needed later in the development process for the agency's
coverage decisions for Medicare.
The CTI aims to provide useful information on its activities and
initiatives to stakeholders, including Medicare beneficiaries,
advocates, medical product manufacturers, providers, and health policy
experts. Stakeholders with further questions about Medicare's coverage,
coding, and payment processes, or who want further guidance about how
they can navigate these processes, can contact the CTI at
CTI@cms.hhs.gov.
We note that applicants for add-on payments for new medical
services or technologies for FY 2019 must submit a formal request,
including a full description of the clinical applications of the
medical service or technology and the results of any clinical
evaluations demonstrating that the new medical service or technology
represents a substantial clinical improvement, along with a significant
sample of data to demonstrate that the medical service or technology
meets the high-cost threshold. Complete application information, along
with final deadlines for submitting a full application, will be posted
as it becomes available on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/newtech.html. To allow interested parties to identify the new medical
services or technologies under review before the publication of the
proposed rule for FY 2019, the CMS Web site also will post the tracking
forms completed by each applicant.
2. Public Input Before Publication of a Notice of Proposed Rulemaking
on Add-On Payments
Section 1886(d)(5)(K)(viii) of the Act, as amended by section
503(b)(2) of Public Law 108-173, provides for a mechanism for public
input before publication of a notice of proposed rulemaking regarding
whether a medical service or technology represents a substantial
clinical improvement or advancement. The process for evaluating new
medical service and technology applications requires the Secretary to--
Provide, before publication of a proposed rule, for public
input regarding whether a new service or technology represents an
advance in medical technology that substantially
[[Page 38106]]
improves the diagnosis or treatment of Medicare beneficiaries;
Make public and periodically update a list of the services
and technologies for which applications for add-on payments are
pending;
Accept comments, recommendations, and data from the public
regarding whether a service or technology represents a substantial
clinical improvement; and
Provide, before publication of a proposed rule, for a
meeting at which organizations representing hospitals, physicians,
manufacturers, and any other interested party may present comments,
recommendations, and data regarding whether a new medical service or
technology represents a substantial clinical improvement to the
clinical staff of CMS.
In order to provide an opportunity for public input regarding add-
on payments for new medical services and technologies for FY 2018 prior
to publication of the FY 2018 IPPS/LTCH PPS proposed rule, we published
a notice in the Federal Register on November 9, 2016 (81 FR 78814), and
held a town hall meeting at the CMS Headquarters Office in Baltimore,
MD, on February 14, 2017. In the announcement notice for the meeting,
we stated that the opinions and presentations provided during the
meeting would assist us in our evaluations of applications by allowing
public discussion of the substantial clinical improvement criterion for
each of the FY 2018 new medical service and technology add-on payment
applications before the publication of the FY 2018 IPPS/LTCH PPS
proposed rule.
Approximately 66 individuals registered to attend the town hall
meeting in person, while additional individuals listened over an open
telephone line. We also live-streamed the town hall meeting and posted
the town hall on the CMS YouTube Web page at: https://www.youtube.com/watch?v=9niqfxXe4oA&t=217s. We considered each applicant's presentation
made at the town hall meeting, as well as written comments submitted on
the applications that were received by the due date of February 24,
2017, in our evaluation of the new technology add-on payment
applications for FY 2018 in the FY 2018 IPPS/LTCH PPS proposed rule.
In response to the published notice and the February 14, 2017 New
Technology Town Hall meeting, we received written comments regarding
the applications for FY 2018 new technology add-on payments. We note
that we do not summarize comments that are unrelated to the
``substantial clinical improvement'' criterion. As explained above and
in the Federal Register notice announcing the New Technology Town Hall
meeting (81 FR78814 through 78816), the purpose of the meeting was
specifically to discuss the substantial clinical improvement criterion
in regard to pending new technology add-on payment applications for FY
2018. Therefore, we did not summarize those written comments in the
proposed rule. As we did in the proposed rule, we are summarizing below
a general comment that we received prior to the issuance of the
proposed rule that did not relate to a specific application for FY 2018
new technology add-on payments. In addition, as we did in section
II.H.5. of the preamble of the proposed rule, we are summarizing
comments regarding individual applications, or, if applicable,
indicating that there were no comments received in response to the New
Technology Town Hall meeting notice, at the end of each discussion of
the individual applications.
Comment: One commenter recommended that CMS: (1) Prohibit local
MACs from denying coverage and add-on payments for new medical services
or technologies approved by the Secretary; and (2) broaden the criteria
applied in making substantial clinical improvement determinations to
require, in addition to existing criteria, that the Secretary consider
whether the new technology or medical service meets one or more of the
following criteria: (a) Results in a reduction of the length of a
hospital stay; (b) improves patient quality of life; (c) creates long-
term clinical efficiencies in treatment; (d) addresses patient-centered
objectives as defined by the Secretary; or (e) meets such other
criteria as the Secretary may specify.
Response: We appreciate the commenter's comments and will consider
them in future rulemaking.
3. ICD-10-PCS Section ``X'' Codes for Certain New Medical Services and
Technologies
As discussed in the FY 2016 IPPS/LTCH final rule (80 FR 49434), the
ICD-10-PCS includes a new section containing the new Section ``X''
codes, which began being used with discharges occurring on or after
October 1, 2015. Decisions regarding changes to ICD-10-PCS Section
``X'' codes will be handled in the same manner as the decisions for all
of the other ICD-10-PCS code changes. That is, proposals to create,
delete, or revise Section ``X'' codes under the ICD-10-PCS structure
will be referred to the ICD-10 Coordination and Maintenance Committee.
In addition, several of the new medical services and technologies that
have been, or may be, approved for new technology add-on payments may
now, and in the future, be assigned a Section ``X'' code within the
structure of the ICD-10-PCS. We posted ICD-10-PCS Guidelines on the CMS
Web site at: https://www.cms.gov/Medicare/Coding/ICD10/2016-ICD-10-PCS-and-GEMs.html, including guidelines for ICD-10-PCS Section ``X'' codes.
We encourage providers to view the material provided on ICD-10-PCS
Section ``X'' codes.
4. Revision of the Reference to an ICD-9-CM Code in Sec. 412.87(b)(2)
of the Regulations
As we discussed in the FY 2018 IPS/LTCH PPS proposed rule (82 FR
19871), the existing regulations under Sec. 412.87(b)(2) state that a
medical service or technology may be considered new within 2 or 3 years
after the point at which data begin to become available reflecting the
ICD-9-CM code assigned to the new service or technology (depending on
when a new code is assigned and data on the new service or technology
become available for DRG recalibration). After CMS has recalibrated the
DRGs, based on available data, to reflect the costs of an otherwise new
medical service or technology, the medical service or technology will
no longer be considered ``new'' under the criterion of this section.
As discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49454),
HIPAA covered entities are required, as of October 1, 2015, to use the
ICD-10 coding system (ICD-10-PCS codes for procedures and ICD-10-CM
codes for diagnoses), instead of the ICD-9-CM coding system, to report
diagnoses and procedures for Medicare hospital inpatient services
provided to Medicare beneficiaries as classified under the MS-DRG
system and paid for under the IPPS. The language in Sec. 412.87(b)(2)
only references an ``ICD-9-CM code.'' Therefore, in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19871), we proposed to revise the
regulations at Sec. 412.87(b)(2) to replace the term ``ICD-9-CM code''
with the term ``inpatient hospital code,'' as defined in section
1886(d)(5)(K)(iii) of the Act. Section 1886(d)(5)(K)(iii) of the Act
defines an ``inpatient hospital code'' as any code that is used with
respect to inpatient hospital services for which payment may be made
under this subsection of the Act and includes an alphanumeric code
issued under the International Classification of Diseases, 9th
Revision, Clinical Modification (``ICD-9-CM'')
[[Page 38107]]
and its subsequent revisions. We invited public comments on our
proposal.
We did not receive any public comments on this proposal. Therefore,
we are finalizing our proposal to revise the regulations at Sec.
412.87(b)(2) to replace the term ``ICD-9-CM code'' with the term
``inpatient hospital code'', as defined in section 1886(d)(5)(K)(iii)
of the Act.
5. FY 2018 Status of Technologies Approved for FY 2017 Add-On Payments
a. CardioMEMSTM HF (Heart Failure) Monitoring System
CardioMEMS, Inc. submitted an application for new technology add-on
payments for FY 2015 for the CardioMEMSTM HF (Heart Failure)
Monitoring System, which is an implantable hemodynamic monitoring
system comprised of an implantable sensor/monitor placed in the distal
pulmonary artery. Pulmonary artery hemodynamic monitoring is used in
the management of heart failure. The CardioMEMSTM HF
Monitoring System measures multiple pulmonary artery pressure
parameters for an ambulatory patient to measure and transmit data via a
wireless sensor to a secure Web site.
The CardioMEMSTM HF Monitoring System utilizes
radiofrequency (RF) energy to power the sensor and to measure pulmonary
artery (PA) pressure and consists of three components: An Implantable
Sensor with Delivery Catheter, an External Electronics Unit, and a
Pulmonary Artery Pressure Database. The system provides the physician
with the patient's PA pressure waveform (including systolic, diastolic,
and mean pressures) as well as heart rate. The sensor is permanently
implanted in the distal pulmonary artery using transcatheter techniques
in the catheterization laboratory where it is calibrated using a Swan-
Ganz catheter. PA pressures are transmitted by the patient at home in a
supine position on a padded antenna, pushing one button which records
an 18-second continuous waveform. The data also can be recorded from
the hospital, physician's office, or clinic.
The hemodynamic data, including a detailed waveform, are
transmitted to a secure Web site that serves as the Pulmonary Artery
Pressure Database, so that information regarding PA pressure is
available to the physician or nurse at any time via the Internet.
Interpretation of trend data allows the clinician to make adjustments
to therapy and can be used along with heart failure signs and symptoms
to adjust medications.
The applicant received FDA approval on May 28, 2014. After
evaluation of the newness, costs, and substantial clinical improvement
criteria for new technology add-on payments for the
CardioMEMSTM HF Monitoring System and consideration of the
public comments we received in response to the FY 2015 IPPS/LTCH PPS
proposed rule, we approved the CardioMEMSTM HF Monitoring
System for new technology add-on payments for FY 2015 (79 FR 49940).
Cases involving the CardioMEMSTM HF Monitoring System that
are eligible for new technology add-on payments are identified by
either ICD-10-PCS procedure code 02HQ30Z (Insertion of pressure sensor
monitoring device into right pulmonary artery, percutaneous approach)
or ICD-10-PCS procedure code 02HR30Z (Insertion of pressure sensor
monitoring device into left pulmonary artery, percutaneous approach).
With the new technology add-on payment application, the applicant
stated that the total operating cost of the CardioMEMSTM HF
Monitoring System is $17,750. Under Sec. 412.88(a)(2), we limit new
technology add-on payments to the lesser of 50 percent of the average
cost of the device or 50 percent of the costs in excess of the MS-DRG
payment for the case. As a result, the maximum new technology add-on
payment for a case involving the CardioMEMSTM HF Monitoring
System is $8,875. We refer the reader to the FY 2015 IPPS/LTCH PPS
final rule (79 FR 49937) for complete details on the
CardioMEMSTM HF Monitoring System.
Our policy is that a medical service or technology may be
considered new within 2 or 3 years after the point at which data begin
to become available reflecting the inpatient hospital code assigned to
the new service or technology. Our practice has been to begin and end
new technology add-on payments on the basis of a fiscal year, and we
have generally followed a guideline that uses a 6-month window before
and after the start of the fiscal year to determine whether to extend
the new technology add-on payment for an additional fiscal year. In
general, we extend add-on payments for an additional year only if the
3-year anniversary date of the product's entry onto the U.S. market
occurs in the latter half of the fiscal year (70 FR 47362).
With regard to the newness criterion for the
CardioMEMSTM HF Monitoring System, we considered the
beginning of the newness period to commence when the
CardioMEMSTM HF Monitoring System was approved by the FDA on
May 28, 2014. Because the 3-year anniversary date of the entry of the
CardioMEMSTM HF Monitoring System onto the U.S. market (May
28, 2017) would occur prior to the beginning of FY 2018, in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR 19871-19872), we proposed to
discontinue new technology add-on payments for this technology for FY
2018. We invited public comments on this proposal.
Comment: Commenters agreed with our proposal to discontinue new
technology add-on payments for the CardioMEMSTM HF
Monitoring System.
Response: As we proposed, we are discontinuing new technology add-
on payments for the CardioMEMSTM HF Monitoring System for FY
2018. The 3-year anniversary date of the product's entry onto the U.S.
market occurred prior to the beginning of FY 2018. Therefore, the
technology is not eligible for new technology add-on payments for FY
2018 because the technology will no longer meet the ``newness''
criterion.
b. Defitelio[supreg] (Defibrotide)
Jazz Pharmaceuticals submitted an application for new technology
add-on payments for FY 2017 for defibrotide (Defitelio[supreg]), a
treatment for patients diagnosed with hepatic veno-occlusive disease
(VOD) with evidence of multiorgan dysfunction. VOD, also known as
sinusoidal obstruction syndrome (SOS), is a potentially life-
threatening complication of hematopoietic stem cell transplantation
(HSCT), with an incidence rate of 8 percent to 15 percent. Diagnoses of
VOD range in severity from what has been classically defined as a
disease limited to the liver (mild) and reversible, to a severe
syndrome associated with multi-organ dysfunction or failure and death.
Patients treated with HSCT who develop VOD with multi-organ failure
face an immediate risk of death, with a mortality rate of more than 80
percent when only supportive care is used. The applicant asserted that
Defitelio[supreg] improves the survival rate of patients diagnosed with
VOD with multi-organ failure by 23 percent.
Defitelio[supreg] received Orphan Drug Designation for the
treatment of VOD in 2003 and for the prevention of VOD in 2007. It has
been available to patients as an investigational drug through an
expanded access program since 2007. The applicant's New Drug
Application (NDA) for Defitelio[supreg] received FDA approval on March
30, 2016. The applicant confirmed that Defitelio[supreg] was not
available on the U.S. market as of the FDA NDA approval date of March
30, 2016. According to the applicant, commercial packaging could not be
completed until the label for Defitelio[supreg] was finalized with FDA
approval, and that commercial shipments of Defitelio[supreg]
[[Page 38108]]
to hospitals and treatment centers began on April 4, 2016. Therefore,
we agreed that, based on this information, the newness period for
Defitelio[supreg] begins on April 4, 2016, the date of its first
commercial availability.
The applicant received unique ICD-10-PCS procedure codes to
describe the use of Defitelio[supreg] that became effective October 1,
2016. The approved procedure codes are XW03392 (Introduction of
defibrotide sodium anticoagulant into peripheral vein, percutaneous
approach) and XW04392 (Introduction of defibrotide sodium anticoagulant
into central vein, percutaneous approach).
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for
Defitelio[supreg] and consideration of the public comments we received
in response to the FY 2017 IPPS/LTCH PPS proposed rule, we approved
Defitelio[supreg] for new technology add-on payments for FY 2017 (81 FR
56906). With the new technology add-on payment application, the
applicant estimated that the average Medicare beneficiary would require
a dosage of 25 mg/kg/day for a minimum of 21 days of treatment. The
recommended dose is 6.25 mg/kg given as a 2-hour intravenous infusion
every 6 hours. Dosing should be based on a patient's baseline body
weight, which is assumed to be 70 kg for an average adult patient. All
vials contain 200 mg at a cost of $825 per vial. Therefore, we
determined that cases involving the use of the Defitelio[supreg]
technology would incur an average cost per case of $151,800 (70 kg
adult x 25 mg/kg/day x 21 days = 36,750 mg per patient/200 mg vial =
184 vials per patient x $825 per vial = $151,800). Under Sec.
412.88(a)(2), we limit new technology add-on payments to the lesser of
50 percent of the average cost of the technology or 50 percent of the
costs in excess of the MS-DRG payment for the case. As a result, the
maximum new technology add-on payment amount for a case involving the
use of Defitelio[supreg] is $75,900.
Because the 3-year anniversary date of the entry of
Defitelio[supreg] onto the U.S. market will occur after FY 2018 (April
4, 2019), we proposed to continue new technology add-on payments for
this technology for FY 2018. We proposed that the maximum payment for a
case involving Defitelio[supreg] would remain at $75,900 for FY 2018.
In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19872), we invited
public comments on our proposal to continue new technology add-on
payments for Defitelio[supreg].
Comment: One commenter agreed with CMS' proposal to continue new
technology add-on payments for Defitelio[supreg].
Response: We appreciate the commenter's support. We are finalizing
our proposal to continue new technology add-on payments for
Defitelio[supreg] for FY 2018. The maximum new technology add-on
payment for a case involving Defitelio[supreg] will remain at $75,900
for FY 2018.
c. GORE[supreg] EXCLUDER[supreg] Iliac Branch Endoprosthesis (Gore IBE
Device)
W. L. Gore and Associates, Inc. submitted an application for new
technology add-on payments for the GORE[supreg] EXCLUDER[supreg] Iliac
Branch Endoprosthesis (GORE IBE device) for FY 2017. The device
consists of two components: The Iliac Branch Component (IBC) and the
Internal Iliac Component (IIC). The applicant indicated that each
endoprosthesis is pre-mounted on a customized delivery and deployment
system allowing for controlled endovascular delivery via bilateral
femoral access. According to the applicant, the device is designed to
be used in conjunction with the GORE[supreg] EXCLUDER[supreg] AAA
Endoprosthesis for the treatment of patients requiring repair of common
iliac or aortoiliac aneurysms. When deployed, the GORE IBE device
excludes the common iliac aneurysm from systemic blood flow, while
preserving blood flow in the external and internal iliac arteries.
With regard to the newness criterion, the applicant received pre-
market FDA approval of the GORE IBE device on February 29, 2016. The
applicant submitted a request for an unique ICD-10-PCS procedure code
and was granted approval for the following procedure codes to describe
the use of this technology: 04VC0EZ (Restriction of right common iliac
artery with branched or fenestrated intraluminal device, one or two
arteries, open approach); 04VC0FZ (Restriction of right common iliac
artery with branched or fenestrated intraluminal device, three or more
arteries, open approach); 04VC3EZ (Restriction of right common iliac
artery with branched or fenestrated intraluminal device, one or two
arteries, percutaneous approach); 04VC3FZ (Restriction of right common
iliac artery with branched or fenestrated intraluminal device, three or
more arteries, percutaneous approach); 04VC4EZ (Restriction of right
common iliac artery with branched or fenestrated intraluminal device,
one or two arteries, percutaneous approach); 04VC4FZ (Restriction of
right common iliac artery with branched or fenestrated intraluminal
device, three or more arteries, percutaneous endoscopic, approach);
04VD0EZ (Restriction of left common iliac artery with branched or
fenestrated intraluminal device, one or two arteries, open approach);
04VD0FZ (Restriction of left common iliac artery with branched or
fenestrated, intraluminal device, three or more arteries, open
approach); 04VD3EZ (Restriction of left common iliac artery with
branched or fenestrated intraluminal device, one or two arteries,
percutaneous approach); 04VD3FZ (Restriction of left common iliac
artery with branched or fenestrated intraluminal device, three or more
arteries, percutaneous approach); 04VD4EZ (Restriction of left common
iliac artery with branched or fenestrated intraluminal device, one or
two arteries, percutaneous endoscopic approach); and 04VD4FZ
(Restriction of left common iliac artery with branched or fenestrated
intraluminal device, three or more arteries, percutaneous endoscopic
approach). These new ICD-10-PCS procedure codes became effective on
October 1, 2016. After evaluation of the newness, costs, and
substantial clinical improvement criteria for new technology add-on
payments for the GORE IBE device and consideration of the public
comments we received in response to the FY 2017 IPPS/LTCH PPS proposed
rule, we approved the GORE IBE device for new technology add-on
payments for FY 2017 (81 FR 56909). With the new technology add-on
payment application, the applicant indicated that the total operating
cost of the GORE IBE device is $10,500. Under Sec. 412.88(a)(2), we
limit new technology add-on payments to the lesser of 50 percent of the
average cost of the device or 50 percent of the costs in excess of the
MS-DRG payment for the case. As a result, the maximum new technology
add-on payment for a case involving the GORE IBE device is $5,250.
With regard to the newness criterion for the GORE IBE device, we
considered the beginning of the newness period to commence when the
GORE IBE device received FDA approval on February 29, 2016. Because the
3-year anniversary date of the entry of the GORE IBE device onto the
U.S. market will occur after FY 2018 (February 28, 2019), in the FY
2018 IPPS/LTCH PPS proposed rule, we proposed to continue new
technology add-on payments for this technology for FY 2018. We proposed
that the maximum payment for a case involving the GORE IBE device would
remain at $5,250 for FY 2018. We invited public comments on our
proposal to continue
[[Page 38109]]
new technology add-on payments for the GORE IBE device.
Comment: Some commenters supported CMS' proposal to continue new
technology add-on payments for the GORE IBE device.
Response: We appreciate the commenters' support. We are finalizing
our proposal to continue new technology add-on payments for the GORE
IBE device for FY 2018. The maximum new technology add-on payment for a
case involving the GORE IBE device will remain at $5,250 for FY 2018.
d. Praxbind[supreg] Idarucizumab
Boehringer Ingelheim Pharmaceuticals, Inc. submitted an application
for new technology add-on payments for FY 2017 for Praxbind[supreg]
Idarucizumab (Idarucizumab), a product developed as an antidote to
reverse the effects of PRADAXAR (Dabigatran), which is also
manufactured by Boehringer Ingelheim Pharmaceuticals, Inc.
Dabigatran is an oral direct thrombin inhibitor currently
indicated: (1) To reduce the risk of stroke and systemic embolism in
patients who have been diagnosed with nonvalvular atrial fibrillation
(NVAF); (2) for the treatment of deep venous thrombosis (DVT) and
pulmonary embolism (PE) in patients who have been administered a
parenteral anticoagulant for 5 to 10 days; (3) to reduce the risk of
recurrence of DVT and PE in patients who have been previously treated;
and (4) for the prophylaxis of DVT and PE in patients who have
undergone hip replacement surgery. Currently, unlike the anticoagulant
Warfarin, there is no specific way to reverse the anticoagulant effect
of Dabigatran in the event of a major bleeding episode. Idarucizumab is
a humanized fragment antigen binding (Fab) molecule, which specifically
binds to Dabigatran to deactivate the anticoagulant effect, thereby
allowing thrombin to act in blood clot formation. The applicant stated
that Idarucizumab represents a new pharmacologic approach to
neutralizing the specific anticoagulant effect of Dabigatran in
emergency situations.
Idarucizumab was approved by the FDA on October 16, 2015. Based on
the FDA indication for Idarucizumab, the product can be used in the
treatment of patients who have been diagnosed with NVAF and
administered Dabigatran to reverse life-threatening bleeding events, or
who require emergency surgery or medical procedures and rapid reversal
of the anticoagulant effects of Dabigatran is necessary and desired.
The applicant received unique ICD-10-PCS procedure codes that
became effective October 1, 2016, to describe the use of this
technology. The approved procedure codes are XW03331 (Introduction of
Idarucizumab, Dabigatran reversal agent into peripheral vein,
percutaneous approach, New Technology Group 1) and XW04331
(Introduction of Idarucizumab, Dabigatran reversal agent into central
vein, percutaneous approach, New Technology Group 1).
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for
Idarucizumab and consideration of the public comments we received in
response to the FY 2017 IPPS/LTCH PPS proposed rule, we approved
Idarucizumab for new technology add-on payments for FY 2017 (81 FR
56897). With the new technology add-on payment application, the
applicant indicated that the total operating cost of Idarucizumab is
$3,500. Under Sec. 412.88(a)(2), we limit new technology add-on
payments to the lesser of 50 percent of the average cost of the
technology or 50 percent of the costs in excess of the MS-DRG payment
for the case. As a result, the maximum new technology add-on payment
for a case involving Idarucizumab is $1,750.
With regard to the newness criterion for Idarucizumab, we
considered the beginning of the newness period to commence when
Idarucizumab was approved by the FDA on October 16, 2015. Because the
3-year anniversary date of the entry of Idarucizumab onto the U.S.
market will occur after FY 2018 (October 15, 2018), in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR 19873), we proposed to continue new
technology add-on payments for this technology for FY 2018. We proposed
that the maximum payment for a case involving Idarucizumab would remain
at $1,750 for FY 2018. We invited public comments on our proposal to
continue new technology add-on payments for Idarucizumab.
Comment: Several commenters supported CMS' proposal to continue new
technology add-on payments for Idarucizumab.
Response: We appreciate the commenters' support. We are finalizing
our proposal to continue new technology add-on payments for
Idarucizumab for FY 2018. The maximum new technology add-on payment for
a case involving Idarucizumab will remain at $1,750 for FY 2018.
e. Lutonix[supreg] Drug Coated Balloon PTA Catheter and
In.PACTTM AdmiralTM Paclitaxel Coated
Percutaneous Transluminal Angioplasty (PTA) Balloon Catheter
Two manufacturers, CR Bard Inc. and Medtronic, submitted
applications for new technology add-on payments for FY 2016 for
LUTONIX[supreg] Drug-Coated Balloon (DCB) Percutaneous Transluminal
Angioplasty (PTA) Catheter (LUTONIX[supreg]) and IN.PACTTM
AdmiralTM Paclitaxel Coated Percutaneous Transluminal
Angioplasty (PTA) Balloon Catheter (IN.PACTTM
AdmiralTM), respectively. Both of these technologies are
drug-coated balloon angioplasty treatments for patients diagnosed with
peripheral artery disease (PAD). Typical treatments for patients with
PAD include angioplasty, stenting, atherectomy and vascular bypass
surgery. PAD most commonly occurs in the femoropopliteal segment of the
peripheral arteries, is associated with significant levels of morbidity
and impairment in quality of life, and requires treatment to reduce
symptoms and prevent or treat ischemic events.\1\ Treatment options for
symptomatic PAD include noninvasive treatment such as medication and
life-style modification (for example, exercise programs, diet, and
smoking cessation) and invasive options, which include endovascular
treatment and surgical bypass. The 2013 American College of Cardiology
and American Heart Association (ACC/AHA) guidelines for the management
of PAD recommend endovascular therapy as the first-line treatment for
femoropopliteal artery lesions in patients suffering from claudication
(Class I, Level A recommendation).\2\
---------------------------------------------------------------------------
\1\ Tepe G, Zeller T, Albrecht T, Heller S, Schwarzwalder U,
Beregi JP, Claussen CD, Oldenburg A, Scheller B, Speck U., Local
delivery of paclitaxel to inhibit restenosis during angioplasty of
the leg, N Engl J Med 2008, 358: 689-99.
\2\ Anderson JL, Halperin JL, Albert NM, Bozkurt B, Brindis RG,
Curtis LH, DeMets D, Guyton RA, Hochman JS, Kovacs RJ, Ohman EM,
Pressler SJ, Sellke FW, Shen WK., Management of patients with
peripheral artery disease (compilation of 2005 and 2011 ACCF/AHA
guideline recommendations): A report of the American College of
Cardiology Foundation/American Heart Association Task Force on
Practice Guidelines, J Am Coll Cardiol 2013, 61:1555-70. Available
at: https://dx.doi.org/10.1016/j.jacc.2013.01.004.
---------------------------------------------------------------------------
According to both applicants, LUTONIX[supreg] and
IN.PACTTM AdmiralTM are the first drug coated
balloons that can be used for treatment of patients who are diagnosed
with PAD. In the FY 2016 IPPS/LTCH PPS final rule, we stated that
because cases eligible for the two devices would group to the same MS-
DRGs and we believe that these devices are substantially similar to
each
[[Page 38110]]
other (that is, they are intended to treat the same or similar disease
in the same or similar patient population and are purposed to achieve
the same therapeutic outcome using the same or similar mechanism of
action), we evaluated both technologies as one application for new
technology add-on payments under the IPPS. The applicants submitted
separate cost and clinical data, and we reviewed and discussed each set
of data separately. However, we made one determination regarding new
technology add-on payments that applied to both devices. We believe
that this is consistent with our policy statements in the past
regarding substantial similarity. Specifically, we have noted that
approval of new technology add-on payments would extend to all
technologies that are substantially similar (66 FR 46915), and we
believe that continuing our current practice of extending a new
technology add-on payment without a further application from the
manufacturer of the competing product or a specific finding on cost and
clinical improvement if we make a finding of substantial similarity
among two products is the better policy because we avoid--
Creating manufacturer-specific codes for substantially
similar products;
Requiring different manufacturers of substantially similar
products from having to submit separate new technology add-on payment
applications;
Having to compare the merits of competing technologies on
the basis of substantial clinical improvement; and
Bestowing an advantage to the first applicant representing
a particular new technology to receive approval (70 FR 47351).
CR Bard, Inc. received FDA approval for LUTONIX[supreg] on October
9, 2014. Commercial sales in the U.S. market began on October 10, 2014.
Medtronic received FDA approval for IN.PACTTM
AdmiralTM on December 30, 2014. Commercial sales in the U.S.
market began on January 29, 2015.
In accordance with our policy, we stated in the FY 2016 IPPS\LTCH
PPS final rule (80 FR 49463) that we believe it is appropriate to use
the earliest market availability date submitted as the beginning of the
newness period. Accordingly, for both devices, we stated that the
beginning of the newness period will be October 10, 2014.
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for the
LUTONIX[supreg] and IN.PACTTM AdmiralTM
technologies and consideration of the public comments we received in
response to the FY 2016 IPPS/LTCH PPS proposed rule, we approved the
LUTONIX[supreg] and IN.PACTTM AdmiralTM
technologies for new technology add-on payments for FY 2016 (80 FR
49469). Cases involving the LUTONIX[supreg] and IN.PACTTM
AdmiralTM technologies that are eligible for new technology
add-on payments are identified using one of the ICD-10-PCS procedure
codes in the following table:
------------------------------------------------------------------------
ICD-10-PCS code Code description
------------------------------------------------------------------------
047K041................... Dilation of right femoral artery with drug-
eluting intraluminal device using drug-
coated balloon, open approach.
047K0D1................... Dilation of right femoral artery with
intraluminal device using drug-coated
balloon, open approach.
047K0Z1................... Dilation of right femoral artery using drug-
coated balloon, open approach.
047K341................... Dilation of right femoral artery with drug-
eluting intraluminal device using drug-
coated balloon, percutaneous approach.
047K3D1................... Dilation of right femoral artery with
intraluminal device using drug-coated
balloon, percutaneous approach.
047K3Z1................... Dilation of right femoral artery using drug-
coated balloon, percutaneous approach.
047K441................... Dilation of right femoral artery with drug-
eluting intraluminal device using drug-
coated balloon, percutaneous endoscopic
approach.
047K4D1................... Dilation of right femoral artery with
intraluminal device using drug-coated
balloon, percutaneous endoscopic approach.
047K4Z1................... Dilation of right femoral artery using drug-
coated balloon, percutaneous endoscopic
approach.
047L041................... Dilation of left femoral artery with drug-
eluting intraluminal device using drug-
coated balloon, open approach.
047L0D1................... Dilation of left femoral artery with
intraluminal device using drug-coated
balloon, open approach.
047L0Z1................... Dilation of left femoral artery using drug-
coated balloon, open approach.
047L341................... Dilation of left femoral artery with drug-
eluting intraluminal device using drug-
coated balloon, percutaneous approach.
047L3D1................... Dilation of left femoral artery with
intraluminal device using drug-coated
balloon, percutaneous approach.
047L3Z1................... Dilation of left femoral artery using drug-
coated balloon, percutaneous approach.
047L441................... Dilation of left femoral artery with drug-
eluting intraluminal device using drug-
coated balloon, percutaneous endoscopic
approach.
047L4D1................... Dilation of left femoral artery with
intraluminal device using drug-coated
balloon, percutaneous endoscopic approach.
047L4Z1................... Dilation of left femoral artery using drug-
coated balloon, percutaneous endoscopic
approach.
047M041................... Dilation of right popliteal artery with drug-
eluting intraluminal device using drug-
coated balloon, open approach.
047M0D1................... Dilation of right popliteal artery with
intraluminal device using drug-coated
balloon, open approach.
047M0Z1................... Dilation of right popliteal artery using
drug-coated balloon, open approach.
047M341................... Dilation of right popliteal artery with drug-
eluting intraluminal device using drug-
coated balloon, percutaneous approach.
047M3D1................... Dilation of right popliteal artery with
intraluminal device using drug-coated
balloon, percutaneous approach.
047M3Z1................... Dilation of right popliteal artery using
drug-coated balloon, percutaneous approach.
047M441................... Dilation of right popliteal artery with drug-
eluting intraluminal device using drug-
coated balloon, percutaneous endoscopic
approach.
047M4D1................... Dilation of right popliteal artery with
intraluminal device using drug-coated
balloon, percutaneous endoscopic approach.
047M4Z1................... Dilation of right popliteal artery using
drug-coated balloon, percutaneous
endoscopic approach.
047N041................... Dilation of left popliteal artery with drug-
eluting intraluminal device using drug-
coated balloon, open approach.
047N0D1................... Dilation of left popliteal artery with
intraluminal device using drug-coated
balloon, open approach.
047N0Z1................... Dilation of left popliteal artery using drug-
coated balloon, open approach.
047N341................... Dilation of left popliteal artery with drug-
eluting intraluminal device using drug-
coated balloon, percutaneous approach.
047N3D1................... Dilation of left popliteal artery with
intraluminal device using drug-coated
balloon, percutaneous approach.
047N3Z1................... Dilation of left popliteal artery using drug-
coated balloon, percutaneous approach.
047N441................... Dilation of left popliteal artery with drug-
eluting intraluminal device using drug-
coated balloon, percutaneous endoscopic
approach.
047N4D1................... Dilation of left popliteal artery with
intraluminal device using drug-coated
balloon, percutaneous endoscopic approach.
047N4Z1................... Dilation of left popliteal artery using drug-
coated balloon, percutaneous endoscopic
approach.
------------------------------------------------------------------------
[[Page 38111]]
As discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49469),
each of the applicants submitted operating costs for its DCB. The
manufacturer of the LUTONIX[supreg] stated that a mean of 1.37 drug-
coated balloons was used during the LEVANT 2 clinical trial. The
acquisition price for the hospital will be $1,900 per drug-coated
balloon, or $2,603 per case (1.37 x $1,900). The applicant projected
that approximately 8,875 cases will involve use of the LUTONIX[supreg]
for FY 2016. The manufacturer for the IN.PACTTM
AdmiralTM stated that a mean of 1.4 drug-coated balloons was
used during the IN.PACTTM AdmiralTM DCB arm. The
acquisition price for the hospital will be $1,350 per drug-coated
balloon, or $1,890 per case (1.4 x $1,350). The applicant projected
that approximately 26,000 cases will involve use of the
IN.PACTTM AdmiralTM for FY 2016.
For FY 2016, we based the new technology add-on payment for cases
involving these technologies on the weighted average cost of the two
DCBs described by the ICD-10-PCS procedure codes listed above (which
are not manufacturer specific). Because ICD-10 codes are not
manufacturer specific, we cannot set one new technology add-on payment
amount for IN.PACTTM AdmiralTM and a different
new technology add-on payment amount for LUTONIX[supreg]; both
technologies will be captured by using the same ICD-10-PCS procedure
code. As such, we stated that we believe that the use of a weighted
average of the cost of the standard DCBs based on the projected number
of cases involving each technology to determine the maximum new
technology add-on payment would be most appropriate. To compute the
weighted cost average, we summed the total number of projected cases
for each of the applicants, which equaled 34,875 cases (26,000 plus
8,875). We then divided the number of projected cases for each of the
applicants by the total number of cases, which resulted in the
following case-weighted percentages: 25 percent for the LUTONIX[supreg]
and 75 percent for the IN.PACTTM AdmiralTM. We
then multiplied the cost per case for the manufacturer specific DCB by
the case-weighted percentage (0.25 * $2,603 = $662.41 for
LUTONIX[supreg] and 0.75 * $1,890 = $1,409.03 for the
IN.PACTTM AdmiralTM). This resulted in a case-
weighted average cost of $2,071.45 for DCBs. Under Sec. 412.88(a)(2),
we limit new technology add-on payments to the lesser of 50 percent of
the average cost of the device or 50 percent of the costs in excess of
the MS-DRG payment for the case. As a result, the maximum payment for a
case involving the LUTONIX[supreg] or IN.PACTTM
AdmiralTM DCBs is $1,035.72.
With regard to the newness criterion for the LUTONIX[supreg] and
IN.PACTTM AdmiralTM technologies, we considered
the beginning of the newness period to commence when LUTONIX[supreg]
gained entry onto the U.S. market on October 10, 2014. As discussed
previously in this section, in general, we extend new technology add-on
payments for an additional year only if the 3-year anniversary date of
the product's entry onto the U.S. market occurs in the latter half of
the upcoming fiscal year. Because the 3-year anniversary date of the
entry of LUTONIX[supreg] onto the U.S. market (October 10, 2017) will
occur in the first half of FY 2018, in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19875), we proposed to discontinue new technology
add-on payments for both the LUTONIX[supreg] and IN.PACTTM
AdmiralTM technologies for FY 2018. We invited public
comments on this proposal.
Comment: Some commenters supported CMS' proposal to discontinue new
technology add-on payments for both the LUTONIX[supreg] and
IN.PACTTM AdmiralTM technologies for FY 2018.
Response: We appreciate the commenters' support. As we proposed, we
are discontinuing new technology add-on payments for both the
LUTONIX[supreg] and IN.PACTTM AdmiralTM
technologies for FY 2018. The 3-year anniversary date of the product's
entry onto the U.S. market occurs in the first half of FY 2018.
Therefore, the technology is not eligible for new technology add-on
payments for FY 2018 because the technology will no longer meet the
``newness'' criterion.
f. MAGEC[supreg] Spinal Bracing and Distraction System (MAGEC[supreg]
Spine)
Ellipse Technologies, Inc. submitted an application for new
technology add-on payments for FY 2017 for the MAGEC[supreg] Spine.
According to the applicant, the MAGEC[supreg] Spine has been developed
for use in the treatment of children diagnosed with severe spinal
deformities, such as scoliosis. The system can be used in the treatment
of skeletally immature patients less than 10 years of age who have been
diagnosed with severe progressive spinal deformities associated with or
at risk of Thoracic Insufficiency Syndrome (TIS).
The MAGEC[supreg] Spine consists of a (spinal growth) rod that can
be lengthened through the use of magnets that are controlled by an
external remote controller (ERC). The rod(s) can be implanted into
children as young as 2 years of age. According to the applicant, use of
the MAGEC[supreg] Spine has proven to be successfully used in the
treatment of patients diagnosed with scoliosis who have not been
responsive to other treatments.
The MAGEC[supreg] Spine initially received FDA clearance for use of
the predicate device, which used a Harrington Rod on February 27, 2014.
The applicant verified that, due to manufacturing delays, the
MAGEC[supreg] Spine was not available for implant until April 1, 2014.
Specifically, the complete MAGEC[supreg] Spine system was produced and
available for shipment for the first implant on April 1, 2014.
Therefore, the newness period for the MAGEC[supreg] Spine began on
April 1, 2014. Subsequent FDA clearance was granted for use of the
modified device, which uses a shorter 70 mm rod on September 18, 2014.
After minor modification of the product, the MAGEC[supreg] Spine
received FDA clearances on March 24, 2015, and May 29, 2015,
respectively.
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for the
MAGEC[supreg] Spine and consideration of the public comments we
received in response to the FY 2017 IPPS/LTCH PPS proposed rule, we
approved the MAGEC[supreg] Spine for new technology add-on payments for
FY 2017 (81 FR 56891). Cases involving the MAGEC[supreg] Spine that are
eligible for new technology add-on payments are identified by ICD-10-
PCS procedure codes XNS0032 (Reposition of lumbar vertebra using
magnetically controlled growth rod(s), open approach); XNS0432
(Reposition of lumbar vertebra using magnetically controlled growth
rod(s), percutaneous endoscopic approach); XNS3032 (Reposition of
cervical vertebra using magnetically controlled growth rod(s), open
approach); XNS3432 (Reposition of cervical vertebra using magnetically
controlled growth rod(s), percutaneous endoscopic approach); XNS4032
(Reposition of thoracic vertebra using magnetically controlled growth
rod(s), open approach); and XNS4432 (Reposition of thoracic vertebra
using magnetically controlled growth rod(s).
With the new technology add-on payment application, the applicant
stated that the total operating cost of the MAGEC[supreg] Spine was
$17,500 for a single rod and $35,000 for a dual rod. It is historical
practice for CMS to make the new technology add-on payment based on the
average cost of the technology and not the maximum. For example, in the
FY 2013 IPPS/LTCH PPS final rule (77 FR 53358), we approved new
technology add-on payments for
[[Page 38112]]
DIFICIDTM based on the average dosage of 6.2 days, rather
than the maximum 10-day dosage. The applicant noted that 20 percent of
cases use a single rod, while 80 percent of cases use a dual rod. As a
result, the weighted average cost for a single and dual MAGEC[supreg]
Spine is $31,500 (((0.2 * $17,500) + (0.8 * $35,000))). Under Sec.
412.88(a)(2), we limit new technology add-on payments to the lesser of
50 percent of the average cost of the device or 50 percent of the costs
in excess of the MS-DRG payment for the case. As a result, the maximum
new technology add-on payment for a case involving the MAGEC[supreg]
Spine is $15,750. We refer the reader to the FY 2017 IPPS/LTCH PPS
final rule (81 FR 56888) for complete details on the MAGEC[supreg]
Spine.
With regard to the newness criterion for the MAGEC[supreg] Spine,
we considered the beginning of the newness period to commence when the
MAGEC[supreg] Spine was produced and available for shipment for the
first implant on April 1, 2014. As discussed previously in this
section, in general, we extend new technology add-on payments for an
additional year only if the 3-year anniversary date of the product's
entry onto the U.S. market occurs in the latter half of the upcoming
fiscal year. Because the 3-year anniversary date of the entry of the
MAGEC[supreg] Spine onto the U.S. market (April 1, 2017) would occur
prior to the beginning of FY 2018, in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19876), we proposed to discontinue new technology
add-on payments for this technology for FY 2018. We invited public
comments on this proposal.
Comment: Some commenters supported CMS' proposal to discontinue new
technology add-on payments for the MAGEC[supreg] Spine for FY 2018.
Some commenters supported the continuation of the new technology add-on
payments for MAGEC[supreg] Spine for FY 2018. The manufacturer also
requested that CMS extend new technology add-on payments for
MAGEC[supreg] Spine. The manufacturer provided the following reasons to
extend the new technology add-on payment:
Based on internal data, there have not been enough cases
to provide the stimulus that the new technology add-on payments program
intended.
The patient population for which the new technology add-on
payment applies is very small, estimated at less than or equal to 10
percent of the total annual cases.
The new technology add-on payment has been available for
approximately 9 months. Given the small number of patients, providers
have not had enough cases yet to utilize the new technology add-on
payments in the way the program intended.
Extension of the new technology add-on payment for FY 2018
would allow more patients to gain access to MAGEC[supreg] rods. The
manufacturer stated that this has clinical benefits as noted in the
literature, but also ultimately helps payers, including CMS. The
manufacturer stated that payer costs of treatment are reduced over the
course of care when MAGEC[supreg] rods are used vs. traditional growth
rods.
Extending the new technology add-on payment for
MAGEC[supreg] Spine has minimal budgetary impact due again to the small
patient population.
The manufacturer cited the importance of the new technology add-on
payments to MAGEC[supreg] Spine and stated that extending the new
technology add-on payment would help make the technology more
accessible.
Response: We thank the commenters for their comments. With regard
to the technology's newness, the timeframe that a new technology can be
eligible to receive new technology add-on payments ends when data
documenting the use and cost of the procedures become available.
Section 412.87(b)(2) states that, a medical service or technology may
be considered new within 2 or 3 years after the point at which data
begin to become available reflecting the ICD-9-CM code (or, as
finalized earlier in this section, the inpatient hospital code)
assigned to the new service or technology (depending on when a new code
is assigned and data on the new service or technology become available
for DRG recalibration). Section 412.87(b)(2) also states, after CMS has
recalibrated the DRGs, based on available data, to reflect the costs of
an otherwise new medical service or technology, the medical service or
technology will no longer be considered ``new'' under the applicable
criteria. Therefore, as discussed in the FY 2005 IPPS final rule (69 FR
49003), if the costs of the technology are included in the charge data,
and the MS-DRGs have been recalibrated using that data, the technology
can no longer be considered ``new'' for the purposes of this provision.
In addition, similar to our discussion in the FY 2006 IPPS final
rule (70 FR 47349), we do not believe that case volume is a relevant
consideration for making the determination as to whether a product is
``new.'' Consistent with the statute and our implementing regulations,
a technology no longer qualifies as ``new'' once it is more than 2 to 3
years old, irrespective of how frequently it has been used in the
Medicare population. Therefore, if a product is more than 2 to 3 years
old, we consider its costs to be included in the MS-DRG relative
weights, whether its use in the Medicare population has been frequent
or infrequent.
Therefore, based on all of the reasons stated above, the
MAGEC[supreg] Spine is no longer considered ``new'' for purposes of new
technology add-on payments for FY 2018. Therefore, we are finalizing
our proposal to discontinue making new technology add-on payments for
the MAGEC[supreg] Spine for FY 2018.
g. Vistogard\TM\ (Uridine Triacetate)
BTG International Inc., submitted an application for new technology
add-on payments for the VistogardTM for FY 2017.
VistogardTM was developed as an emergency treatment for
Fluorouracil toxicity.
Chemotherapeutic agent 5-fluorouracil (5-FU) is used to treat
specific solid tumors. It acts upon deoxyribonucleic acid (DNA) and
ribonucleic acid (RNA) in the body, as uracil is a naturally occurring
building block for genetic material. Fluorouracil is a fluorinated
pyrimidine. As a chemotherapy agent, Fluorouracil is absorbed by cells
and causes the cell to metabolize into byproducts that are toxic and
used to destroy cancerous cells. According to the applicant, the
byproducts fluorodoxyuridine monophosphate (F-dUMP) and floxuridine
triphosphate (FUTP) are believed to do the following: (1) Reduce DNA
synthesis; (2) lead to DNA fragmentation; and (3) disrupt RNA
synthesis. Fluorouracil is used to treat a variety of solid tumors such
as colorectal, head and neck, breast, and ovarian cancer. With
different tumor treatments, different dosages, and different dosing
schedules, there is a risk for toxicity in these patients. Patients may
suffer from fluorouracil toxicity/death if 5-FU is delivered in slight
excess or at faster infusion rates than prescribed. The cause of
overdose can happen for a variety of reasons including: Pump
malfunction, incorrect pump programming or miscalculated doses, and
accidental or intentional ingestion.
VistogardTM is an emergency treatment for Fluorouracil
toxicity and is a prodrug of uridine. Once the drug is metabolized into
uridine, it competes with the toxic byproduct FUTP in binding to RNA,
thereby reducing the impact FUTP has on cell death.
The VistogardTM received FDA approval on December 11,
2015. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56910), we stated
that we agreed with the manufacturer that, due to the
[[Page 38113]]
delay in availability, the date the newness period begins for
VistogardTM is March 2, 2016, instead of December 11, 2015.
The applicant noted that the VistogardTM is the first
FDA-approved antidote used to reverse fluorouracil toxicity. The
applicant received a unique ICD-10-PCS procedure code that became
effective October 1, 2016, to describe the use of this technology. The
approved procedure code is XW0DX82 (Introduction of Uridine Triacetate
into Mouth and Pharynx, External Approach, New Technology Group 2).
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for
VistogardTM and consideration of the public comments we
received in response to the FY 2017 IPPS/LTCH PPS proposed rule, we
approved VistogardTM for new technology add-on payments for
FY 2017 (81 FR 56912). With the new technology add-on payment
application, the applicant stated that the total operating cost of
VistogardTM is $75,000. Under Sec. 412.88(a)(2), we limit
new technology add-on payments to the lesser of 50 percent of the
average cost of the technology or 50 percent of the costs in excess of
the MS-DRG payment for the case. As a result, the maximum new
technology add-on payment for a case involving VistogardTM
is $37,500.
As noted previously, with regard to the newness criterion for the
VistogardTM, we considered the beginning of the newness
period to commence on March 2, 2016. Because the 3-year anniversary
date of the entry of the VistogardTM onto the U.S. market
(March 2, 2019) will occur after FY 2018, in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19876), we proposed to continue new technology
add-on payments for this technology for FY 2018. We proposed that the
maximum payment for a case involving the VistogardTM would
remain at $37,500 for FY 2018. We invited public comments on our
proposal to continue new technology add-on payments for the
VistogardTM.
Comment: The manufacturer commented that, as of April 1, 2017,
pricing for VistogardTM has changed. The manufacturer noted
that the wholesale acquisition cost (WAC) for VistogardTM is
now $80,260 for a 20-dose pack (or $4,013.00 per each 10g packet of
oral granules). Given the current price for VistogardTM, the
manufacturer requested that CMS revise the maximum payment per case to
$40,130, or 50 percent of the revised WAC.
Response: According to the manufacturer, as noted in the FY 2017
IPPS/LTCH PPS final rule (81 FR 56912), the WAC of
VistogardTM was $3,750.00 per each 10g packet of oral
granules. The recommended adult dosing per the VistogardTM
label is 10g (one packet every 6 hours for a minimum of 20 doses over 5
days). The total cost was 20 packets x WAC of $3,750.00 per packet,
which equaled $75,000 per patient.
Using the updated WAC provided by the manufacturer, we performed an
additional cost analysis to determine if Vistogard would meet the cost
criterion. We determined that the price increase would increase the
amount that the inflated average standardized case-weighted charge per
case exceeds the average case-weighted threshold amount. Therefore,
VistogardTM would still meet the cost criterion.
We are finalizing our proposal to continue new technology add-on
payments for VistogardTM for FY 2018. Using the revised
pricing, the maximum new technology add-on payment for a case involving
VistogardTM is $40,130 for FY 2018.
h. Blinatumomab (BLINCYTO[supreg])
Amgen, Inc. submitted an application for new technology add-on
payments for FY 2016 for Blinatumomab (BLINCYTO[supreg]), a bi-specific
T-cell engager (BiTE) used for the treatment of Philadelphia
chromosome-negative (Ph-) relapsed or refractory (R/R) B-cell precursor
acute-lymphoblastic leukemia (ALL), which is a rare aggressive cancer
of the blood and bone marrow. Approximately 6,050 individuals are
diagnosed with Ph- R/R B-cell precursor ALL in the United States each
year, and approximately 2,400 individuals, representing 30 percent of
all new cases, are adults. Ph- R/R B-cell precursor ALL occurs when
there are malignant transformations of B-cell or T-cell progenitor
cells, causing an accumulation of lymphoblasts in the blood, bone
marrow, and occasionally throughout the body. As a bi-specific T-cell
engager, the BLINCYTO [supreg] technology attaches to a molecule on the
surface of the tumorous cell, as well as to a molecule on the surface
of normal T-cells, bringing the two into closer proximity and allowing
the normal T-cell to destroy the tumorous cell. Specifically, the
BLINCYTO[supreg] technology attaches to a cell identified as CD19,
which is present on all of the cells of the malignant transformations
that cause Ph- R/R B-cell precursor ALL and helps attract the cell into
close proximity of the T-cell CD3 with the intent of getting close
enough to allow the T-cell to inject toxins that destroy the cancerous
cell. According to the applicant, the BLINCYTO[supreg] technology is
the first, and the only, bi-specific CD19-directed CD3 T-cell engager
single-agent immunotherapy approved by the FDA.
BLINCYTO[supreg] is administered as a continuous IV infusion
delivered at a constant flow rate using an infusion pump. A single
cycle of treatment consists of 28 days of continuous infusion, and each
treatment cycle is followed by 2 weeks without treatment prior to
administering any further treatments. A course of treatment would
consist of two phases. Phase 1 consists of initial inductions or
treatments intended to achieve remission followed by additional
inductions and treatments to maintain consolidation; or treatments
given after remission has been achieved to prolong the duration. During
Phase 1 of a single treatment course, up to two cycles of
BLINCYTO[supreg] are administered, and up to three additional cycles
are administered during consolidation. The recommended dosage of
BLINCYTO[supreg] administered during the first cycle of treatment is 9
mcg per day for the first 7 days of treatment. The dosage is then
increased to 28 mcg per day for 3 weeks until completion. During Phase
2 of the treatment course, all subsequent doses are administered as 28
mcg per day throughout the entire duration of the 28-day treatment
period.
With regard to the newness criterion, the BLINCYTO[supreg]
technology received FDA approval on December 3, 2014, for the treatment
of patients diagnosed with Ph- R/R B-cell precursor ALL, and the
product gained entry onto the U.S. market on December 17, 2014.
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for
BLINCYTO[supreg] and consideration of the public comments we received
in response to the FY 2016 IPPS/LTCH PPS proposed rule, we approved
BLINCYTO[supreg] for new technology add-on payments for FY 2016 (80 FR
49449). Cases involving BLINCYTO[supreg] that are eligible for new
technology add-on payments are identified using one of the following
ICD-10-PCS procedure codes: XW03351 (Introduction of Blinatumomab
antineoplastic immunotherapy into peripheral vein, percutaneous
approach, New Technology Group 1), or XW04351 (Introduction of
Blinatumomab antineoplastic immunotherapy into central vein,
percutaneous approach, New Technology Group 1).
As discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49449),
the
[[Page 38114]]
applicant recommended that CMS consider and use the cost of the full
28-day inpatient treatment cycle as the expected length of treatment
when determining the maximum new technology add-on payment for cases
involving the BLINCYTO[supreg], rather than the average cost of lesser
number of days used as other variables. For the reasons discussed, we
disagreed with the applicant and established the maximum new technology
add-on payment amount for a case involving the BLINCYTO[supreg]
technology for FY 2016 using the weighted average of the cycle 1 and
cycle 2 observed treatment length. Specifically, in the Phase II trial,
the most recent data available, 92 patients received cycle 1 treatment
for an average length of 21.2 days, and 52 patients received cycle 2
treatment for an average length of 10.2 days. The weighted average of
cycle 1 and cycle 2 treatment length is 17 days. We noted that a small
number of patients also received 3 to 5 treatment cycles. However,
based on the data provided, these cases do not appear to be typical at
this point and we excluded them from this calculation. We noted that,
if we included all treatment cycles in this calculation, the weighted
average number of days of treatment is much lower, 10 days. Using the
clinical data provided by the applicant, we stated that we believe
setting the maximum new technology add-on payment amount for a case
involving the BLINCYTO[supreg] technology for FY 2016 based on a 17-day
length of treatment cycle is representative of historical and current
practice. We also stated that, for FY 2017, if new data on length of
treatment are available, we would consider any such data in evaluating
the maximum new technology add-on payment amount. However, we did not
receive any new data from the applicant to evaluate for FY 2017.
In the application, the applicant estimated that the average
Medicare beneficiary would require a dosage of 9mcg/day for the first 7
days under the first treatment cycle, followed by a dosage of 28mcg/day
for the duration of the treatment cycle, as well as all days included
in subsequent cycles. All vials contain 35mcg at a cost of $3,178.57
per vial. The applicant noted that all vials are single-use. Therefore,
we determined that cases involving the use of the BLINCYTO[supreg]
technology would incur an average cost per case of $54,035.69 (1 vial/
day x 17 days x $3,178.57/vial). Under Sec. 412.88(a)(2), we limit new
technology add-on payments to the lesser of 50 percent of the average
cost of the technology or 50 percent of the costs in excess of the MS-
DRG payment for the case. As a result, the maximum new technology add-
on payment amount for a case involving the use of the BLINCYTO[supreg]
is $27,017.85.
With regard to the newness criterion for BLINCYTO[supreg], we
consider the beginning of the newness period to commence when the
product gained entry onto the U.S. market on December 17, 2014. As
discussed previously in this section, in general, we extend new
technology add-on payments for an additional year only if the 3-year
anniversary date of the product's entry onto the U.S. market occurs in
the latter half of the upcoming fiscal year. Because the 3-year
anniversary date of the entry of the BLINCYTO[supreg] onto the U.S.
market will occur in the first half of FY 2018 (December 17, 2017), in
the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19877), we proposed to
discontinue new technology add-on payments for this technology for FY
2018. We invited public comments on this proposal.
Comment: Some commenters supported CMS' proposal to discontinue new
technology add-on payments for BLINCYTO[supreg]. The applicant (the
manufacturer) disagreed with the proposal to discontinue new technology
add-on payments for BLINCYTO[supreg]. The manufacturer stated that CMS
is discontinuing the new technology add-on payment in advance of the 3-
year statutory limit. The manufacturer requested that CMS reconsider
and extend the new technology add-on payments for FY 2018.
The manufacturer explained that the continuation of new technology
add-on payments for BLINCYTO[supreg] in FY 2018 is well within CMS'
statutory authority and would permit CMS to bolster its claims data for
rate-setting to ensure that it can meaningfully recalibrate the MS-DRG
weights to reflect the costs of BLINCYTO[supreg] in accordance with the
policy objectives of the statute. The manufacturer stated that section
1886(d)(5)(K) of the Act gives CMS authority to grant new technology
add-on payments to new technologies to ``provide for the collection of
data with respect to the costs of a new medical service or technology
[. . .] for a period of not less than 2 years and not more than 3 years
beginning on the date on which an inpatient hospital code is issued
with respect to the service or technology.'' The manufacturer also
stated that the regulation at 42 CFR 412.87(b)(2) is phrased similarly
and reads that ``A medical service or technology may be considered new
within 2 or 3 years after the point at which data begin to become
available reflecting the ICD-9-CM code assigned to the new service or
technology (depending on when a new code is assigned and data on the
new service or technology become available for DRG recalibration).
After CMS has recalibrated the DRGs, based on available data, to
reflect the costs of an otherwise new medical service or technology,
the medical service or technology will no longer be considered `new'
under the criterion of this section.''
The manufacturer stated that BLINCYTO[supreg] received FDA approval
on December 3, 2014, gained entry onto the U.S. market on December 17,
2014, and was issued an inpatient hospital code (ICD-10-PCS code) on
October 1, 2015. Therefore, the manufacturer asserted that, as of
October 1, 2017, BLINCYTO[supreg] will have received the new technology
add-on payment for the minimum permitted duration of 2 years, and is
eligible, by statute and regulation, for an additional year new
technology add-on payments.
The manufacturer also stated that CMS explained in the FY 2017
IPPS/LTCH PPS final rule (81 FR 56877) that ``a specific medical
service or technology will be considered `new' for purposes of new
technology add-on payments until such time as Medicare data are
available to fully reflect the cost of the technology in the MS-DRG
weights through recalibration'' and that only once the MS-DRGs have
been recalibrated to reflect the costs of a new medical technology
should new technology add-on payments cease. The manufacturer believed
that the above quoted regulation likewise links the termination of new
technology add-on payments to having data to incorporate the item into
the calibration of the inpatient payment groupings. The manufacturer
also cited the FY 2011 IPPS final rule (75 FR 50138) and stated that
CMS has acknowledged in previous rulemaking that, in some cases, there
may be valid reasons to extend new technology add-on payment status,
including, for example, when ``there may be few to no Medicare data
available for the new service or technology following FDA approval'' to
achieve the objective of appropriately recalibrating MS-DRG weights.
The manufacturer believed that if insufficient data are collected on
the technology to ``fully reflect the cost of the technology'' in the
MS-DRG weights, there would be a valid reason to continue the new
technology add-on payment.
The manufacturer stated that claims of BLINCYTO[supreg] in the FY
2016
[[Page 38115]]
MedPAR, which is used for FY 2018 MS-DRG recalibration, are
insufficient in number and do not fully reflect the cost of
BLINCYTO[supreg] in the MS-DRG recalibration. The applicant stated
that, in the FY 2016 MedPAR claims, there were a total of 145
BLINCYTO[supreg] claims eligible for the new technology add-on payment,
111 of which were distributed across 6 MS-DRGs that the technology most
frequently mapped to. The manufacturer noted that this claims volume
represents less than 1 percent of the over 10,000 patient discharge
claims for these 6 MS-DRGs. As a result of this low claims volume, both
objectively and relative to the frequency of the relevant MS-DRGs on
patient discharge claims, the manufacturer believed it is very unlikely
that the fundamental objective of the new technology add-on payment to
provide time to collect sufficient data to recalibrate MS-DRG weights
to ``fully reflect the cost of the technology'' can be achieved by
discontinuing the new technology add-on payment status for
BLINCYTO[supreg].
The manufacturer stated that it recognizes that CMS has a general
practice (not set forth in its regulations) for technologies that have
had new technology add-on payments for 2 fiscal years to only provide
an additional year of new technology add-on payment if the 3-year
anniversary of the product's FDA approval is during the second half of
the fiscal year unless CMS receives evidence of a documented delay in
making the product available on the market. The manufacturer believed
that this general practice should not be followed here because of the
paucity of data on BLINCYTO[supreg]. The manufacturer noted that CMS
does not apply the general practice when there is a delay in market
availability, ostensibly because that delay has an impact on the
availability of data for use in inpatient hospital payment rate
setting. The manufacturer asserted that when there is a paucity of data
from the first of the 2 years of the new technology add-on payment, CMS
should continue making new technology add-on payments for a third year
to ensure that when it incorporates the item into the inpatient payment
system, it has enough data to do so.
Further, the manufacturer noted that BLINCYTO[supreg] demonstrated
significant improvements in overall survival, complete remission, and
event-free survival in comparison to standard of care chemotherapy in
adult patients with Ph-R/R B-cell precursor ALL. The manufacturer
stated that extending new technology add-on payments for
BLINCYTO[supreg] would continue to support access to this novel
therapy.
Response: We thank the commenters for their comments. With regard
to the technology's newness, as discussed in the FY 2005 IPPS final
rule (69 FR 49003), the timeframe that a new technology can be eligible
to receive new technology add-on payments begins when data become
available. As the manufacturer noted in its comments, Sec.
412.87(b)(2) clearly states that a medical service or technology may be
considered new within 2 or 3 years after the point at which data begin
to become available reflecting the ICD-9-CM code (or, as finalized
earlier in this section, the inpatient hospital code) assigned to the
new service or technology (depending on when a new code is assigned and
data on the new service or technology become available for DRG
recalibration). Section 412.87(b)(2) also specifies that after CMS has
recalibrated the DRGs, based on available data, to reflect the costs of
an otherwise new medical service or technology, the medical service or
technology will no longer be considered ``new'' under the criterion of
the section. The period of newness does not necessarily start with the
approval date for the medical service or technology, and does not
necessarily start with the issuance of a distinct code. Instead, it
begins with availability of the product on the U.S. market, which is
when data become available. As the manufacturer noted, we considered
the newness period for BLINCYTO[supreg] to commence when the product
gained entry onto the U.S. market on December 17, 2014. We have
consistently applied this standard, and believe that it is most
consistent with the purpose of new technology add-on payments.
While CMS may consider a documented delay in a technology's
availability on the U.S. market in determining when the newness period
begins, its policy for determining whether to extend new technology
add-on payments for a third year generally applies regardless of the
claims volume for the technology after the start of the newness period.
Similar to our discussion earlier and in the FY 2006 IPPS final rule
(70 FR 47349), we do not believe that case volume is a relevant
consideration for making the determination as to whether a product is
``new.'' Consistent with the statute, a technology no longer qualifies
as ``new'' once it is more than 2 to 3 years old, irrespective of how
frequently it has been used in the Medicare population. Similarly, this
same determination is applicable no matter how many MS-DRGs the
technology is spread across. Therefore, if a product is more than 2 to
3 years old, we consider its costs to be included in the MS-DRG
relative weights whether its use in the Medicare population has been
frequent or infrequent.
Based on the reasons stated above, BLINCYTO[supreg] is no longer
considered ``new'' for purposes of new technology add-on payments for
FY 2018. We are finalizing our proposal to discontinue making new
technology add-on payments for BLINCYTO[supreg] for FY 2018.
6. FY 2018 Applications for New Technology Add-On Payments
We received nine applications for new technology add-on payments
for FY 2018. Three applicants withdrew their applications prior to the
issuance of the FY 2018 IPPS/LTCH PPS proposed rule. Two applicants,
Kite Pharma and IsoRay Medical, Inc., in conjunction with GammaTile
LLC, withdrew their applications for KTE-C19 (axicabtagene ciloleucel)
and GammaTileTM, respectively, prior to the issuance of this
FY 2018 IPPS/LTCH PPS final rule.
In addition, in accordance with the regulations under Sec.
412.87(c), applicants for new technology add-on payments must have FDA
approval or clearance by July 1 of each year prior to the beginning of
the fiscal year that the application is being considered. One
applicant, Celator Pharmaceuticals, Inc. for VYXEOSTM, did
not receive FDA approval for its technology by July 1, 2017. Therefore,
VYXEOSTM is not eligible for consideration for new
technology add-on payments for FY 2018. We are not including in this
final rule the descriptions and discussions of this application which
was included in the FY 2018 IPPS/LTCH PPS proposed rule. We note that
we did receive public comments on this application. However, because
VYXEOSTM is ineligible for new technology add-on payments
for FY 2018 because it did not receive FDA approval by July 1, 2017, we
are not summarizing nor responding to public comments regarding the new
technology criteria for this application in this final rule. We note
that the applicant did request that we make an exception to the July 1
deadline if it were to receive FDA approval prior to the beginning of
FY 2018. However, we did not propose any changes to the regulations at
Sec. 412.87(c), and we believe the request is out of scope for this
final rule.
A discussion of the three remaining applications is presented
below.
a. Bezlotoxumab (ZINPLAVATM)
Merck & Co., Inc. submitted an application for new technology add-
on payments for ZINPLAVATM for FY 2018.
ZINPLAVATM is indicated to reduce
[[Page 38116]]
recurrence of Clostridium difficile infection (CDI) in adult patients
who are receiving antibacterial drug treatment for a diagnosis of CDI
who are at high risk for CDI recurrence. ZINPLAVATM is not
indicated for the treatment of the presenting episode of CDI and is not
an antibacterial drug.
Clostridium difficile (C-diff) is a disease-causing anaerobic,
spore forming bacteria that can affect the gastrointestinal (GI) tract.
Some people carry the C-diff bacterium in their intestines, but never
develop symptoms of an infection. The difference between asymptomatic
colonization and pathogenicity is caused primarily by the production of
an enterotoxin (Toxin A) and/or a cytotoxin (Toxin B). The presence of
either or both toxins can lead to symptomatic CDI, which is defined as
the acute onset of diarrhea with a documented infection with toxigenic
C-diff, or the presence of either toxin A or B. The GI tract contains
millions of bacteria, commonly referred to as ``normal flora'' or
``good bacteria,'' which play a role in protecting the body from
infection. Antibiotics can kill these good bacteria and allow the C-
diff bacteria to multiply and release toxins that damage the cells
lining the intestinal wall, resulting in a CDI. CDI is a leading cause
of hospital-associated gastrointestinal illnesses. Persons at increased
risk for CDI include people who are treated with current or recent
antibiotic use, people who have encountered current or recent
hospitalization, people who are older than 65 years, immunocompromised
patients, and people who have recently had a diagnosis of CDI. CDI
symptoms include, but are not limited to, diarrhea, abdominal pain, and
fever. CDI symptoms range in severity from mild (abdominal discomfort,
loose stools) to severe (profuse, watery diarrhea, severe pain, and
high fevers). Severe CDI can be life-threatening and, in rare cases,
can cause bowel rupture, sepsis and organ failure. CDI is responsible
for 14,000 deaths per year in the United States.
C-diff produces two virulent, pro-inflammatory toxins, Toxin A and
Toxin B, which target host colonocytes (that is, large intestine
endothelial cells) by binding to endothelial cell surface receptors via
combined repetitive oligopeptide (CROP) domains. These toxins cause the
release of inflammatory cytokines leading to intestinal fluid secretion
and intestinal inflammation. The applicant asserted that
ZINPLAVATM targets Toxin B sites within the CROP domain
rather than the C-diff organism itself. According to the applicant, by
targeting C-diff Toxin B, ZINPLAVATM neutralizes Toxin B,
prevents large intestine endothelial cell inflammation, symptoms
associated with CDI, and reduces the recurrence of CDI.
ZINPLAVATM binds to sites within the CROP domain, which
prevents Toxin B from binding to the host cell, thereby preventing the
inflammation and symptoms associated with CDI. ZINPLAVATM is
used concomitantly with standard of care (SOC) antibiotics. Typical
treatment of CDI includes antibiotic therapy using vancomycin,
metronidazole, fidaxomicin, or other antibiotics. Alternative therapies
include fecal microbiota transplant (FMT) and the use of probiotics.
The primary goal of CDI treatment is resolving the infection.
Antibacterial drug treatment remains the cornerstone of treatment of
CDI. However, this treatment option alone may not be adequate for
patients diagnosed with recurrent CDI. A major concern with respect to
a CDI is that even when treatment with an antibacterial drug of a
primary infection is successful, generally, 25 percent to 30 percent of
patients experience a recurrence of the infection within days or weeks
of the presenting episode's symptom resolution. The risk of recurrence
increases to 65 percent with subsequent CDI episodes. Disease
recurrence results from continued disruption of the intestinal
microbiota by SOC CDI antibiotics (or use of other antibiotics used to
treat non-gastrointestinal conditions), combined with persistence of
resistant C-diff spores (relapse) or acquisition of new spores from the
environment (reinfection).
Antibacterial drug use may inhibit the intestinal microbiota from
reestablishing itself, allowing C-diff spores potentially to germinate
and colonize the intestines when the antibacterial drug is
discontinued. If regrowth of C-diff overtakes the reestablishment of
the intestinal microbiota, then spore germination and toxin production
from vegetative C-diff may restart the cycle of CDI and the need for
subsequent treatment. These challenges highlight the need for
nonantibiotic therapies. ZINPLAVATM targets Toxin B rather
than the C-diff bacteria itself. According to the applicant, unlike
antibacterial drugs, ZINPLAVATM is a human monoclonal
antibody and does not affect the microbiota. According to the
applicant, ZINPLAVATM neutralizes C-diff Toxin B and reduces
recurrence of CDI. ZINPLAVATM is given concomitantly during
the course of SOC antibacterial treatment of a CDI..
With respect to the newness criterion, ZINPLAVATM
received FDA approval on October 21, 2016, for reduction of recurrence
of CDI in patients receiving antibacterial drug treatment for CDI and
who are at high risk of CDI recurrence. ZINPLAVATM became
commercially available on February 10, 2017. Therefore, the newness
period for ZINPLAVATM began on February 10, 2017.
The applicant submitted a request for a unique ICD-10-PCS procedure
code and was granted approval for the following procedure codes:
XW033A3 (Introduction of bezlotoxumab monoclonal antibody, into
peripheral vein, percutaneous approach, New Technology Group 3) and
XW043A3 (Introduction of bezlotoxumab monoclonal antibody, into central
vein, percutaneous approach, New Technology Group 3).
As discussed above, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome,
according to the applicant, ZINPLAVATM is a human monoclonal
antibody with an innovative mechanism of action. The applicant asserted
that ZINPLAVATM is a novel treatment, with a unique
mechanism of action relative to SOC CDI antibiotics that target C-diff.
The applicant explained that ZINPLAVATM is the first human
monoclonal antibody that targets and neutralizes C. diff Toxin B
because the technology specifically binds to and neutralizes C-diff
Toxin B (which is an exotoxin that contributes to intestinal tissue
damage and immune system effects that underlie the symptoms of CDI) and
inhibits binding of the toxin to mammalian cells. The applicant further
asserted that the administration of ZINPLAVATM, in addition
to standard of care antibacterial drug treatment, reduces CDI
recurrence by providing passive immunity against Toxin B resulting from
persistent or newly acquired C-diff spores. According to the applicant,
ZINPLAVATM is the only FDA-approved treatment indicated for
reducing CDI recurrence as adjunctive therapy in adult patients who are
receiving antibacterial drug treatment for CDI and who are at high risk
for CDI recurrence.
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant maintained that
patients who may be eligible to receive treatment using
ZINPLAVATM could be in an acute-care hospital setting for a
wide
[[Page 38117]]
variety of reasons and may develop a secondary CDI as a hospital-
acquired infection and, therefore, cases representing patients that may
be eligible for treatment using the technology can map to a wide range
of MS-DRGs. ZINPLAVATM is indicated for patients receiving
SOC treatment for CDI and who are at a high risk for CDI recurrence. In
order to identify the range of MS-DRGs for which cases representing
patients that may be eligible for treatment using ZINPLAVATM
may map to, the applicant identified all MS-DRGs containing cases that
represent patients presenting with CDI as a primary or secondary
diagnosis. The applicant used FY 2015 MedPAR data to map the identified
cases to 543 MS-DRGs, with 12 MS-DRGs accounting for approximately 40
percent of all cases. The applicant segmented these cases based on age
because patients 65 years and older are at higher risk for CDI
recurrence. Based on the FY 2015 MedPAR data, MS-DRG distribution was
found to be similar, irrespective of CDI status (primary or secondary),
for patients over 65 years of age and those under 65 years of age. The
top 7 MS-DRGs across both age groups account for nearly 54 percent
(over 65 years of age) and 49 percent (under 65 years of age). The
applicant further segmented these cases to determine if status of CDI
as a primary or secondary diagnosis influenced MS-DRG mapping.
Regardless of age, when CDI is the primary diagnosis, approximately 98
percent of patient cases map to the same 3 MS-DRGs: MS-DRG 371 (Major
Gastrointestinal Disorders and Peritoneal Infections with MCC); MS-DRG
372 (Major Gastrointestinal Disorders and Peritoneal Infections with
CC); and MS-DRG 373 (Major Gastrointestinal Disorders and Peritoneal
Infections without CC/MCC), respectively. Potential cases representing
patients who may be eligible for treatment with ZINPLAVATM
would be assigned to the same MS-DRGs as cases representing patients
who receive SOC treatment for a diagnosis of CDI.
With respect to the third criterion, whether the new use of the
technology involves the treatment of the same or similar type of
disease and the same or similar patient population, according to the
applicant, ZINPLAVATM is administered concomitantly or as
adjunctive therapy with SOC antibacterial treatment for recurrent CDI.
The applicant stated that ZINPLAVATM is indicated to reduce
recurrence of CDI in adult patients at high risk of CDI recurrence who
are receiving antibacterial drug treatment for CDI. According to the
applicant, the addition of ZINPLAVATM to SOC antibacterial
drug treatment reduces CDI recurrence by providing passive immunity
against Toxin B resulting from persistent or newly acquired C-diff
spores. ZINPLAVATM is used to reduce recurrence of the same
or similar type of disease (CDI) and to treat a similar patient
population receiving SOC therapy for the treatment of recurrent CDI.
We stated in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19879)
that, based on the applicant's statements presented above, because
ZINPLAVATM has a unique mechanism of action, we did not
believe that the technology is substantially similar to existing
technologies and, therefore, meets the newness criterion. We invited
public comments on whether ZINPLAVATM meets the newness
criterion.
Comment: The applicant submitted comments in agreement with CMS'
belief that ZINPLAVATM meets the newness criterion for new
technology add-on payments. The applicant reiterated that
ZINPLAVATM is the only FDA approved treatment indicated for
reducing CDI recurrence as adjunctive therapy in adult patients who are
receiving antibacterial drug treatment for CDI and who are at risk for
CDI recurrence. The applicant agreed that ZINPLAVATM is not
substantially similar to existing technologies and, therefore, meets
the newness criterion.
Response: We appreciate the comments submitted by the applicant on
whether ZINPLAVATM meets the newness criterion. After review
of the information provided by the applicant and consideration of its
comments, we believe that ZINPLAVATM meets the newness
criterion and we consider the technology to be ``new'' as of February
10, 2017, when the technology became commercially available.
With regard to the cost criterion, the applicant conducted the
following analysis to demonstrate that the technology meets the cost
criterion. In order to identify the range of MS-DRGs that cases
representing potential patients who may be eligible for treatment using
ZINPLAVATM may map to, the applicant identified all MS-DRGs
for patients diagnosed with CDI as a primary or secondary diagnosis.
Specifically, the applicant searched the FY 2015 MedPAR file for claims
that included target patients over 65 years of age and identified cases
reporting diagnoses of CDI by ICD-9-CM diagnosis code 008.45
(Intestinal infection due to Clostridium difficile) as a primary or
secondary diagnosis. This resulted in 139,135 cases across 543 MS-DRGs,
with approximately 40 percent of all cases mapping to the following 12
MS-DRGs: MS-DRG 177 (Respiratory Infections and Inflammations with
MCC); MS-DRG 193 (Simple Pneumonia and Pleurisy with MCC); MS-DRG
291(Heart Failure and Shock with MCC); MS-DRGs 371, 372, and 373 (Major
Gastrointestinal Disorders and Peritoneal Infections with MCC, with CC,
and without CC/MCC, respectively); MS-DRGs 682 and 683 (Renal Failure
with MCC and with CC, respectively); MS-DRG 853 (Infectious and
Parasitic Diseases with O.R. Procedure with MCC); MS-DRGs 870, 871, and
872 (Septicemia or Severe Sepsis with Mechanical Ventilation >96 Hours,
with MCC, and without MCC, respectively).
Using the 139,135 identified cases, the average unstandardized
case-weighted charge per case was $80,677. The applicant then
standardized the charges. The applicant did not remove charges for the
current treatment because, as discussed above, ZINPLAVATM
will be used concomitantly with SOC antibacterial treatments for the
treatment of CDI as an additive, or adjunctive treatment option, to
reduce the recurrence of CDI infection. The applicant then applied the
2-year inflation factor of 1.098446 from the FY 2017 IPPS/LTCH PPS
final rule (81 FR 57286) to inflate the charges from FY 2015 to FY
2017. The applicant noted that the anticipated price for
ZINPLAVATM has yet to be determined; therefore, no charges
for ZINPLAVATM were added in the analysis. Based on the FY
2017 IPPS/LTCH PPS Table 10 thresholds, the average case-weighted
threshold amount was $56,871. The inflated average case-weighted
standardized charge per case was $78,929. Because the inflated average
case-weighted standardized charge per case exceeds the average case-
weighted threshold amount, the applicant maintained that the technology
meets the cost criterion. The applicant noted that the inflated average
case-weighted standardized charge per case exceeds the average case-
weighted threshold amount without the average per patient cost of the
technology. As such, the applicant anticipated that the inclusion of
the cost of ZINPLAVATM, at any price point, will further
increase charges above the average case-weighted threshold amount. In
the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19879), we invited
public comments on whether ZINPLAVATM meets the cost
criterion.
Comment: The applicant submitted comments reiterating its cost
analysis
[[Page 38118]]
results. Specifically, the applicant stated that as indicated in the FY
2015 MedPAR data analysis summarized above, the average case-weighted
standardized charge per case exceeded the average case-weighted
threshold amount. As noted in the proposed rule, at the time the
applicant submitted its application, the applicant indicated that the
price of ZINPLAVATM had not yet been determined. However,
because the inflated average case-weighted standardized charge per case
exceeded the average case-weighted threshold amount without the average
per-patient cost of the technology, the applicant contended that the
inclusion of the cost of ZINPLAVA , at any price point, would further
increase charges above the average case-weighted threshold amount.
The applicant noted, in supplemental information submitted to CMS,
the wholesale acquisition cost (WAC) of ZINPLAVATM (which is
supplied as a 1000 mg/40 mL (25 mg/mL) solution in a single-dose vial)
is $3,800 per vial. The recommended dosage of ZINPLAVATM is
a single 10 mg/kg dose administered as an IV infusion based on patient
body weight. Because each vial contains 1,000 mg of
ZINPLAVATM, a single vial provides the complete recommended
dose for a single patient who weighs 100 kg or less.
As noted in the applicant's supplemental submission, to estimate
the anticipated average charge submitted by hospitals for
ZINPLAVATM, the applicant assumed that hospitals will mark
up the cost for ZINPLAVATM by 200 percent. A 200 percent
mark-up of the $3,800 WAC results in a total charge of $7,600 for
ZINPLAVATM. The applicant added the anticipated charge for
ZINPLAVATM of $7,600 to the previously determined inflated
average case-weighted standardized charge per case of $78,929. This
resulted in a revised inflated average case-weighted standardized
charge per case of $86,529, which still exceeds the average case-
weighted threshold amount of $56,871.
Response: After consideration of the comments we received, we agree
that ZINPLAVATM meets the cost criterion.
With respect to the substantial clinical improvement criterion, the
applicant asserted that the addition of ZINPLAVATM to SOC
antibacterial drug treatment reduces CDI recurrence because it provides
passive immunity against Toxin B resulting from persistent or newly
acquired C-diff spores.
The applicant conducted two Phase III studies, MODIFY I and MODIFY
II. The primary endpoint of the studies was recurrent CDI within 12
weeks after completion of treatment with ZINPLAVATM. The
first study design initially included actoxumab, an antitoxin A
monoclonal antibody treatment arm that was later discontinued due to a
high failure rate and increase in mortality compared to other treatment
arms.\3\ Clinical data on ZINPLAVATM is provided exclusively
from the FDA briefing document available on the FDA Web site at: https://www.fda.gov/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/Anti-InfectiveDrugsAdvisoryCommittee. Information is also provided in the
package insert by the manufacturer, Merck & Company, Inc. The FDA
briefing provided data on the safety and efficacy of
ZINPLAVATM. The FDA considered sustained clinical responses
defined as clinical cure of the initial CDI episode and the absence of
CDI recurrence as an appropriate endpoint to assess the efficacy of
ZINPLAVA\TM\ in the prevention of CDI recurrences.
---------------------------------------------------------------------------
\3\ Wilcox MH et al. Bezlotoxumab for Prevention of Recurrent
Clostridium difficile Infection. N Engl J Med. 2017 Jan
26;376(4):305-317.
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In MODIFY I trial, the clinical cure rate of the presenting CDI
episode was lower in the ZINPLAVA\TM\ arm as compared to the placebo
arm, whereas in MODIFY II trial the clinical cure rate was lower in the
placebo arm as compared to the ZINPLAVA\TM\ arm. Additional analyses
showed that, by 3 weeks post study drug infusion, the clinical cure
rates of the presenting CDI episode were similar between treatment
arms.
In MODIFY I, the rate of sustained clinical response was
numerically in favor of ZINPLAVA\TM\ (60.1 percent) in comparison to
placebo (55.2 percent) with an adjusted difference and 95 percent CI of
4.8 percent (-2.1 percent; 11.7 percent). In MODIFY II, the proportion
of subjects with sustained clinical response in the ZINPLAVA\TM\ arm
(66.8 percent) was also higher than in the placebo arm (52.1 percent)
with an adjusted difference of 14.6 percent and 95 percent CI (7.8
percent; 21.4 percent). The treatment did not significantly decrease
mortality. Recurrence rates, including CDI-related hospital readmission
rates, reportedly were between 10 and 25 percent. No clinically
meaningful differences in the exposure of bezlotoxumab were found
between patients 65 years of age and older and patients under 65 years
of age.
In the Phase III trials, the safety profile of
ZINPLAVATM was similar overall to that of placebo. However,
heart failure was reported more commonly in the two Phase III clinical
trials of ZINPLAVATM-treated patients compared to placebo-
treated patients. These adverse reactions occurred primarily in
patients with underlying congestive heart failure (CHF). In patients
with a history of CHF, 12.7 percent (15/118) of ZINPLAVATM-
treated patients and 4.8 percent (5/104) of placebo-treated patients
had the serious adverse reaction of heart failure during the 12-week
study period. In addition, in patients with a history of CHF, there
were more deaths in ZINPLAVATM-treated patients (19.5
percent (23/118)) than in placebo-treated patients (12.5 percent (13/
104)) during the 12-week study period. We stated in the proposed rule
that we were concerned regarding the safety of ZINPLAVATM in
patients diagnosed with CHF. In regards to safety, data from the MODIFY
I and MODIFY II studies suggest few adverse events associated with
ZINPLAVATM, with no significant differences in the number of
serious adverse events, deaths or discontinuations of study drug that
occurred between the ZINPLAVATM and the placebo groups.
However, both the ZINPLAVATM and the ZINPLAVATM
plus actoxumab treatment groups experienced more episodes of cardiac
failure (defined as acute or chronic cardiac failure) then compared to
the placebo group (2.2 percent versus 1 percent). We stated in the
proposed rule that we were unsure if the cardiac failure reported in
the studies may be the result of a higher number of baseline patients
with heart failure in the treatment arms or the result of an adverse
effect to ZINPLAVATM. Therefore, we stated that we were
concerned with regard to the adverse event of cardiac failure of
ZINPLAVATM.
In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19880), we
invited public comments on whether ZINPLAVATM meets the
substantial clinical improvement criterion. We noted that we did not
receive any written public comments in response to the New Technology
Town Hall meeting notice regarding the application of
ZINPLAVATM for new technology add-on payments.
Comment: The applicant submitted comments regarding the substantial
clinical improvement criterion. The applicant reiterated that the
addition of ZINPLAVATM to standard of care antibacterial
drug treatment reduces the risk of CDI recurrence in adult patients who
are at high risk for CDI recurrence because it provides passive
immunity against Toxin B resulting from persistent or newly acquired C.
difficile spores. The applicant noted CMS'
[[Page 38119]]
concern, as described in the proposed rule, regarding the reported
adverse event of cardiac failure with ZINPLAVATM. The
applicant provided additional information concerning serious adverse
events (SAEs) observed in the Phase III trials, and also included a
series of analyses performed in the 41 subjects with an SAE of cardiac
failure, as well as a discussion of analyses performed in a subset of
patients with a baseline history of CHF..
The applicant noted that SAEs were collected for the full 12-week
follow-up period in the both Phase III trials (P001 + P002). Amongst
the 2344 Phase III trial subjects, 29.8 percent of subjects experienced
an SAE during the 12-week follow-up period. According to the applicant,
the proportion of subjects with a SAE was lower in the active treatment
groups compared with placebo (bezlotoxumab, 29.4 percent; actoxumab +
bezlotoxumab, 27.3 percent; and placebo, 32.7 percent). The most
frequently reported SAEs across all treatment groups were CDI (4.7
percent), pneumonia (2.0 percent), sepsis (1.8 percent), cardiac
failure (1.7 percent), diarrhea (1.6 percent), and urinary tract
infection (1.5 percent). A higher percentage of subjects in the active
treatment groups reported SAEs of cardiac failure compared with placebo
(bezlotoxumab, 2.2 percent; actoxumab + bezlotoxumab, 2.2 percent; and
placebo, 0.9 percent), whereas a higher percentage of subjects reported
SAEs of CDI, pneumonia, and sepsis in the placebo group compared with
the bezlotoxumab and actoxumab + bezlotoxumab groups. The incidence for
other frequently reported SAEs was similar across groups. SAEs
generally reflected the underlying comorbidities and advanced age of
the subjects enrolled.
The applicant also further characterized the observed numerical
imbalance of subjects experiencing cardiac failure SAEs in
bezlotoxumab-containing versus placebo treatment groups, by performing
a series of analyses in the 41 subjects with an SAE of cardiac failure.
The applicant noted the baseline characteristics of the 41 subjects who
experienced an SAE of cardiac failure. As compared with the All
patients as treated (APaT) population for the integrated Phase III
trials (P001 + P002) dataset, the 41 subjects were older, almost all
were inpatients at the time of enrollment, had a higher incidence of
comorbid conditions (as evidenced by Charlson Comorbidity Index and
Horn's Index), and a higher incidence of severe CDI. Across the
treatment groups, nearly 90 percent had a medical history of including
at least one cardiac condition and approximately 70 percent had a
history of cardiac failure and/or cardiomyopathy. Therefore, the
applicant believed that any assessment of the safety profile of this
morbidly ill patient population must be interpreted with caution.
The applicant provided an analysis of the safety profile of the 41
subjects with cardiac failure SAEs with respect to timing to cardiac
failure SAE and death. In the placebo group, 5 of 7 subjects
experienced an SAE of cardiac failure before Week 4, while in the
bezlotoxumab and actoxumab + bezlotoxumab groups, the majority of such
events occurred after Week 4. None of the cardiac failure SAEs was
deemed drug related by the investigator. Among subjects with a cardiac
failure SAE, a higher proportion of subjects in the placebo group than
in the bezlotoxumab group died before Week 4. The applicant noted that
the events were often associated with concurrent conditions such as
infection and/or worsening CDI that are known to exacerbate CHF,
thereby further supporting the assessments that these events were not
drug related. Overall, according to the applicant, these findings do
not support a clear association between cardiac failure and
bezlotoxumab, especially recognizing the severe baseline morbidity of
the subjects and the lack of a temporal association of the event and
any associated death.
The applicant reiterated that heart failure is listed in the
warnings and precautions section of the prescribing information for
ZINPLAVATM to describe the higher incidence of heart failure
reported in the two Phase III trials in subjects who received
ZINPLAVATM compared with those who received placebo,
primarily in patients with underlying CHF. The warnings and precautions
section of the ZINPLAVATM label states, in part, that in
patients with a history of CHF, ZINPLAVATM ``should be
reserved for use when the benefit outweighs the risk.'' Although the
overall safety profile of ZINPLAVATM was found to be
acceptable, the FDA considered that this information was clinically
relevant. Furthermore, the applicant stated that ZINPLAVATM
has also recently been authorized for use by the European Medicines
Agency (EMA) and that there is no heart failure warning in the EU
prescribing information.
Response: We appreciate the additional information and analysis
provided by the applicant in response to our concerns regarding the
adverse event of cardiac failure. We are satisfied that the warnings
and precautions section of the drug's label clearly state that
``ZINPLAVATM should be reserved for use when the benefit
outweighs the risk'' for patients with a history of congestive heart
failure (CHF). We agree that ZINPLAVATM represents a
substantial clinical improvement over existing technologies because,
based on the studies provided by the applicant, it reduces CDI
recurrence by providing passive immunity against Toxin B resulting from
persistent or newly acquired C-diff spores. After consideration of the
public comments we received, we have determined that
ZINPLAVATM meets all of the criteria for approval of new
technology add-on payments. Therefore, we are approving new technology
add-on payments for ZINPLAVATM for FY 2018. Cases involving
ZINPLAVATM that are eligible for new technology add-on
payments will be identified by ICD-10-PCS procedure codes XW033A3 and
XW043A3.
In its application, the applicant estimated that the average
Medicare beneficiary would require a dosage of 10 mg/kg administered as
an IV infusion over 60 minutes as a single dose. According to the
applicant, the WAC for one dose is $3,800. Under 42 CFR 412.88(a)(2),
we limit new technology add-on payments to the lesser of 50 percent of
the average cost of the technology or 50 percent of the costs in excess
of the MS-DRG payment for the case. As a result, the maximum new
technology add-on payment amount for a case involving the use of
ZINPLAVATM is $1,900 for FY 2018. In keeping with the
current ZINPLAVATM label, CMS expects ZINPLAVATM
will be prescribed for adult patients who are receiving antibacterial
drug treatment for a diagnosis of CDI who are at high risk for CDI
recurrence, and after consideration of its current warnings and
precautions section which indicates for patients with a history of CHF,
ZINPLAVATM should be reserved for use when the benefit
outweighs the risk.
b. EDWARDS INTUITY EliteTM Valve System (INTUITY) and
LivaNova Perceval Valve (Perceval)
Two manufacturers, Edwards Lifesciences and LivaNova, submitted
applications for new technology add-on payments for FY 2018 for the
INTUITY EliteTM Valve System (INTUITY) and the Perceval
Valve (Perceval), respectively. Both of these technologies are
prosthetic aortic valves inserted using surgical aortic valve
replacement (AVR). We note that, while Edwards Lifesciences submitted
an application for new technology add-on payments for
[[Page 38120]]
FY 2017 for the INTUITY valve, FDA approval was not received by July 1,
2016, and, therefore, the device was not eligible for consideration for
new technology add-on payments for FY 2017.
Aortic valvular disease is relatively common, primarily manifested
by aortic stenosis. Most aortic stenosis is due to calcification of the
valve, either on a normal tri-leaflet valve or on a congenitally
bicuspid valve. The resistance to outflow of blood is progressive over
time, and as the size of the aortic orifice narrows, the heart must
generate increasingly elevated pressures to maintain blood flow.
Symptoms such as angina, heart failure, and syncope eventually develop,
and portend a very serious prognosis. There is no effective medical
therapy for aortic stenosis, so the diseased valve must be replaced or,
less commonly, repaired.
The INTUITY valve incorporates the expansion feature of a catheter
implanted valve, but is designed to be placed during cardiac surgery.
The manufacturer explained that the INTUITY valve requires fewer
stitches to hold the device in place because of the balloon expanded
design and, therefore, can be inserted more quickly than a standard
valve, and also facilitates minimally invasive cardiac surgery; that
is, use of a smaller incision to allow faster recovery. The
manufacturer of the INTUITY valve indicated that the device is
comprised of: (1) A bovine pericardial aortic bioprosthetic valve; (2)
a balloon expandable stainless steel frame; and (3) a textured sealing
cloth. The manufacturer of the Perceval valve indicated that the
Perceval valve device is comprised of: (1) Sizers used to determine the
correct size of the prosthesis; (2) a dual holder used for positioning
and deployment (available in two models, one for sternal approaches and
one for MIS); (3) a ``smart clip'' to assist during assembly of the
valve on the dual holder to prevent release during positioning; (4) a
dual collapser used to evenly reduce the diameter of the prosthesis
allowing it to mount onto the holder prior to implantation; (5) a dual
collapser base used to allow proper positioning; and (6) a postdilation
catheter used for in situ dilation of the prosthesis after implantation
(available in two models, one for sternal approaches and one for MIS).
According to both applicants, the INTUITY valve and the Perceval valve
are the first sutureless, rapid deployment aortic valves that can be
used for the treatment of patients who are candidates for surgical AVR.
The applicants indicated that the two new device innovations facilitate
MIS approaches through: (1) The device rapid deployment mechanisms; and
(2) the design of the prosthetic valve that allows for markedly fewer
to no sutures to securely fasten the prosthetic valve to the aortic
orifice. The applicants explained that both of these aspects of their
devices are credited with the reduction of operating time.
As noted, according to both applicants, the INTUITY valve and the
Perceval valve are the first sutureless, rapid deployment aortic valves
that can be used for the treatment of patients who are candidates for
surgical AVR. Because potential cases representing patients who are
eligible for treatment using the INTUITY and the Perceval aortic valve
devices would group to the same MS-DRGs, and we believe that these
devices are intended to treat the same or similar disease in the same
or similar patient population, and are purposed to achieve the same
therapeutic outcome using the same or similar mechanism of action, we
believe these two devices are substantially similar to each other and
that it is appropriate to evaluate both technologies as one application
for new technology add-on payments under the IPPS.
With respect to the newness criterion, the INTUITY valve received
FDA approval on August 12, 2016, and was commercially available on the
U.S. market on August 19, 2016. The Perceval valve received FDA
approval on January 8, 2016, and was commercially available on the U.S.
market on February 29, 2016. We believe that, in accordance with our
policy, it is appropriate to use the earliest market availability date
submitted as the beginning of the newness period. Therefore, we stated
in the proposed rule that based on our policy, with regard to both
devices, if the technologies are approved for new technology add-on
payments, we believe that the beginning of the newness period would be
February 29, 2016. In addition, both applicants indicated that ICD-10-
PCS code X2RF032 (Replacement of Aortic Valve using Zooplastic Tissue,
Rapid Deployment Technique, Open Approach, New Technology Group 2)
would identify procedures involving the use of the devices when
surgically implanted.
We previously stated that, because we believe these two devices are
substantially similar to each other, we believe it is appropriate to
evaluate both technologies as one application for new technology add-on
payment under the IPPS. The applicants submitted separate cost and
clinical data, and we reviewed and discuss each set of data separately.
However, we stated in the proposed rule that we intend to make one
determination regarding new technology add-on payments that will apply
to both devices. We believe that this is consistent with our policy
statements in the past regarding substantial similarity. Specifically,
we have noted that approval of new technology add-on payments would
extend to all technologies that are substantially similar (66 FR
46915), and we believe that continuing our current practice of
extending new technology add-on payments without a further application
from the manufacturer of the competing product, or a specific finding
on cost and clinical improvement if we make a finding of substantial
similarity among two products is the better policy because we avoid--
Creating manufacturer-specific codes for substantially
similar products;
Requiring different manufacturers of substantially similar
products to submit separate new technology applications;
Having to compare the merits of competing technologies on
the basis of substantial clinical improvement; and
Bestowing an advantage to the first applicant representing
a particular new technology to receive approval (70 FR 47351).
We explained in the proposed rule that if these substantially
similar technologies were submitted for review in different (and
subsequent) years, rather than the same year, we would evaluate and
make a determination on the first application and apply that same
determination to the second application. However, because the
technologies have been submitted for review in the same year, we
believe that it is appropriate to consider both sets of cost data and
clinical data in making a determination and we do not believe that it
is possible to choose one set of data over another set of data in an
objective manner.
As stated above, we believe that the INTUITY valve and the Perceval
valve are substantially similar to each other for purposes of analyzing
these two applications as one application. As we stated in the proposed
rule, we also need to determine whether the INTUITY valve and the
Perceval valve are substantially similar to existing technologies prior
to their approval by the FDA and their release on the market. As
discussed earlier, if a technology meets all three of the substantial
similarity criteria, it would be considered substantially similar to an
existing technology and would not be
[[Page 38121]]
considered ``new'' for purposes of new technology add-on payments.
With respect to the first criterion, whether a product uses the
same or a similar mechanism of action to achieve a therapeutic outcome,
the applicant for the INTUITY valve asserted that its unique design,
which utilizes features that were not previously included in
conventional aortic valves, constitutes a new mechanism of action. The
deployment mechanism allows for rapid deployment. The expandable frame
can reshape the native valve's orifice, creating a larger and more
efficiently shaped effective orifice area. In addition, the expandable
skirt allows for structural differentiation upon fixation of the valve
requiring 3 permanent, guiding sutures rather than the 12 to 18
permanent sutures used to fasten standard prosthetic aortic valves. The
applicant for the Perceval valve described the Perceval valve's
mechanism of action as including: (a) No permanent sutures; (b) a
dedicated delivery system that increases the surgeon's visibility; (c)
an enabler of minimally invasive approach; (d) a complexity reduction
and reproducibility of the procedure; and (e) a unique device assembly
and delivery systems.
With respect to the second and third criteria, whether a product is
assigned to the same or a different MS-DRG and whether the new use of
the technology involves the treatment of the same or similar type of
disease and the same or similar patient population, the applicant for
the INTUITY valve indicated that the technology is used in the
treatment of the same patient population and potential cases
representing patients that may be eligible for treatment using the
INTUITY valve would be assigned to the same MS-DRGs as cases involving
the use of other prosthetic aortic valves (that is, MS-DRGs 216
(Cardiac Valve & Other Major Cardiothoracic Procedures with Cardiac
Catheterization with MCC), 217 (Cardiac Valve & Other Major
Cardiothoracic Procedures with Cardiac Catheterization with CC), 218
(Cardiac Valve & Other Major Cardiothoracic Procedures with Cardiac
Catheterization without CC/MCC), 219 (Cardiac Valve & Other Major
Cardiothoracic Procedures without Cardiac Catheterization with MCC),
220 (Cardiac Valve & Other Major Cardiothoracic Procedures without
Cardiac Catheterization with CC), and 221 (Cardiac Valve & Other Major
Cardiothoracic Procedures without Cardiac Catheterization without CC/
MCC).
The applicant for the Perceval valve also indicated that the
Perceval valve device is used in the treatment of the same patient
population and potential cases representing patients that may be
eligible for treatment using the technology would be assigned to the
same MS-DRGs (MS-DRGs 216 through 221) as cases involving the use of
other prosthetic aortic valves.
We stated in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19881)
that after considering the materials included with both applications,
we remained concerned as to whether the mechanism of action described
by the applicants represents an improvement to an existing surgical
technique and technology or a new technology. While the INTUITY and
Perceval valves address some of the challenges posed by implantation of
existing valves, including improving the visibility of the orifice and
the physiological function of the valves, we stated that we did not
believe that their mechanisms of action are fundamentally different
from that of other aortic valves. As one of the applicants stated in
its application, the goal of the prosthetic aortic valve is to mimic
the native valve that it has replaced via the incorporation of three
leaflets that open and close in response to pressure gradients
developed during the cardiac cycle. We stated that we believe that the
INTUITY and Perceval valves are the same or similar to other prosthetic
aortic valves used to treat the same or similar diagnoses.
In the proposed rule, we invited public comments on whether the
mechanism of action of the sutureless, rapid deployment of the INTUITY
and Perceval valves differs from the mechanism of action of standard
AVR valves and whether the technologies meet the newness criterion.
Comment: The applicant for the INTUITY valve, as well as several
physicians that have performed surgeries implanting the INTUITY, stated
that the mechanism of action differs from that of standard aortic
valves because of the expeditious implantation, rapid deployment, and
improved hemodynamics. The applicant also emphasized innovative aspects
about the INTUITY that were described in its application, such as the
flexible delivery system, the ability to reshape the native valve's
orifice, and the balloon expandable stented frame and subannular skirt.
The applicant emphasized that minimally invasive aortic valve
replacement has not been widely adopted because of greater technical
challenge and longer cross-clamp times, but that the INTUITY
facilitates minimally invasive surgery by addressing both of these
challenges.
One commenter, who also manufactures heart valves, indicated that
it shared CMS' concern about whether the mechanism of action
constitutes a new technology. This commenter indicated that prosthetic
aortic valves fall into two categories: Traditional, open surgical and
minimally invasive, and that differences in design of the valves are
intended to address challenges in surgical valve replacement, including
surgical technique, reduction in complications, improvement in
hemodynamics, or resistance to calcification. The commenter stated that
all prosthetic aortic valves are substantially similar to each other.
The commenter described the steps involved in placing surgical valves,
and indicated that the applicants' devices introduce a new technique
for securing a surgically implanted bioprosthetic heart valve to the
annulus and surrounding structures, but that the mechanism of action is
unchanged. The commenter also noted that rapid deployment surgical
aortic valves were introduced into clinical practice in 1963.
Response: We thank the commenters for the details and input on
whether INTUITY and Perceval meet the newness criterion. While we
appreciate the additional information provided by the commenter that
did not believe these valves represented a new technology, we believe
that based on comments from the manufacturer and physicians who have
used the INTUITY device, the mechanism of action for the INTUITY and
Perceval is different from other aortic valves. Specifically, as the
manufacturer and other physicians emphasized in their comments, the
technical features of the valve provide the ability to improve clinical
function beyond the opening and closing of the valve leaflets and allow
it to perform more efficiently than a standard valve. Thus, as these
commenters noted, a prosthetic aortic valve inserted using surgical AVR
with its insertion process improves the physiologic function of the
outflow track of the new valve. After further review of the information
provided by the applicant and consideration of the public comments we
received, we believe that INTUITY and Perceval meet the newness
criterion. Therefore, we consider the technology to be ``new'' as of
February 29, 2016, when the Perceval valve became commercially
available.
As we stated above, each applicant submitted separate analyses
regarding the cost criterion for each of their devices, and both
applicants maintained that their device meets the cost criterion. We
summarize each analysis below.
[[Page 38122]]
With regard to the cost criterion, the INTUITY valve's applicant
researched the FY 2015 MedPAR claims data file to identify cases
representing patients who may be potential recipients of treatment
using the INTUITY valve. The applicant identified claims that reported
an ICD-9-CM diagnosis code of 424.1 (Aortic valve disorder), in
combination with an ICD-9-CM procedure code of 35.21 (Replacement of
aortic valve with tissue) or 35.22 (Open and other replacement of
aortic valve). The applicant also identified cases with or without a
coronary artery bypass graft (CABG) using the ICD-9-CM procedure codes
in the table below.
------------------------------------------------------------------------
ICD-9-CM code Code description
------------------------------------------------------------------------
36.10..................... Aortocoronary bypass for heart
revascularization, not otherwise specified
36.11..................... (Aorto)coronary bypass of one coronary
artery.
36.12..................... (Aorto)coronary bypass of two coronary
arteries.
36.13..................... (Aorto)coronary bypass of three coronary
arteries.
36.14..................... (Aorto)coronary bypass of four or more
coronary arteries.
36.15..................... Single internal mammary-coronary artery
bypass.
36.16..................... Double internal mammary-coronary artery
bypass.
36.17..................... Abdominal-coronary artery bypass.
------------------------------------------------------------------------
The applicant identified a total of 25,173 cases that mapped to MS-
DRGs 216 through 221. Of these cases, the applicant identified 10,251
CABG cases and 14,922 non-CABG cases. According to the applicant,
patients that undergo a procedure without need of a concomitant CABG
are more likely to receive treatment with the INTUITY valve than
patients in need of a concomitant CABG. Therefore, the applicant
weighted the non-CABG cases at 90 percent of total cases and the CABG
cases at 10 percent of total cases under each of the six MS-DRGs. The
final case count is a weighted average of 14,455 cases.
The applicant calculated an average unstandardized charge per case
of $192,506 for all cases. The applicant then removed 100 percent of
the charges for pacemakers, investigational devices, and other implants
that would not be required for patients receiving treatment using the
INTUITY valve. The applicant standardized the charges and then applied
an inflation factor of 1.098446, which is the 2-year inflation factor
in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57286), to update the
charges from FY 2015 to FY 2017. The applicant calculated the average
expected charge for the INTUITY valve based on the current list price
of the device. Although the applicant submitted data related to the
cost of the INTUITY valve, the applicant noted that the cost of the
device is proprietary information. To add charges for the device, the
applicant assumed a hospital mark-up of approximately 300 percent,
based on the current average CCR for implantable devices (0.331) as
reported in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56876). Based
on the FY 2017 IPPS/LTCH PPS Table 10 thresholds, the average case-
weighted threshold amount was $170,321. The applicant computed an
inflated average case-weighted standardized charge per case of
$194,291, which is $23,970 above the average case-weighted threshold
amount. Because the inflated average case-weighted standardized charge
per case exceeds the average case-weighted threshold amount, the
applicant maintained that the technology meets the cost criterion.
In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19882), we
thanked the applicant for the analysis above. However, we indicated
that we would like more information from the applicant regarding how it
decided upon which cases to include in the sensitivity analysis, as
well as further details about how and on what basis the applicant
weighted CABG and non-CABG cases. We invited public comments on whether
the INTUITY valve meets the cost criterion. We summarize the public
comment we received from the applicant regarding its cost analysis
later in this section.
With regard to the cost criterion in reference to the Perceval
valve, the applicant conducted the following analysis. The applicant
examined FY 2015 MedPAR claims data that included cases reporting an
ICD-9 procedure code of 35.21 or 35.22, in combination with diagnosis
code: 424.1. Noting that MS-DRGs 216 through 221 contained 97 percent
of these cases, the applicant limited its analysis to these 6 MS-DRGs.
The applicant identified 25,193 cases across these MS-DRGs, resulting
in an average case-weighted unstandardized charge per case of $173,477.
The applicant then standardized charges using FY 2015 standardization
factors and applied an inflation factor of 1.089846 from the FY 2017
IPPS/LTCH PPS proposed rule (81 FR 25271). The applicant indicated that
the technology meets the cost criterion by applying the inflation
factor from the proposed rule and, therefore, would meet the cost
criterion by applying the higher inflation factor from the final rule.
Included in the average case-weighted standardized charge per case
were charges for the current valve prosthesis. Therefore, the applicant
removed all charges associated with revenue center 0278, and calculated
the adjusted average case-weighted standardized charge per case by
subtracting these charges from the standardized charge per case. The
applicant then added the charge for the new technology by taking the
anticipated hospital cost of the new technology and dividing it by the
national average implantable devices CCR of 0.331. The applicant then
added the charge for the new technology to the inflated average case-
weighted standardized charges per case to arrive at the final inflated
average case-weighted standardized charge per case, which was then
case-weighted based on the distribution of cases within the six MS-
DRGs. This resulted in an inflated average case-weighted standardized
charge per case of $206,109. Using the FY 2017 IPPS Table 10
thresholds, the average case-weighted threshold amount was $173,477.
Because the inflated average case-weighted standardized charge per case
exceeds the average case-weighted threshold amount, the applicant
maintained that the technology meets the cost criterion. In the FY 2018
IPPS/LTCH PPS proposed rule (82 FR 19882), we invited public comments
on whether the Perceval technology meets the cost criterion. We did not
receive any public comments concerning the costs for the Perceval
technology.
Comment: The applicant for the INTUITY valve stated that it based
its initial sensitivity analysis on 14,455 cases that reflected the
weighted mix of CABG and non-CABG cases, as the findings in European
trials indicated that INTUITY was predominantly performed on patients
who did not have a concomitant CABG during their inpatient stay. The
applicant stated that
[[Page 38123]]
because the INTUITY is intended for use in all surgical aortic valve
replacement procedures, regardless of whether the patient also receives
CABG, it reran the cost threshold analysis including all 25,173 target
cases in the FY 2015 MedPAR with an ICD-9-CM diagnosis code of 424.1
(Aortic valve disorder), in combination with an ICD-9-CM procedure code
of 35.21 (Replacement of aortic valve with tissue) or 35.22 (Open and
other replacement of aortic valve) that mapped to MS-DRGs 216 through
221. The applicant presented a summary table, which indicated that the
case weighted threshold was $173,463, the final inflated case weighted
standardized charge per case was $206,329, and the difference is
$32,866.
Response: We appreciate the applicant's submission of this
additional information. Based on review of the sensitivity analysis
included in the original application and subsequent analysis included
in the INTUITY applicant's public comment, as well as the cost analyses
set forth in both applicants' original applications as set forth above,
we have determined that both the INTUITY and the Perceval valve meet
the cost criterion.
With regard to substantial clinical improvement for the INTUITY
valve, the applicant asserted that several aspects of the valve system
represent a substantial clinical improvement over existing
technologies. The applicant believed that the flexible deployment arm
allows improved surgical access and visualization, making the surgery
less challenging for the surgeon, improving the likelihood that the
surgeon can use a minimally invasive approach. According to the
applicant, the assembly of the device only allows the correct valve
size to be fitted, which ensures that the valve does not slip or
migrate, which prevents paravalvular leaks and patient prosthetic
mismatch. The applicant indicated that the device improves clinical
outcomes for patients undergoing minimally invasive AVR and full-
sternotomy AVR. The applicant stated that the rapid deployment
technology enables reduced operative time, specifically cross-clamp
time, thereby reducing the period of myocardial ischemia. In addition,
the applicant indicated that the device offers a reduction in operative
time for full-sternotomy AVR. The applicant noted that clinical results
document significant patient outcome and utilization improvements,
including improved patient satisfaction, faster return to normal
activity, decreased post-operative pain, reduced mortality and
decreased complications, including need for reoperation due to
bleeding, reduced recovery time, reduced length of stay (both ICU and
overall), more access to minimally invasive surgery, and improved
hemodynamics.
The INTUITY valve has been tested clinically in several trials. In
the TRITON trial (Kocher et al., 2013 \4\), 287 patients diagnosed with
aortic stenosis underwent surgery in 1 of 6 European centers. The first
149 patients received the first generation Model 8300A valve, and the
next 138 patients received the second generation Model 8300AB. The
average age of the patients was 75.7 years. Early, 30-day mortality was
1.7 percent (5/287), the post-op valve gradient was low, and 75 percent
of the patients improved functionally. A total of 4 valves were
explanted in the final 30 days due to bleeding, and 3 were explanted
later for paravalvular leak, endocarditis, and aortic root aneurysms.
Follow-up extended to 3 years (mean 1.8 years).
---------------------------------------------------------------------------
\4\ Kocher AA, Laufer G, Haverich A, et al. One-year outcomes of
the surgical treatment of aortic stenosis with a next generation
surgical aortic valve (TRITON) trial: A prospective multicenter
study of rapid-deployment aortic valve replacement with the EDWARDS
INTUITY valve system. J Thorac Cardiovasc Surg 2013;145:110-116.
---------------------------------------------------------------------------
Implantation of the INTUITY valve using minimally invasive surgery
was compared with conventional aortic valve replacement via full
sternotomy in the CADENCE-MIS randomized trial (Borger et al., 2015
\5\) of 100 patients treated in 1 of 5 centers in Germany. The authors
found no significant difference in 30-day mortality, the need for
pacemaker implantation, significant paravalvular regurgitation, and
quality of life scores at 3 months. Aortic cross-clamp time was
significantly reduced from 54.0 to 41.3 minutes (p < 0.0001), and
cardiopulmonary bypass time was reduced from 74.4 to 68.8 minutes (p =
0.21). Early clinical outcomes were similar: No significant differences
in mortality, reoperation, or other clinical outcomes. The aortic valve
gradient was significantly lower in the MIS group: 8.5 versus 10.3
mmHg.
---------------------------------------------------------------------------
\5\ Borger MA, Moustafine V, Conradi L, et al. A randomized
multicenter trial of minimally invasive rapid deployment versus
conventional full sternotomy aortic valve replacement. Ann Thorac
Surg 2015; 99:17-25.
---------------------------------------------------------------------------
The TRANSFORM trial (Barnhart et al. 2017 \6\) was a single-arm,
non-randomized, multicenter trial, in which 839 patients underwent
rapid deployment AVR surgery. The average age of the patients was 73.5
years. The mean cross-clamp time and cardiopulmonary bypass times for
full sternotomy were 49.3 26.9 min and 69.2
34.7 min, respectively, and for MIS, 63.1 25.4 min and
84.6 33.5 min, respectively. The authors compared these
times to STS database comparators: For full sternotomy, 76.3 minutes
and 104.2 minutes, respectively, and for MIS, 82.9 minutes and 111.4
minutes, respectively. All cause early mortality was 0.8 percent, mean
EOA at 1 year was 1.7 cm\2\; mean gradient, 10.3 mmHg; and moderate and
severe PVL, 1.2 percent and 0.4 percent, respectively. The authors
indicated that the INTUITY valve ``. . . may lead to a relative
reduction in aortic cross-clamp time and cardiopulmonary bypass time''
and ``may confer benefits to patients, such as decreased mortality and
morbidity.'' The authors noted the possibility of potential bias
resulting from the level of experience of the study surgeons relative
to typical cardiac surgeons. In addition, long-term follow-up is not
available, and study comparators from the Society of Thoracic Surgeons
(STS) database were not matched.
---------------------------------------------------------------------------
\6\ Barnhart, G.A. et al. (2017). TRANSFORM (Multicenter
Experience with Rapid Deployment Edwards INTUITY Valve System for
Aortic Valve Replacement) US clinical trial: Performance of a rapid
deployment aortic valve. The Journal of Thoracic and Cardiovascular
Surgery, 153, 241-251.
---------------------------------------------------------------------------
In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25057), after
reviewing the studies provided by the applicant with its application
for FY 2017, we expressed some specific concerns. We indicated that we
were concerned that the INTUITY valve does not have sufficient
advantages over alternative surgically implanted valves to constitute a
substantial clinical improvement. We noted that, while some of the
studies included with the application demonstrate reduced aortic cross-
clamp time, conventional aortic valve replacement was used in the
comparison group. Therefore, it is unclear whether the reduced aortic
cross-clamp time is associated with the use of the INTUITY valve or as
a result of the MIS surgery in general.
In response to these concerns, the INTUITY valve's applicant stated
that the INTUITY valve is associated with significant clinical benefits
outside of the benefits achieved by use of an MIS approach. The
applicant referenced the sub-study of the TRANSFORM trial, which
compared the MISAVR with the INTUITY valve to MISAVR with a
conventional valve, stating that the results indicated reduced cross-
clamp time and other benefits that are not simply a function of the MIS
approach. The applicant also referenced trials that indicated that the
INTUITY valve had excellent hemodynamic performance
[[Page 38124]]
(Haverich et al.,\7\ Borger et al.,\8\ Barnhart et al.,\9\) one of
which found a significant improvement in functional status (Haverich et
al.).
---------------------------------------------------------------------------
\7\ Haverich, A, et al. (2014), Three-year hemodynamic
performance, left ventricular mass regression, and prosthetic-
patient mismatch after rapid deployment aortic valve replacement in
287 patients. J Thorac Cardiovasc Surg, 148(6), 2854-60.
\8\ Borger MA, Moustafine V, Concadi L, et al. A randomized
multicenter trial of minimally invasive rapid deployment versus
conventional full sternotomy aortic valve replacement. Ann Thorac
Surg 2015; 99:17-25.
\9\ Barnhart, G.A. et al. (2017). TRANSFORM (Multicenter
Experience with Rapid Deployment Edwards INTUITY Valve System for
Aortic Valve Replacement) US clinical trial: Performance of a rapid
deployment aortic valve. The Journal of Thoracic and Cardiovascular
Surgery, 153, 241-251.
---------------------------------------------------------------------------
After considering the studies provided by the INTUITY valve
applicant, in the proposed rule, we stated that we were concerned about
the possibility of potential bias resulting from the level of
experience of the study surgeons relative to typical cardiac surgeons,
as well as the lack of long-term follow-up in these studies.
Comment: The applicant stated that there are three key points to
support the improved clinical performance of the INTUITY. First, there
is a sufficient body of evidence across multiple clinical studies
demonstrating improved clinical and hemodynamic performance versus
traditionally implanted surgical valves. Second, these improvements are
not simply a result of a minimally invasive surgical approach. Third,
collectively, these points validate the premise that the technical
features of the INTUITY are the primary contributor of the improved
clinical outcomes, and that non-INTUITY procedures done with a
minimally invasive surgical approach generally have longer cross-clamp
and operative times. Physicians that have implanted the INTUITY valve
also indicated that the INTUITY valve reduces cardiopulmonary bypass
time and cross-clamp time, both of which have been shown to reduce
complications.
The applicant also stated that its studies included surgeons with
varied degrees of experience, and that over 62 physicians participated
in the US INTUITY trials, which reduces the impact of surgeon bias and
allows for greater generalizability of results. The applicant stated
that while no study is free of bias, the INTUITY has been shown to have
consistent results in both clinical trials and the real-world setting.
The applicant further supplemented its application with recently
published 5-year follow-up data (Laufer et al., 2017),\10\ which found
sustained benefits, including effective orifice area (EOA)
improvements, low pressure gradients, and reductions in left
ventricular mass, as well as excellent survival rates.
---------------------------------------------------------------------------
\10\ Laufer, G et al. (2017). Long-term outcomes of a rapid
deployment aortic valve: Data up to 5 years. European Journal of
Cardiothorac Surgery, 2017 Apr 26.
---------------------------------------------------------------------------
A manufacturer that also manufactures heart valves stated that the
studies cited by the INTUITY applicant have potential bias resulting
from the level of experience of the study surgeons relative to typical
cardiac surgeons, as well as a lack of long-term follow-up. This
commenter noted that, in the CADENCE-MIS trial, key outcome measures
did not differ statistically significantly at 3 months between the
randomized arms of the study, but that the rate of pacemaker implants
was higher in the INTUITY group. This commenter noted that while
transaortic valve gradients are reported as significantly lower, the
study population was small, and that the comparator devices are not all
representative of best in class gradients. This commenter also pointed
to the high rate of pacemaker implants in the TRANSFORM trial, and
mentioned a recent manuscript that reported that early pacemaker
implantation after aortic valve replacement was associated with an
increased risk of death.\11\
---------------------------------------------------------------------------
\11\ Greason et al. (2017). Long-Term Mortality Effect of Early
Pacemaker Implantation after Surgical Aortic Valve Replacement. The
Society of Thoracic Surgeons.
---------------------------------------------------------------------------
Response: While we appreciate the concerns raised by one commenter
regarding the studies that examined the INTUITY valve, we believe the
manufacturer addresses our concerns.
With regard to substantial clinical improvement for the Perceval
valve, the applicant submitted several studies examining the Perceval
valve. The following discussion summarizes some of these studies.
Pollari and colleagues \12\ (2014) utilized a propensity score
analysis to examine 82 matched pairs as part of a larger trial that
included 566 patients treated with bioprosthetic aortic valve
replacement, 166 of which received treatment using the Perceval
sutureless valve and 400 of which received treatment using a stented
valve. Aortic cross-clamp, cardiopulmonary bypass, and operation times
were significantly shorter in the group that received treatment using
the Perceval sutureless valve. The Perceval sutureless group also had
shorter ICU stays, hospital stays, and intubation times, and lower
incidence of postoperative atrial fibrillation and respiratory
insufficiency. The authors noted that, despite the promising
preliminary results, longer follow-up is warranted before drawing
definite conclusions.
---------------------------------------------------------------------------
\12\ Pollari, F. (2014), Better short-term outcome by using
sutureless valves: A propensity-matched score analysis, Ann Thorac
Surg, 98; 611-6.
---------------------------------------------------------------------------
In a nonrandomized trial of 100 patients in a German hospital,
Santarpino and colleagues \13\ (2013) found that procedures completed
using the Perceval valve were associated with significantly shorter
cross-clamp and cardiopulmonary bypass times (40 13.8 and
69 19.1 versus 66 20.4 and 105
34.8) relative to conventional stented bioprosthetic valves, as well as
less frequent use of blood transfusions, shorter ICU stays and shorter
use of intubation. In contrast, Gilmanov and colleagues \14\ (2013)
found that a MIS approach resulted in improved outcomes, albeit longer
aortic cross-clamp times. A meta-analysis by Hurley and colleagues \15\
(2015) found reduced cross-clamp and cardiopulmonary bypass times, but
found a significantly higher permanent pacemaker rate with the use of
Perceval sutureless valves.
---------------------------------------------------------------------------
\13\ Santarpino, G. et al. (2013), The Perceval S aortic valve
has the potential of shortening surgical time: Does it also result
in improved outcome?, Ann Thorac Surg, 96, 77-81.
\14\ Gilmanov, D. (2013), Minimally invasive and conventional
aortic valve replacement: a propensity score analysis, Ann Thorac
Surg, 96, 837-843.
\15\ Hurley et al., ``A Meta-Analysis Examining Differences in
Short-Term Outcomes Between Sutureless and Conventional Aortic Valve
Prostheses,'' Innovations 2015; 10:375-382.
---------------------------------------------------------------------------
A study conducted by Dalen and colleagues \16\ (2015) used
propensity score matching to examine early post-operative outcomes and
2-year survival between 171 pairs of patients who underwent
ministernotomy using the Perceval device or a full sternotomy with
stented prosthesis. There were no differences in 30-day mortality or 2-
year survival between the groups. The aortic cross-clamp time and
cardiopulmonary bypass time were shorter, and there were fewer blood
transfusions in the group that received treatment using the Perceval
device. However, this group was also at higher risk for post-operative
permanent pacemaker implantation.
---------------------------------------------------------------------------
\16\ Dale[aacute]n, M. (2015), Aortic valve replacement through
full sternotomy with a stented bioprosthesis versus minimally
invasive sternotomy with a sutureless bioprosthesis, Eur J
Cardiothorac Surg 2015; doi:10.1093/ejcts/ezv014.
---------------------------------------------------------------------------
We stated in the proposed rule that, after reviewing the
publications submitted by the applicant, we are concerned that the lack
of randomization and blinded investigators may have influenced the
outcomes in many of the studies provided. For example, in the
discussion following
[[Page 38125]]
Santarpino et al.'s 2013 study, one of the participants suggested that
medical decision-making regarding ventilation times, ICU times, and
blood transfusions may be affected by the knowledge of investigators as
to which valve the patient received treatment using. Also, as indicated
above with respect to the INTUITY valve, the experience of the surgeons
in these studies may be confounding factors that may have influenced
the length of surgical procedures and/or surgical outcomes.
Comment: One manufacturer that produces heart valves stated that
the evidence for the Perceval device suffers from lack of randomization
and blinding of investigators. This commenter cited a brief by the
Health Technology Assessment Information Services of ECRI summarizing
the most recent evidence about the LivaNova Perceval valve. The brief
cited a range of values for clinical outcomes, suggesting the
importance in variation in technique. This commenter also compiled a
table of gradients for aortic heart valves, including those of the
applicants, and stated that the gradients are comparable to
conventional surgical devices but are not best-in-class.
Response: While we acknowledge the concerns raised by one commenter
regarding the Perceval valve, we recognize that studies in general may
have some limitations. We also note that the studies submitted by the
manufacturer indicate that the Perceval valve is associated with fewer
blood transfusions and significantly shorter aortic cross-clamp,
cardiopulmonary bypass, and operation times. The Perceval sutureless
group also had shorter ICU stays, hospital stays, and intubation times,
and lower incidence of postoperative atrial fibrillation and
respiratory insufficiency.
In the proposed rule, we invited public comments on whether rapid
deployment valves, specifically the INTUITY and Perceval valves, meet
the substantial clinical improvement criterion. We noted that we did
not receive any written public comments regarding the INTUITY and
Perceval valves in response to the New Technology Town Hall meeting
notice.
We agree with the manufacturers that the INTUITY and Perceval
valves represent a substantial clinical improvement for the following
reasons: The rapid deployment technology enables reduced operative time
for minimally invasive AVR and full-sternotomy AVR. Additionally, the
device improves cross-clamp time, thereby reducing the period of
myocardial ischemia. The improved patient outcomes were also reflected
in improved patient satisfaction, faster return to normal activity,
decreased postoperative pain, reduced mortality and decreased
complications, including need for reoperation due to bleeding, reduced
recovery time, reduced length of stay (both ICU and overall), and
improved hemodynamics. In addition, the newly published 5-year data
further support the substantial clinical improvement of this
technology.
For the reasons described above and after consideration of the
public comments we received, we have determined that the INTUITY and
Perceval valve meet all of the criteria for approval of new technology
add-on payments for FY 2018. Each of the applicants submitted cost
information for its valve. The manufacturer of the INTUITY valve stated
that the cost of the valve is $12,500. The applicant projected that
1,750 cases will involve the use of INTUITY in FY 2018. The
manufacturer of the Perceval valve stated that the cost of the valve is
$11,500. The applicant projected that 679 cases will involve the use of
the Perceval valve in FY 2018.
New technology add-on payments for cases involving these
technologies will be based on the weighted average cost of the two
valves described by the ICD-10-PCS procedure code X2RF032 (Replacement
of Aortic Valve using Zooplastic Tissue, Rapid Deployment Technique,
Open Approach, New Technology Group 2). Because ICD-10 codes are not
manufacturer specific, we cannot set one new technology add-on payment
amount for INTUITY and a different new technology add-on payment amount
for the Perceval valve; both technologies will be captured by using the
same ICD-10-PCS procedure code. As such, we believe that the use of a
weighted average of the cost of the standard valves based on the
projected number of cases involving each technology to determine the
maximum new technology add-on payment would be most appropriate. To
compute the weighted cost average, we summed the total number of
projected cases for each of the applicants, which equaled 2,429 cases
(1,750 plus 679). We then divided the number of projected cases for
each of the applicants by the total number of cases, which resulted in
the following case-weighted percentages: 72 percent for the INTUITY and
28 percent for the Perceval valve. We then multiplied the cost per case
for the manufacturer specific valve by the case-weighted percentage
(0.72 * $12,500 = $9,005.76 for INTUITY and 0.28 * $11,500 = $3,214.70
for the Perceval valve). This resulted in a case-weighted average cost
of $12,220.46 for the valves. Under Sec. 412.88(a)(2), we limit new
technology add-on payments to the lesser of 50 percent of the average
cost of the device or 50 percent of the costs in excess of the MS-DRG
payment for the case. As a result, the maximum new technology add-on
payment for a case involving the INTUITY or Perceval valves is
$6,110.23 for FY 2018.
c. Ustekinumab (Stelara[supreg])
Janssen Biotech submitted an application for new technology add-on
payments for the Stelara[supreg] induction therapy for FY 2018.
Stelara[supreg] received FDA approval as an intravenous (IV) infusion
treatment of Crohn's disease (CD) on September 23, 2016, which added a
new indication for the use of Stelara[supreg] and route of
administration for this monoclonal antibody. IV infusion of
Stelara[supreg] is indicated for the treatment of adult patients (18
years and older) diagnosed with moderately to severely active CD who
have: (1) Failed or were intolerant to treatment using immunomodulators
or corticosteroids, but never failed a tumor necrosis factor (TNF)
blocker; or (2) failed or were intolerant to treatment using one or
more TNF blockers. Stelara[supreg] for IV infusion has only one
purpose, induction therapy. Stelara[supreg] must be administered
intravenously by a health care professional in either an inpatient
hospital setting or an outpatient hospital setting.
Stelara[supreg] for IV infusion is packaged in single 130mg vials.
Induction therapy consists of a single IV infusion dose using the
following weight-based dosing regimen: patients weighing less than (<)
55kg are administered 260mg of Stelara[supreg] (2 vials); patients
weighing more than (>) 55kg, but less than (<) 85kg are administered
390mg of Stelara[supreg] (3 vials); and patients weighing more than (>)
85kg are administered 520mg of Stelara[supreg] (4 vials). An average
dose of Stelara[supreg] administered through IV infusion is 390mg (3
vials). Maintenance doses of Stelara[supreg] are administered at 90mg,
subcutaneously, at 8-week intervals and may occur in the outpatient
hospital setting.
CD is an inflammatory bowel disease of unknown etiology,
characterized by transmural inflammation of the gastrointestinal (GI)
tract. Symptoms of CD may include fatigue, prolonged diarrhea with or
without bleeding, abdominal pain, weight loss and fever. CD can affect
any part of the GI tract including the mouth, esophagus, stomach, small
intestine, and large intestine.
Conventional pharmacologic treatments of CD include antibiotics,
mesalamines, corticosteroids,
[[Page 38126]]
immunomodulators, tumor necrosis alpha (TNF[alpha]) inhibitors, and
anti-integrin agents. Surgery may be necessary for some patients
diagnosed with CD in which conventional therapies have failed. The
applicant asserted that use of Stelara[supreg] offers an alternative to
conventional pharmacologic treatments, and has been shown to be
successful in the treatment of patients who have failed treatment using
the conventional agents currently being used for a diagnosis of CD,
including TNF[alpha] inhibitors.
Although the precise cause of CD is unknown, the environment,
genetics, and the patient's immune system are thought to play a role in
this form of inflammatory bowel disease (IBD). Conventional
pharmacologic therapy is directed against many different inflammatory
mediators that produce inflammation and ultimately lead to
gastrointestinal damage. The applicant asserted that it is of paramount
importance to have a variety of pharmacologic agents that can address
the proper inflammatory mediator for a particular patient. The
applicant also asserted that, while the currently available anti-
inflammatory agents used in the treatment of a diagnosis of CD are
excellent medications, these agents do not successfully treat all
patients diagnosed with CD, nor do they reliably sustain disease
remission once a response has been achieved. The applicant believed
that the use of Stelara[supreg] offers an alternative to currently
available treatment options.
With regard to the newness criterion, Stelara[supreg] is not a
newly formulated drug. Stelara[supreg], administered subcutaneously,
received FDA approval in 2009 (September 25, 2009) for the treatment of
moderate to severe plaque psoriasis in adults. Its IV use for the
treatment of patients diagnosed with CD was approved by the FDA in 2016
(September 23, 2016). With regard to the new use of an existing
technology, in the September 1, 2001 final rule (66 FR 46915), we
stated that if the new use of an existing technology was for treating
patients not expected to be assigned to the same MS-DRG as the patients
receiving the existing technology, it may be considered for approval,
but it must also meet the cost and substantial clinical improvement
criteria in order to qualify for the new technology add-on payment. We
do not believe that potential cases representing patients that may be
eligible for treatment with the new use of the Stelara[supreg] for IV
treatment of a diagnosis of CD would be assigned to the same MS-DRGs as
cases treated using the prior indications.
As discussed above, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome, we
stated in the proposed rule that we were concerned that
Stelara[supreg]'s mechanism of action does not appear to differ from
the mechanism of action of other monoclonal antibodies, which also
target unique gastrointestinal-selective cytokines. The applicant
believed that the Stelara[supreg] uses a different mechanism of action
than other medications currently available for the treatment of
patients diagnosed with CD. However, we stated that we believe that the
mechanism of action for the new use of the Stelara[supreg] may be
similar to the mechanism of action of other cytokine-selective
monoclonal antibodies that disrupt cytokine mediated signals crucial to
the inflammatory process in patients diagnosed with CD.
The applicant stated that the Stelara[supreg] is a human IgG1
monoclonal antibody that binds with specificity to the p40 protein
subunit, which is common to both the interleukin-12 (IL-12) and
interleukin (IL-23) cytokines. IL-12 and IL-23 are naturally occurring
cytokines that are involved in inflammatory and immune responses, such
as natural killer cell activation and CD4+ T-cell differentiation and
activation. In in vitro models, the Stelara[supreg] was shown to
disrupt IL-12 and IL-23 mediated signaling and cytokine cascades by
blocking the interaction of these cytokines with a shared cell-surface
receptor chain, IL-12R[beta]1. The cytokines IL-12 and IL-23 have been
implicated as important contributors to chronic inflammation. According
to the applicant, IV induction therapy quickly achieves optimal blood
levels of Stelara[supreg] so that blockade of IL-12 and IL-23 is most
effective. This level of blockade is not achieved with subcutaneous
administration.
The applicant further stated that other available CD anti-
inflammatory or immune modulator therapies do not target the IL-12/IL-
23p40 substrate. Rather, these therapies may target other integrin
pairs such as the alpha4- beta7 integrins. Therefore, the applicant
believed that the Stelara[supreg] drug is not substantially similar to
any other approved drug for the treatment of moderately to severely
active CD. As previously noted, the applicant asserted that, while the
currently available agents are excellent medications, these agents do
not successfully treat all patients diagnosed with CD, nor do these
agents reliably sustain remission once a clinical response has been
achieved. According to the applicant, the new use of the
Stelara[supreg] offers an alternative to currently available treatment
options, and has been shown to be successful in the treatment of
patients who have failed treatment with the conventional agents
currently being used for a diagnosis of CD, including TNF blockers. In
the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19885), we stated that
we are concerned that the Stelara[supreg]'s mechanism of action is
similar to that of other immune system suppressors used in the
treatment of patients diagnosed with moderately to severely active CD
because other cytokine-selective monoclonal antibodies also disrupt
cytokine mediated signals crucial to the inflammatory process in
patients diagnosed with CD.
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant maintained that MS-
DRGs 386, 387, and 385 (Inflammatory Bowel Disease with CC, without CC/
MCC, and with MCC, respectively) and MS-DRGs 330, 329 and 331 (Major
Small and Large Bowel Procedures with CC, without CC/MCC, and with MCC,
respectively) are used to identify cases representing patients who may
potentially be eligible for treatment using the Stelara[supreg]. The
applicant researched claims data from the FY 2015 MedPAR file and found
10,344 cases. About 85 percent of potentially eligible cases mapped to
MS-DRGs for inflammatory bowel disease and most of the remainder of
cases mapped to MS-DRGs for bowel surgery. In the proposed rule, we
stated that we believe that potential cases involving Stelara[supreg]
induction therapy may be assigned to the same MS-DRGs as cases
representing patients who have been treated using currently available
treatment options.
With respect to the third criterion, whether the new use of the
technology involves the treatment of the same or similar type of
disease and the same or similar patient population, according to the
applicant, currently available pharmacologic treatments include
antibiotics, mesalamines, corticosteroids, immunomodulators, tumor
necrosis alfa (TNF[alpha]) inhibitors and anti-integrins. The applicant
stated that the new use of the Stelara[supreg] for IV infusion is
indicated for the treatment of adults (18 years and older) diagnosed
with moderately to severely active CD
[[Page 38127]]
who have: (1) Failed or were intolerant to treatment with
immunomodulators or corticosteroids, but never failed treatment using a
TNF blocker; or (2) failed or were intolerant to treatment with one or
more TNF blockers. The applicant asserted that Stelara[supreg] for
induction therapy is not substantially similar to other treatment
options because it does not involve the treatment of the same or
similar type of patient population. Patients who are eligible for
treatment using the Stelara[supreg] induction therapy have failed other
CD treatment modalities. The applicant believed that the subset of
primary and secondary nonresponder patients to TNF inhibitor treatments
is a patient population unresponsive to, or ineligible for, currently
available treatments for diagnoses of moderate to severe CD. Based on
the indications for the use of Stelara[supreg], there is a class of
patients who failed, or were intolerant to, treatment using
immunomodulators or corticosteroids, but never failed treatment using a
TNF blocker. The applicant indicated that, for those patients who never
failed treatment with a TNF blocker, this class of patients can be
recognized as two separate patient populations: One population of
patients who have never received treatment using a TNF blocker, or the
other population of patients who have received and responded to
treatment using a TNF blocker. In the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 19885), we stated that we believe that, if the new use of
the Stelara[supreg] has the same mechanism of action as other immune
system suppressors such as TNF blockers, the patient population that
did not receive treatment using a TNF blocker may not be a new patient
population because those patients may be able to receive treatment
using, and would successfully respond to treatment using, a TNF
blocker. Moreover, if the mechanism of action is the same as other
immune system suppressors, we stated that we believe that the new use
of the Stelara[supreg] may be targeted at a new patient population in
some circumstances and instances, but we are concerned that it may not
be targeted at a new patient population in all circumstances and
instances.
In the proposed rule, we invited public comments on whether the
Stelara[supreg] meets the newness criterion.
Comment: Several commenters stated that Stelara[supreg] has a
different mechanism of action than other immune system suppressors. The
applicant also submitted comments acknowledging that CMS accurately
noted that other monoclonal antibodies targeting unique
gastrointestinal-selective cytokines are currently marketed for the
treatment of CD. The applicant noted that a critical differentiator is
that Stelara[supreg] targets the IL-12 and IL-23 regulatory cytokines
while other monoclonal antibodies used to treat Crohn's disease are
either TNF inhibitors or anti-integrin monoclonal antibodies. The
applicant stated that, as a result, Stelara[supreg] has a different
mechanism of action for reducing the inflammatory response in CD than
other monoclonal antibodies used to treat the disease. Furthermore, the
applicant stated that while many patients respond to TNF inhibition, 20
to 25 percent of them will not respond, regardless of the TNF inhibitor
employed or the dose provided. By targeting the IL-12 and IL-23
regulatory cytokines that may be responsible for the inflammation
producing the patient's symptoms, the applicant stated that
Stelara[supreg] has a different mechanism of action designed to treat
patients that failed other Crohn's disease treatments. The applicant
believed that this distinction makes Stelara[supreg] new and different
for treating some patients with Crohn's disease. The applicant provided
comments reflecting that clinicians have learned that different
patients with Crohn's disease require different types of cytokine
inhibition to target the inflammatory process in each particular
patient. The applicant believed that this is an example of personalized
medicine--choosing the right biologic for the right patient at the
right time. Therefore, according to the applicant, Stelara[supreg]'s
mechanism of action provides a treatment option for patients with CD
where others have been unsuccessful.
Response: We appreciate the comments we received from the applicant
on whether or not Stelara[supreg] meets the newness criterion.
After consideration of the public comments we received, we believe
that Stelara[supreg] has a unique mechanism of action because it is
unique from other immune system suppressors in that it targets the IL-
12 and IL-23 regulatory cytokines. Therefore, Stelara[supreg] meets the
newness criterion for new technology add-on payments.
With regard to the cost criterion, the applicant conducted the
following analysis to demonstrate that Stelara[supreg] meets the cost
criterion. The applicant searched claims from the FY 2015 MedPAR file
for cases with a principal ICD-9-CM diagnosis of 555.x (Regional
Enteritis), which are cases of a diagnosis of Crohn's Disease that may
be eligible for treatment using Stelara[supreg].
The applicant identified 10,344 cases that mapped to 35 MS-DRGs.
Approximately 85 percent of cases mapped to the following Inflammatory
Bowel MS-DRGs: MS-DRGs 385 (Inflammatory Bowel Disease with MCC), 386
(Inflammatory Bowel Disease with CC), and 387 (Inflammatory Bowel
Disease without CC/MCC). Similarly, 11 percent of the cases mapped to
the following MS-DRGs for bowel surgery: MS-DRGs 329 (Major Small and
Large Bowel Procedures with MCC), 330 (Major Small and Large Bowel
Procedures with CC), and 331 (Major Small and Large Bowel Procedures
without CC/MCC). The remaining cases (4 percent) represented all other
digestive system disorders.
Using the 10,344 identified cases, the average unstandardized case-
weighted charge per case was $39,935. The applicant then standardized
the charges. The applicant did not remove charges for the current
treatment because as discussed above Stelara[supreg] is indicated for
use in patients who fail other treatments. The applicant then applied
the 2-year inflation factor of 1.098446 from the FY 2017 IPPS/LTCH PPS
final rule (81 FR 57286) to inflate the charges from FY 2015 to FY
2017. The applicant then added charges for the Stelara[supreg]
technology. Specifically, the applicant assumed that hospitals would
mark up Stelara[supreg] IV to the same extent that they currently mark-
up Stelara[supreg] SC (J3357, ustekinumab, 1 mg). The applicant used
the actual hospital mark-up based on charges in the CY 2017 OPPS/ASC
proposed rule file (OPPS claims incurred and paid in CY 2015). Based on
the FY 2017 IPPS/LTCH PPS Table 10 thresholds, the average case-
weighted threshold amount was $55,023. The inflated average case-
weighted standardized charge per case was $69,826. Because the inflated
average case-weighted standardized charge per case exceeds the average
case-weighted threshold amount, the applicant maintained that the
technology meets the cost criterion. In the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19886), we invited public comments on whether
Stelara[supreg] meets the cost criterion.
Comment: The applicant submitted public comments reiterating its
cost analysis results. According to the applicant, the inflated average
case-weighted standardized charge per case exceeds the average case-
weighted threshold amount. The applicant maintained that the technology
meets the cost criterion.
Response: After consideration of the public comments we received,
we agree that Stelara[supreg] meets the cost criterion.
With regard to the third criterion, whether a technology represents
a substantial clinical improvement over existing technologies,
according to the
[[Page 38128]]
applicant, the new use of the Stelara[supreg] has been shown to produce
clinical response and remission in patients diagnosed with moderate to
severe CD who have failed treatment using conventional therapies,
including antibiotics, mesalamine, corticosteroids, immunomodulators,
and TNF[alpha] inhibitors. Stelara[supreg] has been commercially
available on the U.S. market for the treatment of patients diagnosed
with psoriasis (PsO) since 2009 and the treatment of patients diagnosed
with psoriatic arthritis (PsA) since 2013, and the applicant has
maintained a safety registry, which enrolled over 12,000 patients since
2007. According to the applicant, the drug has been extremely well-
tolerated, and the safety profile in patients diagnosed with CD has
been consistent with that experienced in cases representing patients
diagnosed with PsO and PsA.
The applicant presented the results of three pivotal trials
involving over 1,300 patients diagnosed with moderate to severe CD. All
three trials utilized a multicenter, double-blind, placebo controlled
study design. There were two single-dose IV induction trials, which
included patients who had failed treatment using one or more TNF[alpha]
inhibitors (UNITI-1) (N = 741), and patients who had failed treatment
using corticosteroids and/or immunomodulators (UNITI-2) (N = 628).
Responders to the single IV induction dose were then eligible to be
enrolled in a maintenance trial (IM-UNITI) (N = 397), which began 8
weeks after administration of the single IV induction dose. IM-UNITI
patients were given subcutaneous Stelara[supreg] and were treated for
44 weeks. Over half of the patients treated with 90 mg of
Stelara[supreg] every 12 weeks were able to achieve remission; a highly
significant response compared to placebo, according to the applicant.
The results of these trials have been published by the New England
Journal of Medicine and the applicant provided the published
studies.\17\ The published study supported the applicant's assertion
that Stelara[supreg] single IV dose induces response and remission in
patients diagnosed with moderately to severely active CD that is
refractory to either TNF antagonists or conventional therapy. Of the
patients in the IM-UNITI trial receiving subcutaneous Stelara[supreg]
at 8 weeks or 12 weeks, 53.1 percent and 48 percent, respectively, were
in remission at week 44 as compared with 35.9 percent of those patients
receiving treatment using placebo.
---------------------------------------------------------------------------
\17\ Feagan, W.J., et al. (2016) Ustekinumab as Induction and
Maintenance Therapy for Crohn' Disease. The New England Journal of
Medicine. 2016 Nov 17; 3745(20):1946-60.
---------------------------------------------------------------------------
The applicant submitted published results of a multicenter, double-
blind, placebo controlled Phase III study of Stelara[supreg].\18\ In
the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19886), we indicated
that we were concerned that the study did not effectively establish the
need for Stelara[supreg] induction therapy. Also, the median age of
patients in the study was 37 years, and we stated that we were
concerned that the study did not include a significant amount of older
patients.
---------------------------------------------------------------------------
\18\ Ibid.
---------------------------------------------------------------------------
We also indicated that we were concerned that we do not have enough
information to determine that the new use of the Stelara[supreg] is a
substantial clinical improvement over existing technologies for the
treatment of moderate to severe CD. We noted that the UNITI-1, UNITI-2,
and IMUNITI trials were completed to evaluate efficacy and safety of
Stelara[supreg], not superiority of Stelara[supreg] to current
conventional therapy. Our concerns were based on a lack of head-to-head
trials comparing IV induction and maintenance Stelara[supreg] therapy
with conventional therapy in patients diagnosed with moderate to severe
CD that are also primary and secondary nonresponders to treatment using
TNF alpha inhibitor \19\ therapy. We recognized the subset of primary
and secondary nonresponder patients to TNF inhibitor treatments as a
patient population unresponsive to, or ineligible for, currently
available treatments for diagnoses of moderate to severe CD. However,
we stated that we believe that this primary and secondary TNF alpha
inhibitor non-responder patient population represents patients that
experience a gap in treatment for diagnoses of moderate to severe CD.
Specifically, we recognized the nonresponder patient population as
described by Simon et al.\20\ as those patients who are TNF inhibitor
immunogenicity failures, pharmacokinetic failures, and/or
pharmacodynamics failures. We also noted the supplement data in Feagan
et al.'s publication \21\ summarized the primary and secondary
nonresponders in UNITI-1. However, we stated that we were not clear how
the inclusion of the TNF alpha inhibitor intolerant patients with
primary and secondary TNF alpha inhibitor failure patients impacts the
final comparison of the placebo and treatment arms. In addition, we
noted that, in the UNITI-1, UNITI-2, and IMUNITI studies, all treatment
arms were allowed to continue conventional treatments for diagnoses of
CD throughout the study. We stated that we were concerned that it is
difficult to determine whether the new use of the Stelara[supreg]
represents a substantial clinical improvement over existing
technologies with the concomitant use of other conventional CD
medications throughout the duration of the UNITI-1, UNITI-2, and
IMUNITI studies.
---------------------------------------------------------------------------
\19\ Ibid.
\20\ Simon E.G., et al., (2016) Ustekinumab for the treatment of
Crohn's disease: can it find its niche? Therapeutic Advances in
Gastroenterology. 2016 Jan; 9(1):26-36.
\21\ Feagan, W.J., et al. (2016) Ustekinumab as Induction and
Maintenance Therapy for Crohn' Disease. The New England Journal of
Medicine. 2016 Nov 17; 3745(20):1946-60.
---------------------------------------------------------------------------
Also, as mentioned earlier, based on the indications for the use of
the Stelara[supreg], there is a class of patients who failed, or were
intolerant to, treatment with immunomodulators or corticosteroids, but
never failed treatment using a TNF blocker. According to the applicant,
for those patients who never failed treatment using a TNF blocker, this
patient population can be recognized as two separate patient
populations: One patient population representing patients who never
received treatment using a TNF blocker; or the other patient population
representing patients who received and responded to treatment using a
TNF blocker. In the patient population that did not receive treatment
using a TNF blocker, we stated that we were unsure if the new use of
the Stelara[supreg] represents a substantial clinical improvement
because it is possible that some patients will have a positive response
to treatment using a TNF blocker and will not respond successfully to
treatment using Stelara[supreg], or some patients may have a positive
response to both treatment using a TNF blocker and using
Stelara[supreg], or some patients may not respond to treatment using a
TNF blocker, but will have a positive response to treatment using
Stelara[supreg].
In the proposed rule, we invited public comments on whether the
Stelara[supreg] meets the substantial clinical improvement criterion.
We noted that we did not receive any written public comments in
response to the New Technology Town Hall meeting notice regarding the
application of Stelara[supreg] for new technology add-on payments.
Comment: The applicant submitted public comments addressing CMS'
concerns. The applicant stated that the first dose of any therapy may
be considered induction therapy. The applicant reiterated the results
of its early trials which demonstrated that
[[Page 38129]]
intravenous induction therapy was superior to subcutaneous
administration and that higher intravenous doses appeared to be more
efficacious than lower subcutaneous doses. The applicant noted that IBD
experts are generally in agreement that higher doses of biologics are
required at the outset to induce remission, while lower and less
frequent doses may be adequate to maintain remission in a maintenance
setting.
The applicant also submitted comments addressing CMS' concerns with
regards to the lack of head-to-head clinical trials comparing IV
induction and maintenance Stelara[supreg] therapy with conventional
therapy in patients diagnosed with moderate to severe CD that are also
primary and secondary nonresponders to treatment using TNF alpha
inhibitor therapy. The applicant stated that the UNITI trials were, in
fact, head-to-head trials--the placebo group was receiving active
treatment and was not truly a placebo group. Those patients continued
the conventional therapies they were taking prior to study entry. The
applicant noted that the UNITI induction trials covered the breadth of
CD patients and that the UNITI-2 population had failed either
corticosteroids and/or immunomodulators--these drugs are both
recognized as standard conventional therapy for CD according to the
applicant. The UNITI-1 population had failed at least one TNF
inhibitor; in fact, approximately 50 percent had failed greater than
one. This patient population, according to the applicant, is considered
to be the most difficult group to treat in that they had, in most
cases, already failed not only non-biologic therapy with
corticosteroids and/or immunomodulators, but TNF inhibitors as well.
The applicant summarized that the trials should be considered head-to-
head comparing Stelara[supreg] to conventional therapies.
Response: We appreciate the comments submitted by the applicant in
response to our concerns. After consideration of the public comments we
received, which clarify the placebo group as having received
conventional therapies and, therefore, the clinical trials did compare
Stelara[supreg] to existing therapies, we believe Stelara[supreg] meets
the substantial clinical improvement criterion because, according to
the studies provided by the applicant, Stelara[supreg] produced a
clinical response and remission in patients with moderate to severe
Crohn's Disease who have failed conventional therapies, including
antibiotics, mesalamines, corticosteroids, immunomodulators, and
TNF[alpha] inhibitors as outlined in their label. Specifically,
Stelara[supreg] targets cytokines IL-12 and IL-23 which are responsible
for inflammation in CD, offering a treatment option, otherwise not
available, for a specific patient population. Stelara[supreg] provides
a treatment option for this difficult-to-treat patient population.
We have determined that Stelara[supreg] meets all of the criteria
for approval of new technology add-on payments. Therefore, we are
approving new technology add-on payments for Stelara[supreg] for FY
2018. We expect that Stelara[supreg] will be administered for the
treatment of adult patients (18 years and older) diagnosed with
moderately to severely active CD who have: (1) Failed or were
intolerant to treatment using immunomodulators or corticosteroids, but
never failed a tumor necrosis factor (TNF) blocker; or (2) failed or
were intolerant to treatment using one or more TNF blockers. Cases
involving Stelara[supreg] that are eligible for new technology add-on
payments will be identified by ICD-10-PCS procedure code XW033F3
(Introduction of other New Technology therapeutic substance into
peripheral vein, percutaneous approach, New Technology Group 3). In its
application, the applicant estimated that the average dose of
Stelara[supreg] administered through IV infusion is 390 mg which would
require 3 vials of Stelara IV at a hospital acquisition cost of $1,600
per vial (for a total of $4,800). Under 42 CFR 412.88(a)(2), we limit
new technology add-on payments to the lesser of 50 percent of the
average cost of the technology or 50 percent of the costs in excess of
the MS-DRG payment for the case. As a result, the maximum new
technology add-on payment amount for a case involving the use of
STELARATM is $2,400 for FY 2018.
III. Changes to the Hospital Wage Index for Acute Care Hospitals
A. Background
1. Legislative Authority
Section 1886(d)(3)(E) of the Act requires that, as part of the
methodology for determining prospective payments to hospitals, the
Secretary adjust the standardized amounts for area differences in
hospital wage levels by a factor (established by the Secretary)
reflecting the relative hospital wage level in the geographic area of
the hospital compared to the national average hospital wage level. We
currently define hospital labor market areas based on the delineations
of statistical areas established by the Office of Management and Budget
(OMB). A discussion of the FY 2018 hospital wage index based on the
statistical areas appears under section III.A.2. of the preamble of
this final rule.
Section 1886(d)(3)(E) of the Act requires the Secretary to update
the wage index annually and to base the update on a survey of wages and
wage-related costs of short-term, acute care hospitals. (CMS collects
these data on the Medicare cost report, CMS Form 2552-10, Worksheet S-
3, Parts II, III, and IV. The OMB control number for approved
collection of this information is 0938-0050.) This provision also
requires that any updates or adjustments to the wage index be made in a
manner that ensures that aggregate payments to hospitals are not
affected by the change in the wage index. The adjustment for FY 2018 is
discussed in section II.B. of the Addendum to this final rule.
As discussed in section III.I. of the preamble of this final rule,
we also take into account the geographic reclassification of hospitals
in accordance with sections 1886(d)(8)(B) and 1886(d)(10) of the Act
when calculating IPPS payment amounts. Under section 1886(d)(8)(D) of
the Act, the Secretary is required to adjust the standardized amounts
so as to ensure that aggregate payments under the IPPS after
implementation of the provisions of sections 1886(d)(8)(B),
1886(d)(8)(C), and 1886(d)(10) of the Act are equal to the aggregate
prospective payments that would have been made absent these provisions.
The budget neutrality adjustment for FY 2018 is discussed in section
II.A.4.b. of the Addendum to this final rule.
Section 1886(d)(3)(E) of the Act also provides for the collection
of data every 3 years on the occupational mix of employees for short-
term, acute care hospitals participating in the Medicare program, in
order to construct an occupational mix adjustment to the wage index. A
discussion of the occupational mix adjustment that we are applying to
the FY 2018 wage index appears under sections III.E.3. and F. of the
preamble of this final rule.
2. Core-Based Statistical Areas (CBSAs) for the FY 2018 Hospital Wage
Index
The wage index is calculated and assigned to hospitals on the basis
of the labor market area in which the hospital is located. Under
section 1886(d)(3)(E) of the Act, beginning with FY 2005, we delineate
hospital labor market areas based on OMB-established Core-Based
Statistical Areas (CBSAs). The current statistical areas (which were
implemented beginning with FY 2015) are based on revised OMB
delineations issued on February 28, 2013, in OMB Bulletin No. 13-01.
OMB Bulletin No.
[[Page 38130]]
13-01 established revised delineations for Metropolitan Statistical
Areas, Micropolitan Statistical Areas, and Combined Statistical Areas
in the United States and Puerto Rico based on the 2010 Census, and
provided guidance on the use of the delineations of these statistical
areas using standards published on June 28, 2010 in the Federal
Register (75 FR 37246 through 37252). We refer readers to the FY 2015
IPPS/LTCH PPS final rule (79 FR 49951 through 49963) for a full
discussion of our implementation of the OMB labor market area
delineations beginning with the FY 2015 wage index.
Generally, OMB issues major revisions to statistical areas every 10
years, based on the results of the decennial census. However, OMB
occasionally issues minor updates and revisions to statistical areas in
the years between the decennial censuses through OMB Bulletins. On July
15, 2015, OMB issued OMB Bulletin No. 15-01, which provides updates to
and supersedes OMB Bulletin No. 13-01 that was issued on February 28,
2013. The attachment to OMB Bulletin No. 15-01 provides detailed
information on the update to statistical areas since February 28, 2013.
The updates provided in OMB Bulletin No. 15-01 are based on the
application of the 2010 Standards for Delineating Metropolitan and
Micropolitan Statistical Areas to Census Bureau population estimates
for July 1, 2012 and July 1, 2013. In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 56913), we adopted the updates set forth in OMB Bulletin
No. 15-01 effective October 1, 2016, beginning with the FY 2017 wage
index. For a complete discussion of the adoption of the updates set
forth in OMB Bulletin No. 15-01, we refer readers to the FY 2017 IPPS/
LTCH PPS final rule.
For FY 2018, we are continuing to use the OMB delineations that we
adopted beginning with FY 2015 to calculate the area wage indexes, with
updates as reflected in OMB Bulletin No. 15-01 specified in the FY 2017
IPPS/LTCH PPS final rule.
3. Codes for Constituent Counties in CBSAs
CBSAs are made up of one or more constituent counties. Each CBSA
and constituent county has its own unique identifying codes. There are
two different lists of codes associated with counties: Social Security
Administration (SSA) codes and Federal Information Processing Standard
(FIPS) codes. Historically, CMS has listed and used SSA and FIPS county
codes to identify and crosswalk counties to CBSA codes for purposes of
the hospital wage index. We have learned that SSA county codes are no
longer being maintained and updated. However, the FIPS codes continue
to be maintained by the U.S. Census Bureau. The Census Bureau's most
current statistical area information is derived from ongoing census
data received since 2010; the most recent data are from 2015. For the
purposes of crosswalking counties to CBSAs, in the FY 2018 IPPS/LTCH
PPS proposed rule (82 FR 19898 through 19899), we proposed to
discontinue the use of SSA county codes and begin using only the FIPS
county codes.
The Census Bureau maintains a complete list of changes to counties
or county equivalent entities on the Web site at: https://www.census.gov/geo/reference/county-changes.html. In our proposed
transition to using only FIPS codes for counties for the hospital wage
index, we proposed to update the FIPS codes used for crosswalking
counties to CBSAs for the hospital wage index to incorporate changes to
the counties or county equivalent entities included in the Census
Bureau's most recent list. Based on information included in the Census
Bureau's Web site, since 2010, the Census Bureau has made the following
updates to the FIPS codes for counties or county equivalent entities:
Petersburg Borough, AK (FIPS State County Code 02-195),
CBSA 02, was created from part of former Petersburg Census Area (02-
195) and part of Hoonah-Angoon Census Area (02-105). The CBSA code
remains 02.
The name of La Salle Parish, LA (FIPS State County Code
22-059), CBSA 14, is now LaSalle Parish, LA (FIPS State County Code 22-
059). The CBSA code remains as 14.
The name of Shannon County, SD (FIPS State County Code 46-
113), CBSA 43, is now Oglala Lakota County, SD (FIPS State County Code
46-102). The CBSA code remains as 43.
We believe that it is important to use the latest counties or
county equivalent entities in order to properly crosswalk hospitals
from a county to a CBSA for purposes of the hospital wage index used
under the IPPS. In addition, we believe that using the latest FIPS
codes will allow us to maintain a more accurate and up-to-date payment
system that reflects the reality of population shifts and labor market
conditions. Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule (82
FR 19898 through 19899), we proposed to implement these FIPS code
updates, effective October 1, 2017, beginning with the FY 2018 wage
indexes. We proposed to use these update changes to calculate area wage
indexes in a manner that is generally consistent with the CBSA-based
methodologies finalized in the FY 2005 IPPS final rule and the FY 2015
IPPS/LTCH PPS final rule. We note that while the county update changes
listed earlier changed the county names, the CBSAs to which these
counties map did not change from the prior counties. Therefore, there
is no impact or change to hospitals in these counties; they continue to
be considered rural for the hospital wage index under these changes. We
invited public comments on our proposals.
We did not receive any public comments on our proposals. Therefore,
for the reasons discussed earlier, we are finalizing our proposal,
without modification, to discontinue the use of the SSA county codes
and begin using only the FIPS county codes for purposes of crosswalking
counties to CBSAs. In addition, we are finalizing our proposal, without
modification, to implement the latest FIPS code updates, as discussed
earlier, effective October 1, 2017, beginning with the FY 2018 wage
indexes. As we proposed, we will use these update changes to calculate
the wage indexes in a manner that is generally consistent with the
CBSA-based methodologies finalized in the FY 2005 IPPS final rule and
the FY 2015 IPPS/LTCH PPS final rule. For FY 2018, Tables 2 and 3
associated with this final rule and the County to CBSA Crosswalk File
and Urban CBSAs and Constituent Counties for Acute Care Hospitals File
posted on the CMS Web site reflect these county changes.
B. Worksheet S-3 Wage Data for the FY 2018 Wage Index
The FY 2018 wage index values are based on the data collected from
the Medicare cost reports submitted by hospitals for cost reporting
periods beginning in FY 2014 (the FY 2017 wage indexes were based on
data from cost reporting periods beginning during FY 2013).
1. Included Categories of Costs
The FY 2018 wage index includes all of the following categories of
data associated with costs paid under the IPPS (as well as outpatient
costs):
Salaries and hours from short-term, acute care hospitals
(including paid lunch hours and hours associated with military leave
and jury duty);
Home office costs and hours;
Certain contract labor costs and hours, which include
direct patient care, certain top management, pharmacy, laboratory, and
nonteaching physician Part A services, and certain contract indirect
patient care services (as discussed in the FY 2008 final rule
[[Page 38131]]
with comment period (72 FR 47315 through 47317)); and
Wage-related costs, including pension costs (based on
policies adopted in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51586
through 51590)) and other deferred compensation costs.
2. Excluded Categories of Costs
Consistent with the wage index methodology for FY 2017, the wage
index for FY 2018 also excludes the direct and overhead salaries and
hours for services not subject to IPPS payment, such as skilled nursing
facility (SNF) services, home health services, costs related to GME
(teaching physicians and residents) and certified registered nurse
anesthetists (CRNAs), and other subprovider components that are not
paid under the IPPS. The FY 2018 wage index also excludes the salaries,
hours, and wage-related costs of hospital-based rural health clinics
(RHCs), and Federally qualified health centers (FQHCs) because Medicare
pays for these costs outside of the IPPS (68 FR 45395). In addition,
salaries, hours, and wage-related costs of CAHs are excluded from the
wage index for the reasons explained in the FY 2004 IPPS final rule (68
FR 45397 through 45398).
3. Use of Wage Index Data by Suppliers and Providers Other Than Acute
Care Hospitals Under the IPPS
Data collected for the IPPS wage index also are currently used to
calculate wage indexes applicable to suppliers and other providers,
such as SNFs, home health agencies (HHAs), ambulatory surgical centers
(ASCs), and hospices. In addition, they are used for prospective
payments to IRFs, IPFs, and LTCHs, and for hospital outpatient
services. We note that, in the IPPS rules, we do not address comments
pertaining to the wage indexes of any supplier or provider except IPPS
providers and LTCHs. Such comments should be made in response to
separate proposed rules for those suppliers and providers.
C. Verification of Worksheet S-3 Wage Data
The wage data for the FY 2018 wage index were obtained from
Worksheet S-3, Parts II and III of the Medicare cost report (Form CMS-
2552-10) for cost reporting periods beginning on or after October 1,
2013, and before October 1, 2014. For wage index purposes, we refer to
cost reports during this period as the ``FY 2014 cost report,'' the
``FY 2014 wage data,'' or the ``FY 2014 data.'' Instructions for
completing the wage index sections of Worksheet S-3 are included in the
Provider Reimbursement Manual (PRM), Part 2 (Pub.15-2), Chapter 40,
Sections 4005.2 through 4005.4. The data file used to construct the FY
2018 wage index includes FY 2014 data submitted to us as of June 14,
2017. As in past years, we performed an extensive review of the wage
data, mostly through the use of edits designed to identify aberrant
data.
We asked our MACs to revise or verify data elements that result in
specific edit failures. For the proposed FY 2018 wage index, we
identified and excluded 51 providers with aberrant data that should not
be included in the wage index, although we stated in the FY 2018 IPPS/
LTCH PPS proposed rule that if data elements for some of these
providers are corrected, we intend to include data from those providers
in the final FY 2018 wage index (82 FR 19899). We note that of the 51
hospitals that we excluded from the proposed wage index, some hospitals
had data that we did not expect to change or improve (for example,
among the reasons these providers were excluded are: They are low
Medicare utilization providers; they closed and failed edits for
reasonableness; or they have extremely high or low average hourly wages
that are atypical for their CBSAs). We also adjusted certain aberrant
data and included these data in the proposed wage index. For example,
in situations where a hospital did not have documentable salaries,
wages, and hours for housekeeping and dietary services, we imputed
estimates, in accordance with policies established in the FY 2015 IPPS/
LTCH PPS final rule (79 FR 49965 through 49967). We instructed MACs to
complete their data verification of questionable data elements and to
transmit any changes to the wage data no later than March 24, 2017. In
addition, as a result of the April and May appeals processes, and
posting of the April 28, 2017 PUF, we have made additional revisions to
the FY 2018 wage data, as described further below. The revised data are
reflected in this FY 2018 IPPS/LTCH PPS final rule.
In constructing the proposed FY 2018 wage index, we included the
wage data for facilities that were IPPS hospitals in FY 2014, inclusive
of those facilities that have since terminated their participation in
the program as hospitals, as long as those data did not fail any of our
edits for reasonableness. We believed that including the wage data for
these hospitals is, in general, appropriate to reflect the economic
conditions in the various labor market areas during the relevant past
period and to ensure that the current wage index represents the labor
market area's current wages as compared to the national average of
wages. However, we excluded the wage data for CAHs as discussed in the
FY 2004 IPPS final rule (68 FR 45397 through 45398). For the proposed
rule, we removed 7 hospitals that converted to CAH status on or after
January 22, 2016, the cut-off date for CAH exclusion from the FY 2017
wage index, and through and including January 23, 2017, the cut-off
date for CAH exclusion from the FY 2018 wage index. After excluding
CAHs and hospitals with aberrant data, we calculated the proposed wage
index using the Worksheet S-3, Parts II and III wage data of 3,325
hospitals.
Since the development of the FY 2018 proposed wage index, as a
result of further review by the MACs and the April and May appeals
processes, we received improved data for 15 hospitals and are including
the wage data of these 15 hospitals in the final wage index. However,
during our review of the wage data in preparation of the April 28, 2017
PUF, we identified and deleted the data of 2 additional hospitals whose
data we determined to be aberrant (unusually low average hourly wages)
relative to their CBSAs, and there was insufficient documentation
provided to explain their wage data. Finally, we learned that in the
proposed wage index, we inadvertently deleted the data of one hospital
when we should have deleted the data of a different hospital. We have
corrected this error, although because we were including one hospital
while deleting another, there was no effect on the number of hospitals
in the wage index. With regard to CAHs, we have since learned of 2
additional hospitals that converted to CAH status on or after January
22, 2016, the cut-off date for CAH exclusion from the FY 2017 wage
index, and through and including January 23, 2017, the cut-off date for
CAH exclusion from the FY 2018 wage index. Accordingly, we have removed
9 hospitals that converted to CAH status from the FY 2018 wage index.
The final FY 2018 wage index is based on the wage index of 3,336
hospitals (3,325 + 15-2-1 + 1-2 = 3,336).
For the final FY 2018 wage index, we allotted the wages and hours
data for a multicampus hospital among the different labor market areas
where its campuses are located in the same manner that we allotted such
hospitals' data in the FY 2017 wage index (81 FR 56915). Table 2, which
contains the final FY 2018 wage index associated with this final rule
(available via the Internet on the CMS Web site), includes separate
wage data for the campuses of 9 multicampus hospitals.
[[Page 38132]]
D. Method for Computing the FY 2018 Unadjusted Wage Index
1. Methodology for FY 2018
The method used to compute the FY 2018 wage index without an
occupational mix adjustment follows the same methodology that we used
to compute the wage indexes without an occupational mix adjustment
since FY 2012 (76 FR 51591 through 51593).
Comment: One commenter requested that CMS consider developing a
process for determining a wage index that would reward hospitals that
invest in the workforce and raise the wages of the lowest paid workers,
rather than relying primarily on the average hourly wages of the labor
market area as a whole.
Response: Section 1886(d)(3)(E) of the Act requires the Secretary
to adjust for area differences in hospital wage levels by a factor
reflecting the relative hospital wage level in the geographic area of
the hospital compared to the national average hospital wage level. The
statute does not direct the Secretary to develop a wage index that
rewards hospitals for workforce investment or other labor initiatives.
Comment: One commenter requested that CMS establish a floor wage
index for providers in Puerto Rico that is not lower than the ratio of
Puerto Rico nonhealth care wages to U.S. nonhealth care wages, using
data from the Occupational Employment Statistics (OES) of the U.S.
Bureau of Labor Statistics (BLS).
Response: We appreciate this comment. However, we consider it to be
outside the scope of the FY 2018 IPPS/LTCH PPS proposed rule.
Therefore, we are not responding to this comment at this time.
As discussed in the FY 2012 IPPS/LTCH PPS final rule, in ``Step
5,'' for each hospital, we adjust the total salaries plus wage-related
costs to a common period to determine total adjusted salaries plus
wage-related costs. To make the wage adjustment, we estimate the
percentage change in the employment cost index (ECI) for compensation
for each 30-day increment from October 14, 2013, through April 15,
2015, for private industry hospital workers from the BLS' Compensation
and Working Conditions. We have consistently used the ECI as the data
source for our wages and salaries and other price proxies in the IPPS
market basket, and we did not propose any changes to the usage of the
ECI for FY 2018. The factors used to adjust the hospital's data were
based on the midpoint of the cost reporting period, as indicated in the
following table.
Midpoint of Cost Reporting Period
------------------------------------------------------------------------
Adjustment
After Before factor
------------------------------------------------------------------------
10/14/2013......................... 11/15/2013............ 1.02310
11/14/2013......................... 12/15/2013............ 1.02155
12/14/2013......................... 01/15/2014............ 1.02004
01/14/2014......................... 02/15/2014............ 1.01866
02/14/2014......................... 03/15/2014............ 1.01740
03/14/2014......................... 04/15/2014............ 1.01615
04/14/2014......................... 05/15/2014............ 1.01482
05/14/2014......................... 06/15/2014............ 1.01339
06/14/2014......................... 07/15/2014............ 1.01193
07/14/2014......................... 08/15/2014............ 1.01048
08/14/2014......................... 09/15/2014............ 1.00905
09/14/2014......................... 10/15/2014............ 1.00761
10/14/2014......................... 11/15/2014............ 1.00614
11/14/2014......................... 12/15/2014............ 1.00463
12/14/2014......................... 01/15/2015............ 1.00309
01/14/2015......................... 02/15/2015............ 1.00155
02/14/2015......................... 03/15/2015............ 1.00000
03/14/2015......................... 04/15/2015............ 0.99845
------------------------------------------------------------------------
For example, the midpoint of a cost reporting period beginning
January 1, 2014, and ending December 31, 2014, is June 30, 2014. An
adjustment factor of 1.01193 would be applied to the wages of a
hospital with such a cost reporting period. Using the data as
previously described, the FY 2018 national average hourly wage
(unadjusted for occupational mix) is $42.1027.
Previously, we also would provide a Puerto Rico overall average
hourly wage. As discussed in the FY 2017 IPPS/LTCH PPS final rule (81
FR 56915), prior to January 1, 2016, Puerto Rico hospitals were paid
based on 75 percent of the national standardized amount and 25 percent
of the Puerto Rico-specific standardized amount. As a result, we
calculated a Puerto Rico-specific wage index that was applied to the
labor share of the Puerto Rico-specific standardized amount. Section
601 of the Consolidated Appropriations Act, 2016 (Pub. L. 114-113)
amended section 1886(d)(9)(E) of the Act to specify that the payment
calculation with respect to operating costs of inpatient hospital
services of a subsection (d) Puerto Rico hospital for inpatient
hospital discharges on or after January 1, 2016, shall use 100 percent
of the national standardized amount. As we stated in the FY 2017 IPPS/
LTCH PPS final rule (81 FR 56915 through 56916), because Puerto Rico
hospitals are no longer paid with a Puerto Rico-specific standardized
amount as of January 1, 2016, under section 1886(d)(9)(E) of the Act,
as amended by section 601 of the Consolidated Appropriations Act, 2016,
there is no longer a need to calculate a Puerto Rico-specific average
hourly wage and wage index. Hospitals in Puerto Rico are now paid 100
percent of the national standardized amount and, therefore, are subject
to the national average hourly wage (unadjusted for occupational mix)
(which is $42.1027 for this FY 2018 final rule) and the national wage
index, which is applied to the national labor share of the national
standardized amount. Therefore, for FY 2018, we did not propose a
Puerto Rico-specific overall average hourly wage or wage index.
2. Clarification of Other Wage Related Costs in the Wage Index
Section 1886(d)(3)(E) of the Act requires the Secretary to update
the wage index based on a survey of hospitals' costs that are
attributable to wages and wage-related costs. In the September 1, 1994
IPPS final rule (59 FR 45356), we developed a list of ``core'' wage-
related costs that hospitals may report on Worksheet S-3, Part II of
the Medicare hospital cost report in order to include those costs in
the wage index. Core wage-related costs include categories of
retirement cost, plan administrative costs, health and insurance costs,
taxes, and other specified costs such as tuition reimbursement. In
addition to these categories of core wage-related costs, we allow
hospitals to report wage-related costs other than those on the core
list if the other wage-related costs meet certain criteria. The
criteria for including other wage-related costs in the wage index are
discussed in the September 1, 1994 IPPS final rule (59 FR 45357) and
also are listed in the Provider Reimbursement Manual (PRM), Part II,
Chapter 40, Sections 4005.2 through 4005.4, Line 18 of the Medicare
cost report (Form CMS-2552-10, OMB control number 0938-0050).
Specifically, ``other'' wage-related costs are allowable for the wage
index if the cost for employees whose services are paid under the IPPS
exceeds 1 percent of the total adjusted salaries net of excluded area
salaries, is a fringe benefit as defined by the IRS and has been
reported to the IRS (as income to the employees or contractors), is not
being furnished for the convenience of the provider, and is not listed
on Worksheet S-3, Part IV.
We note that other wage-related costs are not to include benefits
already included in Line 1 salaries on Worksheet S-3, Part II (refer to
the cost report instructions for Worksheet S-3, Part II, Line 18, which
state, `` `Other' wage-related costs do not include wage-related costs
reported on line 1 of this worksheet.''). We also note that the 1-
percent test is conducted by dividing each individual category of the
other wage-related cost (that is, the
[[Page 38133]]
numerator) by the sum of the following lines on the Medicare hospital
cost report (Form CMS-2552-10): Worksheet S-3, Part II, Lines 11, 12,
13, and 14, Column 4, and Worksheet S-3, Part III, Line 3, Column 4
(that is, the denominator). The other wage-related costs associated
with contract labor and home office/related organization personnel are
included in the numerator because these other wage-related costs are
allowed in the wage index (in addition to other wage-related costs for
direct employees), assuming the requirements for inclusion in the wage
index are met. For example, if a hospital is trying to include a
parking garage as an other-wage related cost that is reported on the W-
2 or 1099 form, when running the 1-percent test, include in the
numerator all the parking garage other wage-related cost for direct
salary employees, contracted employees, and home office employees and
divide by the sum of Worksheet S-3, Part II, Lines 11, 12, 13, and 14,
Column 4, and Worksheet S-3, Part III, Line 3, Column 4. For the
category of parking other wage-related costs, the 1-percent test would
be run only one time, inclusive of other wage-related costs for
employee salaries, contracted employees, and home office employees. We
intend to clarify the hospital cost report instructions to reflect that
contract labor and home office/related organization salaries should be
added to the subtotal of salaries on Worksheet S-3, Part III, Line 3,
Column 4 (Line 3 is the difference of net salaries minus excluded area
salaries) for purposes of performing the 1-percent test. If a hospital
has more than one other wage-related cost, the 1-percent test must be
conducted separately for each other wage-related cost (for example,
parking and cafeteria separately; do not sum all the different types of
other wage-related costs together and then run the 1-percent test). If
the 1-percent test is met for a particular type of other wage-related
costs, and the other criteria listed earlier are met as well, the other
wage-related cost may be reported on Worksheet S-3, Part II, Line 18 of
the hospital cost report.
We originally allowed for the inclusion of wage-related costs other
than those on the core list because we were concerned that individual
hospitals might incur unusually large wage-related costs that are not
reflected on the core list but that may represent a significant wage-
related cost. However, as we discussed in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19900 through 19902), we are reconsidering
allowing other wage-related costs to be included in the wage index
because recent internal reviews of the FY 2018 wage data show that only
a small minority of hospitals are reporting other wage-related costs
that meet the 1-percent test described earlier. In the calculation of
the proposed FY 2018 wage index, for each hospital reporting other
wage-related costs on Line 18 of Worksheet S-3, we performed the 1-
percent test. We then made internal edits removing other wage-related
costs on Line 18 where hospitals reported data that failed to meet the
mathematical requirement that other wage-related costs must exceed 1
percent of total adjusted salaries net of excluded area salaries. After
this review, only approximately 80 hospitals of approximately 3,320
hospitals had other wage-related costs on Line 18 meeting the 1-percent
test. We believe that such a limited number of hospitals nationally
reporting and meeting the 1-percent test may indicate that other wage-
related costs might not constitute an appropriate part of a relative
measure of wage costs in a particular labor market area, a longstanding
tenet of the wage index. In other words, while other wage-related costs
may represent costs that may have an impact on an individual hospital's
average hourly wage, we do not believe that costs reported by only a
very small minority of hospitals accurately reflect the economic
conditions of the labor market areas in which those hospitals are
located. Therefore, it is possible that inclusion of other wage-related
costs in the wage index in such a limited manner may distort the
average hourly wage of a particular labor market area so that its wage
index does not accurately represent that labor market area's current
wages relative to national wages.
Furthermore, the open-ended nature of the types of other wage-
related costs that may be included on Line 18 of Worksheet S-3, in
contrast to the concrete list of core wage-related costs, may hinder
consistent and proper reporting of fringe benefits. Our internal review
indicates widely divergent types of costs that hospitals are reporting
as other wage-related costs on Line 18. We are concerned that
inconsistent reporting of other wage-related costs on Line 18 further
compromises the accuracy of the wage index as a representation of the
relative average hourly wage for each labor market area. Our intent in
creating a core list of wage-related costs in the September 1, 1994
IPPS final rule was to promote consistent reporting of fringe benefits,
and we are increasingly concerned that inconsistent reporting of wage-
related costs on Line 18 of Worksheet S-3 undermines this effort.
Specifically, we expressed in the September 1, 1994 IPPS final rule
that, since we began including fringe benefits in the wage index, we
have been concerned with the inconsistent reporting of fringe benefits,
whether because of a lack of provider proficiency in identifying fringe
benefit costs or varying interpretations across fiscal intermediaries
of the definition for fringe benefits in PRM-I, Section 2144.1 (59 FR
45356).
We believe that the limited and inconsistent use of Line 18 of
Worksheet S-3 for reporting wage-related costs other than the core list
might indicate that including other wage-related costs in the wage
index compromises the accuracy of the wage index as a relative measure
of wages in a given labor market area. Therefore, in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19901), we sought public comments on
whether we should, in future rulemaking, propose to only include the
wage-related costs on the core list in the calculation of the wage
index and not to include any other wage-related costs in the
calculation of the wage index.
Meanwhile, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19901
through 19902), we clarified that, under our current policy, an other
wage-related cost (which we define as the value of a benefit) must be a
fringe benefit as described by the IRS (refer to IRS Publication 15-B)
and must be reported to the IRS on employees' or contractors' W-2 or
1099 forms as taxable income in order to be considered an other wage-
related cost on Line 18 of Worksheet S-3 and for the wage index. That
is, other wage-related costs that are not reported to the IRS on
employees' or contractors' W-2 or 1099 forms as taxable income, even if
not required to be reported to the IRS according to IRS requirements,
will not be included in the wage index. This is consistent with current
cost report instructions for Line 18 of Worksheet S-3, Part II of the
Medicare cost report, Form 2552-10, which state that, to be considered
an allowable other wage-related cost, the cost ``has been reported to
the IRS.'' We will apply this policy to the process for calculating the
wage index for FY 2019, including the FY 2019 desk reviews beginning in
September 2017.
As we stated in the FY 2018 proposed rule, we believe this
clarification is necessary because some hospitals have incorrectly
interpreted prior manual and existing preamble language to mean that a
cost could be considered an other wage-related cost if the provider's
reporting (or not reporting) of the cost
[[Page 38134]]
was in accordance with IRS requirements, rather than if the cost was
actually reported on an employee's or contractor's W-2 or 1099 form as
taxable income. We believe that such an interpretation of our policy
would require an analysis of whether the reporting or not reporting of
the cost to the IRS was done properly in accordance with IRS
regulations and guidance in order to allow the cost as an other wage-
related cost. We believe that the determinations regarding the proper
or improper reporting of certain other wage-related costs to the IRS
for the purpose of inclusion in the Medicare wage index are impractical
for CMS and the MACs because we do not have the expertise and fluency
in IRS regulations and tax law sufficient to perform such technical
reviews of hospital wage-related costs. In contrast, our current policy
of including an amount as an other wage-related cost for wage index
purposes only if the amount was actually reported to the IRS on
employees' or contractors' W-2 or 1099 forms as taxable income is a
straightforward policy that we believe provides clarity to all involved
parties. The brightline test of allowing an other wage-related cost to
be included in the wage index only if it has been reported on an
employee's or contractor's W-2 or 1099 form as taxable income helps
ensure consistent treatment of other wage-related costs for all
hospitals. Considering the variety of types of costs that may be
included on Line 18 of Worksheet S-3 of the cost report for other wage-
related costs (assuming the 1-percent test is met and other criteria
are met), we believe that a straightforward policy that is simple for
hospitals and CMS to apply is particularly important.
In addition, we believe the policy we are clarifying that an other
wage-related cost can be included in the wage index only if it was
reported to the IRS as taxable income on the employee's or contractor's
W-2 or 1099, is consistent with CMS' longstanding position that a
fringe benefit is not furnished for the convenience of the employer or
otherwise excludable from income as a fringe benefit (such as a working
condition fringe) and that inappropriate types of costs may not be
included in the wage index. In response to a comment when we finalized
the criteria for other wage-related costs in the September 1, 1994 IPPS
final rule (59 FR 45359), we stated that ``items such as the
unrecovered cost of employee meals, tuition reimbursement, and auto
allowances will only be allowed as a wage-related cost for purposes of
the wage index if properly reported to the IRS on an employee's W-2
form as a fringe benefit.'' (We note that the September 1, 1994 IPPS
final rule does not mention the 1099 form for contractors, as contract
labor was not allowed at that time in the wage index. Consistent with
our treatment of costs for contract labor similar to that of employees
for the wage index, we are clarifying that the requirement that a cost
be reported to the IRS to be allowed as a wage-related cost for the
wage index also applies to contract labor, which must be reported on
the contractor's 1099 to be allowed as a wage-related cost for the wage
index.) We believe that requiring other wage-related costs to be
reported on employees' or contractors' W-2 or 1099 forms to be
allowable for Line 18 of Worksheet S-3 of the Medicare cost report is
consistent with the requirement that the cost is not being furnished
for the convenience of the employer. A cost reported on an employee's
or contractor's W-2 or 1099 form as taxable income is clearly a wage-
related cost that is provided solely for the benefit of the employee.
We believe that the requirement that other wage-related costs be a
benefit to the employee also guarantees that administrative costs such
as overhead and capitalized costs are excluded from other wage-related
costs in the wage index.
Therefore, for the reasons discussed above, as we discussed in the
FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19901 through 19902), we are
clarifying that a cost must be a fringe benefit as described by the IRS
and must be reported to the IRS on employees' or contractors' W-2 or
1099 forms as taxable income in order to be considered an other wage-
related cost on Line 18 of Worksheet S-3 and for the wage index. In
addition, as discussed earlier, in the proposed rule, we requested
public comments on whether we should consider in future rulemaking
removing other wage-related costs from the wage index.
Because some hospitals have incorrectly interpreted prior manual
and existing preamble language, as stated earlier, in the proposed rule
we restated the criteria from the September 1, 1994 IPPS final rule (59
FR 45357) for allowing other wage-related costs for the wage index,
with clarifications. The criteria follow below, and as stated in the
proposed rule, we intend to update the manual with these
clarifications: Other Wage-Related Costs. A hospital may be able to
report a wage-related cost (defined as the value of the benefit) that
does not appear on the core list if it meets all of the following
criteria:
The wage-related cost is provided at a significant
financial cost to the employer. To meet this test, the individual wage-
related cost must be greater than 1 percent of total salaries after the
direct excluded salaries are removed (the sum of Worksheet S-3, Part
II, Lines 11, 12, 13, 14, column 4, and Worksheet S-3, Part III, Line
3, Column 4).
The wage-related cost is a fringe benefit as described by
the IRS and is reported to the IRS on an employee's or contractor's W-2
or 1099 form as taxable income.
The wage-related cost is not furnished for the convenience
of the provider or otherwise excludable from income as a fringe benefit
(such as a working condition fringe).
We note that those wage-related costs reported as salaries on Line
1 (for example, loan forgiveness and sick pay accruals) should not be
included as other wage-related costs on Line 18.
Comment: One commenter fully supported CMS proposing in future
rulemaking to only include the wage-related costs on the core list in
the calculation of the wage index and not to include any other wage-
related costs in the calculation of the wage index. The commenter
reiterated CMS' observation that only a small minority of hospitals
benefit from the reporting of other wage-related costs, emphasizing
that the inclusion of other wage-related costs in the wage index in
such a limited manner distorts the average hourly wage of a particular
labor market area so that its wage index does not accurately represent
that labor market area's current wages relative to national wages.
Several commenters did not oppose CMS proposing in future rulemaking to
only include wage-related costs on the core list but requested that CMS
first consider convening stakeholders for additional input prior to the
removal of the item. Similarly, one commenter requested that CMS be as
transparent as possible and provide complete information on the impact
on the wage index for all areas of the country in future rulemaking if
CMS proposes to exclude other wage-related costs from the wage index
calculation.
Response: We appreciate the commenter's support for our proposing
in future rulemaking to consider only including the wage-related costs
on the core list in the calculation of the wage index and not to
include any other wage-related costs in the calculation of the wage
index. In response to the commenters who requested that CMS first
consider convening stakeholders
[[Page 38135]]
for additional input prior to the removal of other wage-related costs
(on Line 18 of Worksheet S-3) from the wage index, we are reassuring
the commenters that we would engage in notice-and-comment rulemaking in
order to solicit stakeholder input before removing Line 18 of Worksheet
S-3 from the wage index calculation. Similarly, we endeavor to be as
transparent as possible and, if appropriate, may consider providing
information on the impact on the wage index for all areas of the
country in future rulemaking if we propose to exclude other wage-
related costs from the wage index calculation.
Comment: Two commenters applauded CMS' goals of achieving a more
equitable and accurate wage index, but suggested that CMS address the
inadequacies in the current reporting requirements for noncore other
wage-related costs rather than consider eliminating Line 18 of
Worksheet S-3 of the Medicare cost report from the wage index. These
commenters asserted that all hospitals have noncore benefits. However,
the commenters added, the limited guidance and ``significant threshold
limitations'' in the current instructions prevent hospitals from
capturing these noncore benefits. Furthermore, the commenters
maintained that benefits are rapidly evolving into more nontraditional
structures and, therefore, a mechanism to capture these evolving
benefits is necessary for CMS to ensure an equitable survey. The
commenters submitted several suggestions to ensure open and transparent
reporting of other wage-related costs and to remove the onus from CMS
and the MAC to make determinations regarding the acceptability of other
wage-related costs. The commenters believed that clear and consistent
reporting guidelines create an equitable playing field for all
providers and stated that addressing the inadequacies in the current
reporting requirements for Line 18 is prudent. However, the commenters
suggested an approach different than CMS' clarifications of current
policy to more accurately identify and capture other wage-related
costs.
Response: We appreciate the feedback from commenters in favor of
our improving the current reporting requirements for noncore other
wage-related costs rather than considering eliminating Line 18 of
Worksheet S-3 from the wage index calculation. We are not eliminating
Line 18 from the wage index calculation at this time. Rather, in line
with the commenters' recommendation, we are clarifying the requirements
for Line 18 in this final rule to facilitate consistent and accurate
reporting of other wage-related costs for the wage index. We share the
commenters' interests in reporting guidelines that are clear,
consistent, and equitable. The commenters' specific suggestions and our
responses follow below:
Comment: Commenters suggested that CMS, with input from providers,
define a specific list of noncore benefits commonly shared by a large
number of providers for inclusion in the wage index, such as employee
parking and transit costs, uniform costs, and meal allowances. The
commenters suggested that CMS approach the identification of noncore
benefits with the same specificity as it does with core benefits in
order to ensure an equitable wage index, more easily address tax
issues, and allow more direct application of the employer convenience
test.
Response: We appreciate the commenters' suggestion and agree that
defined lists of allowable costs are generally helpful to support
consistent and equitable reporting. In fact, our intent in creating a
core list of wage-related costs in the September 1, 1994 IPPS final
rule was to promote ``more equitable and consistent reporting of wage-
related costs for all hospitals'' (59 FR 45356). When developing the
list of core wage-related costs, we stated that one or more of the
following criteria must be met to be considered a core wage-related
cost: The wage-related cost is provided at a significant financial cost
to the employer; the wage-related cost is of a type and nature that
would generally be offered as a fringe benefit by most employers; the
perceived value of this wage-related cost is of such importance that it
would influence an individual's employment decisions; and the wage-
related cost is a mandatory requirement under Federal or State law (for
example FICA, Federal and State unemployment, among others) (59 FR
45356).
If there are noncore benefits that are of a type and nature that
would generally be offered as a fringe benefit by most employers, as
the commenters suggested, we believe that perhaps these costs should be
added to the core list rather than defined separately as a list of
other wage-related costs. In future rulemaking, we may consider this
suggestion in the form of seeking hospitals' input on expanding the
core list of wage-related costs to include common wage-related costs
(such as parking) that are currently considered other wage-related
costs.
Comment: Commenters suggested that the taxable or nontaxable nature
of the benefit should not be a determinant for inclusion as a noncore
benefit. In the commenters' opinion, CMS made too broad a connection
between taxable reporting and the employer convenience test;
specifically, many employee benefits are not taxable due to dollar
threshold exclusions and public policy considerations by Congress and
the IRS. Furthermore, the commenters pointed out that evolving tax law
could cause volatility in the wage index because what is considered a
taxable benefit one year may not be taxable in the next year.
Rather, the commenters suggested that, in order for other wage-
related costs to be included in the wage index, CMS require other wage-
related costs to be reported to the IRS on the W-2, regardless of
whether the benefit is taxable or not (the W-2 allows for reporting of
both taxable and nontaxable benefits), and that CMS could then include
other wage-related costs in the wage index as long as those costs,
whether taxable or nontaxable, are reported on the W-2. The commenters
maintained that it should not be the responsibility of CMS or the MACs
to prove that the benefit has been handled appropriately for tax
purposes, and this requirement to include all taxable and nontaxable
costs on the W-2 in order to have those costs included in the wage
index would ensure that the benefit has been handled correctly for tax
purposes.
Response: In the proposed rule (82 FR 19902), we stated that
requiring other wage-related costs to be reported on employees' or
contractors' W-2 or 1099 forms to be allowable for Line 18 is
consistent with the requirement that the cost is not being furnished
for the convenience of the employer because, typically, a cost that is
for the convenience of the employer is not taxable as income to the
employee. This is not to say that all costs that are a benefit to the
employee are taxable. Indeed, in our clarification of the criteria for
allowing a cost as an other wage-related costs on Line 18 in the wage
index, we specifically stated that ``The wage-related cost is not
furnished for the convenience of the provider or otherwise excludable
from income as a fringe benefit (such as a working condition fringe)''
(emphasis added). That is, we recognize that being furnished for the
convenience of the provider is only one of many reasons that a cost may
be excludable from income as a fringe benefit.
While we understand that many employee benefits are not taxable due
to dollar threshold exclusions and public policy considerations by
Congress and the IRS, and thereby excluded from Line 18, we continue to
believe that a brightline test is necessary for consistent
[[Page 38136]]
treatment of other wage-related costs for all hospitals. Taken with the
commenter's suggestion that CMS allow taxable and nontaxable other
wage-related costs (assuming other criteria are met) as long as the
costs are reported on W-2s or 1099s, we understand that the commenter
is suggesting a different brightline test: That the cost be listed on
the W-2, regardless of whether the cost is taxable or tax-exempt. We
continue to believe that our clarification in the proposed rule is a
more straightforward policy than the commenter's suggestion for two
reasons. First, not all employers report nontaxable costs on an
employee's W-2, nor are they required to do so. Therefore, to allow
nontaxable costs so long as those costs are on an employee's W-2 would
create an uneven playing field with inconsistent treatment of
nontaxable costs. Second, a taxable benefit is typically income-related
and a benefit to the employee. While we understand that there may be
benefits to the employee that are tax-exempt due to a variety of public
policy considerations, we believe that costs should be taxable in order
to be incorporated as part of the wage index because the wage index is
a relative measure of salaries and wages.
Furthermore, we agree with the commenters' assertion that it should
not be the responsibility of CMS or the MACs to prove that the benefit
has been handled appropriately for tax purposes. Indeed, it is for that
reason that we clarified our current policy of allowing an amount as an
other wage-related cost for wage index purposes only if the amount was
actually reported to the IRS on employees' or contractors' W-2 or 1099
forms as taxable income. We stated in the proposed rule (82 FR 19901
through 19902) that other wage-related costs that are not reported to
the IRS on employees' or contractors' W-2 or 1099 forms as taxable
income, even if not required to be reported to the IRS according to IRS
requirements, will not be included in the wage index. We explained that
determinations regarding the proper or improper reporting of certain
other wage-related costs to the IRS for the purpose of inclusion in the
Medicare wage index are impractical for CMS and the MACs because we do
not have the expertise and fluency in IRS regulations and tax law
sufficient to perform such technical reviews of hospital wage-related
costs.
Comment: Commenters suggested that CMS change the 1-percent test to
a test in aggregate for the items on their recommended noncore list.
For benefits not specifically listed by CMS as noncore, the commenters
suggested that CMS continue using the current methodology, which
requires each individual benefit to meet the 1-percent test.
Response: We appreciate the commenters' suggestion. However, as we
stated earlier, if there are noncore benefits that are of a type and
nature that would generally be offered as a fringe benefit by most
employers, we believe that perhaps these costs should be added to the
core list rather than defined separately as a list of other wage-
related costs. In future rulemaking, we may consider this suggestion in
the form of seeking hospitals' input on expanding the core list of
wage-related costs to include common wage-related costs (such as
parking) that are currently considered other wage-related costs.
We continue to believe that it is appropriate for the 1-percent
test to be performed on individual, rather than aggregate, other wage-
related costs. In response to a public comment, in the September 1,
1994 IPPS final rule (59 FR 45358), we stated that ``[t]he provision to
include wage-related costs other than those reflected on the core list
is intended to recognize only those limited circumstances where a
hospital incurs any additional wage-related cost items that truly
represent a significant financial burden to the hospital, but that also
meet the current definition of a fringe benefit cost. We believe the 1-
percent threshold is an appropriate measure of significance, and that
the exclusion of any cost representing less than 1 percent of total
salaries would not significantly affect the hospital's overall average
hourly wage. We consider the 1-percent test critical in ensuring that
providers only include other wage-related costs that contribute
significantly to their wage costs and that are not accounted for in the
core list.'' We continue to believe that the 1-percent test performed
on individual costs ensures that the wage-related cost is provided at a
significant financial cost to the employer.
Furthermore, we believe that allowing the 1-percent test to be
performed on aggregate other wage-related costs (even on a limited list
of other wage-related costs, as the commenter suggests) would lead to
inequitable treatment of other wage-related costs. Hospitals with an
other wage-related cost comprising an identical percentage of total
adjusted salaries net of excluded area salaries could be treated
differently, depending on the presence or absence of additional other
wage-related costs to collectively ``pass'' the 1-percent test. For
example, parking costs totaling .08 percent of total salaries for one
hospital could be allowed (assuming the other criteria were met) if the
hospital also has additional noncore wage-related costs that combine to
exceed 1 percent, while another hospital with parking costs totaling
the identical .08 percentage of total salaries could have those costs
disallowed in absence of additional noncore wage-related costs to add
to the parking costs to exceed 1 percent of salaries.
We appreciate all of the comments submitted on this issue. We will
take these comments into consideration in determining whether to
propose in future rulemaking to remove other wage-related costs from
the wage index calculation. Meanwhile, as discussed earlier and in the
FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19900 through 19902), we are
again clarifying that a cost must be a fringe benefit as described by
the IRS and must be reported to the IRS on employees' or contractors'
W-2 or 1099 forms as taxable income in order to be considered an other
wage-related cost on Line 18 of Worksheet S-3 and for the wage index.
E. Occupational Mix Adjustment to the FY 2018 Wage Index
As stated earlier, section 1886(d)(3)(E) of the Act provides for
the collection of data every 3 years on the occupational mix of
employees for each short-term, acute care hospital participating in the
Medicare program, in order to construct an occupational mix adjustment
to the wage index, for application beginning October 1, 2004 (the FY
2005 wage index). The purpose of the occupational mix adjustment is to
control for the effect of hospitals' employment choices on the wage
index. For example, hospitals may choose to employ different
combinations of registered nurses, licensed practical nurses, nursing
aides, and medical assistants for the purpose of providing nursing care
to their patients. The varying labor costs associated with these
choices reflect hospital management decisions rather than geographic
differences in the costs of labor.
1. Use of 2013 Occupational Mix Survey for the FY 2018 Wage Index
Section 304(c) of the Consolidated Appropriations Act, 2001 (Pub.
L. 106-554) amended section 1886(d)(3)(E) of the Act to require CMS to
collect data every 3 years on the occupational mix of employees for
each short-term, acute care hospital participating in the Medicare
program. We collected data in 2013 to compute the occupational mix
adjustment for the FY 2016, FY 2017, and FY 2018 wage indexes. A new
[[Page 38137]]
measurement of occupational mix is required for FY 2019.
The 2013 survey included the same data elements and definitions as
the previous 2010 survey and provided for the collection of hospital-
specific wages and hours data for nursing employees for calendar year
2013 (that is, payroll periods ending between January 1, 2013 and
December 31, 2013). We published the 2013 survey in the Federal
Register on February 28, 2013 (78 FR 13679 through 13680). This survey
was approved by OMB on May 14, 2013, and is available on the CMS Web
site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/Medicare-Wage-Index-Occupational-Mix-Survey2013.html. The 2013 Occupational Mix Survey
Hospital Reporting Form CMS-10079 for the Wage Index Beginning FY 2016
(in Excel format) is available on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/Medicare-Wage-Index-Occupational-Mix-Survey2013.html. Hospitals were required to submit
their completed 2013 surveys to their MACs by July 1, 2014. The
preliminary, unaudited 2013 survey data were posted on the CMS Web site
on July 11, 2014. As with the Worksheet S-3, Parts II and III cost
report wage data, we asked our MACs to revise or verify data elements
in hospitals' occupational mix surveys that result in certain edit
failures.
2. Use of the 2016 Medicare Wage Index Occupational Mix Survey for the
FY 2019 Wage Index
As stated earlier, a new measurement of occupational mix is
required for FY 2019. The FY 2019 occupational mix adjustment will be
based on a new calendar year (CY) 2016 survey. The CY 2016 survey (CMS
Form CMS-10079) received OMB approval on September 27, 2016. The final
CY 2016 Occupational Mix Survey Hospital Reporting Form is available on
the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/2016-Occupational-Mix-Survey-Hospital-Reporting-Form-CMS-10079-for-the-Wage-Index-Beginning-FY-2019.html. Hospitals were required to submit their
completed 2016 surveys to their MACs by July 3, 2017. The preliminary,
unaudited CY 2016 survey data were posted on the CMS Web site on July
12, 2017. As with the Worksheet S-3, Parts II and III cost report wage
data, as part of the FY 2019 desk review process, the MACs will revise
or verify data elements in hospitals' occupational mix surveys that
result in certain edit failures.
3. Calculation of the Occupational Mix Adjustment for FY 2018
In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19903), for FY
2018, we proposed to calculate the occupational mix adjustment factor
using the same methodology that we have used since the FY 2012 wage
index (76 FR 51582 through 51586) and to apply the occupational mix
adjustment to 100 percent of the FY 2018 wage index. Because the
statute requires that the Secretary measure the earnings and paid hours
of employment by occupational category not less than once every 3
years, all hospitals that are subject to payments under the IPPS, or
any hospital that would be subject to the IPPS if not granted a waiver,
must complete the occupational mix survey, unless the hospital has no
associated cost report wage data that are included in the FY 2018 wage
index. For the proposed FY 2018 wage index, we used the Worksheet S-3,
Parts II and III wage data of 3,325 hospitals, and we used the
occupational mix surveys of 3,128 hospitals for which we also have
Worksheet S-3 wage data, which represented a ``response'' rate of 94
percent (3,128/3,325). For the proposed FY 2018 wage index, we applied
proxy data for noncompliant hospitals, new hospitals, or hospitals that
submitted erroneous or aberrant data in the same manner that we applied
proxy data for such hospitals in the FY 2012 wage index occupational
mix adjustment (76 FR 51586).
Comment: One commenter stated that all hospitals should be
obligated to submit the occupational mix survey because failure to
complete the survey jeopardizes the accuracy of the wage index. The
commenter suggested that a penalty be instituted for nonsubmitters.
This commenter also requested that, pending CMS' analysis of the
Commuting Based Wage Index and given the Institute of Medicine's study
on geographic variation in hospital wage costs, CMS eliminate the
occupational mix survey and the significant reporting burden it
creates.
Response: We appreciate the commenter's concern about the accuracy
of the wage index. We have continually requested that all hospitals
complete and submit the occupational mix surveys. We did not establish
a penalty for hospitals that did not submit the 2013 surveys. However,
we are continuing to consider for future rulemaking various options for
ensuring full compliance with future occupational mix surveys.
Regarding the commenter's request that CMS eliminate the occupational
mix survey, this survey is necessary to meet the provisions of section
1886(d)(3)(E) of the Act, which requires us to measure the earnings and
paid hours of employment by occupational category.
After consideration of the public comments we received, for FY
2018, we are adopting as final our proposal to calculate the
occupational mix adjustment factor using the same methodology that we
have used since the FY 2012 wage index. For the final FY 2018 wage
index, we are using the Worksheet S-3, Parts II and III wage data of
3,336 hospitals, and we are using the occupational mix surveys of 3,138
hospitals for which we also have Worksheet S-3 wage data, which
represents a ``response rate'' of 94 percent (3,138/3,336). We note
that, in the proposed rule (82 FR 19903), we stated that we used the
occupational mix survey of 3,128 hospitals. The reason for the increase
in the number of hospitals from 3,128 to 3,138 is that 10 hospitals
that had been deleted from the proposed rule wage index and that are
now included in the final rule wage index had acceptable occupational
mix surveys to use for the final rule. Therefore, we have included the
occupational mix surveys of these 10 additional hospitals to calculate
the wage index for this final rule. For the final FY 2018 wage index,
we applied proxy data for noncompliant hospitals, new hospitals, or
hospitals that submitted erroneous or aberrant data in the same manner
that we applied proxy data for such hospitals in the FY 2012 wage index
occupational mix adjustment (76 FR 51586). As a result of applying this
methodology, the FY 2018 occupational mix adjusted national average
hourly wage is $42.0564.
F. Analysis and Implementation of the Occupational Mix Adjustment and
the FY 2018 Occupational Mix Adjusted Wage Index
As discussed in section III.E. of the preamble of this final rule,
for FY 2018, we are applying the occupational mix adjustment to 100
percent of the FY 2018 wage index. We calculated the occupational mix
adjustment using data from the 2013 occupational mix survey data, using
the methodology described in the FY 2012 IPPS/LTCH PPS final rule (76
FR 51582 through 51586). Using the occupational mix survey data and
applying the occupational mix adjustment to 100 percent of the FY 2018
wage index results in a national average hourly wage of $42.0564.
[[Page 38138]]
The FY 2018 national average hourly wages for each occupational mix
nursing subcategory as calculated in Step 2 of the occupational mix
calculation are as follows:
------------------------------------------------------------------------
Average
Occupational mix nursing subcategory hourly wage
------------------------------------------------------------------------
National RN............................................. $38.86637039
National LPN and Surgical Technician.................... 22.73227683
National Nurse Aide, Orderly, and Attendant............. 15.95002569
National Medical Assistant.............................. 17.96799473
National Nurse Category................................. 32.856948
------------------------------------------------------------------------
The national average hourly wage for the entire nurse category as
computed in Step 5 of the occupational mix calculation is $32.856948.
Hospitals with a nurse category average hourly wage (as calculated in
Step 4) of greater than the national nurse category average hourly wage
receive an occupational mix adjustment factor (as calculated in Step 6)
of less than 1.0. Hospitals with a nurse category average hourly wage
(as calculated in Step 4) of less than the national nurse category
average hourly wage receive an occupational mix adjustment factor (as
calculated in Step 6) of greater than 1.0.
Based on the 2013 occupational mix survey data, we determined (in
Step 7 of the occupational mix calculation) that the national
percentage of hospital employees in the nurse category is 42.6 percent,
and the national percentage of hospital employees in the all other
occupations category is 57.4 percent. At the CBSA level, the percentage
of hospital employees in the nurse category ranged from a low of 25.7
percent in one CBSA to a high of 73.5 percent in another CBSA.
We compared the FY 2018 occupational mix adjusted wage indexes for
each CBSA to the unadjusted wage indexes for each CBSA. As a result of
applying the occupational mix adjustment to the wage data, the final
wage index values for 222 (54.4 percent) urban areas and 23 (48.9
percent) rural areas will increase. The final wage index values for 110
(27.0 percent) urban areas will increase by greater than or equal to 1
percent but less than 5 percent, and the final wage index values for 6
(1.5 percent) urban areas will increase by 5 percent or more. The final
wage index values for 10 (21.3 percent) rural areas will increase by
greater than or equal to 1 percent but less than 5 percent, and no
rural areas' final wage index values will increase by 5 percent or
more. However, the final wage index values for 184 (45.1 percent) urban
areas and 24 (51.1 percent) rural areas will decrease. The final wage
index values for 85 (20.8 percent) urban areas will decrease by greater
than or equal to 1 percent but less than 5 percent, and no urban areas'
final wage index value will decrease by 5 percent or more. The final
wage index values of 8 (17.0 percent) rural areas will decrease by
greater than or equal to 1 percent and less than 5 percent, and no
rural areas' final wage index values will decrease by 5 percent or
more. The largest final positive impacts will be 17.4 percent for an
urban area and 2.9 percent for a rural area. The largest final negative
impacts will be 4.9 percent for an urban area and 2.4 percent for a
rural area. Two urban areas' final wage index, but no rural area wage
indexes, will remain unchanged by application of the occupational mix
adjustment. These results indicate that a larger percentage of urban
areas (54.4 percent) will benefit from the occupational mix adjustment
than will rural areas (48.9 percent).
G. Application of the Rural, Imputed, and Frontier Floors
1. Rural Floor
Section 4410(a) of Public Law 105-33 provides that, for discharges
on or after October 1, 1997, the area wage index applicable to any
hospital that is located in an urban area of a State may not be less
than the area wage index applicable to hospitals located in rural areas
in that State. This provision is referred to as the ``rural floor.''
Section 3141 of Public Law 111-148 also requires that a national budget
neutrality adjustment be applied in implementing the rural floor. Based
on the FY 2018 wage index associated with this final rule (which is
available via the Internet on the CMS Web site), we estimate that 366
hospitals will receive an increase in their FY 2018 wage index due to
the application of the rural floor.
2. Expiration of the Imputed Floor Policy
In the FY 2005 IPPS final rule (69 FR 49109 through 49111), we
adopted the ``imputed floor'' policy as a temporary 3-year regulatory
measure to address concerns from hospitals in all-urban States that
have argued that they are disadvantaged by the absence of rural
hospitals to set a wage index floor for those States. Since its initial
implementation, we have extended the imputed floor policy seven times,
the last of which was adopted in the FY 2017 IPPS/LTCH PPS final rule
and is set to expire on September 30, 2017. (We refer readers to
further discussions of the imputed floor in the FY 2014, FY 2015, FY
2016, and FY 2017 IPPS/LTCH PPS final rules (78 FR 50589 through 50590,
79 FR 49969 through 49970, 80 FR 49497 through 49498, and 81 FR 56921
through 56922, respectively) and to the regulations at 42 CFR
412.64(h)(4).) Currently, there are three all-urban States--Delaware,
New Jersey, and Rhode Island--with a range of wage indexes assigned to
hospitals in these States, including through reclassification or
redesignation. (We refer readers to discussions of geographic
reclassifications and redesignations in section III.I. of the preamble
of this final rule.) In computing the imputed floor for an all-urban
State under the original methodology, which was established beginning
in FY 2005, we calculated the ratio of the lowest-to-highest CBSA wage
index for each all-urban State as well as the average of the ratios of
lowest-to-highest CBSA wage indexes of those all-urban States. We then
compared the State's own ratio to the average ratio for all-urban
States and whichever is higher is multiplied by the highest CBSA wage
index value in the State--the product of which established the imputed
floor for the State. As of FY 2012, there were only two all-urban
States--New Jersey and Rhode Island--and only New Jersey benefitted
under this methodology. Under the previous OMB labor market area
delineations, Rhode Island had only one CBSA (Providence-New Bedford-
Fall River, RI-MA) and New Jersey had 10 CBSAs. Therefore, under the
original methodology, Rhode Island's own ratio equaled 1.0, and its
imputed floor was equal to its original CBSA wage index value. However,
because the average ratio of New Jersey and Rhode Island was higher
than New Jersey's own ratio, this methodology provided a benefit for
New Jersey, but not for Rhode Island.
In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53368 through
53369), we retained the imputed floor calculated under the original
methodology as discussed above, and established an alternative
methodology for computing the imputed floor wage index to address the
concern that the original imputed floor methodology guaranteed a
benefit for one all-urban State with multiple wage indexes (New Jersey)
but could not benefit the other all-urban State (Rhode Island). The
alternative methodology for calculating the imputed floor was
established using data from the application of the rural floor policy
for FY 2013. Under the alternative methodology, we first determined the
average percentage difference between the post-reclassified, pre-floor
area wage index and the post-reclassified, rural floor wage index
(without rural floor
[[Page 38139]]
budget neutrality applied) for all CBSAs receiving the rural floor.
(Table 4D associated with the FY 2013 IPPS/LTCH PPS final rule (which
is available via the Internet on the CMS Web site) included the CBSAs
receiving a State's rural floor wage index.) The lowest post-
reclassified wage index assigned to a hospital in an all-urban State
having a range of such values then is increased by this factor, the
result of which establishes the State's alternative imputed floor. We
amended Sec. 412.64(h)(4) of the regulations to add new paragraphs to
incorporate the finalized alternative methodology, and to make
reference and date changes. In summary, for the FY 2013 wage index, we
did not make any changes to the original imputed floor methodology at
Sec. 412.64(h)(4) and, therefore, made no changes to the New Jersey
imputed floor computation for FY 2013. Instead, for FY 2013, we adopted
a second, alternative methodology for use in cases where an all-urban
State has a range of wage indexes assigned to its hospitals, but the
State cannot benefit under the original methodology.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50589 through
50590), we extended the imputed floor policy (both the original
methodology and the alternative methodology) for 1 additional year,
through September 30, 2014, while we continued to explore potential
wage index reforms.
In the FY 2015 IPPS/LTCH PPS final rule (79 FR 49969 through
49970), for FY 2015, we adopted a policy to extend the imputed floor
policy (both the original methodology and alternative methodology) for
another year, through September 30, 2015, as we continued to explore
potential wage index reforms. In that final rule, we revised the
regulations at Sec. 412.64(h)(4) and (h)(4)(vi) to reflect the 1-year
extension of the imputed floor. As discussed in section III.B. of the
preamble of that FY 2015 final rule, we adopted the new OMB labor
market area delineations beginning in FY 2015. Under the new OMB
delineations, Delaware became an all-urban State, along with New Jersey
and Rhode Island. Under the new OMB delineations, Delaware has three
CBSAs, New Jersey has seven CBSAs, and Rhode Island continues to have
only one CBSA (Providence-Warwick, RI- MA). We refer readers to a
detailed discussion of our adoption of the new OMB labor market area
delineations in section III.B. of the preamble of the FY 2015 IPPS/LTCH
PPS final rule. Therefore, under the adopted new OMB delineations
discussed in section III.B. of the preamble of the FY 2015 IPPS/LTCH
PPS final rule, Delaware became an all-urban State and was subject to
an imputed floor as well for FY 2015.
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49497 through
49498), for FY 2016, we extended the imputed floor policy (under both
the original methodology and the alternative methodology) for 1
additional year, through September 30, 2016. In that final rule, we
revised the regulations at Sec. 412.64(h)(4) and (h)(4)(vi) to reflect
this additional 1-year extension. Similarly, in the FY 2017 IPPS/LTCH
PPS final rule (81 FR 56921 through 56922), for FY 2017, we extended
the imputed floor policy (under both the original methodology and the
alternative methodology) for 1 additional year, through September 30,
2017. In that final rule, we revised the regulations at Sec.
412.64(h)(4) and (h)(4)(vi) to reflect this additional 1-year
extension.
The imputed floor is set to expire effective October 1, 2017, and
in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19905), we did not
propose to extend the imputed floor policy. In the FY 2005 IPPS final
rule (69 FR 49110), we adopted the imputed floor policy for all-urban
States under the authority of section 1886(d)(3)(E) of the Act, which
gives the Secretary broad authority to adjust the proportion (as
estimated by the Secretary from time to time) of hospitals' costs which
are attributable to wages and wage-related costs of the DRG prospective
payment rates for area differences in hospital wage levels by a factor
(established by the Secretary). However, we have expressed reservations
about establishment of an imputed floor, considering that the imputed
rural floor methodology creates a disadvantage in the application of
the wage index to hospitals in States with rural hospitals but no urban
hospitals receiving the rural floor (72 FR 24786 and 72 FR 47322). As
we discussed in the FY 2008 IPPS final rule (72 FR 47322), the
application of the rural and imputed floors requires transfer of
payments from hospitals in States with rural hospitals but where the
rural floor is not applied to hospitals in States where the rural or
imputed floor is applied. For this reason, in the FY 2018 IPPS/LTCH PPS
proposed rule, we proposed not to apply an imputed floor to wage index
calculations and payments for hospitals in all-urban States for FY 2018
and subsequent years. That is, we proposed that hospitals in New
Jersey, Delaware, and Rhode Island (and in any other all-urban State)
would receive a wage index that is calculated without applying an
imputed floor for FY 2018 and subsequent years. Therefore, under our
proposal, only States containing both rural areas and hospitals located
in such areas (including any hospital reclassified as rural under the
provisions of Sec. 412.103 of the regulations) would benefit from the
rural floor, in accordance with section 4410 of Public Law 105-33. In
addition, we proposed to no longer include the imputed floor as a
factor in the national budget neutrality adjustment. Therefore, the
proposed wage index and impact tables associated with the FY 2018 IPPS/
LTCH PPS proposed rule (which are available via the Internet on the CMS
Web site) did not reflect the imputed floor policy, and there was no
proposed national budget neutrality adjustment for the imputed floor
for FY 2018. We invited public comments on our proposal not to extend
the imputed floor for FY 2018 and subsequent years.
We are presenting below summaries of the public comments we
received and our responses.
Comment: Several commenters supported CMS' proposal to allow the
imputed floor policy to expire. One commenter stated that the imputed
floor policy only benefited two States at the expense of other States
due to national budget neutrality. Another commenter stated the imputed
floor policy should only apply when required by statute.
Response: We appreciate the positions of commenters that support
the proposal not to extend the imputed floor. In the FY 2005 IPPS final
rule (69 FR 49110), we adopted the imputed floor policy for all-urban
States under the authority of section 1886(d)(3)(E) of the Act, which
gives the Secretary broad authority to adjust the proportion (as
estimated by the Secretary from time to time) of hospitals' costs which
are attributable to wages and wage-related costs, of the DRG
prospective payment rates for area differences in hospital wage levels
by a factor (established by the Secretary). Therefore, we believe that
we have the discretion to adopt a policy that would adjust wage indexes
in the stated manner. We adopted the imputed floor policy to address
concerns from hospitals in all-urban States and subsequently extended
it through notice-and-comment rulemaking. While we understand the
commenters' concerns that the application of the imputed floors
requires transfer of payments from hospitals in States with rural
hospitals but where the rural floor is not applied to hospitals in
States where the rural or imputed floor is applied, we also received
many comments expressing concern about discontinuing the imputed floor
(as further discussed below). As explained further below, we have
decided to
[[Page 38140]]
temporarily extend the imputed floor for 1 year while we continue to
consider the comments we received and assess whether to continue or
discontinue the imputed floor policy for the long term.
Comment: Several commenters disagreed with the proposal to allow
the imputed floor to expire, and stated that CMS should maintain the
status quo and continue to extend the imputed floor in 1-year
increments until the entirety of Medicare wage index reform is
complete. The commenters stated that, by eliminating the imputed floor
wage index, CMS is alleviating only a fraction of the combined payment
transfer from the application of the rural and imputed floors. The
commenters pointed out that, combined, hospitals in the three all-urban
States (New Jersey, Rhode Island, and Delaware) accounted for less than
10 percent of the 397 hospitals nationally that received either the
rural or imputed floor last year. The commenters conveyed that CMS
indicated in the FY 2014 and FY 2015 IPPS/LTCH PPS final rules, both of
which extended the imputed floor for an additional year, that CMS would
continue to explore potential wage index reform, and that, as of the FY
2018 IPPS/LTCH PPS proposed rule, such reform has not occurred.
Multiple commenters indicated that eliminating the imputed floor
would create the same uneven playing field that existed prior to 2005,
in response to which CMS initially established the policy. The
commenters stated that the anomaly originally cited by CMS (that is,
that hospitals in all-urban States with predominant labor market areas
do not have any type of protection, or ``floor,'' from declines in
their wage index) would exist again if the imputed floor policy were
discontinued.
One commenter indicated that the imputed floor is an equitable
measure established by CMS which provides relief to hospitals in all-
urban States. The commenter stated that this longstanding policy has
reduced volatility and increased the equitability of the wage index
system. The commenter believed that CMS should not remove the imputed
floor from all-urban States. Regarding CMS' concern with the payment
impact of the existing imputed floor policy on States with rural
hospitals that do not have urban hospitals that benefit from a rural
floor, the commenter believed this should be reviewed as part of a
comprehensive Medicare wage index reform. The commenter suggested that
CMS consider all recommended changes to the imputed floor as part of
wage index reform, and that the public have a chance to provide input
to CMS prior to finalizing any decisions regarding elimination of the
imputed rural floor. The commenter further suggested that if there is a
decision made to eliminate the imputed rural floor, the decision should
include a 2-year notification period to allow impacted hospitals
appropriate planning time. The commenter stated that CMS has extended
such advance notice, including changes concerning the wage index, for
this purpose in the past.
Several commenters stated they would like to make the imputed floor
wage index provision permanent in the FY 2018 IPPS/LTCH PPS final rule.
The commenters pointed out that CMS has upheld the imputed floor for
the past 12 years as a valuable method of maintaining equitable wage
index protections for all-urban States, consistent with those that
exist for States with rural areas. The commenters referenced CMS'
explanation from the FY 2005 IPPS final rule (69 FR 49110) for adopting
the imputed floor, such as: ``because there is no `floor' to protect
those hospitals not located in the predominant labor market area from
facing continued declines in their wage index, it becomes increasingly
difficult for those hospitals to continue to compete for labor.'' The
commenters stated it is imperative that the imputed floor policy be
made permanent to ensure that its State's hospitals are not
artificially disadvantaged simply because of geography and population.
In addition, the commenters stated that there are many Medicare
payment programs that redirect scarce Medicare funding to a class of
unique hospitals. Not all States have hospitals that benefit from these
programs. For example, the commenters stated that CMS makes payments to
CAHs at a rate of 101 percent of their cost. The commenters noted that
some States do not have any hospitals that qualify as a CAH and do not
benefit from this program. The commenters further stated that while
CAHs are paid outside the IPPS program, the dollars continue to come
from a finite Medicare trust fund. The commenters believed that this
represents a transfer of payments from hospitals in States without any
CAHs, such as all-urban States, into States with CAHs, similar to the
transfer of payments CMS cites as its rationale to discontinue the
imputed floor. The commenters indicated that there is precedent for CMS
to restore, in the final rule, policies or provisions that were
scheduled for elimination or discontinuation in the proposed rule. The
commenters pointed out that, in the FY 2012 IPPS/LTCH PPS proposed
rule, CMS stated that the imputed floor would expire on September 30,
2011. However, in the final rule, CMS announced that the imputed floor
provision was extended for 2 additional years, through FY 2013
(September 30, 2013).
One commenter supported the alternative methodology for calculating
the imputed rural floor in Rhode Island. According to the commenter,
the methodology has been used since FY 2013 and has been key for the
State's hospitals and maintaining access to care for residents of Rhode
Island. The commenter stated that the alternative methodology for
calculating the imputed floor appropriately addresses a hospital wage
index reclassification system that does not reflect Rhode Island's
characteristics. The commenter further expressed that the alternative
methodology for calculating the imputed rural floor protects its
hospitals from falling to some of the lowest reimbursement rates in the
country, at the same time while competing with some of the most highly
reimbursed urban hospitals. The commenter referenced FY 2013, where a
majority of hospitals in Rhode Island reported operating losses and a
cumulative operating margin of negative 2.0 percent. The commenter
pointed out that since implementing the alternative methodology for
calculating the imputed floor, there has been improvement in the
overall fiscal condition of Rhode Island's health care system.
According to the commenter, the alternative methodology provided nearly
$29 million to hospitals in Rhode Island last year. The commenter was
concerned that any discontinuation of this policy would be devastating
for a State still facing challenging economic conditions.
Response: While the commenters raised concerns that, if the imputed
floor were discontinued, hospitals in all-urban States would again be
disadvantaged by the absence of rural hospitals to set a wage index
floor for those States, as well as concerns about the fiscal impacts of
discontinuing the rural floor, we also have expressed concerns about
continuing the imputed floor policy. As we discussed in the FY 2008
IPPS/LTCH PPS final rule (72 FR 47322), the FY 2012 IPPS/LTCH PPS final
rule (76 FR 51593), and the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19905), the application of the rural and imputed floors requires
transfer of payments from hospitals in States with rural hospitals but
where the rural floor is not applied to hospitals in States where the
rural or imputed floor is applied. While the three all-urban States may
count for a fraction of all States that
[[Page 38141]]
received the rural and imputed floor last year, the imputed rural floor
methodology still creates a disadvantage in the application of the wage
index to hospitals in States with rural hospitals but no urban
hospitals receiving the rural floor. As discussed below, given the many
comments we received both in support of and against our proposal to
discontinue the imputed floor, we believe it would be appropriate to
temporarily extend the imputed floor for an additional year, while we
continue to consider these comments and further assess the effects of
this policy and whether to continue or discontinue the policy for the
long term.
In response to the comment suggesting that we maintain the status
quo and continue to extend the imputed floor until wage index reform is
complete, we note that section 3137(b) of the Affordable Care Act
required the Secretary to submit to Congress a report that includes a
plan to reform the Medicare wage index applied under the IPPS. We
submitted the report to Congress on April 11, 2012, and have posted the
report and other information regarding wage index reform on the CMS Web
site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Reform.html. While in past years we have
stated that we continue to explore wage index reforms while extending
the imputed floor in increments (for example, 78 FR 50589 through 50590
and 79 FR 49969 through 49970), we note that it has already been many
years since our Report to Congress was issued with no new legislation
from Congress to comprehensively reform the wage index. Therefore, we
do not agree with the commenter that the imputed floor should continue
until such time as comprehensive wage index reform may be implemented.
In addition, we note that the imputed floor was originally
authorized for only 3 years. In the FY 2005 IPPS final rule (69 FR
49110), we indicated that during the 3 years that the policy is in
effect, we would determine whether to make additional changes to the
policy or eliminate it. Given that we had indicated in the FY 2005 IPPS
final rule that the provision was set to expire after 3 years, and that
we have temporarily extended the provision in increments for several
subsequent years due to the reasons discussed earlier, we believe that
hospitals in all-urban States should not rely on the policy to continue
permanently or until wage index reform is implemented. Furthermore,
because the policy has been temporarily extended in increments for
several years, we believe that hospitals have had ample notice that the
policy could ultimately expire, and thus should not rely on a
notification period as requested by the commenter. However, we would
provide the public a chance to provide input to CMS through the
rulemaking process prior to finalizing any decisions regarding
elimination of the imputed rural floor.
Finally, regarding the comparison made by commenters between the
CAH payment methodology and the imputed floor methodology with respect
to the transfer of payments, we disagree with this comparison. Because
there is no national budget neutrality requirement relating to CAH
payments (as there is with the imputed floor methodology), there is no
transfer of payments from hospitals in States without any CAHs to
hospitals in States with CAHs, similar to that which exists as a result
of the application of the imputed floor. Under sections 1814(l) and
1834(g) of the Act, payments made to CAHs for inpatient and outpatient
services are generally based on 101 percent of the reasonable costs of
the CAH in providing such services. Reasonable cost is defined in
section 1861(v)(1)(A) of the Act and determined in accordance with the
regulations under 42 CFR part 413.
Comment: One commenter stated that, in more recent years, the rural
floor wage index adjustment has been a cause for concern nationally
because urban hospitals in certain States have had their wage indexes
set equal to the highest wage index of any rural hospital in their
respective State. As a result, the commenter pointed out, hospitals in
such States draw Medicare money away from hospitals in other States.
The commenter reemphasized its previous recommendations, which were
also included in the MedPAC's 2007 Report to Congress, that Congress
repeal the existing hospital wage index. The commenter appeared to be
requesting support for legislation which would include: Removing the
more than 900 individual hospital reclassifications, and other
exceptions that occur each year, which are either stipulated in law or
implemented through regulation, and also giving the Secretary authority
to establish a new wage index system, using compensation data from all
employees, together with hospital industry-specific occupational
weights, and adjusting at the county level to smooth large differences
between counties; and a transition period to mitigate large changes in
wage index values. The commenter indicated that the system it proposed
is similar to recommendations made by the Institute of Medicine and
that its sets of recommendations would eliminate the need for the
system of geographic reclassification and exceptions that is currently
in place.
Response: We thank the commenter for its comments and its
recommendations regarding modifications to the hospital wage index.
However, we note that we do not have authority to repeal or revise the
existing wage index statutory provisions, including the rural floor
statutory provisions at section 4410(b) of the BBA and section 3141 of
the Affordable Care Act.
Comment: One commenter opposed the continued application of the
nationwide rural floor budget neutrality adjustment as described in the
proposed rule. The commenter recognized that the impetus for the policy
is a Federal statute, not regulation. The commenter discussed section
3141 of the Affordable Care Act which established a policy of national
budget neutrality for the application of the rural and imputed floors
to the Medicare wage index. The commenter conveyed that, coupled with
the orchestrated conversion of a single facility in Massachusetts--
Nantucket Cottage Hospital--from a CAH to an IPPS hospital, section
3141 of the Affordable Care Act allows hospitals to unfairly manipulate
the Medicare payment system and reward hospitals in Massachusetts and a
few other States at the expense of most other hospitals across the
nation. The commenter stated that the adverse consequences of
nationwide rural floor budget neutrality have been recognized and
commented upon by CMS, MedPAC, and many others over the past several
years. Until this policy is corrected, the commenter stated that the
Medicare wage index system cannot possibly accomplish its objective of
ensuring that payments for the wage component of labor accurately
reflect actual wage costs.
Other commenters stated ``that the current application of the rural
floor is broken'' and referenced how a single hospital can shift such a
large amount of payments and have it paid for by many other States in
the nation. The commenters explained that section 4410 of the BBA
established a rural floor. The commenters noted that, by careful
selection of specific hospitals converting from CAHs to hospitals paid
under the IPPS, States could game the system and exploit this
provision, shifting millions of dollars into that State. These
commenters stated that the most notable example of such gaming is a
hospital located on Nantucket Island off the coast of Massachusetts.
This single hospital sets the wage index for all hospitals in
Massachusetts. The commenters stated that, according to
[[Page 38142]]
rural floor impact statements provided by CMS in the annual IPPS final
rule from FY 2012 through FY 2017, this one hospital will bring a
projected $1.3 billion into the commonwealth of Massachusetts. The
commenter pointed out that the inequity of this provision recently was
highlighted in a March 2017 Office of Inspector General (OIG) report
showing how a single hospital overreported dollars and underreported
hours, driving up the average hourly wage. According to the commenter,
the OIG estimated that this error resulted in more than $133 million in
Medicare overpayments to be paid to Massachusetts hospitals. The
commenters ``urged CMS to establish a national wage index ceiling (for
example, 1.33) that can be used to increase the national wage index
floor to a reasonable level (for example, .874)''. In addition, the
commenters opposed the application of a nationwide rural floor budget
neutrality adjustment and requested that CMS overturn section 3141 of
the Affordable Care Act and restore integrity to the hospital wage
index system.
Response: We thank the commenters for their comments and
suggestions. Because there is no national wage index floor, we are not
clear what the commenter meant with respect to its request to establish
a national wage index ceiling that can be used to increase the national
wage index floor to a reasonable level. Therefore, we are unable to
respond to this suggestion made by the commenter. As we stated earlier,
section 4410 of the BBA requires the application of the rural floor and
section 3141 of the Affordable Care Act requires a uniform, national
budget neutrality adjustment for the rural floor. We do not have
authority to repeal or revise these laws.
Comment: One commenter suggested that CMS use its authority to
establish a temporary wage index floor for Puerto Rico in the interest
of preventing a decrease in Medicare payments due to Puerto Rico's
lower than national average wages.
Response: We appreciate the suggestions provided by the commenter
regarding a temporary wage index floor for Puerto Rico. However, this
comment is outside the scope of the proposed rule.
We appreciate the positions of commenters that both supported and
opposed the proposal to allow the imputed floor policy to expire. After
consideration of public comments we received, we believe extending the
imputed floor policy for 1 more year through FY 2018 is appropriate
while we continue to consider the many comments we received and whether
to continue or discontinue the imputed floor for the long term.
Therefore, we are extending the imputed floor policy under both the
original methodology and the alternative methodology for an additional
year, through September 30, 2018, and will address this issue again in
our FY 2019 rulemaking. We also are revising the regulations at
Sec. Sec. 412.64(h)(4) and (h)(4)(vi) to reflect the 1-year extension
of the imputed floor, through September 30, 2018.
The wage index and impact tables associated with this FY 2018 IPPS/
LTCH PPS final rule (which are available on the Internet via the CMS
Web site) reflect the continued application of the imputed floor policy
at Sec. 412.64(h)(4) and a national budget neutrality adjustment for
the imputed floor for FY 2018. There are 17 hospitals in New Jersey
that will receive an increase in their FY 2018 wage index due to the
continued application of the imputed floor policy under the original
methodology, and 10 hospitals in Rhode Island and 6 hospitals in
Delaware that will benefit under the alternative methodology.
3. State Frontier Floor for FY 2018
Section 10324 of Public Law 111-148 requires that hospitals in
frontier States cannot be assigned a wage index of less than 1.0000.
(We refer readers to the regulations at 42 CFR 412.64(m) and to a
discussion of the implementation of this provision in the FY 2011 IPPS/
LTCH PPS final rule (75 FR 50160 through 50161).) In the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19905), we did not propose any changes to
the frontier floor policy for FY 2018. We stated in the proposed rule
that 52 hospitals would receive the frontier floor value of 1.0000 for
their FY 2018 wage index. These hospitals are located in Montana,
Nevada, North Dakota, South Dakota, and Wyoming.
We did not receive any public comments on the application of the
State frontier floor for 2018. In this final rule, 49 hospitals will
receive the frontier floor value of 1.0000 for their FY 2018 wage
index. These hospitals are located in Montana, Nevada, North Dakota,
South Dakota, and Wyoming.
The areas affected by the final rural and frontier floor policies
for the FY 2018 wage index are identified in Table 2 associated with
this final rule, which is available via the Internet on the CMS Web
site.
H. FY 2018 Wage Index Tables
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49498 and 49807
through 49808), we finalized a proposal to streamline and consolidate
the wage index tables associated with the IPPS proposed and final rules
for FY 2016 and subsequent fiscal years. Prior to FY 2016, the wage
index tables had consisted of 12 tables (Tables 2, 3A, 3B, 4A, 4B, 4C,
4D, 4E, 4F, 4J, 9A, and 9C) that were made available via the Internet
on the CMS Web site. Effective beginning FY 2016, with the exception of
Table 4E, we streamlined and consolidated 11 tables (Tables 2, 3A, 3B,
4A, 4B, 4C, 4D, 4F, 4J, 9A, and 9C) into 2 tables (Tables 2 and 3). We
refer readers to section VI. of the Addendum to this final rule for a
discussion of the final wage index tables for FY 2018.
I. Revisions to the Wage Index Based on Hospital Redesignations and
Reclassifications
1. General Policies and Effects of Reclassification and Redesignation
Under section 1886(d)(10) of the Act, the Medicare Geographic
Classification Review Board (MGCRB) considers applications by hospitals
for geographic reclassification for purposes of payment under the IPPS.
Hospitals must apply to the MGCRB to reclassify not later than 13
months prior to the start of the fiscal year for which reclassification
is sought (usually by September 1). Generally, hospitals must be
proximate to the labor market area to which they are seeking
reclassification and must demonstrate characteristics similar to
hospitals located in that area. The MGCRB issues its decisions by the
end of February for reclassifications that become effective for the
following fiscal year (beginning October 1). The regulations applicable
to reclassifications by the MGCRB are located in 42 CFR 412.230 through
412.280. (We refer readers to a discussion in the FY 2002 IPPS final
rule (66 FR 39874 and 39875) regarding how the MGCRB defines mileage
for purposes of the proximity requirements.) The general policies for
reclassifications and redesignations and the policies for the effects
of hospitals' reclassifications and redesignations on the wage index
are discussed in the FY 2012 IPPS/LTCH PPS final rule for the FY 2012
final wage index (76 FR 51595 and 51596). In addition, in the FY 2012
IPPS/LTCH PPS final rule, we discussed the effects on the wage index of
urban hospitals reclassifying to rural areas under 42 CFR 412.103.
Hospitals that are geographically located in States without any rural
areas are ineligible to apply for rural reclassification in accordance
with the provisions of 42 CFR 412.103.
On April 21, 2016, we published an interim final rule with comment
period
[[Page 38143]]
(IFC) in the Federal Register (81 FR 23428 through 23438) that included
provisions amending our regulations to allow hospitals nationwide to
have simultaneous Sec. 412.103 and MGCRB reclassifications. For
reclassifications effective beginning FY 2018, a hospital may acquire
rural status under Sec. 412.103 and subsequently apply for a
reclassification under the MGCRB using distance and average hourly wage
criteria designated for rural hospitals. In addition, we provided that
a hospital that has an active MGCRB reclassification and is then
approved for redesignation under Sec. 412.103 will not lose its MGCRB
reclassification; such a hospital receives a reclassified urban wage
index during the years of its active MGCRB reclassification and is
still considered rural under section 1886(d) of the Act and for other
purposes.
We discussed that when there is both a Sec. 412.103 redesignation
and an MGCRB reclassification, the MGCRB reclassification controls for
wage index calculation and payment purposes. We exclude hospitals with
Sec. 412.103 redesignations from the calculation of the reclassified
rural wage index if they also have an active MGCRB reclassification to
another area. That is, if an application for urban reclassification
through the MGCRB is approved, and is not withdrawn or terminated by
the hospital within the established timelines, we consider the
hospital's geographic CBSA and the urban CBSA to which the hospital is
reclassified under the MGCRB for the wage index calculation. We refer
readers to the April 21, 2016 IFC (81 FR 23428 through 23438) and the
FY 2017 IPPS/LTCH PPS final rule (81 FR 56922 through 56930) for a full
discussion of the effect of simultaneous reclassifications under both
the Sec. 412.103 and the MGCRB processes on wage index calculations.
2. MGCRB Reclassification and Redesignation Issues for FY 2018
a. FY 2018 Reclassification Requirements and Approvals
As previously stated, under section 1886(d)(10) of the Act, the
MGCRB considers applications by hospitals for geographic
reclassification for purposes of payment under the IPPS. The specific
procedures and rules that apply to the geographic reclassification
process are outlined in regulations under 42 CFR 412.230 through
412.280.
At the time this final rule was constructed, the MGCRB had
completed its review of FY 2018 reclassification requests. Based on
such reviews, there are 374 hospitals approved for wage index
reclassifications by the MGCRB starting in FY 2018. Because MGCRB wage
index reclassifications are effective for 3 years, for FY 2018,
hospitals reclassified beginning in FY 2016 or FY 2017 are eligible to
continue to be reclassified to a particular labor market area based on
such prior reclassifications for the remainder of their 3-year period.
There were 245 hospitals approved for wage index reclassifications in
FY 2016 that will continue for FY 2018, and 246 hospitals approved for
wage index reclassifications in FY 2017 that will continue for FY 2018.
Of all the hospitals approved for reclassification for FY 2016, FY
2017, and FY 2018, based upon the review at the time of this final
rule, 865 hospitals are in a MGCRB reclassification status for FY 2018.
Under the regulations at 42 CFR 412.273, hospitals that have been
reclassified by the MGCRB are permitted to withdraw their applications
if the request for withdrawal is received by the MGCRB within 45 days
of the publication of CMS' annual notice of proposed rulemaking
concerning changes to the inpatient hospital prospective payment system
and proposed payment rates for the fiscal year for which the
application has been filed. (We note that in section III.I.4. of the
preamble of this final rule, we did not finalize our proposal to revise
the above described regulation text to specify that written notice to
the MGCRB must be provided within 45 days from the date of public
display of the proposed rule at the Office of the Federal Register.)
For information about withdrawing, terminating, or canceling a previous
withdrawal or termination of a 3-year reclassification for wage index
purposes, we refer readers to Sec. 412.273, as well as the FY 2002
IPPS final rule (66 FR 39887 through 39888) and the FY 2003 IPPS final
rule (67 FR 50065 through 50066). Additional discussion on withdrawals
and terminations, and clarifications regarding reinstating
reclassifications and ``fallback'' reclassifications were included in
the FY 2008 IPPS final rule (72 FR 47333).
Changes to the wage index that result from withdrawals of requests
for reclassification, terminations, wage index corrections, appeals,
and the Administrator's review process for FY 2018 are incorporated
into the wage index values published in this FY 2018 IPPS/LTCH PPS
final rule. These changes affect not only the wage index value for
specific geographic areas, but also the wage index value that
redesignated/reclassified hospitals receive; that is, whether they
receive the wage index that includes the data for both the hospitals
already in the area and the redesignated/reclassified hospitals.
Further, the wage index value for the area from which the hospitals are
redesignated/reclassified may be affected.
Comment: MedPAC and other commenters stated that the increasing
number of wage index reclassifications, along with other wage index
exceptions, raises questions regarding whether the current wage index
is equitably adjusting payments for local input costs of providing
patient care. One commenter stated that the increasing number of
hospitals that reclassify is a ``clear indication of the broken
system'' that needs to be replaced; another commenter requested general
wage index reform. MedPAC reiterated that recommendations included in
the Commission's 2007 Report to Congress and similar recommendations
made by the Institute of Medicine would eliminate the need for the
system of geographic reclassification and exceptions that is currently
in place. Specifically, MedPAC recommended that the Congress repeal the
existing hospital wage index, remove the more than 900 individual
hospital reclassifications and other exceptions that occur each year,
and give the Secretary the authority to establish a new wage index
system.
Response: We understand the commenters' concerns regarding the high
volume of MGCRB reclassifications. We appreciate MedPAC's
recommendation to repeal the current wage index statute. However,
repealing the wage index statute would require legislative action by
Congress. Specifically, section 1886(d)(3)(E) of the Act requires that,
as part of the methodology for determining prospective payments to
hospitals, the Secretary must adjust the standardized amounts for area
differences in hospital wage levels by a factor (established by the
Secretary) reflecting the relative hospital wage level in the
geographic area of the hospital compared to the national average
hospital wage level. We also appreciate the other commenters' requests
for wage index reform. We will take the requests into consideration and
may address this issue again in future rulemaking.
Applications for FY 2019 reclassifications are due to the MGCRB by
September 1, 2017 (the first working day of September 2017). We note
that this is also the deadline for canceling a previous wage index
reclassification, withdrawal, or termination under 42 CFR 412.273(d).
Applications and other information about MGCRB
[[Page 38144]]
reclassifications may be obtained, beginning in mid-July 2017, via the
Internet on the CMS Web site at: https://www.cms.gov/Regulations-and-Guidance/Review-Boards/MGCRB/, or by calling the MGCRB at
(410) 786-1174. The mailing address of the MGCRB is: 2520 Lord
Baltimore Drive, Suite L, Baltimore, MD 21244-2670.
Under previous regulations at 42 CFR 412.256(a)(1), applications
for reclassification were required to be mailed or delivered to the
MGCRB, with a copy to CMS, and were not allowed to be submitted through
the facsimile (FAX) process or by other electronic means. Because we
believed this previous policy was outdated and overly restrictive and
to promote ease of application for FY 2018 and subsequent years, in the
FY 2017 IPPS/LTCH PPS final rule (81 FR 56928), we revised this policy
to require applications and supporting documentation to be submitted
via the method prescribed in instructions by the MGCRB, with an
electronic copy to CMS. We revised Sec. 412.256(a)(1) to specify that
an application must be submitted to the MGCRB according to the method
prescribed by the MGCRB, with an electronic copy of the application
sent to CMS. We specified that CMS copies should be sent via email to
wageindex@cms.hhs.gov.
In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56928), we
reiterated that MGCRB application requirements will be published
separately from the rulemaking process, and paper applications will
likely still be required. The MGCRB makes all initial determinations
for geographic reclassification requests, but CMS requests copies of
all applications to assist in verifying a reclassification status
during the wage index development process. We stated that we believed
that requiring electronic versions would better aid CMS in this
process, and would reduce the overall burden upon hospitals.
We did not receive any public comments on the requirements for
applications for FY 2019 reclassifications.
b. Extension of PRA Information Collection Requirement Approval for
MGCRB Applications
As stated earlier, under section 1886(d)(10) of the Act, the MGCRB
considers applications by hospitals for geographic reclassification for
purposes of payment under the IPPS. The specific procedures and rules
that apply to the geographic reclassification process are outlined in
the regulations under 42 CFR 412.230 through 412.280. The information
collection requirements for the MGCRB procedures and criteria and
supporting regulations in 42 CFR 412.256 subject to the Paperwork
Reduction Act provisions were approved under OMB Control Number 0938-
0573 and expired on February 28, 2017. As discussed in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR 19906 and 19907), an extension of
the collection was required in time for applications due to the MGCRB
by September 1, 2017 for FY 2019 reclassifications. A request for an
extension of the information collection requirements for the MGCRB
procedures and criteria and supporting regulations received approval by
OMB on June 30, 2017, and can be accessed at: https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=201612-0938-023.
c. Deadline for Submittal of Documentation of Sole Community Hospital
(SCH) and Rural Referral Center (RRC) Classification Status to the
MGCRB
The regulations at 42 CFR 412.230(a)(3), consistent with section
1886(d)(10)(D)(i)(III) of the Act, set special rules for sole community
hospitals (SCHs) and rural referral centers (RRCs) that are
reclassifying under the MGCRB. Specifically, a hospital that is an RRC
or an SCH, or both, does not have to demonstrate a close proximity to
the area to which it seeks redesignation. If a hospital that is an RRC
or an SCH, or both, qualifies for urban redesignation, it is
redesignated to the urban area that is closest to the hospital. If the
hospital is closer to another rural area than to any urban area, it may
seek redesignation to either the closest rural or the closest urban
area.
In addition, section 1886(d)(10)(D)(iii) of the Act, as implemented
in the regulations at Sec. 412.230(d)(3)(i), provides an exception to
certain wage comparison criteria for RRCs and former RRCs reclassifying
under the MGCRB. Under Sec. 412.230(d)(3)(i), if a hospital was ever
an RRC, it does not have to demonstrate that it meets the average
hourly wage criterion at Sec. 412.230(d)(1)(iii), which would require
that the hospital's average hourly wage be at least 106 percent for
rural hospitals and at least 108 percent for urban hospitals of the
average hourly wage of all other hospitals in the area in which the
hospital is located. Rather, as codified at Sec. 412.230(d)(3)(ii),
consistent with our authority under section 1886(d)(10)(D)(i) of the
Act, if a hospital was ever an RRC, it is required to meet only the
criterion for rural hospitals at Sec. 412.230(d)(1)(iv), which
requires that the hospital's average hourly wage is equal to at least
82 percent of the average hourly wage of hospitals in the area to which
it seeks redesignation. The regulations at Sec. 412.96 set forth the
criteria that a hospital must meet in order to qualify as an RRC.
For a hospital to use the special rules at Sec. 412.230(a)(3) for
SCHs and RRCs, the existing regulation at Sec. 412.230(a)(3) requires
that the hospital be an active SCH or an RRC as of the date of the
MGCRB's review. In addition, for a hospital to use the RRC exceptions
at Sec. 412.230(d)(3), a hospital must either be an RRC at the time of
the MGCRB's review or have previously been classified as an RRC in the
past. In other words, under the existing regulations, if a hospital is
approved by CMS as an SCH or an RRC but the approval is not yet
effective at the time of the MGCRB's review, the hospital's status as
an SCH or an RRC would not be considered in the MGCRB's decision,
unless the hospital was a former RRC, in which case it would be able to
use the RRC exceptions at Sec. 412.230(d)(3).
The MGCRB currently accepts supporting documentation of SCH and RRC
classification (including, but not limited to, the CMS approval letter)
up until the date of MGCRB's review, which varies annually. A hospital
may apply at any time for classification as an SCH, and the
classification is effective 30 days after the date of CMS' written
notification of approval, in accordance with Sec. 412.92. Considering
that the MGCRB usually meets in early February, hospitals typically
seek to obtain SCH approval letters no later than early January (30
days prior to the date of MGCRB review) for the SCH status to be
effective as of the date of the MGCRB's review. However, consistent
with section 1886(d)(5)(C)(i) of the Act, a hospital must submit its
application for RRC status during the quarter before the first quarter
of the hospital's cost reporting period, to be effective at the
beginning of the next cost reporting period. The existing regulation at
Sec. 412.230(a)(3), combined with the statutory timeframe for RRC
classification, require that a hospital's cost reporting period as an
RRC begin on or before the date of the MGCRB's review in order to be
considered an RRC by the MGCRB for purposes of the special rules under
Sec. 412.230(a)(3). Similarly, in order to use the RRC exceptions
under Sec. 412.230(d)(3), a hospital's RRC status must be effective on
the date of the MGCRB's review, or (unlike Sec. 412.230(a)(3)) the
hospital must have had RRC status in the past. For example, a hospital
with a cost
[[Page 38145]]
reporting period beginning in March would obtain RRC approval, in
accordance with the statutory timeframe, during the December through
February quarter (potentially before the MGCRB's decision), but would
not be considered an RRC by the MGCRB because the approval would not be
effective until the next cost reporting period begins in March, after
the MGCRB's decision (unless, for purposes of Sec. 412.230(d)(3), the
hospital had previously been classified as an RRC in the past).
As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19907 through 19908), the current practice of accepting documentation
of SCH and RRC approvals up until the date of MGCRB review does not
ensure adequate time for the MGCRB to include SCH and RRC approvals in
its review. We noted in the proposed rule that many hospitals now
obtain SCH or RRC status based on a Sec. 412.103 reclassification in
order to reclassify using the special rules and exceptions under the
MGCRB following the April 21, 2016 IFC (81 FR 23428), which revised the
regulations to allow hospitals nationwide to reclassify based on
acquired rural status. We stated in the proposed rule that we believe
the additional volume of SCH and RRC approvals submitted to the MGCRB
increases the need for an earlier deadline for documentation of SCH and
RRC classifications to be submitted to the MGCRB for purposes of the
special rules at Sec. 412.230(a)(3) and the exception for RRCs at
Sec. 412.230(d)(3). In addition, because the date of the MGCRB's
review varies annually, we stated in the proposed rule that we believe
hospitals would benefit from the certainty of a set date by which
documentation of RRC or SCH status must be submitted in order to have
that status considered by the MGCRB under Sec. 412.230(a)(3) and Sec.
412.230(d)(3).
Therefore, to ensure sufficient time for the MGCRB to include SCH
and RRC status approvals in its review and increase clarity for
hospitals, while allowing as much time and flexibility as possible for
hospitals applying for RRC status to be considered RRCs by the MGCRB,
in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19907 through 19908),
we proposed to revise the regulations at Sec. 412.230(a)(3) and Sec.
412.230(d)(3). We proposed to revise the regulations at Sec.
412.230(a)(3) in two ways. First, we proposed to establish a deadline
of the first business day after January 1 for hospitals to submit to
the MGCRB documentation of SCH or RRC status approval (the CMS approval
letter) in order to take advantage of the special rules under Sec.
412.230(a)(3) when reclassifying under the MGCRB. We stated that we
believe that this date of the first business day after January 1 would
provide sufficient time for the MGCRB to consider documentation of SCH
or RRC status approval in its review, without negatively affecting
hospitals seeking to obtain SCH or RRC status, as explained below.
Second, we proposed to revise Sec. 412.230(a)(3) to require hospitals
to submit documentation of SCH or RRC status approval (the CMS approval
letter) by the deadline above, rather than to have SCH or RRC
classification that is effective as of the date of MGCRB review, in
order to use the special rules for SCHs and RRCs under Sec.
412.230(a)(3). Likewise, we proposed to revise the regulations at Sec.
412.230(d)(3) so that a hospital qualifies for these RRC exceptions if
it was ever approved as a RRC. In other words, the exceptions at Sec.
412.230(d)(3) would continue to apply to hospitals that were ever
classified as RRCs, but consistent with our authority under section
1886(d)(10)(D)(i) of the Act to publish guidelines to be utilized by
the MGCRB, we proposed to also extend these exceptions to hospitals
that were ever approved as RRCs. Similar to Sec. 412.230(a)(3), we
also proposed to establish a deadline of the first business day after
January 1 for hospitals to submit documentation of RRC status approval
(the CMS approval letter) in order to take advantage of the exception
under Sec. 412.230(d)(3) when reclassifying under the MGCRB. We stated
in the proposed rule that these proposed revisions would more
appropriately allow the MGCRB to prepare for its review and would allow
hospitals obtaining SCH or RRC status approval as late as the first
business day after January 1 to have these classifications considered
by the MGCRB under Sec. 412.230(a)(3) and (d)(3), irrespective of the
effective date of these classifications. We stated that these proposals
would not substantially affect hospitals seeking SCH classification for
purposes of reclassifying under the MGCRB because a hospital must
obtain SCH status approval by early January under the existing
regulation in order to have that classification effective 30 days later
by the time the Board usually meets in early February. For hospitals
seeking RRC classification for purposes of reclassifying under the
MGCRB, however, the proposed deadline of no later than the first
business day after January 1, in concert with our proposal to accept
documentation of approval (the CMS approval letter) instead of
requiring the hospital to be an active RRC at the time of the MGCRB
review in order to take advantage of the special rules and exceptions
under Sec. 412.230(a)(3) and (d)(3), is beneficial. We stated that the
proposed revisions to the regulations at Sec. 412.230(a)(3) and (d)(3)
would accommodate more hospitals with various cost reporting year ends
by allowing hospitals with cost reporting periods beginning soon after
the MGCRB's decision to have RRC status approvals included in the
MGCRB's review. Under the proposals, the MGCRB would consider an RRC
status approval obtained as late as the first business day after
January 1 instead of requiring the RRC classification to be effective
by the time the Board meets, which has been in February in past years.
For example, under our proposal, a hospital with a cost reporting
period beginning as late as March, which could apply for RRC status
approval in accordance with the statutory timeframe starting in
December, would be considered an RRC by the MGCRB if it submits
documentation of approval of RRC status no later than the first
business day after January 1, even though the approval would not be
effective until after the MGCRB's decision.
For the reasons discussed earlier, consistent with our authority
under section 1886(d)(10)(D)(i) of the Act to publish guidelines to be
utilized by the MGCRB, we proposed to revise the regulations at Sec.
412.230(a)(3) to specify that, to be redesignated under the special
rules in that paragraph, the hospital must submit documentation of the
approval of SCH or RRC status to the MGCRB no later than the first
business day after January 1. In addition, we proposed conforming
revisions to paragraphs (a)(3)(i) and (ii) of Sec. 412.230 to reflect
that these paragraphs apply to hospitals with SCH and RRC approval as
specified above (and not only effective status). Specifically, we
proposed to revise Sec. 412.230(a)(3)(i) to specify that a hospital
that is approved as an RRC or SCH, or both, does not have to
demonstrate a close proximity to the area to which it seeks
redesignation; and to revise Sec. 412.230(a)(3)(ii) to specify that
this paragraph applies if a hospital that is approved as an RRC or SCH,
or both, qualifies for urban redesignation. We note that we proposed
additional revisions to Sec. 412.230(a)(3)(ii) as discussed in section
III.I.2.d. of the preamble of the proposed rule and this final rule.
In addition, for the reasons discussed above, consistent with our
authority under section 1886(d)(10)(D)(i) of the
[[Page 38146]]
Act to publish guidelines to be utilized by the MGCRB, we proposed to
revise the regulations at Sec. 412.230(d)(3). Specifically, we
proposed to add introductory language to Sec. 412.230(d)(3) to specify
that for the exceptions in this paragraph to apply, the hospital must
submit documentation of the approval of RRC status (current or past) to
the MGCRB no later than the first business day after January 1. In
addition, we proposed to revise Sec. 412.230(d)(3)(i) to specify that
if a hospital was ever approved as an RRC, it does not have to
demonstrate that it meets the average hourly wage criterion set forth
in Sec. 412.230(d)(1)(iii); and to revise Sec. 412.230(d)(3)(ii) to
specify that if a hospital was ever approved as an RRC, it is required
to meet only the criterion that applies to rural hospitals under Sec.
412.230(d)(1)(iv), regardless of its actual location in an urban or
rural area.
We invited public comments on these proposals.
Comment: One commenter did not disagree with the establishment of a
deadline for submitting documentation of SCH and RRC status to the
MGCRB because the commenter believed that the proposed deadline will
provide clarity to hospitals, the MGCRB, and CMS in this process and
will ensure adequate time for the MGCRB to include SCH and RRC
approvals in its review. However, the commenter urged CMS to also
establish a deadline of 30 days from receipt of request for SCH or RRC
status for CMS to respond. The commenter pointed out that while the
regulations specify effective dates for SCH and RRC status, the
regulations do not set a timeframe by which CMS must rule on an SCH or
RRC request. Therefore, the commenter stated, a hospital may face
uncertainty that CMS will respond to its request for SCH or RRC status
by the first business day in January, in time to submit to the MGCRB.
According to the commenter, absent a defined timeframe within which CMS
must respond to hospitals' requests for SCH and RRC status, hospitals
face a disadvantage in complying with the deadline of the first
business day in January for submitting documentation of SCH and RRC
status to the MGCRB.
Response: We appreciate the commenter's support for our effort to
provide clarity to all parties. The commenter is correct that the
regulations do not set a timeframe by which CMS must rule on an SCH or
RRC request. However, under section 1886(d)(5)(C)(i) of the Act, CMS
must make a final determination on a request for RRC status within 60
days after the date the request was submitted. We agree with the
commenter that, depending on the timeframe within which SCH and RRC
status approvals are issued, hospitals may face a disadvantage in
complying with the proposed deadline to submit SCH and RRC
documentation to the MGCRB. Thus, we believe that further consideration
is needed regarding the appropriate timeframe for such approvals to
avoid the disadvantage cited by the commenter. Accordingly, for FY
2018, we are not finalizing the proposed deadline of the first business
day after January 1 for hospitals to submit documentation of SCH and
RRC status to the MGCRB. We may revisit the deadline for submitting
documentation to the MGCRB in future rulemaking to give us the
opportunity to further consider the timeframe for CMS to respond to
applications for SCH and RRC status.
However, we believe that the proposal to require that a hospital
must be approved for SCH or RRC status, rather than have active RRC or
SCH status, in order to use the special rules for SCHs and RRCs and
exceptions for RRCs under Sec. Sec. 412.230(a)(3) and (d)(3), remains
beneficial for hospitals. While we are still concerned with providing
the MGCRB sufficient time to include SCH and RRC status approval in its
review, we believe finalizing our proposal to require that a hospital
be approved for SCH or RRC status, rather than have active RRC or SCH
status, in order to use the special rules for SCHs and RRCs and
exceptions for RRCs under Sec. Sec. 412.230(a)(3) and (d)(3) is
appropriate because it provides flexibility and accommodates more
hospitals. Therefore, as discussed further below, we are finalizing our
proposed changes to the regulations to specify that a hospital must be
approved as an SCH or RRC at the date of the MGCRB's review,
irrespective of effective date of SCH or RRC status. While
documentation of SCH and RRC status approval may include the CMS
approval letter, we are clarifying that other documents could also
serve this purpose as determined by the MGCRB, and that documentation
in addition to the CMS approval letter may be required. Questions about
acceptable supporting documentation should be directed to the MGCRB at
410-786-1174.
After consideration of the public comment we received, for the
reasons discussed earlier, we are not finalizing our proposed revisions
to the regulations at Sec. Sec. 412.230(a)(3) and (d)(3) to establish
a deadline of the first business day after January 1 for hospitals to
submit documentation of SCH and RRC status approval to the MGCRB.
However, consistent with our authority under section 1886(d)(10)(D)(i)
to publish guidelines to be used by the MGCRB, for the reasons
discussed earlier and in the FY 2018 IPPS/LTCH PPS proposed rule, we
are finalizing our proposal that a hospital must be approved for SCH or
RRC status, rather than have active SCH or RRC status in order to use
the special rules for SCHs and RRCs and exceptions for RRCs under
Sec. Sec. 412.230(a)(3) and (d)(3). Specifically, we are revising the
regulation at Sec. 412.230(a)(3) to specify that, to be redesignated
under the special rules in this paragraph, a hospital must be approved
as an SCH or RRC as of the date of the MGCRB's review. In addition, we
are finalizing, without modification, our proposed revisions to
paragraphs (a)(3)(i) and (ii) of Sec. 412.230 to reflect that these
paragraphs apply to hospitals with SCH and RRC approval (and not only
effective status). Specifically, we are revising Sec. 412.230(a)(3)(i)
to specify that a hospital that is approved as an RRC or SCH, or both,
does not have to demonstrate a close proximity to the area to which it
seeks redesignation; and revising Sec. 412.230(a)(3)(ii) to specify
that this paragraph applies if a hospital that is approved as an RRC or
SCH, or both, qualifies for urban redesignation. (We note that we are
making additional revisions to Sec. 412.230(a)(3)(ii) as discussed in
section III.I.2.d. of the preamble of this final rule).
In addition, for the reasons discussed earlier, while we are not
finalizing our proposed introductory language at Sec. 412.230(d)(3),
we are finalizing our proposed revisions to paragraphs (d)(3)(i) and
(ii) of Sec. 412.230, without modification, to reflect that these
paragraphs apply to hospitals with RRC approval (and not only effective
status). Specifically, we are revising Sec. 412.230(d)(3)(i) to
specify that if a hospital was ever approved as an RRC, it does not
have to demonstrate that it meets the average hourly wage criterion set
forth in Sec. 412.230(d)(1)(iii); and revising Sec. 412.230(d)(3)(ii)
to specify that if a hospital was ever approved as an RRC, it is
required to meet only the criterion that applies to rural hospitals
under Sec. 412.230(d)(1)(iv), regardless of its actual location in an
urban or rural area.
d. Clarification of Special Rules for SCHs and RRCs Reclassifying to
Geographic Home Area
Following issuance of the April 21, 2016 IFC (81 FR 23428),
hospitals may simultaneously be redesignated as rural under Sec.
412.103 and reclassified under the MGCRB. An urban hospital seeking
[[Page 38147]]
benefits of rural status, such as rural payments for disproportionate
share hospitals (DSH) and eligibility for the 340B Drug Pricing Program
administered by HRSA, without the associated rural wage index may be
redesignated as rural under Sec. 412.103 (if it meets the applicable
requirements) and also reclassify under the MGCRB to an urban area
(again, if it meets the applicable requirements). As discussed earlier
and in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56922 through
56927), a hospital with simultaneous Sec. 412.103 redesignation and
MGCRB reclassification receives the wage index of the CBSA to which it
is reclassified under the MGCRB while still maintaining Sec. 412.103
reclassified rural status for other purposes.
Hospitals that are redesignated under Sec. 412.103 may seek MGCRB
reclassification to their geographic home area. Such hospitals
automatically meet the criteria for proximity, but must still
demonstrate that they meet the wage comparison requirements using the
criteria for rural hospitals at Sec. 412.230(d). Specifically, a
hospital with a Sec. 412.103 redesignation seeking reclassification
under the MGCRB must demonstrate that its average hourly wage is at
least 106 percent of the average hourly wage of all other hospitals in
the area in which the hospital is located in accordance with Sec.
412.230(d)(1)(iii), and the hospital's average hourly wage is equal to
at least 82 percent of the average hourly wage of hospitals in the area
to which it seeks redesignation, in accordance with Sec.
412.230(d)(1)(iv). In this case, both the area in which the hospital is
located and the area to which it seeks redesignation are the geographic
home area. If a hospital with a Sec. 412.103 rural redesignation also
has SCH or RRC status based on its acquired rural status, the hospital
may use the exception at Sec. 412.230(d)(3) for RRCs seeking
reclassification under the MGCRB and the special reclassification rules
at Sec. 412.230(a)(3) for SCHs and RRCs. Specifically, under Sec.
412.230(d)(3)(ii), an RRC or former RRC must only demonstrate that its
average hourly wage is equal to at least 82 percent of the average
hourly wage of hospitals in the area to which it seeks redesignation.
In other words, a hospital with RRC status based on a Sec. 412.103
rural redesignation that is seeking additional reclassification under
the MGCRB to its geographic home area must only demonstrate that its
average hourly wage is equal to at least 82 percent of the average
hourly wage of hospitals in its geographic home area. The proximity
requirement is waived under Sec. 412.230(a)(3) for SCHs and RRCs, and
SCHs and RRCs are redesignated to the urban area that is closest to the
hospital (or if the hospital is closer to another rural area than to
any urban area, it may seek redesignation to either the closest rural
area or the closest urban area).
As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19908 through 19909), the existing regulation at Sec.
412.230(a)(3)(ii) states that if an SCH or RRC qualifies for urban
redesignation, it is redesignated to the urban area that is closest to
the hospital. As currently worded, we believe it is unclear how this
provision would apply to a hospital with a Sec. 412.103 rural
redesignation and SCH or RRC status. If the urban area that is closest
to the hospital is interpreted to mean the hospital's geographic home
area, a hospital with a Sec. 412.103 rural redesignation and SCH or
RRC status would not be able to reclassify to any closest area outside
of the hospital's geographic home area, but would only be allowed to
reclassify to the geographic home area. Alternatively, if the urban
area that is closest to the hospital is interpreted to mean the closest
urban area to the hospital's geographic home area, the hospital would
seem to be precluded from reclassifying under the MGCRB to its
geographic home area. In other words, under the existing language of
this regulation, the urban area that is closest to the hospital can
either be interpreted to mean the hospital's geographic home area, or
the closest area outside of the hospital's geographic home area.
In the FY 2018 IPS/LTCH PPS proposed rule (82 FR 19909), we stated
that we believe it would be appropriate to revise Sec.
412.230(a)(3)(ii) to clarify that it allows for redesignation to either
the hospital's geographic home area or to the closest area outside of
the hospital's geographic home area. Prior to the April 21, 2016
interim final rule with comment period (IFC) (81 FR 23428), it was not
possible for a hospital with Sec. 412.103 rural redesignation to seek
reclassification to its geographic home area or to the closest area
outside its geographic home area under the MGCRB because dual
reclassification under Sec. 412.103 and under the MGCRB was not
permitted. However, the IFC allowed dual Sec. 412.103 and MGCRB
reclassifications, so a hospital may now reclassify to a rural area
under Sec. 412.103 and then reclassify back to its geographic home
area or another area under the MGCRB for wage index purposes (if it
meets all criteria). Thus, depending on the circumstances, a hospital
may seek to reclassify to either its geographic home area or the
closest area outside of its geographic home area.
Therefore, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19909), we proposed to revise the regulations at Sec.
412.230(a)(3)(ii) to clarify that a hospital with a Sec. 412.103 rural
redesignation and SCH or RRC approval may reclassify under the MGCRB to
its geographic home area or to the closest area outside of its
geographic home area. Specifically, we proposed to revise Sec.
412.230(a)(3)(ii) to state that if a hospital that is approved as an
RRC or an SCH, or both, qualifies for urban redesignation, it is
redesignated to the urban area that is closest to the hospital or to
the hospital's geographic home area. If the hospital is closer to
another rural area than to any urban area, it may seek redesignation to
either the closest rural or the closest urban area.
Comment: Two commenters supported the clarification in the proposed
rule and stated that it provides clarity with respect to SCHs and RRCs
with Sec. 412.103 rural redesignation applying for MGCRB
reclassification based on special access rules. In addition, the
commenters stated that the proposed regulatory revision is consistent
with the regulations, past administrative decisions, and CMS' policy of
allowing a hospital with Sec. 412.103 rural redesignation to
reclassify under the MGCRB.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, for the
reasons discussed earlier and in the FY 2018 IPPS/LTCH PPS proposed
rule, we are finalizing, without modification, our proposed revision of
Sec. 412.230(a)(3)(ii) to clarify that a hospital with a Sec. 412.103
rural redesignation and SCH or RRC approval may reclassify under the
MGCRB to its geographic home area or to the closest area outside of its
geographic home area.
3. Redesignations Under Section 1886(d)(8)(B) of the Act
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51599 through
51600), we adopted the policy that, beginning with FY 2012, an eligible
hospital that waives its Lugar status in order to receive the out-
migration adjustment has effectively waived its deemed urban status
and, thus, is rural for all purposes under the IPPS effective for the
fiscal year in which the hospital receives the out-migration
adjustment. In addition, we adopted a minor procedural change that
would allow a Lugar hospital that qualifies for and accepts the out-
migration adjustment (through written notification to CMS within 45
days from
[[Page 38148]]
the publication of the proposed rule) to waive its urban status for the
full 3-year period for which its out-migration adjustment is effective.
(We note that, in section III.I.4. of the preamble of this final rule,
we finalized a policy revision to require a Lugar hospital that
qualifies for and accepts the out-migration adjustment, or that no
longer wishes to accept the out-migration adjustment and instead elects
to return to its deemed urban status, to notify CMS within 45 days from
the date of public display of the proposed rule at the Office of the
Federal Register.) By doing so, such a Lugar hospital would no longer
be required during the second and third years of eligibility for the
out-migration adjustment to advise us annually that it prefers to
continue being treated as rural and receive the out-migration
adjustment. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56930), we
again clarified that such a request to waive Lugar status, received
within 45 days of the publication of the proposed rule, is valid for
the full 3-year period for which the hospital's out-migration
adjustment is effective. We further clarified that if a hospital wishes
to reinstate its urban status for any fiscal year within this 3-year
period, it must send a request to CMS within 45 days of publication of
the proposed rule for that particular fiscal year. We indicated that
such reinstatement requests may be sent electronically to
wageindex@cms.hhs.gov. We wish to further clarify that both requests to
waive and to reinstate ``Lugar'' status may be sent to this mailbox. To
ensure proper accounting, we request hospitals to include their CCN,
and either ``waive Lugar'' or ``reinstate Lugar'', in the subject line
of these requests. As noted earlier, and discussed further in section
III.I.4. of this final rule, we are finalizing our proposal to revise
these notification timeframes, effective October 1, 2017, to 45 days
from the date of public display of the annual proposed rule.
We did not receive any public comments on this subject area in the
proposed rule.
4. Changes to the 45-Day Notification Rules
Certain Medicare regulations specify that hospitals have 45 days
from the publication of the annual proposed rule for the hospital
inpatient prospective payment system to inform CMS or the MGCRB of
certain requested reclassification/redesignation and out-migration
adjustment changes relating to the development of the hospital wage
index. Specifically, 42 CFR 412.64(i)(3)(iii), which provides for
adjusting the wage index to account for commuting patterns of hospital
workers, and 42 CFR 412.211(f)(3)(iii), which provides for the same
adjustment for hospitals in Puerto Rico, state that a hospital may
waive the application of this wage index adjustment by notifying CMS in
writing within 45 days after the publication of the annual notice of
proposed rulemaking for the hospital inpatient prospective payment
system. The regulations at Sec. 412.273(c) concerning withdrawing an
MGCRB application, terminating an approved 3-year reclassification, or
canceling a previous withdrawal or termination, also state
(specifically Sec. 412.273(c)(1)(ii) and (2)) that a request for
withdrawal or termination must be received by the MGCRB within 45 days
of publication of CMS' annual notice of proposed rulemaking concerning
changes to the inpatient hospital prospective payment system and
proposed payment rates. Similarly, the policy outlined in the FY 2012
IPPS/LTCH PPS final rule (76 FR 51599 through 51600) allows a Lugar
hospital that qualifies for and accepts the out-migration adjustment,
or that no longer wishes to accept the out-migration adjustment and
instead elects to return to its deemed urban status to notify CMS
within 45 days from the publication of the proposed rule.
In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19910), we
proposed to revise the above described regulation text and policies as
follows to specify that written notification to CMS or the MGCRB (as
applicable) must be provided within 45 days from the date of public
display of the annual proposed rule for the hospital inpatient
prospective payment system at the Office of the Federal Register. We
stated that we believe that the public has access to the necessary
information from the date of public display of the proposed rule at the
Office of the Federal Register and on its Web site in order to make the
decisions at issue. Specifically, we proposed to revise the regulations
at Sec. 412.64(i)(3)(iii) and Sec. 412.211(f)(3)(iii) to provide that
a hospital may waive the application of the wage index adjustment by
notifying CMS within 45 days of the date of public display of the
annual notice of proposed rulemaking for the hospital inpatient
prospective payment system at the Office of the Federal Register. In
addition, we proposed to revise the regulations at Sec.
412.273(c)(1)(ii) and (c)(2) to provide that a request for withdrawal
or termination of an MGCRB reclassification must be received by the
MGCRB within 45 days of the date of public display at the Office of the
Federal Register of the annual notice of proposed rulemaking concerning
changes to the inpatient hospital prospective payment system and
proposed payment rates for the fiscal year for which the application
has been filed (in the case of a withdrawal under Sec.
412.273(c)(1)(ii)), or for the fiscal year for which the termination is
to apply (under Sec. 412.273(c)(2)). We also proposed to revise our
policy outlined in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51599
through 51600) (as described above) to require a Lugar hospital that
qualifies for and accepts the out-migration adjustment, or that no
longer wishes to accept the out-migration adjustment and instead elects
to return to its deemed urban status to notify CMS within 45 days from
the date of public display of the IPPS proposed rule at the Office of
the Federal Register. We invited public comments on these proposals.
We did not receive any public comments on the proposed revisions to
Sec. 412.64(i)(3)(iii) or Sec. 412.211(f)(3)(iii) with regard to the
time period for hospitals to notify CMS of decisions about the out-
migration adjustment, or with regard to the proposed revision to the
policy outlined in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51599
through 51600) concerning the time period for notifications by Lugar
hospitals regarding acceptance or nonacceptance of the out-migration
adjustment. However, we did receive public comments on our proposed
revisions to Sec. 412.273(c)(1)(ii) and (c)(2) regarding the time
period to request withdrawal or termination of an MGCRB
reclassification. These comments are summarized below.
Comment: Several commenters disagreed with the proposal to change
the 45-day notification requirement for MGCRB withdrawals and
terminations. They stated that 45 days from the date of public display
at the Office of the Federal Register would not give hospitals adequate
time to review the applicable data. The commenters pointed out that the
proposal would decrease the time period for providers to act by
approximately 14 days, which they claimed would ``unnecessarily
disadvantage'' hospitals in making the most beneficial reclassification
determinations for their wage index. In addition, a few commenters
presented scenarios whereby the proposal may require hospitals to
submit withdrawal or termination requests to the MGCRB prior to the
Administrator's decisions on MGCRB appeals. The commenters recommended
that CMS maintain its existing policy of 45 days after the proposed
rule is issued in the Federal Register for hospitals to request
[[Page 38149]]
withdrawal and termination of MGCRB reclassifications. One commenter
suggested that CMS also allow for an extension of the current deadline
to ensure providers have at least 15 days from the issuance of a CMS
Administrator decision to make withdrawal and termination requests.
Response: While the commenters are correct that requiring hospitals
to submit withdrawal or termination requests to the MGCRB within 45
days from the date of public display, rather than the date the proposed
rule is issued in the Federal Register, reduces the time for hospitals
to make such determinations, we do not agree that hospitals generally
would have inadequate time to review the applicable data. As discussed
in the proposed rule (82 FR 19910), we believe that the public has
access to the necessary information from the date of public display of
the proposed rule at the Office of the Federal Register and on its Web
site in order to make the decisions at issue under our proposals.
However, while we believe that hospitals generally would have adequate
time to make reclassification determinations under the proposal, we
acknowledge that hospitals may be disadvantaged if the Administrator's
decision on a hospital's appeal of an MGCRB decision has not been
issued prior to the proposed deadline for submitting withdrawal or
termination requests to the MGCRB. Specifically, the regulations at
Sec. Sec. 412.278(a) and (b)(1) provide that a hospital may request
the Administrator to review the MGCRB decision, and that such request
must be received by the Administrator within 15 days after the date the
MGCRB issues its decision. Under Sec. 412.278(f)(2)(i), the
Administrator issues a decision not later than 90 days following
receipt of the party's request for review (except that the
Administrator may, it his or her discretion, for good cause shown, toll
such 90 days). Considering the usual dates of the MGCRB's decisions
(generally early February) and of the public display of the IPPS
proposed rule, the maximum amount of time for an Administrator's
decision to be issued may potentially extend beyond the proposed
deadline of 45 days from the date of public display. Therefore, in
order to further consider whether our proposed revisions to Sec.
412.273(c) may require hospitals to submit withdrawal or termination
requests to the MGCRB before the Administrator's decision on an appeal
is issued, we are not finalizing at this time our proposed change to
the 45-day notification rule at Sec. 412.273(c)(1)(ii) and (c)(2) for
requesting withdrawals and terminations of MGCRB reclassifications.
However, after consideration of these comments, we are revising our
regulations at Sec. Sec. 412.273(c)(1)(ii) and (c)(2) to ensure that
our current policy under those regulations is clear. Specifically, we
are revising Sec. Sec. 412.273(c)(1)(ii) and (c)(2) to clarify that,
under these regulations, a hospital's request to withdraw or terminate
an MGCRB reclassification must be received by the MGCRB within 45 days
of the date the annual notice of proposed rulemaking is issued in the
Federal Register. We believe that these revisions will provide for
greater clarification regarding how these provisions are applied. We
note that we are not providing for an extension of the current deadline
as one commenter suggested to allow providers to have at least 15 days
from the issuance of a CMS Administrator decision to withdraw or
terminate an MGCRB reclassification because we do not believe that an
extension is necessary under the current deadline under Sec. Sec.
412.273(c)(1)(ii) and (c)(2). Under the current deadline, a hospital
can plan its withdrawal or termination decisions for both potential
alternatives of the Administrator's decision on its appeal, and then
act immediately within the current 45-day timeframe as soon as the
Administrator's decision either to affirm or reverse the MGCRB's
decision is issued.
Comment: One commenter stated that CMS' policy that hospitals must
request to withdraw or terminate MGCRB reclassifications within 45 days
of the proposed rule is problematic because a hospital could terminate
a reclassification based on information in the proposed rule and, with
the publication of the final rule, discover that its original
reclassified status was more desirable. The commenter stated that
hospitals cannot make informed decisions concerning their
reclassification status based on values in a proposed rule that are
likely to change and, therefore, recommended that CMS revise its
existing policy to permit hospitals to withdraw or terminate their
reclassification status within 45 days after the publication of the
final rule.
Response: We maintain that information provided in the proposed
rule constitutes the best available data to assist hospitals in making
reclassification decisions. In addition, section 1886(d)(8)(D) of the
Act requires the Secretary to adjust the standardized amounts to ensure
that aggregate payments under the IPPS after implementation of the
provisions of certain sections of the Act, including section
1886(d)(10) of the Act for geographic reclassifications by the MGCRB,
are equal to the aggregate prospective payments that would have been
made absent these provisions. If hospitals were to withdraw or
terminate reclassification statuses after the final rule, as the
commenter suggested CMS permit, any resulting changes in the wage index
would not have been taken into account when calculating the IPPS
standardized amounts in the final rule in accordance with the statutory
budget neutrality requirement. Therefore, the values published in the
final rule represent the final wage index values reflective of
reclassification decisions.
While we are not finalizing, for the reasons discussed earlier, the
proposed changes to Sec. 412.273(c)(1)(ii) and (c)(2) concerning the
time period for requesting withdrawals and terminations of MGCRB
reclassifications, we are finalizing, without modification, our
proposed changes to Sec. 412.64(i)(3)(iii) and Sec.
412.211(f)(3)(iii) regarding the 45-day requirement for notifying CMS
of decisions to waive application of the out-migration adjustment, and
our proposed change to the policy outlined in the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51599 through 51600) concerning the time period for
notifications by Lugar hospitals regarding acceptance or nonacceptance
of the out-migration adjustment. Unlike MGCRB decisions under Sec.
412.278, out-migration adjustment and Lugar status decisions are not
subject to Administrator's review. Therefore, hospitals deciding to
waive the out-migration adjustment under Sec. 412.64(i)(3)(iii) or
Sec. 412.211(f)(3)(iii) or Lugar hospitals deciding to accept or
decline the out-migration adjustment would not experience the same
potential disadvantage from implementation of the proposed revisions to
the 45-day notification rules. For decisions regarding the out-
migration adjustment and Lugar status, we continue to believe that the
public has access to the necessary information from the date of public
display of the proposed rule at the Office of the Federal Register and
on its Web site in order to make decisions. Therefore, we believe that
it is appropriate to finalize without modification our proposed changes
to Sec. 412.64(i)(3)(iii) and Sec. 412.211(f)(3)(iii) and our
proposed change to the policy outlined in the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51599 through 51600) as discussed earlier.
In addition, as a courtesy, we will post on the CMS Web site at
https://www.cms.gov/Medicare/Medicare-Fee-
[[Page 38150]]
for-Service-Payment/AcuteInpatientPPS/wageindex.html the calendar
closing dates of the 45-day notification deadlines for waiving the out-
migration adjustment, for Lugar hospitals to notify CMS regarding
acceptance or nonacceptance of the out-migration adjustment, and for
requesting withdrawal or termination of an MGCRB reclassification. We
note that the MGCRB is independent of CMS and that the deadline for
withdrawals and terminations of MGCRB reclassifications posted on CMS'
Web site will be posted as a courtesy only. The MGCRB makes the final
decision regarding the date of the deadline and whether a request for
withdrawal or termination is timely. The public should confirm the
deadline for withdrawals and terminations of MGCRB reclassifications
with the MGCRB.
After consideration of the public comments we received, for the
reasons discussed earlier and in the FY 2018 IPPS/LTCH PPS proposed
rule, we are finalizing, without modification, the proposed changes to
the regulations at Sec. 412.64(i)(3)(iii) and Sec. 412.211(f)(3)(iii)
to provide that hospitals may waive the application of the out-
migration wage index adjustment within 45 days of the date of public
display of the annual notice of proposed rulemaking for the hospital
inpatient prospective payment system at the Office of the Federal
Register. We also are finalizing, without modification, the proposed
changes to the policy outlined in the FY 2012 IPPS/LTCH PPS final rule
(76 FR 51599 through 51600), so that a Lugar hospital that qualifies
for and accepts the out-migration adjustment, or that no longer wishes
to accept the out-migration adjustment and instead elects to return to
its deemed urban status, must notify CMS within 45 days from the date
of public display of the IPPS proposed rule at the Office of the
Federal Register. For the reasons discussed earlier, we are not
finalizing, as proposed, the changes to the regulations at Sec.
412.273(c)(1)(ii) and (c)(2) concerning the timeframe for submitting a
request to the MGCRB to withdraw or terminate an MGCRB
reclassification. Rather, we are revising the regulations at Sec.
412.273(c)(1)(ii) and Sec. 412.273(c)(2) to clarify our current policy
under these regulations that a request for withdrawal or termination of
an MGCRB reclassification must be received by the MGCRB within 45 days
of the date the annual notice of proposed rulemaking is issued in the
Federal Register. Accordingly, a request for withdrawal or termination
of an MGCRB reclassification must still be received by the MGCRB within
45 days of issuance in the Federal Register of CMS' annual notice of
proposed rulemaking concerning changes to the inpatient hospital
prospective payment system and proposed payment rates. Finally, as
discussed earlier, as a courtesy (and independent of the MGCRB), we
will begin posting on the CMS Web site the annual calendar dates of the
45-day notification deadlines for (1) hospitals to notify CMS that they
are waiving the out-migration adjustment; (2) Lugar hospitals to notify
CMS that they qualify for and accept the out-migration adjustment or no
longer wish to accept the outmigration adjustment and elect instead to
return to deemed urban status; and (3) hospitals to request from the
MGCRB withdrawal or termination of an MGCRB reclassification.
J. Out-Migration Adjustment Based on Commuting Patterns of Hospital
Employees
In accordance with section 1886(d)(13) of the Act, as added by
section 505 of Public Law 108-173, beginning with FY 2005, we
established a process to make adjustments to the hospital wage index
based on commuting patterns of hospital employees (the ``out-
migration'' adjustment). The process, outlined in the FY 2005 IPPS
final rule (69 FR 49061), provides for an increase in the wage index
for hospitals located in certain counties that have a relatively high
percentage of hospital employees who reside in the county but work in a
different county (or counties) with a higher wage index. Section
1886(d)(13)(B) of the Act requires the Secretary to use data the
Secretary determines to be appropriate to establish the qualifying
counties. When the provision of section 1886(d)(13) of the Act was
implemented for the FY 2005 wage index, we analyzed commuting data
compiled by the U.S. Census Bureau that were derived from a special
tabulation of the 2000 Census journey-to-work data for all industries
(CMS extracted data applicable to hospitals). These data were compiled
from responses to the ``long-form'' survey, which the Census Bureau
used at the time and which contained questions on where residents in
each county worked (69 FR 49062). However, the 2010 Census was ``short
form'' only; information on where residents in each county worked was
not collected as part of the 2010 Census. The Census Bureau worked with
CMS to provide an alternative dataset based on the latest available
data on where residents in each county worked in 2010, for use in
developing a new out-migration adjustment based on new commuting
patterns developed from the 2010 Census data beginning with FY 2016. To
determine the out-migration adjustments and applicable counties for FY
2016, we analyzed commuting data compiled by the Census Bureau that
were derived from a custom tabulation of the American Community Survey
(ACS), an official Census Bureau survey, utilizing 2008 through 2012
(5-Year) Microdata. The data were compiled from responses to the ACS
questions regarding the county where workers reside and the county to
which workers commute. As we discussed in the FY 2016 and FY 2017 IPPS/
LTCH PPS final rules (80 FR 49501 and 81 FR 56930, respectively), the
same policies, procedures, and computation that were used for the FY
2012 out-migration adjustment were applicable for FY 2016 and FY 2017,
and in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19910), we
proposed to use them again for FY 2018. We have applied the same
policies, procedures, and computations since FY 2012, and we believe
they continue to be appropriate for FY 2018. We refer readers to the FY
2016 IPPS/LTCH PPS final rule (80 FR 49500 through 49502) for a full
explanation of the revised data source.
For FY 2018, until such time that CMS finalizes out-migration
adjustments based on the next Census, the out-migration adjustment
continues to be based on the data derived from the custom tabulation of
the ACS utilizing 2008 through 2012 (5-Year) Microdata. For FY 2018, we
did not propose any changes to the methodology or data source that we
used for FY 2016 (81 FR 25071). (We refer readers to a full discussion
of the out-migration adjustment, including rules on deeming hospitals
reclassified under section 1886(d)(8) or section 1886(d)(10) of the Act
to have waived the out-migration adjustment, in the FY 2012 IPPS/LTCH
PPS final rule (76 FR 51601 through 51602).) We did not receive any
public comments regarding the FY 2018 out-migration adjustment. Thus,
for the reasons discussed earlier and in the FY 2018 IPPS/LTCH PPS
proposed rule, we are finalizing, without modification, our proposed
policies, procedures, methodology, and computation for the out-
migration adjustment. Table 2 associated with this final rule (which is
available via the Internet on the CMS Web site) includes the final out-
migration adjustments for the FY 2018 wage index.
[[Page 38151]]
K. Reclassification From Urban to Rural Under Section 1886(d)(8)(E) of
the Act, Implemented at 42 CFR 412.103
Under section 1886(d)(8)(E) of the Act, a qualifying prospective
payment hospital located in an urban area may apply for rural status
for payment purposes separate from reclassification through the MGCRB.
Specifically, section 1886(d)(8)(E) of the Act provides that, not later
than 60 days after the receipt of an application (in a form and manner
determined by the Secretary) from a subsection (d) hospital that
satisfies certain criteria, the Secretary shall treat the hospital as
being located in the rural area (as defined in paragraph (2)(D)) of the
State in which the hospital is located. We refer readers to the
regulations at 42 CFR 412.103 for the general criteria and application
requirements for a subsection (d) hospital to reclassify from urban to
rural status in accordance with section 1886(d)(8)(E) of the Act. The
FY 2012 IPPS/LTCH PPS final rule (76 FR 51595 through 51596) includes
our policies regarding the effect of wage data from reclassified or
redesignated hospitals.
Hospitals must meet the criteria to be reclassified from urban to
rural status under Sec. 412.103, as well as fulfill the requirements
for the application process. There may be one or more reasons that a
hospital applies for the urban to rural reclassification, and the
timeframe that a hospital submits an application is often dependent on
those reason(s). Because the wage index is part of the methodology for
determining the prospective payments to hospitals for each fiscal year,
we believe there should be a definitive timeframe within which a
hospital should apply for rural status in order for the
reclassification to be reflected in the next Federal fiscal year's wage
data used for setting payment rates.
Therefore, after notice of proposed rulemaking and consideration of
public comments, in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56931
through 56932), we revised Sec. 412.103(b) by adding paragraph (6) to
specify that, in order for a hospital to be treated as rural in the
wage index and budget neutrality calculations under Sec. Sec.
412.64(e)(1)(ii), (e)(2), (e)(4), and (h) for payment rates for the
next Federal fiscal year, the hospital's filing date must be no later
than 70 days prior to the second Monday in June of the current Federal
fiscal year and the application must be approved by the CMS Regional
Office in accordance with the requirements of Sec. 412.103. We refer
readers to the FY 2017 IPPS/LTCH PPS final rule for a full discussion
of this policy. We clarified that the lock-in date does not affect the
timing of payment changes occurring at the hospital-specific level as a
result of reclassification from urban to rural under Sec. 412.103.
This lock-in date also does not change the current regulation that
allows hospitals that qualify under Sec. 412.103(a) to request, at any
time during a cost reporting period, to reclassify from urban to rural.
A hospital's rural status and claims payment reflecting its rural
status continue to be effective on the filing date of its
reclassification application, which is the date the CMS Regional Office
receives the application, in accordance with Sec. 412.103(d). The
hospital's IPPS claims will be paid reflecting its rural status on the
filing date (the effective date) of the reclassification, regardless of
when the hospital applies.
Comment: One commenter suggested that CMS' current policy that the
effective date of an urban to rural reclassification under Sec.
412.103 is the date the application is received by CMS be revised to
allow flexibility for a later date. Specifically, the commenter
requested that CMS allow hospitals to ask for an effective date anytime
from the date the application is received until up to 60 days after the
receipt of the application, to help hospitals that experience a short-
term reduction in payment from obtaining rural status before becoming
eligible for increased payment at a later time. The commenter stated
that amending the regulation in this way would accommodate the various
reasons why hospitals request rural status and will be more consistent
with the statutory language at section 1886(d)(8)(E) of the Act which
provides that the Secretary shall treat a hospital as rural ``not later
than 60 days after the receipt of an application.''
Response: We did not propose any such revisions to the policy at
Sec. 412.103 in the FY 2018 IPPS/LTCH PPS proposed rule, but instead
explained and clarified our existing policy. We appreciate the comments
and may consider the commenter's request in future rulemaking.
L. Clarification of Application Deadline for Rural Referral Center
(RRC) Classification
Section 1886(d)(5)(C)(i) of the Act, implemented at 42 CFR 412.96,
provides for the classification and special treatment of rural referral
centers (RRCs). The regulations at Sec. 412.96 set forth the criteria
that a hospital must meet in order to qualify as an RRC. Under Sec.
412.96(b)(1)(ii), a hospital may qualify as an RRC if it is located in
a rural area and has 275 or more beds during its most recently
completed cost reporting period. The hospital also can obtain RRC
status by showing that at least 50 percent of its Medicare patients are
referred from other hospitals or from physicians not on the staff of
the hospital, and at least 60 percent of the hospital's Medicare
patients live more than 25 miles from the hospital, and at least 60
percent of all the services that the hospital furnishes to Medicare
beneficiaries are furnished to beneficiaries who live more than 25
miles from the hospital (Sec. 412.96(b)(2)), or by showing that the
hospital meets the alternative criteria at Sec. 412.96(c). We refer
readers to 42 CFR 412.96 for a full description of the criteria for
classification as an RRC.
Consistent with section 1886(d)(5)(C)(i) of the Act, the hospital
must submit its application for RRC status during the last quarter of
the hospital's cost reporting period, to be effective with the
beginning of the next cost reporting period. Specifically, section
1886(d)(5)(C)(i) of the Act provides that an appeal allowed under this
paragraph must be submitted to the Secretary (in such form and manner
as the Secretary may prescribe) during the quarter before the first
quarter of the hospital's cost reporting period (or, in the case of a
cost reporting period beginning during October 1984, during the first
quarter of that period), and the Secretary must make a final
determination with respect to such appeal within 60 days after the date
the appeal was submitted. Any payment adjustments necessitated by a
reclassification based upon the appeal will be effective at the
beginning of such cost reporting period. Therefore, in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR 19911), we clarified that
applications for RRC status must be submitted during this timeframe.
That is, applications for RRC status must be submitted during the last
quarter of the cost reporting period before the first quarter of a
hospital's cost reporting year. If approved, the RRC status is
effective with the beginning of the hospital's cost reporting period
occurring after the last quarter of the cost reporting period in which
the hospital submits an application.
We also clarified in the proposed rule that, while RRC applications
must be submitted only within the timeframe described above,
applications for urban-to-rural reclassification under Sec. 412.103
may be submitted at any time for the hospital to be approved for rural
reclassification. This includes hospitals seeking rural
reclassification under Sec. 412.103(a)(3), which states that a
hospital meets criteria for urban-to-rural
[[Page 38152]]
reclassification if the hospital would qualify as a RRC as set forth in
Sec. 412.96, or as an SCH as set forth in Sec. 412.92, if the
hospital were located in a rural area. A hospital seeking RRC status
based on a rural reclassification under Sec. 412.103, including Sec.
412.103(a)(3), must still submit an application for RRC status during
the last quarter of its cost reporting year before the next cost
reporting period in accordance with section 1886(d)(5)(C)(i) of the
Act. While the Sec. 412.103 rural redesignation would be effective as
of the date of filing the application, in accordance with Sec.
412.103(d), the RRC status would be effective beginning with the
hospital's cost reporting period occurring after the last quarter of
the cost reporting period in which the hospital submits an application.
Because a hospital may only apply for RRC status during the last
quarter of its cost reporting year in accordance with section
1886(d)(5)(C)(i) of the Act, hospitals seeking RRC status, in order to
reclassify through the MGCRB using the special rules for SCHs and RRCs
at Sec. 412.230(a)(3) and the exceptions at Sec. 412.230(d)(3) for
RRCs, may be disadvantaged due to their cost reporting year end. As
discussed in section III.I.2. of the preamble of the proposed rule, we
proposed to revise the regulations at Sec. 412.230(a)(3) and (d)(3) to
allow hospitals to submit documentation of the approval of SCH or RRC
status (as applicable) to the MGCRB no later than the first business
day after January 1. We stated in the proposed rule that we believe our
proposal to accept documentation of approval of RRC classification,
instead of requiring that the hospital be classified as a RRC at the
time of Board review, would accommodate more hospitals with various
cost reporting period endings. We refer readers to section III.I.2. of
the preamble of the proposed rule for further discussion of this
proposal. We note that, as discussed in section III.I.2. of the
preamble of this final rule, while we are finalizing our proposal that
a hospital must be approved for SCH or RRC status, rather than have
active SCH or RRC status, in order to use the special rules for SCHs
and RRCs and the exceptions for RRCs under Sec. 412.230(a)(3) and
(d)(3), we are not finalizing our proposal to establish a deadline of
the first business day after January 1 for hospitals to submit
documentation of SCH and RRC status approval to the MGCRB.
Comment: One commenter agreed that the specific timing is required
by the statutory language, but argued that CMS is applying a
``restrictive interpretation'' of the RRC application timing
requirements so that there is not a level playing field based solely on
cost report year-ends. The commenter suggested an interpretation of the
statute that it believes could allow hospitals seeking to obtain RRC
status for the purposes of an MGCRB application to be considered RRCs
even outside of the statutory timeframe. Specifically, the commenter
pointed to section 1886(d)(10)(D)(iii) of the Act, which states that,
in the case of a hospital that has ever been classified by the
Secretary as rural referral center, the MGCRB may not reject the
application on the basis of any comparison between the average hourly
wage of the hospital and the average hourly wage of hospitals in the
area in which it is located. According to the commenter, CMS'
determination that a hospital meets the rural redesignation
requirements under Sec. 412.103(a)(3) (that is, the hospital would
qualify as an RRC if it were located in a rural area) could be
considered sufficient classification to trigger the exemption from the
home area wage test and application of the special access rules.
Response: As discussed earlier, and as noted by the commenter, the
timeframe for applying for RRC status is set forth in the statute. We
recognize that certain hospitals may be disadvantaged due to their cost
reporting year end, and for that reason we proposed, and are finalizing
(as discussed in section III.I.2. of the preamble of this final rule)
revisions to the regulations at Sec. 412.230(a)(3) and (d)(3) to
reflect that these paragraphs apply to hospitals with RRC approval (and
not only effective status).
We do not agree with the commenter that CMS' determination under
Sec. 412.103(a)(3) that a hospital would qualify for RRC status if the
hospital were located in a rural area (which is one condition under
which a hospital can qualify for Sec. 412.103 rural redesignation) is
considered RRC classification. In fact, hospitals may obtain rural
reclassification under Sec. 412.103(a)(3), but not subsequently obtain
RRC status. Therefore, we do not believe that such a determination
under Sec. 412.103(a)(3) is sufficient to satisfy the requirements at
section 1886(d)(10)(D)(iii) of the Act.
M. Process for Requests for Wage Index Data Corrections
1. Process for Hospitals To Request Wage Index Data Corrections
The preliminary, unaudited Worksheet S-3 wage data files for the
proposed FY 2018 wage index were made available on May 16, 2016, and
the preliminary CY 2013 occupational mix data files on May 16, 2016,
through the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/FY2018-Wage-Index-Home-Page.html.
On January 30, 2017, we posted a public use file (PUF) at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/FY2018-Wage-Index-Home-Page.html containing FY 2018 wage index data available as of January
29, 2017. This PUF contains a tab with the Worksheet S-3 wage data
(which includes Worksheet S-3, Parts II and III wage data from cost
reporting periods beginning on or after October l, 2013 through
September 30, 2014; that is, FY 2014 wage data), a tab with the
occupational mix data (which includes data from the CY 2013
occupational mix survey, Form CMS-10079), a tab containing the
Worksheet S-3 wage data of hospitals deleted from the January 30, 2017
wage data PUF, and a tab containing the CY 2013 occupational mix data
(if any) of the hospitals deleted from the January 30, 2017 wage data
PUF. In a memorandum dated January 27, 2017, we instructed all MACs to
inform the IPPS hospitals that they service of the availability of the
January 30, 2017 wage index data PUFs, and the process and timeframe
for requesting revisions in accordance with the FY 2018 Wage Index
Timetable.
In the interest of meeting the data needs of the public, beginning
with the proposed FY 2009 wage index, we post an additional PUF on our
Web site that reflects the actual data that are used in computing the
proposed wage index. The release of this file does not alter the
current wage index process or schedule. We notify the hospital
community of the availability of these data as we do with the current
public use wage data files through our Hospital Open Door Forum. We
encourage hospitals to sign up for automatic notifications of
information about hospital issues and about the dates of the Hospital
Open Door Forums at the CMS Web site at: https://www.cms.gov/Outreach-and-Education/Outreach/OpenDoorForums/.
In a memorandum dated May 16, 2016, we instructed all MACs to
inform the IPPS hospitals that they service of the availability of the
wage index data files and the process and timeframe for requesting
revisions. We also instructed the MACs to advise hospitals that these
data were also made available directly through their representative
hospital organizations.
If a hospital wished to request a change to its data as shown in
the May
[[Page 38153]]
16, 2016 wage data files and the May 16, 2016 occupational mix data
files, the hospital had to submit corrections along with complete,
detailed supporting documentation to its MAC by September 2, 2016.
Hospitals were notified of this deadline and of all other deadlines and
requirements, including the requirement to review and verify their data
as posted in the preliminary wage index data files on the Internet,
through the letters sent to them by their MACs.
November 4, 2016 was the date by when MACs notified State hospital
associations regarding hospitals that failed to respond to issues
raised during the desk reviews. The MACs notified the hospitals by mid-
January 2017 of any changes to the wage index data as a result of the
desk reviews and the resolution of the hospitals' revision requests.
The MACs also submitted the revised data to CMS by January 20, 2017.
CMS published the wage index PUFs that included hospitals' revised wage
index data on January 30, 2017. Hospitals had until February 17, 2017,
to submit requests to the MACs for reconsideration of adjustments made
by the MACs as a result of the desk review, and to correct errors due
to CMS' or the MAC's mishandling of the wage index data. Hospitals also
were required to submit sufficient documentation to support their
requests.
After reviewing requested changes submitted by hospitals, MACs were
required to transmit to CMS any additional revisions resulting from the
hospitals' reconsideration requests by March 24, 2017. Under our
current policy, the deadline for a hospital to request CMS intervention
in cases where a hospital disagreed with a MAC's policy interpretation
was April 5, 2017. As discussed in the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 19912), beginning next year (that is, April 2018 for wage
data revisions for the FY 2019 wage index), we proposed to require that
a hospital that seeks to challenge the MAC's handling of wage data on
any basis (including a policy, factual, or any other dispute) must
request CMS to intervene by the date in April that is specified as the
deadline for hospitals to appeal MAC determinations and request CMS'
intervention in cases where the hospital disagrees with the MAC's
determination (the wage index timetable would be updated to reflect the
specified date). We note that, as we did for the FY 2017 wage index,
for the FY 2018 wage index, in accordance with the FY 2018 wage index
timeline posted on the CMS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/FY2018-Wage-Index-Home-Page.html, the April appeals have to be
sent via mail and email. We refer readers to the wage index timeline
for complete details.
We did not receive any public comments regarding our proposal
discussed above. Therefore, we are finalizing our proposal, without
modification, to require that, beginning next year (that is, April 2018
for wage data revisions for the FY 2019 wage index), a hospital that
seeks to challenge the MAC's handling of wage data on any basis
(including a policy, factual, or any other dispute) must request CMS to
intervene by the date in April that is specified as the deadline for
hospitals to appeal MAC determinations and request CMS' intervention in
cases where the hospital disagrees with the MAC's determination (as we
stated above and in the proposed rule, the wage index timetable will be
updated to reflect the specified date).
Hospitals were given the opportunity to examine Table 2, which was
listed in section VI. of the Addendum to the proposed rule and
available via the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/FY2018-Wage-Index-Home-Page.html. Table 2 associated with
the proposed rule contained each hospital's proposed adjusted average
hourly wage used to construct the wage index values for the past 3
years, including the FY 2014 data used to construct the proposed FY
2018 wage index. We noted in the proposed rule (82 FR 19912) that the
proposed hospital average hourly wages shown in Table 2 only reflect
changes made to a hospital's data that were transmitted to CMS by early
February 2017.
We posted the final wage index data PUFs on April 28, 2017 on the
Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/FY2018-Wage-Index-Home-Page.html. The April 2017 PUFs were made available solely for the
limited purpose of identifying any potential errors made by CMS or the
MAC in the entry of the final wage index data that resulted from the
correction process previously described (revisions submitted to CMS by
the MACs by March 24, 2017).
After the release of the April 2017 wage index data PUFs, changes
to the wage and occupational mix data could only be made in those very
limited situations involving an error by the MAC or CMS that the
hospital could not have known about before its review of the final wage
index data files. Specifically, neither the MAC nor CMS will approve
the following types of requests:
Requests for wage index data corrections that were
submitted too late to be included in the data transmitted to CMS by the
MACs on or before March 24, 2017.
Requests for correction of errors that were not, but could
have been, identified during the hospital's review of the January 30,
2017 wage index PUFs.
Requests to revisit factual determinations or policy
interpretations made by the MAC or CMS during the wage index data
correction process.
If, after reviewing the April 2017 final wage index data PUFs, a
hospital believed that its wage or occupational mix data were incorrect
due to a MAC or CMS error in the entry or tabulation of the final data,
the hospital was given the opportunity to notify both its MAC and CMS
regarding why the hospital believed an error exists and provide all
supporting information, including relevant dates (for example, when it
first became aware of the error). The hospital was required to send its
request to CMS and to the MAC no later than May 30, 2017. Similar to
the April appeals, beginning with the FY 2015 wage index, in accordance
with the FY 2018 wage index timeline posted on the CMS Web site at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/FY2018-Wage-Index-Home-Page.html, the May appeals were required to be sent via mail and email
to CMS and the MACs. We refer readers to the wage index timeline for
complete details.
Verified corrections to the wage index data received timely by CMS
and the MACs (that is, by May 30, 2017) were incorporated into the
final FY 2018 wage index in this FY 2018 IPPS/LTCH PPS final rule,
which is effective October 1, 2017.
We created the processes previously described to resolve all
substantive wage index data correction disputes before we finalize the
wage and occupational mix data for the FY 2018 payment rates.
Accordingly, hospitals that did not meet the procedural deadlines set
forth above will not be afforded a later opportunity to submit wage
index data corrections or to dispute the MAC's decision with respect to
requested changes. Specifically, our policy is that hospitals that do
not meet the procedural deadlines set forth earlier (requiring requests
to MACs by the specified date in February and, where such requests are
unsuccessful,
[[Page 38154]]
requests for intervention by CMS by the specified date in April) will
not be permitted to challenge later, before the PRRB, the failure of
CMS to make a requested data revision. We refer readers also to the FY
2000 IPPS final rule (64 FR 41513) for a discussion of the parameters
for appeals to the PRRB for wage index data corrections.
Again, we believe the wage index data correction process described
earlier provides hospitals with sufficient opportunity to bring errors
in their wage and occupational mix data to the MAC's attention.
Moreover, because hospitals had access to the final wage index data
PUFs by late April 2017, they had the opportunity to detect any data
entry or tabulation errors made by the MAC or CMS before the
development and publication of the final FY 2018 wage index by August
2017, and the implementation of the FY 2018 wage index on October 1,
2017. Given these processes, the wage index implemented on October 1
should be accurate. Nevertheless, in the event that errors are
identified by hospitals and brought to our attention after May 30,
2017, we retain the right to make midyear changes to the wage index
under very limited circumstances.
Specifically, in accordance with 42 CFR 412.64(k)(1) of our
regulations, we make midyear corrections to the wage index for an area
only if a hospital can show that: (1) The MAC or CMS made an error in
tabulating its data; and (2) the requesting hospital could not have
known about the error or did not have an opportunity to correct the
error, before the beginning of the fiscal year. For purposes of this
provision, ``before the beginning of the fiscal year'' means by the May
deadline for making corrections to the wage data for the following
fiscal year's wage index (for example, May 30, 2017 for the FY 2018
wage index). This provision is not available to a hospital seeking to
revise another hospital's data that may be affecting the requesting
hospital's wage index for the labor market area. As indicated earlier,
because CMS makes the wage index data available to hospitals on the CMS
Web site prior to publishing both the proposed and final IPPS rules,
and the MACs notify hospitals directly of any wage index data changes
after completing their desk reviews, we do not expect that midyear
corrections will be necessary. However, under our current policy, if
the correction of a data error changes the wage index value for an
area, the revised wage index value will be effective prospectively from
the date the correction is made.
In the FY 2006 IPPS final rule (70 FR 47385 through 47387 and
47485), we revised 42 CFR 412.64(k)(2) to specify that, effective on
October 1, 2005, that is, beginning with the FY 2006 wage index, a
change to the wage index can be made retroactive to the beginning of
the Federal fiscal year only when CMS determines all of the following:
(1) The MAC or CMS made an error in tabulating data used for the wage
index calculation; (2) the hospital knew about the error and requested
that the MAC and CMS correct the error using the established process
and within the established schedule for requesting corrections to the
wage index data, before the beginning of the fiscal year for the
applicable IPPS update (that is, by the May 30, 2017 deadline for the
FY 2018 wage index); and (3) CMS agreed before October 1 that the MAC
or CMS made an error in tabulating the hospital's wage index data and
the wage index should be corrected.
In those circumstances where a hospital requested a correction to
its wage index data before CMS calculated the final wage index (that
is, by the May 30, 2017 deadline for the FY 2018 wage index), and CMS
acknowledges that the error in the hospital's wage index data was
caused by CMS' or the MAC's mishandling of the data, we believe that
the hospital should not be penalized by our delay in publishing or
implementing the correction. As with our current policy, we indicated
that the provision is not available to a hospital seeking to revise
another hospital's data. In addition, the provision cannot be used to
correct prior years' wage index data; and it can only be used for the
current Federal fiscal year. In situations where our policies would
allow midyear corrections other than those specified in 42 CFR
412.64(k)(2)(ii), we continue to believe that it is appropriate to make
prospective-only corrections to the wage index.
We note that, as with prospective changes to the wage index, the
final retroactive correction will be made irrespective of whether the
change increases or decreases a hospital's payment rate. In addition,
we note that the policy of retroactive adjustment will still apply in
those instances where a final judicial decision reverses a CMS denial
of a hospital's wage index data revision request.
2. Process for Data Corrections by CMS After the January Public Use
File (PUF)
The process set forth with the wage index timeline discussed in
section III.M.1. of the preamble of this final rule allows hospitals to
request corrections to their wage index data within prescribed
timeframes. In addition to hospitals' opportunity to request
corrections of wage index data errors or MACs' mishandling of data, CMS
has the authority under section 1886(d)(3)(E) of the Act to make
corrections to hospital wage index and occupational mix data in order
to ensure the accuracy of the wage index. As we explained in the FY
2016 IPPS/LTCH PPS final rule (80 FR 49490 through 49491) and the FY
2017 IPPS/LTCH PPS final rule (81 FR 56914), section 1886(d)(3)(E) of
the Act requires the Secretary to adjust the proportion of hospitals'
costs attributable to wages and wage-related costs for area differences
reflecting the relative hospital wage level in the geographic areas of
the hospital compared to the national average hospital wage level. As
discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19913
through 19915), we believe that, under section 1886(d)(3)(E) of the
Act, we have discretion to make corrections to hospitals' data to help
ensure that the costs attributable to wages and wage-related costs in
fact accurately reflect the relative hospital wage level in the
hospitals' geographic areas.
We have an established multistep, 15-month process for the review
and correction of the hospital wage data that is used to create the
IPPS wage index for the upcoming fiscal year. Since the origin of the
IPPS, the wage index has been subject to its own annual review process,
first by the MACs, and then by CMS. As a standard practice, after each
annual desk review, CMS reviews the results of the MACs' desk reviews
and focuses on items flagged during the desk review, requiring that, if
necessary, hospitals provide additional documentation, adjustments, or
corrections to the data. This ongoing communication with hospitals
about their wage data may result in the discovery by CMS of additional
items that were reported incorrectly or other data errors, even after
the posting of the January PUF, and throughout the remainder of the
wage index development process. In addition, the fact that CMS analyzes
the data from a regional and even national level, unlike the review
performed by the MACs that review a limited subset of hospitals, can
facilitate additional editing of the data that may not be readily
apparent to the MACs. In these occasional instances, an error may be of
sufficient magnitude that the wage index of an entire CBSA is affected.
Accordingly, CMS uses its authority to ensure that the wage index
accurately reflects the relative hospital wage level in the geographic
area of the
[[Page 38155]]
hospital compared to the national average hospital wage level, by
continuing to make corrections to hospital wage data upon discovering
incorrect wage data, distinct from instances in which hospitals request
data revisions.
We note that CMS corrects errors to hospital wage data as
appropriate, regardless of whether that correction will raise or lower
a hospital's average hourly wage. For example, as discussed in section
III.D.2. of the preamble of the proposed rule (82 FR 19900 through
19902), in the calculation of the proposed FY 2018 wage index, upon
discovering that hospitals reported other wage-related costs on Line 18
of Worksheet S-3, despite those other wage-related costs failing to
meet the requirement that other wage related costs must exceed 1
percent of total adjusted salaries net of excluded area salaries, CMS
made internal edits to remove those other wage-related costs from Line
18. Conversely, if CMS discovers after conclusion of the desk review,
for example, that a MAC inadvertently failed to incorporate positive
adjustments resulting from a prior year's wage index appeal to a
hospital's wage related costs such as pension, CMS would correct that
data error and the hospital's average hourly wage would likely increase
as a result.
While we maintain CMS' authority to conduct additional review and
make resulting corrections at any time during the wage index
development process, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19914), we proposed a process for hospitals to request further review
of a correction made by CMS starting with the FY 2019 wage index. In
order to allow opportunity for input from hospitals concerning
corrections made by CMS after the posting of the January PUF, we
proposed a process similar to the existing process in which hospitals
may request corrections to wage index data displayed in the January
PUF. We stated in the proposed rule that instances where CMS makes a
correction to a hospital's data after the January PUF based on a
different understanding than the hospital about certain reported costs,
for example, could potentially be resolved using this proposed process
before the final wage index is calculated. We stated that we believe
this proposed process and timeline (as described below) would bring
additional transparency to instances where CMS makes data corrections
after the January PUF, and would provide opportunities for hospitals to
request further review of CMS changes in time for the most accurate
data to be reflected in the final wage index calculations.
Effective beginning with the FY 2019 wage index development cycle,
we proposed to use existing appeal deadlines (in place for hospitals to
appeal determinations made by the MAC during the desk review process)
for hospitals to dispute corrections made by CMS after posting of the
January PUF that do not arise from a hospital request for a wage data
revision. Starting with the April appeal deadline, hospitals would use
the soonest approaching appeal deadline to dispute any adjustments made
by CMS. However, if a hospital was notified of an adjustment within 14
days of an appeal deadline, the hospital would have until the next
appeal deadline to dispute any adjustments. We believe this would give
hospitals sufficient time to prepare an appeal of adjustments made by
CMS after the January PUF. Specifically, for any adjustments made by
CMS between the date the January PUF is posted and at least 14 calendar
days before the April appeals deadline, we proposed that hospitals
would have until the April appeals deadline (which, for example, is
April 5 in the FY 2018 Wage Index Timetable) to dispute the
adjustments. For any adjustments made by CMS between 13 calendar days
before the April appeals deadline and 14 calendar days before the May
appeals deadline, we proposed that hospitals would have until the May
appeals deadline (which, for example, is May 30 in the FY 2018 Wage
Index Timetable) to dispute the adjustments. In cases where hospitals
disagree with CMS adjustments of which they were notified 13 calendar
days before the May appeals deadline or later, the hospitals could
appeal to the PRRB with no need for further review by CMS before such
appeal.
We are using dates from the FY 2018 Wage Index Timetable in the
following example which was included in the proposed rule at 82 FR
19914 (we reiterate that this appeals process would be effective
beginning with the FY 2019 wage index cycle, but for illustrative
purposes, we are using dates from the FY 2018 Wage Index Timetable, the
most recently published wage index timetable): A hospital that is
notified by the MAC or CMS of an adjustment to its wage data after the
release of the January 30, 2017 PUF could use the April 5, 2017 appeals
deadline to dispute the adjustment. If the hospital is notified of an
adjustment by CMS or the MAC to its wage data after March 22, 2017
(that is, less than 14 days prior to the April 5 appeals deadline), it
could use the May 30, 2017 appeals deadline to dispute the adjustment.
If the hospital is first notified about the adjustment after May 16,
2017 (that is, less than 14 days prior to the May 30 deadline), and
disagrees with the adjustment, the hospital could appeal directly to
the PRRB.
As with the existing process for requesting wage data corrections,
we proposed that a hospital disputing an adjustment made by CMS after
the posting of the January PUF would be required to request a
correction by the first applicable deadline. For example, using the FY
2018 Wage Index Timetable for illustrative purposes only, if a hospital
was notified on March 20 of an adjustment to its data by CMS and did
not appeal by April 5, the hospital would not be able to appeal by May
30 or bring the case before the PRRB. That is, hospitals that do not
meet the procedural deadlines set forth earlier would not be afforded a
later opportunity to submit wage index data corrections or to dispute
CMS' decision with respect to requested changes. As with the existing
process for hospitals to request wage data corrections, our policy is
that hospitals that do not meet the procedural deadlines set forth
earlier would not be permitted to challenge later, before the PRRB, the
failure of CMS to make a requested data revision.
In summary, under the statute, CMS has discretion to make
corrections and revisions to hospitals' wage data throughout the
multistep wage index development process, and we proposed a pathway for
hospitals to request additional review of corrections to their wage
data made by CMS. Beginning with the development of the FY 2019 wage
index, we proposed a process whereby CMS could continue to correct data
after the posting of the January PUF, while allowing hospitals to
appeal changes made by CMS using existing deadlines from the process
for hospitals to request wage data corrections. As with the existing
process, a hospital would be required to appeal by the first applicable
deadline, if relevant, to maintain the right to appeal to the PRRB to
dispute a correction to its wage data made by CMS.
We invited public comments on our proposals.
Comment: Several commenters stated that CMS is proposing to limit
the time a provider has to dispute an adjustment once the January PUF
is posted. The commenters stated that, currently, hospitals have 1
month to request corrections for errors in the April 28 PUF. They
maintained that the reduced timelines will require hospitals to review
the posted PUF immediately to
[[Page 38156]]
ensure that the data are correct and take any necessary action to
correct. The commenters also noted that CMS has taken a more active
role in recent years in performing additional data analysis that
results in follow-up questions or requests to hospitals for supporting
data, which require time for hospitals to develop a response. One
commenter stated that, by reducing time, CMS will be placing an
administrative hardship on hospitals while they attempt to respond to
detailed audit requests. Some of the commenters were ``deeply
concerned'' that the short timeline CMS proposed to respond to detailed
requests will not allow for comprehensive analysis and a thorough
response. One commenter specifically requested that the dispute process
be expanded to 28 days prior to the appeal deadline, instead of the
proposed 14 days, to give hospitals enough time to collect data and
respond in a timely manner.
Response: We believe that the commenters misunderstood our proposal
as a change to the current process for hospitals to request wage data
corrections, rather than an additional process for disputing
corrections made by CMS after the January PUF that do not arise from a
hospital's request for wage data revisions. Under our proposal,
hospitals would still have approximately 1 month to request corrections
for errors in the April 28 PUF, in accordance with the wage index
timetable. Our proposal would create an additional process for
hospitals to appeal adjustments or corrections made by CMS or the MAC
after the normal desk review timeframe that do not arise from a
hospital's request for wage data revisions. Therefore, we do not agree
that this proposal requires hospitals to review the posted PUF any
earlier than hospitals would do so under the current policy, or that it
constitutes administrative hardship. Furthermore, we believe that,
rather than limiting hospitals, our proposal would provide additional
transparency and opportunities for hospitals to request further review
of CMS changes made after the January PUF where there is currently no
such established process.
Regarding the concerns that the proposed timeline is too short and
the suggestion that CMS expand the 14-day timeline to 28 days, we
continue to believe that our proposed timeline would give hospitals
sufficient time to prepare an appeal of adjustments made by CMS after
the January PUF. We believe that a hospital that was notified of an
adjustment at least 2 weeks before the upcoming deadline has enough
time to prepare an appeal by the upcoming deadline. Specifically,
starting with the April appeal deadline, hospitals would use the
soonest approaching appeal deadline to dispute any adjustments made by
CMS. However, if a hospital was notified of an adjustment within 14
days of an appeal deadline, the hospital would have until the next
appeal deadline to dispute any adjustments.
Comment: One commenter did not state a position on the proposal but
expressed the following concerns: First, that CMS should add the
particulars of this appeal process to the existing FY 2019 Wage Index
Timeline that is published and made available online each year by CMS;
second, that most adjustments to the wage data made by CMS on a routine
basis be performed much earlier in the process than these April and May
appeal deadlines, so that the proposed appeal process would be reserved
for ``rare and unusual circumstances requiring CMS' intervention and
adjustment to the data.'' Specifically, this commenter stated that it
would oppose a policy that gives CMS the latitude to indiscriminately
make adjustments to the hospital wage data this late in the process
where that adjustment was known of far ahead of time and/or could have
easily been made earlier in the process.
Response: We appreciate the commenter's concerns and suggestions.
In response to the commenter's first suggestion, we intend to add the
particulars of this appeal process to the existing Wage Index Timeline
that is published and made available online each year by CMS. Second,
while we maintain CMS' authority under section 1886(d)(3)(E) of the Act
to make corrections to hospitals' data to help ensure the accuracy of
the wage index, we note that routine adjustments to the wage data that
are known of far ahead of time and/or could easily be made earlier in
the process will continue to be performed earlier in the process than
these April and May appeal deadlines.
After consideration of the public comments we received, for the
reasons discussed earlier and in the FY 2018 IPPS/LTCH PPS proposed
rule, we are finalizing, without modification, our proposed process for
hospitals to dispute data corrections made by CMS after the January PUF
that do not arise from a hospital's request for wage data revisions.
Effective beginning with the FY 2019 wage index development cycle, we
will use existing appeal deadlines (in place for hospitals to appeal
determinations made by the MAC during the desk review process) for
hospitals to dispute corrections made by CMS after posting of the
January PUF that do not arise from a hospital request for a wage data
revisions. Starting with the April appeal deadline, hospitals must use
the soonest approaching appeal deadline to dispute any adjustments made
by CMS. However, if a hospital is notified of an adjustment within 14
days of an appeal deadline, the hospital has until the next appeal
deadline to dispute any adjustments, as discussed earlier. As with the
existing process for requesting wage data corrections, a hospital
disputing an adjustment made by CMS after the posting of the January
PUF will be required to request a correction by the first applicable
deadline. For example, using the FY 2018 Wage Index Timetable for
illustrative purposes only, if a hospital was notified on March 20 of
an adjustment to its data by CMS and did not appeal by April 5, the
hospital would not be able to appeal by May 30 or bring the case before
the PRRB. That is, hospitals that do not meet the procedural deadlines
set forth above will not be afforded a later opportunity to submit wage
index data corrections or to dispute CMS' decision with respect to
requested changes. Our policy is that hospitals that do not meet the
procedural deadlines set forth earlier will not be permitted to
challenge later, before the PRRB, the failure of CMS to make a
requested data revision.
N. Labor-Market Share for the FY 2018 Wage Index
Section 1886(d)(3)(E) of the Act directs the Secretary to adjust
the proportion of the national prospective payment system base payment
rates that are attributable to wages and wage-related costs by a factor
that reflects the relative differences in labor costs among geographic
areas. It also directs the Secretary to estimate from time to time the
proportion of hospital costs that are labor-related and to adjust the
proportion (as estimated by the Secretary from time to time) of
hospitals' costs which are attributable to wages and wage-related costs
of the DRG prospective payment rates. We refer to the portion of
hospital costs attributable to wages and wage-related costs as the
labor-related share. The labor-related share of the prospective payment
rate is adjusted by an index of relative labor costs, which is referred
to as the wage index.
Section 403 of Public Law 108-173 amended section 1886(d)(3)(E) of
the Act to provide that the Secretary must employ 62 percent as the
labor-related share unless this would result in lower payments to a
hospital than would otherwise be made. However, this provision of
Public Law 108-173 did
[[Page 38157]]
not change the legal requirement that the Secretary estimate from time
to time the proportion of hospitals' costs that are attributable to
wages and wage-related costs. Thus, hospitals receive payment based on
either a 62-percent labor-related share, or the labor-related share
estimated from time to time by the Secretary, depending on which labor-
related share resulted in a higher payment.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50596 through
50607), we rebased and revised the hospital market basket. We
established a FY 2010-based IPPS hospital market basket to replace the
FY 2006-based IPPS hospital market basket, effective October 1, 2013.
In that final rule, we presented our analysis and conclusions regarding
the frequency and methodology for updating the labor-related share for
FY 2014. Using the FY 2010-based IPPS market basket, we finalized a
labor-related share for FY 2014, FY 2015, FY 2016, and FY 2017 of 69.6
percent. In addition, in FY 2014, we implemented this rebased and
revised labor-related share in a budget neutral manner (78 FR 51016).
However, consistent with section 1886(d)(3)(E) of the Act, we did not
take into account the additional payments that would be made as a
result of hospitals with a wage index less than or equal to 1.0000
being paid using a labor-related share lower than the labor-related
share of hospitals with a wage index greater than 1.0000.
For FY 2018, as described in section IV. of the preamble of the FY
2018 IPPS/LTCH PPS proposed rule (82 FR 19916 through 19929), we
proposed to rebase and revise the IPPS market basket reflecting 2014
data. We also proposed to recalculate the labor-related share for
discharges occurring on or after October 1, 2017 using the proposed
2014-based IPPS market basket. As discussed in Appendix A of the
proposed rule, we proposed this rebased and revised labor-related share
in a budget neutral manner. However, consistent with section
1886(d)(3)(E) of the Act, we did not take into account the additional
payments that would be made as a result of hospitals with a wage index
less than or equal to 1.0000 being paid using a labor-related share
lower than the labor-related share of hospitals with a wage index
greater than 1.0000. We refer readers to section IV. of the preamble of
this final rule and Appendix A for our finalized policies for the 2014-
based IPPS market basket.
The labor-related share is used to determine the proportion of the
national IPPS base payment rate to which the area wage index is
applied. We include a cost category in the labor-related share if the
costs are labor intensive and vary with the local labor market. As
described in section IV. of the preamble of the proposed rule, we
proposed to include in the labor-related share the national average
proportion of operating costs that are attributable to Wages and
Salaries, Employee Benefits, Professional Fees: Labor-Related,
Administrative and Facilities Support Services, Installation,
Maintenance, and Repair Services, and All Other: Labor-Related Services
as measured in the proposed 2014-based IPPS market basket. Therefore,
for FY 2018, we proposed to use a labor-related share of 68.3 percent
for discharges occurring on or after October 1, 2017.
We refer readers to section IV.B.3. of the preamble of this final
rule for a discussion of our recalculation of the labor-related share
for discharges occurring on or after October 1, 2017 using the 2014-
based IPPS market basket.
Prior to January 1, 2016, Puerto Rico hospitals were paid based on
75 percent of the national standardized amount and 25 percent of the
Puerto Rico-specific standardized amount. As a result, we applied the
Puerto Rico-specific labor-related share percentage and nonlabor-
related share percentage to the Puerto Rico-specific standardized
amount. Section 601 of the Consolidated Appropriations Act, 2016 (Pub.
L. 114-113) amended section 1886(d)(9)(E) of the Act to specify that
the payment calculation with respect to operating costs of inpatient
hospital services of a subsection (d) Puerto Rico hospital for
inpatient hospital discharges on or after January 1, 2016, shall use
100 percent of the national standardized amount. Because Puerto Rico
hospitals are no longer paid with a Puerto Rico-specific standardized
amount as of January 1, 2016, under section 1886(d)(9)(E) of the Act as
amended by section 601 of the Consolidated Appropriations Act, 2016,
there is no longer a need for us to calculate a Puerto Rico-specific
labor-related share percentage and nonlabor-related share percentage
for application to the Puerto Rico-specific standardized amount.
Hospitals in Puerto Rico are now paid 100 percent of the national
standardized amount and, therefore, are subject to the national labor-
related share and nonlabor-related share percentages that are applied
to the national standardized amount. Accordingly, for FY 2018, we did
not propose a Puerto Rico-specific labor-related share percentage or a
nonlabor-related share percentage in the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 19915).
Comment: Commenters suggested that CMS consider an approach that
will mitigate significant decreases in inpatient payments to hospitals
as a result of the proposed decrease in the labor-related share for FY
2018.
Response: As noted earlier, section 1886(d)(3)(E) of the Act
directs the Secretary to adjust the proportion of the national
prospective payment system base payment rates that are attributable to
wages and wage-related costs by a factor that reflects the relative
differences in labor costs among geographic areas. It also directs the
Secretary to estimate from time to time the proportion of hospital
costs that are labor-related and to adjust the proportion (as estimated
by the Secretary from time to time) of hospitals' costs which are
attributable to wages and wage-related costs of the DRG prospective
payment rates. In section IV.B.3. of the preamble of this final rule,
we discuss our recalculation of the labor-related share for discharges
occurring on or after October 1, 2017, using the 2014-based IPPS market
basket. We believe that the labor-related share calculated for FY 2018
accurately and appropriately reflects the proportion of hospitals'
costs that are attributable to wages and wage-related costs. Therefore,
we do not believe it is necessary or appropriate to mitigate the
effects of the labor-related share percentage finalized in this rule.
After consideration of the public comments we received, for the
reasons discussed in section IV.B.3. of the preamble of this final rule
and in the FY 2018 IPPS/LTCH PPS proposed rule, we are finalizing our
proposal to use a labor-related share of 68.3 percent for discharges
occurring on or after October 1, 2017, for all hospitals (including
Puerto Rico hospitals) whose wage indexes are greater than 1.0000.
Tables 1A and 1B, which are published in section VI. of the
Addendum to this FY 2018 IPPS/LTCH PPS final rule and available via the
Internet on the CMS Web site, reflect the national labor-related share,
which is also applicable to Puerto Rico hospitals. For FY 2018, for all
IPPS hospitals (including Puerto Rico hospitals) whose wage indexes are
less than or equal to 1.0000, we are applying the wage index to a
labor-related share of 62 percent of the national standardized amount.
For all hospitals (including Puerto Rico hospitals) whose wage indexes
are greater than 1.0000, for FY 2018, we are applying the wage index to
a labor-related share of 68.3 percent of the national standardized
amount.
[[Page 38158]]
IV. Rebasing and Revising of the Hospital Market Baskets for Acute Care
Hospitals
A. Background
Effective for cost reporting periods beginning on or after July 1,
1979, we developed and adopted a hospital input price index (that is,
the hospital market basket for operating costs). Although ``market
basket'' technically describes the mix of goods and services used in
providing hospital care, this term is also commonly used to denote the
input price index (that is, cost category weights and price proxies
combined) derived from that market basket. Accordingly, the term
``market basket'' as used in this document refers to the hospital input
price index.
The percentage change in the market basket reflects the average
change in the price of goods and services hospitals purchase in order
to provide inpatient care. We first used the market basket to adjust
hospital cost limits by an amount that reflected the average increase
in the prices of the goods and services used to provide hospital
inpatient care. This approach linked the increase in the cost limits to
the efficient utilization of resources.
Since the inception of the IPPS, the projected change in the
hospital market basket has been the integral component of the update
factor by which the prospective payment rates are updated every year.
An explanation of the hospital market basket used to develop the
prospective payment rates was published in the Federal Register on
September 1, 1983 (48 FR 39764). We also refer readers to the FY 2014
IPPS/LTCH PPS final rule (78 FR 50596) in which we discussed the most
recent previous rebasing of the hospital input price index.
The hospital market basket is a fixed-weight, Laspeyres-type price
index. A Laspeyres-type price index measures the change in price, over
time, of the same mix of goods and services purchased in the base
period. Any changes in the quantity or mix of goods and services (that
is, intensity) purchased over time are not measured.
The index itself is constructed in three steps, which are discussed
in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19916 through 19929)
and in this final rule. First, a base period is selected (in the
proposed rule, we proposed to use 2014 as the base period) and total
base period expenditures are estimated for a set of mutually exclusive
and exhaustive spending categories, with the proportion of total costs
that each category represents being calculated. These proportions are
called ``cost weights'' or ``expenditure weights.'' Second, each
expenditure category is matched to an appropriate price or wage
variable, referred to as a ``price proxy.'' In almost every instance,
these price proxies are derived from publicly available statistical
series that are published on a consistent schedule (preferably at least
on a quarterly basis). Finally, the expenditure weight for each cost
category is multiplied by the level of its respective price proxy. The
sum of these products (that is, the expenditure weights multiplied by
their price index levels) for all cost categories yields the composite
index level of the market basket in a given period. Repeating this step
for other periods produces a series of market basket levels over time.
Dividing an index level for a given period by an index level for an
earlier period produces a rate of growth in the input price index over
that timeframe.
As noted above, the market basket is described as a fixed-weight
index because it represents the change in price over time of a constant
mix (quantity and intensity) of goods and services needed to provide
hospital services. The effects on total expenditures resulting from
changes in the mix of goods and services purchased subsequent to the
base period are not measured. For example, a hospital hiring more
nurses to accommodate the needs of patients would increase the volume
of goods and services purchased by the hospital, but would not be
factored into the price change measured by a fixed-weight hospital
market basket. Only when the index is rebased would changes in the
quantity and intensity be captured, with those changes being reflected
in the cost weights. Therefore, we rebase the market basket
periodically so that the cost weights reflect recent changes in the mix
of goods and services that hospitals purchase (hospital inputs) to
furnish inpatient care between base periods.
We last rebased the hospital market basket cost weights effective
for FY 2014 (78 FR 50596), with FY 2010 data used as the base period
for the construction of the market basket cost weights. For the FY 2018
IPPS/LTCH PPS proposed rule, we proposed to rebase the cost structure
for the IPPS hospital index from FY 2010 to 2014, as discussed in the
proposed rule (82 FR 19916 through 19929) and below in this final rule.
B. Rebasing and Revising the IPPS Market Basket
The terms ``rebasing'' and ``revising,'' while often used
interchangeably, actually denote different activities. ``Rebasing''
means moving the base year for the structure of costs of an input price
index (for example, in the proposed rule, we proposed to shift the base
year cost structure for the IPPS hospital index from FY 2010 to 2014).
We note that we proposed to no longer refer to the market basket as a
``FY 2014-based'' market basket and instead referred to the proposed
market basket as simply ``2014-based''. We proposed this change in
naming convention for the market basket because the base year cost
weight data for the proposed market basket does not reflect only fiscal
year data. For example, the proposed 2014-based IPPS market basket uses
Medicare cost report data and other government data that reflect 2014
fiscal year, 2014 calendar year, and 2014 State fiscal year expenses to
determine the base year cost weights. Given that it is based on a mix
of classifications of 2014 data, we proposed to refer to the market
basket as ``2014-based'' instead of ``FY 2014-based'' or ``CY 2014-
based''.
``Revising'' means changing data sources or price proxies used in
the input price index. As published in the FY 2006 IPPS final rule (70
FR 47387), in accordance with section 404 of Public Law 108-173, CMS
determined a new frequency for rebasing the hospital market basket. We
established a rebasing frequency of every 4 years and, therefore, for
the FY 2018 IPPS update, we proposed to rebase and revise the IPPS
market basket from FY 2010 to 2014. We invited public comments on our
proposed methodology. A summary of the public comments we received and
our responses are included below under the appropriate subject area.
1. Development of Cost Categories and Weights
a. Use of Medicare Cost Report Data
The major source of expenditure data for developing the proposed
hospital market basket cost weights is the 2014 Medicare cost reports.
These 2014 Medicare cost reports are for cost reporting periods
beginning on and after October 1, 2013 and before October 1, 2014. We
note that while these dates appear to reflect fiscal year data, in
order to be classified as a ``2014 cost report,'' a hospital's cost
reporting period must begin between these dates. For example, we found
that of the 2014 Medicare cost reports for IPPS hospitals,
approximately 40 percent of the reports had a begin date on January 1,
2014, approximately 30 percent had a begin date on July 1, 2014, and
approximately 18 percent had a begin date on October 1, 2013. For this
reason, we are defining the base year of the market basket as ``2014-
based'' instead of ``FY 2014-
[[Page 38159]]
based''. We proposed to use 2014 as the base year because we believe
that the 2014 Medicare cost reports represent the most recent, complete
set of Medicare cost report data available to develop cost weights for
IPPS hospitals at the time of rulemaking. As was done in previous
rebasings, these cost reports are from IPPS hospitals only (hospitals
excluded from the IPPS and CAHs are not included) and are based on IPPS
Medicare-allowable operating costs. IPPS Medicare-allowable operating
costs are costs that are eligible to be paid under the IPPS. For
example, the IPPS market basket excludes home health agency (HHA) costs
as these costs would be paid under the HHA PPS and, therefore, these
costs are not IPPS Medicare-allowable costs.
We proposed to derive costs for eight major expenditures or cost
categories for the 2014-based IPPS market basket from the CMS Medicare
cost reports (Form 2552-10, OMB Control Number 0938-0050): Wages and
Salaries, Employee Benefits, Contract Labor, Pharmaceuticals,
Professional Liability Insurance (Malpractice), Blood and Blood
Products, Home Office Contract Labor, and a residual ``All Other''
category. The residual ``All Other'' category reflects all remaining
costs that are not captured in the other seven cost categories. We
proposed that, for the 2014-based IPPS market basket, we obtain costs
for one additional major cost category from the Medicare cost reports
compared to the FY 2010-based IPPS market basket--Home Office Contract
Labor Costs. We describe below the detailed methodology for obtaining
costs for each of the seven cost categories directly determined from
the Medicare cost reports. We received one specific comment on the
detailed methodology of the major cost weights, specifically for the
Home Office Contract Labor cost weight. We address this comment below.
(1) Wages and Salaries Costs
To derive wages and salaries costs for the Medicare allowable cost
centers, we proposed to first calculate total unadjusted wages and
salaries costs as reported on Worksheet S-3, part II. We then proposed
to remove the wages and salaries attributable to non-Medicare allowable
cost centers (that is, excluded areas) as well as a portion of overhead
wages and salaries attributable to these excluded areas. Specifically,
wages and salaries costs were equal to total wages and salaries as
reported on Worksheet S-3, Part II, Column 4, Line 1, less excluded
area wages and salaries (reported on Worksheet S-3, Part II, Column 4,
Lines 3 and 5 through 10) and less overhead wages and salaries
attributable to the excluded areas.
Overhead wages and salaries are attributable to the entire IPPS
facility. Therefore, we proposed to only include the proportion
attributable to the Medicare allowable cost centers. We proposed to
estimate the proportion of overhead wages and salaries that are not
attributable to Medicare allowable costs centers (that is, excluded
areas) by multiplying the ratio of excluded area wages and salaries (as
defined earlier) to total wages and salaries (Worksheet S-3, part II,
Column 4, Line 1) by total overhead wages and salaries (Worksheet A,
Column 1, Lines 4 through 18). A similar methodology was used to derive
wages and salaries costs in the FY 2010-based IPPS market basket.
(2) Employee Benefits Costs
We proposed to derive employee benefits costs using a similar
methodology as the wages and salaries costs; that is, reflecting
employee benefits costs attributable to the Medicare allowable cost
centers. First, we calculated total unadjusted employee benefits costs
as the sum of Worksheet S-3, Part II, Column 4, Lines 17, 18, 20, and
22. We then excluded those employee benefits attributable to the
overhead wages and salaries for the non-Medicare allowable cost centers
(that is, excluded areas). Employee benefits attributable to the non-
Medicare allowable cost centers were derived by multiplying the ratio
of total employee benefits (equal to the sum of Worksheet S-3, Part II,
Column 4, Lines 17 through 25) to total wages and salaries (Worksheet
S-3, Part II, Column 4, Line 1) by excluded overhead wages and salaries
(as derived above for wages and salaries costs). A similar methodology
was used in the FY 2010-based IPPS market basket.
(3) Contract Labor Costs
Contract labor costs are primarily associated with direct patient
care services. Contract labor costs for services such as accounting,
billing, and legal are estimated using other government data sources as
described below. We proposed to derive contract labor costs for the
2014-based IPPS market basket as the sum of Worksheet S-3, Part II,
Column 4, Lines 11, 13 and 15. A similar methodology was used in the FY
2010-based IPPS market basket.
(4) Professional Liability Insurance Costs
We proposed that professional liability insurance (PLI) costs
(often referred to as malpractice costs) be equal to premiums, paid
losses, and self-insurance costs reported on Worksheet S-2, Part I,
Columns 1 through 3, Line 118.01. A similar methodology was used for
the FY 2010-based IPPS market basket.
(5) Pharmaceuticals Costs
We proposed to calculate pharmaceuticals costs using nonsalary
costs reported for the Pharmacy cost center (Worksheet A, Column 2,
Line 15) and Drugs Charged to Patients cost center (Worksheet A, Column
2, Line 73) less estimated employee benefits attributable to these two
cost centers. We proposed to estimate these employee benefits costs by
multiplying the ratio of total employee benefits (equal to the sum of
Worksheet S-3, Part II, Column 4, Lines 17 through 25) to total wages
and salaries (Worksheet S-3, Part II, Column 4, Line 1) by total wages
and salaries costs for the Pharmacy and Drugs Charged to Patients cost
centers (equal to the sum of Worksheet A, Column 1, Lines 15 and 73). A
similar methodology was used for the FY 2010-based IPPS market basket.
(6) Blood and Blood Products Costs
We proposed to calculate blood and blood products costs using
nonsalary costs reported for the Whole Blood & Packed Red Blood Cells
cost center (Worksheet A, Column 2, Line 62) and the Blood Storing,
Processing, & Transfusing cost center (Worksheet A, Column 2, Line 63)
less estimated employee benefits attributable to these two cost
centers. We estimated these employee benefits costs by multiplying the
ratio of total employee benefits (equal to the sum of Worksheet S-3,
Part II, Column 4, Lines 17 through 25) to total wages and salaries
(Worksheet S3, Part II, Column 4, Line 1) by total wages and salaries
for the Whole Blood & Packed Red Blood Cells and Blood Storing,
Processing, & Transfusing cost centers (equal to the sum of Worksheet
A, Column 1, Lines 62 and 63). A similar methodology was used for the
FY 2010-based IPPS market basket.
(7) Home Office Contract Labor Costs
We proposed to determine home office contract labor costs using
data reported on Worksheet S-3, Part II, Column 4, line 14.
Specifically, we proposed to determine the Medicare allowable portion
of these costs by multiplying them by the ratio of total Medicare
allowable operating costs (as defined in section IV.B.1.b. of the
preamble to the proposed rule and in section IV.B.1.b. of the preamble
of this final rule) to total operating costs (calculated as Worksheet
B, Part I, Column 26, Line 202, less Worksheet B,
[[Page 38160]]
Part I, Column 0, Lines 1 through 3). Home office contract labor costs
in the FY 2010-based IPPS market basket were calculated using the U.S.
Census Bureau's Bureau of Economic Analysis (BEA) Benchmark Input-
Output (I-O) data, as described in section IV.B.1.c. of the preamble to
the proposed rule and in section IV.B.1.c. of the preamble of this
final rule.
Comment: One commenter stated that the data reported on Worksheet
S-3, Part II, Column 4, Line 14 is not specific to home office costs
but can include costs to other related organizations. The commenter
recommended that if the intent is to only capture home office costs,
CMS use a different data source. However, if the intent is to capture
home office and other related organization costs, the commenter
recommended that the label applied to the major cost category be
altered to reflect the actual cost being utilized (for example, Home
Office/Related Party Contract Labor Costs).
Response: We agree with the commenter's suggestion to alter the
label for this cost category. The instructions for the Medicare cost
report (CMS form 2552-10) in the CMS Provider Reimbursement Manual,
Part 2 state that the costs included on this line represent salaries
and wage-related costs paid to personnel who are affiliated with a home
office and/or related organization, who provide services to the
hospital, and whose salaries are not included on Worksheet A, Column 1
(CMS Pub. 15-2, Section 4005.2). According to the CMS Provider
Reimbursement Manual, Part 1, an organization is defined as being
related to the provider when the provider to a significant extent is
associated or affiliated with, or has control of, or is controlled by,
the organization furnishing the services, facilities, or supplies (CMS
Pub 15-1, Section 1002.1).
As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19923), the costs included in this proposed category for the 2014-based
IPPS market basket were previously obtained from the BEA Benchmark I-O
data using the costs from the NAICS 55 sector (Management of Companies
or Enterprises). The definition of the NAICS 55 sector from the BLS Web
site is: (1) Establishments that hold the securities of (or other
equity interests in) companies and enterprises for the purpose of
owning a controlling interest or influencing management decisions or
(2) establishments (except government establishments) that administer,
oversee, and manage establishments of the company or enterprise and
that normally undertake the strategic or organizational planning and
decision-making role of the company or enterprise. Establishments that
administer, oversee, and manage may hold the securities of the company
or enterprise. (https://www.bls.gov/iag/tgs/iag55.htm).
As was done for the FY 2010-based IPPS market basket when we used
the Benchmark I-O data, to calculate home office contract labor costs
using the Medicare cost reports, our intent is to capture both home
office and related organization compensation costs. Our proposed
methodology of using the Medicare cost report data meets our intention
and reflects the most current data on these expenses. We appreciate the
commenter's suggestion and will incorporate this suggestion by
finalizing the cost category label to be ``Home Office/Related
Organization Contract Labor'' so it is more consistent with the scope
of costs included in this category.
b. Final Major Cost Category Computation
After we derived costs for the seven major cost categories for each
provider using the Medicare cost report data as previously described,
we proposed to address data outliers using the following steps. First,
we divided the costs for each of the seven categories by total Medicare
allowable operating costs calculated for the provider to obtain cost
weights for each PPS hospital. We proposed that total Medicare
allowable operating costs were equal to noncapital costs (Worksheet B,
part I, Column 26 less Worksheet B, part II, Column 26) that are
attributable to the Medicare allowable cost centers of the hospital.
Medicare allowable cost centers were defined as Lines 30 through 35,
50, 51, 53 through 60, 62 through 76, 90, 91, 92.01 and 93.
For all of the major cost weights except the Home Office Contract
Labor cost weight, we then removed those providers whose derived cost
weights fall in the top and bottom 5 percent of provider-specific cost
weights to ensure the removal of outliers. After the outliers were
removed, we summed the costs for each category across all remaining
providers. We then divided this by the sum of total Medicare allowable
operating costs across all remaining providers to obtain a cost weight
for the proposed 2014-based IPPS market basket for the given category.
We note that, in the FY 2018 IPPS/LTCH PPS proposed rule, we
mistakenly referenced that we used the same trimming methodology for
the Home Office Contract Labor cost weight that we used for the other
major cost weights (a top and bottom 5 percent trimming methodology).
For the Home Office Contract Labor cost weight, we applied a 1-
percent top-only trimming methodology. This allowed all providers'
Medicare allowable costs to be included, even if their home office
contract labor costs were zero. We believe, as the Medicare cost report
data (Worksheet S-2, Part 1, Line 140) indicate, that not all IPPS
hospitals have a home office. IPPS hospitals without a home office can
incur these expenses directly by having their own staff, for which the
costs would be included in the Wages and Salaries and Employee Benefits
cost weights. Alternatively, IPPS hospitals without a home office could
also purchase related services from external contractors for which
these expenses would be captured in the residual ``All-Other'' cost
weight. We believe this 1-percent top-only trimming methodology is
appropriate as it addresses outliers while allowing providers with zero
Home Office Contract Labor costs to be included in the Home Office
Contract Labor cost weight calculation. If we applied both the top and
bottom 5 percent trimming methodology, we would exclude providers who
have zero Home Office Contract Labor costs. Finally, we proposed to
calculate the residual ``All Other'' cost weight that reflects all
remaining costs that are not captured in the seven cost categories
listed.
Table IV-01 in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19918) shows the major cost categories and their respective cost
weights as derived from the Medicare cost reports for the proposed
rule. Table IV-01 below provides these same major cost categories and
respective cost weights, with the change made to the Home Office
Contract Labor Cost category name as discussed earlier in our response
to public comments.
[[Page 38161]]
Table IV-01--Major Cost Categories as Derived From the Medicare Cost
Reports
------------------------------------------------------------------------
Proposed and
Major cost categories FY 2010 final 2014
------------------------------------------------------------------------
Wages and Salaries...................... 45.8 42.1
Employee Benefits....................... 12.7 12.0
Contract Labor.......................... 1.8 1.8
Professional Liability Insurance 1.3 1.2
(Malpractice)..........................
Pharmaceuticals......................... 5.4 5.9
Blood and Blood Products................ 1.1 0.8
Home Office/Related Organization - 4.2
Contract Labor*........................
``All Other'' Residual.................. 31.9 32.0
------------------------------------------------------------------------
*Home Office/Related Organization Contract Labor costs were included in
the ``All Other'' residual cost weight of the FY 2010-based IPPS
market basket.
From FY 2010 to 2014, the Wages and Salaries and Employee Benefits
cost weights as calculated directly from the Medicare cost reports
decreased by approximately 3.7 and 0.7 percentage points, respectively,
while the Contract Labor cost weight was unchanged. The decrease in the
Wages and Salaries cost weight occurred among most cost centers and in
aggregate for the General Service (overhead), Inpatient Routine
Service, Ancillary Service, and Outpatient Service cost centers.
Comment: One commenter expressed concerns that several of the
updated payment rates based on the proposed market basket do not
accurately account for the realities facing hospitals and health
systems. For example, the commenter believed the proposed market basket
cost weights for certain categories are too low. Specifically, the
weight for employee benefits that decreased from 12.7 percent to 12.0
percent, and the weight for pharmaceuticals that increased from 5.4
percent to 5.9 percent. The commenter further stated that hospitals,
similar to other employers, are experiencing significant increases in
costs for providing health care to their employees. The commenter
claimed that, in 2017 alone, employer-sponsored premiums increased by 3
percent nationally. The commenter further cited a study conducted for
the American Hospital Association and the Federation of American
Hospitals, which found that between FY 2013 and FY 2015, average annual
inpatient drug spending at community hospitals increased by 23.4
percent and average spending per admission increased 38.7 percent. The
commenter stated that Virginia hospitals saw a 9.6-percent increase in
spending on pharmaceuticals between 2014 and 2015 and a 41-percent
increase in the last 6 years. The commenter further stated that it is
important that CMS ensures any rebasing of the market basket adequately
accounts for these increased costs.
Response: As stated in the FY 2018 IPPS/LTCH PPS proposed rule (82
FR 19916), the market basket is described as a fixed-weight index
because it represents the change in price over time of a constant mix
(quantity and intensity) of goods and services needed to provide
hospital services. The effects on total expenditures resulting from
changes in the mix of goods and services purchased subsequent to the
base period are not measured. Only when the index is rebased and
updated cost weights determined would changes in the quantity and
intensity be captured. Therefore, we rebase the market basket
periodically so that the cost weights reflect recent changes in the mix
of goods and services that hospitals purchase (hospital inputs) to
furnish inpatient care between base periods.
We used a similar methodology for calculating the Employee Benefits
and Pharmaceuticals cost weights as we used to derive the FY 2010-based
IPPS market basket. These data are obtained directly from the Medicare
cost reports completed by IPPS hospitals. In addition, in the FY 2018
IPPS/LTCH PPS proposed rule, we provided the specific fields from the
Medicare cost report that we were proposing to use to calculate the
cost weights. We did not receive any technical public comments on these
specific methodologies we proposed.
The change in the cost weight of a specific category from the
current index (FY 2010) to the rebased index (2014) is a function of
the growth rate of those specific expenses relative to other components
of the market basket. For pharmaceuticals, costs increased faster than
other components of the market basket between FY 2010 and 2014, which
is why the Pharmaceuticals cost weight increased from 5.4 to 5.9
percent. As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19917), the Pharmaceuticals cost weight does not include compensation
costs associated with hospital pharmacy employees; rather, these costs
are included in the compensation cost weight. The increase in
pharmaceutical costs over this period reflects changes in both the
price of prescription drugs, proxied by the Producer Price Index for
Prescription Drugs, as well the quantity and intensity of
prescriptions.
We note that, for the FY 2018 IPPS market basket update,
pharmaceuticals price growth contributes approximately 0.4 percentage
point to the FY 2018 IPPS market basket update of 2.7 percent, or
nearly 15 percent of the update. This large contribution (relative to
the base year cost weight) reflects not only a projected FY 2018
prescription drug price increase that is approximately 80 percent
faster than the weighted average price associated with the other
remaining market basket cost categories, but also that over the FY 2014
to FY 2017 time period, the pharmaceuticals prices are projected to
increase over 25 percent compared to the price increases of the other
market basket categories combined at approximately 5 percent. Thus, we
believe that the market basket is adequately reflecting the recent
trends in prescription drug price growth.
For employee benefits, costs increased over the FY 2010 to FY 2014
period but at a slower rate than other components of the market basket,
which resulted in a slight decrease in the proposed Employee Benefits
cost weight from 12.7 to 12.0 percent. The changes in employee benefit
costs over this period reflect not only the price changes associated
with employee benefits, which are proxied by the Employment Cost Index
for All Civilian Workers in Hospitals, but also any changes in the mix
of workers. For FY 2018, the price change in the benefits component for
the ECI for hospital workers is projected to be 2.6 percent.
After consideration of public comments we received, in this final
rule, we are finalizing our calculation of the major cost weights of
the 2014-based IPPS market basket as proposed. As
[[Page 38162]]
discussed above, we are making one revision to change the label of the
proposed ``Home Office Contract Labor'' category to ``Home Office/
Related Organization Contract Labor''. However, there is no effect on
the calculation of the major cost weight for this category or in how it
is apportioned between Professional Fees: Labor-Related and
Professional Fees: Nonlabor Related as described in detail in section
IV.B.3 of the preamble of this final rule.
As we did for the FY 2010-based IPPS market basket (78 FR 50597),
we proposed to allocate contract labor costs to the Wages and Salaries
and Employee Benefits cost weights based on their relative proportions
for employed labor under the assumption that contract labor costs are
comprised of both wages and salaries and employee benefits. The
contract labor allocation proportion for wages and salaries was equal
to the Wages and Salaries cost weight as a percent of the sum of the
Wages and Salaries cost weight and the Employee Benefits cost weight.
Using the 2014 Medicare cost report data, this percentage was 78
percent. Therefore, we proposed to allocate approximately 78 percent of
the Contract Labor cost weight to the Wages and Salaries cost weight
and 22 percent to the Employee Benefits cost weight. The FY 2010-based
IPPS market basket also allocated 78 percent of the Contract Labor cost
weight to the Wages and Salaries cost weight.
Table IV-02 in the proposed rule (82 FR 19918) shows the Wages and
Salaries and Employee Benefits cost weights after contract labor
allocation for the FY 2010-based IPPS market basket and the proposed
2014-based IPPS market basket. This table is also included below to
reflect the final 2014-based IPPS market basket.
Table IV-02--Wages and Salaries and Employee Benefits Cost Weights After
Contract Labor Allocation
------------------------------------------------------------------------
Proposed and
FY 2010-based final 2014-
Major cost categories IPPS market based IPPS
basket market basket
------------------------------------------------------------------------
Wages and Salaries...................... 47.2 43.4
Employee Benefits....................... 13.1 12.4
------------------------------------------------------------------------
We did not receive any specific public comments regarding the
allocation of the Contract Labor cost weight to the Wages and Salaries
and Employee Benefits cost weights. In this final rule, we are
finalizing our methodology of allocating the Contract Labor cost weight
as we proposed.
c. Derivation of the Detailed Cost Weights
To further divide the ``All Other'' residual cost weight estimated
from the 2014 Medicare cost report data into more detailed cost
categories, we proposed to use the 2007 Benchmark I-O ``Use Tables/
Before Redefinitions/Purchaser Value'' for NAICS 622000, Hospitals,
published by the BEA. These data are publicly available at the
following Web site: https://www.bea.gov/industry/io_annual.htm. The BEA
Benchmark I-O data are generally scheduled for publication every 5
years on a lagged basis, with the most recent data available for 2007.
The 2007 Benchmark I-O data are derived from the 2007 Economic Census
and are the building blocks for BEA's economic accounts. Therefore,
they represent the most comprehensive and complete set of data on the
economic processes or mechanisms by which output is produced and
distributed.\22\ BEA also produces Annual I-O estimates. However, while
based on a similar methodology, these estimates reflect less
comprehensive and less detailed data sources and are subject to
revision when benchmark data become available. Instead of using the
less detailed Annual I-O data, we proposed to inflate the detailed 2007
Benchmark I-O data forward to 2014 by applying the annual price changes
from the respective price proxies to the appropriate market basket cost
categories that are obtained from the 2007 Benchmark I-O data. In our
calculations for the proposed rule, we repeated this practice for each
year.
---------------------------------------------------------------------------
\22\ https://www.bea.gov/papers/pdf/IOmanual_092906.pdf.
---------------------------------------------------------------------------
We then calculated the cost shares that each cost category
represents of the 2007 data inflated to 2014. These resulting 2014 cost
shares were applied to the ``All Other'' residual cost weight to obtain
the detailed cost weights for the proposed 2014-based IPPS market
basket. For example, the cost for Food: Direct Purchases represented
7.3 percent of the sum of the ``All Other'' 2007 Benchmark I-O Hospital
Expenditures inflated to 2014. Therefore, the Food: Direct Purchases
cost weight represented 7.3 percent of the proposed 2014-based IPPS
market basket's ``All Other'' cost category (32.0 percent), yielding a
Food: Direct Purchases proposed cost weight of 2.3 percent in the
proposed 2014-based IPPS market basket (0.073 x 32.0 percent = 2.3
percent). For the FY 2010-based IPPS market basket (78 FR 50597), we
used the same methodology utilizing the 2002 Benchmark I-O data (aged
to FY 2010).
Using this methodology, we proposed to derive 18 detailed cost
categories from the proposed 2014-based IPPS market basket residual
cost weight (32.0 percent). These categories were: (1) Fuel: Oil and
Gas; (2) Electricity; (3) Water and Sewerage; (4) Food: Direct
Purchases; (5) Food: Contract Services; (6) Chemicals; (7) Medical
Instruments; (8) Rubber and Plastics; (9) Paper and Printing Products;
(10) Miscellaneous Products; (11) Professional Fees: Labor-Related;
(12) Administrative and Facilities Support Services; (13) Installation,
Maintenance, and Repair Services; (14) All Other: Labor-Related
Services; (15) Professional Fees: Nonlabor-Related; (16) Financial
Services; (17) Telephone Services; and (18) All Other: Nonlabor-Related
Services.
Similar to the 2013-based LTCH market basket, the proposed 2014-
based IPPS market basket does not include separate cost categories for
Apparel, Machinery and Equipment, and Postage. Due to the small weights
associated with these detailed categories and relatively stable price
growth in the applicable price proxy, we believed that consolidating
these smaller cost category weights with other cost categories in the
proposed market basket that experience similar price increases
eliminates unnecessary complexity to the market basket without having a
material impact on the total market basket increase. Therefore, we
proposed to include Apparel and Machinery and Equipment in the
Miscellaneous Products cost category and Postage in the All-Other:
Nonlabor-Related Services cost category. We note that the
[[Page 38163]]
machinery and equipment expenses are for equipment that is paid for in
a given year and not depreciated over the asset's useful life.
Depreciation expenses for movable equipment are reflected in the
proposed 2014-based Capital Input Price Index (described in section
IV.D. of the preamble of this final rule). For the proposed 2014-based
IPPS market basket, we also proposed to include a separate cost
category for Installation, Maintenance, and Repair Services in order to
proxy these costs by a price index that better reflects the price
changes of labor associated with maintenance-related services.
We did not receive any specific public comments on the derivation
of the detailed cost weights. In this final rule, we are finalizing our
methodology for deriving the detailed cost weights as we proposed.
2. Selection of Proposed Price Proxies
After computing the proposed 2014 cost weights for the IPPS market
basket, it was necessary to select appropriate wage and price proxies
to reflect the rate of price change for each expenditure category. With
the exception of the proxy for professional liability insurance (PLI),
all the proxies we proposed are based on Bureau of Labor Statistics
(BLS) data and are grouped into one of the following BLS categories:
Producer Price Indexes--Producer Price Indexes (PPIs)
measure price changes for goods sold in markets other than the retail
market. PPIs are preferable price proxies for goods and services that
hospitals purchase as inputs because PPIs better reflect the actual
price changes encountered by hospitals. For example, we proposed to use
a PPI for prescription drugs, rather than the Consumer Price Index
(CPI) for prescription drugs, because hospitals generally purchase
drugs directly from a wholesaler. The PPIs that we proposed to use
measure price changes at the final stage of production.
Consumer Price Indexes--Consumer Price Indexes (CPIs)
measure change in the prices of final goods and services bought by the
typical consumer. Because they may not represent the price faced by a
producer, we proposed to use CPIs only if an appropriate PPI is not
available, or if the expenditures are more like those faced by retail
consumers in general rather than by purchasers of goods at the
wholesale level. For example, the CPI for food purchased away from home
was proposed to be used as a proxy for contracted food services.
Employment Cost Indexes--Employment Cost Indexes (ECIs)
measure the rate of change in employee wage rates and employer costs
for employee benefits per hour worked. These indexes are fixed-weight
indexes and strictly measure the change in wage rates and employee
benefits per hour. Appropriately, they are not affected by shifts in
employment mix.
We evaluated the price proxies using the criteria of reliability,
timeliness, availability, and relevance. Reliability indicates that the
index is based on valid statistical methods and has low sampling
variability. Timeliness implies that the proxy is published regularly,
preferably at least once a quarter. Availability means that the proxy
is publicly available. Finally, relevance means that the proxy is
applicable and representative of the cost category weight to which it
is applied. We stated in the proposed rule that we believe the proposed
PPIs, CPIs, and ECIs selected meet these criteria.
a. Price Proxies for Each Cost Category
Below we present a detailed explanation of the price proxies that
we proposed for each cost category weight and a statement of our
finalized policies. We note that many of the proxies that we proposed
to use for the 2014-based IPPS market basket are the same as those used
for the FY 2010-based IPPS market basket.
(1) Wages and Salaries
We proposed to use the ECI for Wages and Salaries for All Civilian
Workers in Hospitals (BLS series code CIU1026220000000I) to measure the
price growth of this cost category. This is the same price proxy used
in the FY 2010-based IPPS market basket.
(2) Employee Benefits
We proposed to use the ECI for Total Benefits for All Civilian
Workers in Hospitals to measure the price growth of this cost category.
This ECI is calculated using the ECI for Total Compensation for All
Civilian Workers in Hospitals (BLS series code CIU1016220000000I) and
the relative importance of wages and salaries within total
compensation. This is the same price proxy used in the FY 2010-based
IPPS market basket.
(3) Fuel: Oil and Gas
We proposed to change the proxy used for the Fuel: Oil and Gas cost
category. The FY 2010-based IPPS market basket uses the PPI Industry
for Petroleum Refineries (BLS series code PCU32411-32411-) to proxy
these expenses.
For the proposed 2014-based IPPS market basket, we proposed to use
a blend of the PPI Industry for Petroleum Refineries (BLS series code
PCU32411-32411-) and the PPI Commodity for Natural Gas (BLS series code
WPU0531). Our analysis of the BEA 2007 Benchmark I-O data (use table
before redefinitions, purchaser's value for NAICS 622000 [Hospitals])
shows that petroleum refineries expenses account for approximately 70
percent and Natural Gas expenses account for approximately 30 percent
of the Fuel: Oil and Gas expenses. Therefore, we proposed a blended
proxy of 70 percent of the PPI Industry for Petroleum Refineries (BLS
series code PCU32411-32411-) and 30 percent of the PPI Commodity for
Natural Gas (BLS series code WPU0531). We stated in the proposed rule
that we believe that these two price proxies are the most technically
appropriate indices available to measure the price growth of the Fuel:
Oil and Gas cost category in the proposed 2014-based IPPS market
basket.
(4) Electricity
We proposed to use the PPI Commodity for Commercial Electric Power
(BLS series code WPU0542) to measure the price growth of this cost
category. This is the same price proxy used in the FY 2010-based IPPS
market basket.
(5) Water and Sewerage
We proposed to use the CPI for Water and Sewerage Maintenance (All
Urban Consumers) (BLS series code CUUR0000SEHG01) to measure the price
growth of this cost category. This is the same price proxy used in the
FY 2010-based IPPS market basket.
(6) Professional Liability Insurance
We proposed to proxy price changes in hospital professional
liability insurance premiums (PLI) using percentage changes as
estimated by the CMS Hospital Professional Liability Index. To generate
these estimates, we collected commercial insurance premiums for a fixed
level of coverage while holding nonprice factors constant (such as a
change in the level of coverage). This is the same price proxy used in
the FY 2010-based IPPS market basket.
(7) Pharmaceuticals
We proposed to use the PPI Commodity for Pharmaceuticals for Human
Use, Prescription (BLS series code WPUSI07003) to measure the price
growth of this cost category. This is the same price proxy used in the
FY 2010-based IPPS market basket.
[[Page 38164]]
(8) Food: Direct Purchases
We proposed to use the PPI Commodity for Processed Foods and Feeds
(BLS series code WPU02) to measure the price growth of this cost
category. This is the same price proxy used in the FY 2010-based IPPS
market basket.
(9) Food: Contract Services
We proposed to use the CPI for Food Away From Home (All Urban
Consumers) (BLS series code CUUR0000SEFV) to measure the price growth
of this cost category. This is the same price proxy used in the FY
2010-based IPPS market basket.
(10) Chemicals
We proposed to continue to use a four-part blended index composed
of the PPI Industry for Industrial Gas Manufacturing (BLS series code
PCU325120325120P), the PPI Industry for Other Basic Inorganic Chemical
Manufacturing (BLS series code PCU32518-32518-), the PPI Industry for
Other Basic Organic Chemical Manufacturing (BLS series code PCU32519-
32519-), and the PPI Industry for Soap and Cleaning Compound
Manufacturing (BLS series code PCU32561-32561-). We proposed to update
the blended weights using 2007 Benchmark I-O data, which we also
proposed to use for the proposed 2014-based IPPS market basket. The FY
2010-based IPPS market basket included the same blended chemical price
proxy, but used the 2002 Benchmark I-O data to determine the weights of
the blended chemical price index. The 2007 Benchmark I-O data have a
higher weight for organic chemical products and a lower weight for the
other chemical products compared to the 2002 Benchmark I-O data.
Table IV-03 in the proposed rule (82 FR 19920) shows the proposed
weights for each of the four PPIs used to create the blended index
compared to those used for the FY 2010-based IPPS market basket. This
table is also included below and reflects the final 2014-based IPPS
weights.
Table IV-03--Blended Chemical Weights
----------------------------------------------------------------------------------------------------------------
Proposed and
FY 2010-based final 2014-
Name IPPS weights Based IPPS NAICS
(%) weights (%)
----------------------------------------------------------------------------------------------------------------
PPI for Industrial Gas Manufacturing............................ 35 32 325120
PPI for Other Basic Inorganic Chemical Manufacturing............ 25 17 325180
PPI for Other Basic Organic Chemical Manufacturing.............. 30 45 325190
PPI for Soap and Cleaning Compound Manufacturing................ 10 6 325610
----------------------------------------------------------------------------------------------------------------
(11) Blood and Blood Products
We proposed to use the PPI Industry for Blood and Organ Banks (BLS
series code PCU621991621991) to measure the price growth of this cost
category. This is the same price proxy used in the FY 2010-based IPPS
market basket.
(12) Medical Instruments
We proposed to use a blended price proxy for the Medical
Instruments cost category. The 2007 Benchmark Input-Output data show an
approximate 50/50 split between Surgical and Medical Instruments and
Medical and Surgical Appliances and Supplies for this cost category.
Therefore, we proposed a blend composed of 50 percent of the PPI
Commodity for Surgical and Medical Instruments (BLS series code
WPU1562) and 50 percent of the PPI Commodity for Medical and Surgical
Appliances and Supplies (BLS series code WPU1563). The FY 2010-based
IPPS market basket used the single, higher level PPI Commodity for
Medical, Surgical, and Personal Aid Devices (BLS series code WPU156).
We stated in the proposed rule that we believe that the proposed price
proxy better reflects the mix of expenses for this cost category as
obtained from the 2007 Benchmark I-O data.
(13) Rubber and Plastics
We proposed to use the PPI Commodity for Rubber and Plastic
Products (BLS series code WPU07) to measure the price growth of this
cost category. This is the same price proxy used in the FY 2010-based
IPPS market basket.
(14) Paper and Printing Products
We proposed to use the PPI Commodity for Converted Paper and
Paperboard Products (BLS series code WPU0915) to measure the price
growth of this cost category. This is the same price proxy used in the
FY 2010-based IPPS market basket.
(15) Miscellaneous Products
We proposed to use the PPI Commodity for Finished Goods Less Food
and Energy (BLS series code WPUFD4131) to measure the price growth of
this cost category. This is the same price proxy used in the FY 2010-
based IPPS market basket.
(16) Professional Fees: Labor-Related
We proposed to use the ECI for Total Compensation for Private
Industry Workers in Professional and Related (BLS series code
CIU2010000120000I) to measure the price growth of this category. It
includes occupations such as legal, accounting, and engineering
services. This is the same price proxy used in the FY 2010-based IPPS
market basket.
(17) Administrative and Facilities Support Services
We proposed to use the ECI for Total Compensation for Private
Industry Workers in Office and Administrative Support (BLS series code
CIU2010000220000I) to measure the price growth of this category. This
is the same price proxy used in the FY 2010-based IPPS market basket.
(18) Installation, Maintenance, and Repair Services
We proposed to use the ECI for Total Compensation for All Civilian
Workers in Installation, Maintenance, and Repair (BLS series code
CIU1010000430000I) to measure the price growth of this new cost
category. Previously these costs were included in the All Other: Labor-
Related Services category and were proxied by the ECI for Total
Compensation for Private Industry Workers in Service Occupations (BLS
series code CIU2010000300000I). We believe that this index better
reflects the price changes of labor associated with maintenance-related
services and its incorporation represents a technical improvement to
the market basket.
[[Page 38165]]
(19) All Other: Labor-Related Services
We proposed to use the ECI for Total Compensation for Private
Industry Workers in Service Occupations (BLS series code
CIU2010000300000I) to measure the price growth of this cost category.
This is the same price proxy used in the FY 2010-based IPPS market
basket.
(20) Professional Fees: Nonlabor-Related
We proposed to use the ECI for Total Compensation for Private
Industry Workers in Professional and Related (BLS series code
CIU2010000120000I) to measure the price growth of this category. This
is the same price proxy that we proposed to use for the Professional
Fees: Labor-Related cost category and the same price proxy used in the
FY 2010-based IPPS market basket.
(21) Financial Services
We proposed to use the ECI for Total Compensation for Private
Industry Workers in Financial Activities (BLS series code
CIU201520A000000I) to measure the price growth of this cost category.
This is the same price proxy used in the FY 2010-based IPPS market
basket.
(22) Telephone Services
We proposed to use the CPI for Telephone Services (BLS series code
CUUR0000SEED) to measure the price growth of this cost category. This
is the same price proxy used in the FY 2010-based IPPS market basket.
(23) All Other: Nonlabor-Related Services
We proposed to use the CPI for All Items Less Food and Energy (BLS
series code CUUR0000SA0L1E) to measure the price growth of this cost
category. We believe that using the CPI for All Items Less Food and
Energy avoids double counting of changes in food and energy prices as
they are already captured elsewhere in the market basket. This is the
same price proxy used in the FY 2010-based IPPS market basket. We did
not receive any specific public comments on the price proxies we
proposed to use for the 2014-based IPPS market basket. In this final
rule, we are finalizing the use of these price proxies as we proposed.
After consideration of the public comments we received, we are
finalizing the 2014-based IPPS market basket as proposed.
Table IV-04 in the proposed rule (82 FR 19921) set forth the
proposed 2014-based IPPS market basket, including the cost categories
and their respective weights and price proxies. For comparison
purposes, the corresponding FY 2010-based IPPS market basket cost
weights also were listed. This table is also included below and
reflects the final 2014-based IPPS market basket.
Table IV-04--Proposed and Final 2014-Based IPPS Market Basket Cost Categories, Cost Weights, and Price Proxies
Compared to FY 2010-Based IPPS Market Basket Cost Weights
----------------------------------------------------------------------------------------------------------------
Proposed and
FY 2010-based final 2014-
Cost categories IPPS market based IPPS Proposed and final 2014-based
basket cost market basket IPPS market basket price proxies
weights cost weights
----------------------------------------------------------------------------------------------------------------
1. Compensation............................... 60.3 55.8
A. Wages and Salaries \1\................. 47.2 43.4 ECI for Wages and Salaries for
All Civilian Workers in
Hospitals.
B. Employee Benefits \1\.................. 13.1 12.4 ECI for Total Benefits for All
Civilian Workers in Hospitals.
2. Utilities.................................. 2.2 2.5
A. Fuel: Oil and Gas...................... 0.4 1.3 Blend of PPIs for Petroleum
Refineries and Natural Gas.
B. Electricity............................ 1.7 1.0 PPI Commodity for Commercial
Electric Power.
C. Water and Sewerage..................... 0.1 0.1 CPI for Water and Sewerage
Maintenance (All Urban
Consumers).
3. Professional Liability Insurance........... 1.3 1.2 CMS Hospital Professional
Liability Insurance Premium
Index.
4. All Other.................................. 36.1 40.5
A. All Other Products..................... 19.5 17.4
(1) Pharmaceuticals................... 5.4 5.9 PPI Commodity for
Pharmaceuticals for Human Use,
Prescription.
(2) Food: Direct Purchases............ 4.2 2.3 PPI Commodity for Processed
Foods and Feeds.
(3) Food: Contract Services........... 0.6 1.3 CPI for Food Away From Home (All
Urban Consumers).
(4) Chemicals......................... 1.5 0.9 Blend of Chemical PPIs.
(5) Blood and Blood Products.......... 1.1 0.8 PPI Industry for Blood and Organ
Banks.
(6) Medical Instruments............... 2.6 2.9 Blend of PPI for Surgical and
Medical Instruments and PPI for
Medical and Surgical Appliances
and Supplies.
(7) Rubber and Plastics............... 1.6 0.8 PPI Commodity for Rubber and
Plastic Products.
(8) Paper and Printing Products....... 1.5 1.5 PPI Commodity for Converted
Paper and Paperboard Products.
(9) Miscellaneous Products \2\........ 1.0 1.1 PPI Commodity for Finished Goods
less Food and Energy.
B. Labor-Related Services................. 9.2 12.5
(1) Professional Fees: Labor-Related.. 5.5 6.8 ECI for Total Compensation for
Private Industry Workers in
Professional and Related.
(2) Administrative and Facilities 0.6 1.0 ECI for Total Compensation for
Support Services. Private Industry Workers in
Office and Administrative
Support.
[[Page 38166]]
(3) Installation, Maintenance and 2.4 ECI for Total Compensation for
Repair Services. Civilian Workers in
Installation, Maintenance, and
Repair.
(4) All Other: Labor-Related Services. 3.1 2.3 ECI for Total Compensation for
Private Industry Workers in
Service Occupations.
C. Nonlabor-Related Services.............. 7.4 10.7
(1) Professional Fees: Nonlabor- 3.7 5.1 ECI for Total Compensation for
Related. Private Industry Workers in
Professional and Related.
(2) Financial Services................ 1.2 3.0 ECI for Total Compensation for
Private Industry Workers in
Financial Activities.
(3) Telephone Services................ 0.6 0.8 CPI for Telephone Services.
(4) All Other: Nonlabor-Related 1.9 1.7 CPI for All Items less Food and
Services \3\. Energy.
--------------------------------
Total............................. 100.0 100.0
----------------------------------------------------------------------------------------------------------------
Note: The cost weights are calculated using three decimal places. For presentational purposes, we are displaying
one decimal and therefore, the detail may not add to the total due to rounding.
\1\ Contract labor is distributed to wages and salaries and employee benefits based on the share of total
compensation that each category represents.
\2\ The FY 2010-based IPPS market basket Miscellaneous Products cost category also includes Apparel and
Machinery and Equipment cost categories. These costs were not broken out separately in the 2014-based IPPS
market basket.
\3\ The FY 2010-based IPPS market basket All Other: Nonlabor-Related Services cost category also includes the
Postage cost category. These costs were not broken out separately in the 2014-based IPPS market basket.
Table IV-05 in the proposed rule (82 FR 19922) compares both the
historical and forecasted percent changes in the FY 2010-based IPPS
market basket and the proposed 2014-based IPPS market basket. The
percent changes in the proposed rule were based on IHS Global Inc.'s
(IGI's) fourth quarter 2016 forecast with historical data through third
quarter 2016. The forecasted growth rates provided in Table IV-05 below
are based on IGI's more recent second quarter 2017 forecast with
historical data through first quarter 2017.
Table IV-05--FY 2010-Based and Proposed and Final 2014-Based IPPS
Hospital Operating Index Percent Change, FY 2013 Through FY 2020
------------------------------------------------------------------------
Proposed and
FY 2010-based final 2014-
Fiscal year (FY) IPPS market based IPPS
basket percent market basket
change percent change
------------------------------------------------------------------------
Historical data:
FY 2013............................. 2.0 2.0
FY 2014............................. 1.8 1.8
FY 2015............................. 1.8 1.6
FY 2016............................. 1.8 1.8
Average FYs 2013-2016............... 1.9 1.8
Forecast:
FY 2017............................. 2.6 2.7
FY 2018............................. 2.7 2.7
FY 2019............................. 2.9 2.9
FY 2020............................. 3.0 3.1
Average FYs 2017-2020............... 2.8 2.9
------------------------------------------------------------------------
Source: IHS Global Inc., 2nd Quarter 2017 forecast.
The percent change in the proposed and final 2014-based IPPS market
basket is, on average, 0.1 percentage point lower than the FY 2010-
based IPPS market basket over the FY 2013 to FY 2016 historical time
period and on average 0.1 percentage point higher over the FY 2017 to
FY 2020 forecasted time period. The difference in the average growth
rates is mostly a result of the lower compensation cost weight and the
revised price proxy for the Fuel, Oil and Gasoline cost category. As
stated in section IV.B.2. of the preamble of the FY 2018 IPPS/LTCH PPS
proposed rule (and in section IV.B.2.a. of the preamble of this final
rule), for the 2014-based IPPS market basket, we proposed to revise the
price proxy for the Fuel: Oil and Gas cost category to be a blend of
the PPI Industry for Petroleum Refineries (BLS series code PCU32411-
32411-) and the PPI Commodity for Natural Gas (BLS series code
WPU0531). The FY 2010-based IPPS market basket used only the PPI
Industry for Petroleum Refineries.
[[Page 38167]]
3. Labor-Related Share
Under section 1886(d)(3)(E) of the Act, the Secretary estimates
from time to time the proportion of payments that are labor-related.
Section 1886(d)(3)(E) of the Act states that the Secretary shall adjust
the proportion, (as estimated by the Secretary from time to time) of
hospitals' costs which are attributable to wages and wage-related
costs, of the DRG prospective payment rates. We refer to the proportion
of hospitals' costs that are attributable to wages and wage-related
costs as the ``labor-related share.''
The labor-related share is used to determine the proportion of the
national PPS base payment rate to which the area wage index is applied.
We include a cost category in the labor-related share if the costs are
labor intensive and vary with the local labor market. For the FY 2018
IPPS/LTCH PPS proposed rule, we proposed (82 FR 19923) to include in
the labor-related share the national average proportion of operating
costs that are attributable to the following cost categories in the
proposed 2014-based IPPS market basket: Wages and Salaries, Employee
Benefits, Professional Fees: Labor-Related, Administrative and
Facilities Support Services, Installation, Maintenance, and Repair
Services, and All Other: Labor-Related Services. As noted in section
IV.B.1.c. of the preamble of the proposed rule, for the proposed 2014-
based IPPS market basket, we proposed the creation of a separate cost
category for Installation, Maintenance, and Repair Services. These
expenses were previously included in the All Other: Labor-Related
Services cost category in the FY 2010-based IPPS market basket, along
with other services, including, but not limited to, janitorial, waste
management, security, and dry cleaning/laundry services. Because these
services tend to be labor-intensive and are mostly performed at the
facility (and, therefore, unlikely to be purchased in the national
market), we continue to believe that they meet our definition of labor-
related services.
Similar to the FY 2010-based IPPS market basket, we proposed that
the Professional Fees: Labor-Related cost category includes expenses
associated with advertising and a proportion of legal services,
accounting and auditing, engineering, management consulting, and
management of companies and enterprises expenses. As was done in the FY
2010-based IPPS market basket rebasing, we proposed to determine the
proportion of legal, accounting and auditing, engineering, and
management consulting services that meet our definition of labor-
related services based on a survey of hospitals conducted by CMS in
2008. We notified the public of our intent to conduct this survey on
December 9, 2005 (70 FR 73250) and did not receive any public comments
in response to the notice (71 FR 8588).
A discussion of the composition of the survey and
poststratification can be found in the FY 2010 IPPS/LTCH PPS final rule
(74 FR 43850 through 43856). Based on the weighted results of the
survey, we determined that hospitals purchase, on average, the
following portions of contracted professional services outside of their
local labor market:
34 percent of accounting and auditing services;
30 percent of engineering services;
33 percent of legal services; and
42 percent of management consulting services.
We proposed to apply each of these percentages to its respective
Benchmark I-O cost category underlying the professional fees cost
category. This is the methodology that we used to separate the FY 2010-
based IPPS market basket professional fees cost category into
Professional Fees: Labor-Related and Professional Fees: Nonlabor-
Related cost categories. We proposed to use the same methodology and
survey results to separate the professional fees costs for the proposed
2014-based IPPS market basket into Professional Fees: Labor-Related and
Professional Fees: Nonlabor-Related cost categories. We stated that we
believe these survey results are appropriate to use for the 2014-based
IPPS market basket as they empirically determine the proportion of
contracted professional services purchased by the industry that is
attributable to local firms and the proportion that is purchased from
national firms.
In the proposed 2014-based IPPS market basket, nonmedical
professional fees that were subject to allocation based on these survey
results represent 4.9 percent of total operating costs (and are limited
to those fees related to Accounting & Auditing, Legal, Engineering, and
Management Consulting services). Based on our survey results, we
proposed to apportion 3.1 percentage points of the 4.9 percentage point
figure into the Professional Fees: Labor-Related share cost category
and designate the remaining 1.8 percentage point into the Professional
Fees: Nonlabor-Related cost category.
Comment: Several commenters expressed concern about the methodology
CMS proposed to use to remove a portion of professional fees from the
labor-related share. Several commenters believed the Professional Fees
Survey that was gathered in 2008 is outdated. Some of those commenters
stated that it is inappropriate to use data gathered in 2008 to adjust
payments made in 2018. In addition, one commenter stated that the
survey was outdated because hospitals have reduced staff since 2008 and
rely more on consulting services for obtaining needed personnel
expertise. A few commenters stated that if CMS' intention is to update
the labor-related share to account for recent changes, it should also
update these survey data.
A few commenters reiterated how, in previous comments, they stated
that they did not believe the survey could be statistically
representative because it was based on 108 hospitals. The commenters
also stated that CMS failed to share data on the characteristics of the
hospitals that responded to the survey, selection bias, or survey
methodology. The commenters urged CMS not to use the results of this
survey to estimate the proportion of professional fees that are labor-
related. Several commenters urged CMS to continue to investigate
alternative methodologies for determining the proportion that is labor-
related before implementing any changes.
Response: We first utilized the Professional Fees Survey in the FY
2006-based IPPS market basket finalized in the FY 2010 IPPS/LTCH PPS
final rule (74 FR 43843). In response to our proposal to use this
Professional Fees Survey in the FY 2010 IPPS/LTCH PPS proposed rule,
commenters had similar requests for additional information on the
survey, specifically requesting the characteristics of the hospitals
that responded, possible selection bias, and survey methodology. For
the FY 2010 IPPS/LTCH PPS final rule (74 FR 43853), we provided
additional information on the Professional Fees Survey methodology,
sample selection, and methodology for deriving the final weights. The
FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19923) made note of this
information and provided the Federal Register reference for the FY 2010
IPPS/LTCH PPS final rule (74 FR 43850 through 43856). Therefore, we
disagree with the commenters' claim that we failed to share
characteristics of the hospitals that responded to the survey,
selection bias, and survey methodology.
With respect to the comment that the survey is outdated because
hospitals have reduced staff since 2008 and rely more on consulting
services for obtaining needed personnel expertise, the Professional
Fees Survey is not used
[[Page 38168]]
to determine the level of hospital staffing relative to contract
staffing. As stated above, the Medicare cost report data show that over
the FY 2010 to FY 2014 time period, the Wages and Salaries and Employee
Benefit cost weights decreased while the Labor-related services cost
weight increased. This supports the commenter's claim that hospitals
have reduced staff and are relying more on consulting services, and is
reflected in the hospital market basket. The Professional Fees Survey
is only used to determine the proportion of Professional Fees costs
that are purchased within a hospital's local labor market, a proportion
that we believe is unlikely to change significantly over time.
With respect to the commenters' concern regarding alternative
methodologies, we are not aware of any other currently available data
source regarding the proportion of Professional Fees that are labor-
related. Therefore, the only possible alternatives to the current
methods would be to assume that 100 percent of the accounting and
auditing services, engineering services, legal services, and management
consulting services are purchased in the national market or assume that
100 percent are purchased in the local labor market. Neither of these
approaches seems reasonable, given that the 2008 Professional Fees
Survey results in the assumption that 63 percent of those services are
purchased locally (in aggregate) and the remaining 37 percent are
purchased nationally. As stated in the FY 2018 IPPS/LTCH PPS proposed
rule, we continue to believe the survey results are appropriate to use
for the 2014-based IPPS market basket as they empirically determine the
proportion of contracted professional services purchased by the
industry that is attributable to local firms and the proportion that is
purchased from national firms. We will continue to explore options for
updating the Professional Fees Survey to reflect more recent data for
incorporation into future market basket rebasing and labor-related
share determinations. If conducted, we encourage providers to respond
to the survey, which would be announced in the Federal Register as done
previously. After consideration of the public comments we received, we
are finalizing the use of the Professional Fees Survey as proposed.
In addition to the professional services listed earlier, we also
proposed to classify a proportion of the home office/related
organization contract labor expenses (as this cost category has been
relabeled, as discussed earlier in section IV.B.1.a. of the preamble of
this final rule, and is referred to throughout this discussion) into
the Professional Fees: Labor-Related cost category as was done in the
previous rebasing. For the FY 2010-based IPPS market basket, we
obtained home office/related organization contract labor expenses from
the Benchmark I-O data for the NAICS 55 industry (Management of
Companies and Enterprises). As stated in section IV.B.1.a. of the
preamble to the FY 2018 IPPS/LTCH PPS proposed rule, for the 2014-based
IPPS market basket, we proposed to obtain these data from the Medicare
cost reports. We believe that many of the home office/related
organization contract labor expenses are labor-intensive and vary with
the local labor market. However, data indicate that not all IPPS
hospitals with home offices have home offices located in their local
labor market. Therefore, we proposed to include in the labor-related
share only a proportion of the home office/related organization
contract labor expenses based on the methodology described below.
For the FY 2010-based IPPS market basket, we used data primarily
from the Medicare cost reports and a CMS database of Home Office
Medicare Records (HOMER) (a database that provides city and state
information (addresses) for home offices). We determined the proportion
of costs that should be allocated to the labor-related share based on
the percent of hospital home office/related organization contract labor
compensation as reported in Worksheet S-3, Part II. Using this
methodology, we determined that 62 percent of hospitals' home office/
related organization contract labor compensation costs were for home
offices located in their respective local labor markets (defined as the
same Metropolitan Statistical Area (MSA)). Therefore, we classified 62
percent of these costs into the Professional Fees: Labor-Related
Services cost category and the remaining 38 percent into the
Professional Fees: Nonlabor-Related Services cost category for the FY
2010-based IPPS market basket. For a detailed discussion of this
analysis, we refer readers to the FY 2014 IPPS/LTCH PPS final rule (78
FR 50601).
For the proposed 2014-based IPPS market basket, we conducted a
similar analysis of home office data. For consistency, we believe that
it is important for our analysis on home office data to be conducted on
the same IPPS hospitals used to derive the proposed 2014-based IPPS
market basket cost weights. The Medicare cost report requires a
hospital to report information regarding their home office provider.
Approximately 64 percent of IPPS hospitals reported some type of home
office information on their Medicare cost report for 2014 (for example,
city, State, and zip code). Using the data reported on the Medicare
cost report, we compared the location of the hospital with the location
of the hospital's home office. We then proposed to determine the
proportion of costs that should be allocated to the labor-related share
based on the percent of total hospital home office/related organization
contract labor compensation costs (as reported in Worksheet S-3, Part
II) for those hospitals that had home offices located in their
respective local labor markets--defined as being in the same MSA. We
determined a hospital's and home office's MSAs using their zip code
information from the Medicare cost report. Using this methodology, we
determined that 60 percent of hospitals' home office/related
organization contract labor compensation costs were for home offices
located in their respective local labor markets. Therefore, we proposed
to allocate 60 percent of home office expenses to the labor-related
share.
In the proposed 2014-based IPPS market basket, home office/related
organization contract labor expenses that were subject to allocation
based on the home office allocation methodology represent 4.2 percent
of total operating costs. Based on the results of the home office
analysis discussed earlier, we proposed to apportion 2.5 percentage
points of the 4.2 percentage points figure into the Professional Fees:
Labor-Related cost category and designate the remaining 1.7 percentage
points into the Professional Fees: Nonlabor-Related cost category. In
summary, based on the two allocations mentioned earlier, we apportioned
5.6 percentage points of the professional fees and home office/related
organization contract labor cost weights into the Professional Fees:
Labor-Related cost category. This amount was added to the portion of
professional fees that we already identified as labor-related using the
I-O data such as contracted advertising and marketing costs
(approximately 1.2 percentage point of total operating costs) resulting
in a Professional Fees: Labor-Related cost weight of 6.8 percent.
The FY 2018 IPPS/LTCH PPS proposed rule included Table IV-06 (82 FR
19924), which compared the proposed 2014-based labor-related share and
the FY 2010-based labor-related share. As discussed in section
IV.B.1.b. of the preamble of the FY 2018 IPPS/LTCH PPS proposed rule,
the Wages and Salaries and Employee Benefits cost weights reflect
contract labor costs. This
[[Page 38169]]
table is also included below and reflects the final 2014-based labor-
related share.
Table IV-06--Comparison of the FY 2010-Based Labor-Related Share and the
Proposed and Final 2014-Based Labor-Related Share
------------------------------------------------------------------------
Proposed and
FY 2010-based final 2014-
IPPS market based IPPS
basket cost market basket
weights cost weights
------------------------------------------------------------------------
Wages and Salaries...................... 47.2 43.4
Employee Benefits....................... 13.1 12.4
Professional Fees: Labor-Related........ 5.5 6.8
Administrative and Facilities Support 0.6 1.0
Services...............................
Installation, Maintenance, and Repair .............. 2.4
Services \1\...........................
All Other: Labor-Related Services....... 3.1 2.3
-------------------------------
Total Labor-Related Share........... 69.6 68.3
------------------------------------------------------------------------
Note: Detail may not add to total due to rounding.
\1\ Installation, Maintenance, and Repair Services costs were previously
included in the All Other: Labor-Related Services cost category of the
FY 2010-based IPPS market basket.
Using the cost category weights from the proposed 2014-based IPPS
market basket, we calculated a labor-related share of 68.3 percent,
approximately 1.3 percentage points lower than the current labor-
related share of 69.6 percent. Therefore, we proposed to use a labor-
related share of 68.3 percent for discharges occurring on or after
October 1, 2017. We continue to believe, as we have stated in the past,
that these operating cost categories are related to, influenced by, or
vary with the local markets. Therefore, our definition of the labor-
related share continues to be consistent with section 1886(d)(3) of the
Act. We note that section 403 of Public Law 108-173 amended sections
1886(d)(3)(E) and 1886(d)(9)(C)(iv) of the Act to provide that the
Secretary must employ 62 percent as the labor-related share unless 62
percent would result in lower payments to a hospital than would
otherwise be made.
Comment: Several commenters stated that they were unable to
replicate or verify the proposed labor-related share. One commenter
stated that it is unclear how we determined that a reduction to the
labor-related share from 69.6 percent to 68.3 percent was warranted
since we did not release the base calculations. Several commenters
further stated that not having access to this information severely
limited their ability to comment sufficiently on this issue. The
commenters requested that CMS provide all information necessary to
replicate the agency's calculation of the labor-related share,
including, but not limited to, greater clarity of data sources used;
case counts at different points, such as number of providers after
trimming; provider level data illustrating what information was used in
the calculation; and the kinds of checks CMS made during calculations
to assess and ensure accuracy. The commenters requested that this
information be provided in advance of publication of the final rule.
Response: We disagree with the commenters' claim that we did not
provide sufficiently detailed information regarding our calculations of
the labor-related share. As stated in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19923), the labor-related share is derived using
the cost weights of the proposed 2014-based IPPS market basket. The FY
2018 IPPS/LTCH PPS proposed rule included a detailed description of the
data sources and methodology used to derive all of the market basket
cost weights.
Specifically, section IV.B.1.a. of the preamble of the proposed
rule (82 FR 19916) provided the detailed Medicare cost report
methodology used to calculate the major cost weights of the proposed
2014-based IPPS market basket (including the specific Medicare cost
report worksheets and trimming methodologies). Section IV.B.1.c. of the
preamble of the proposed rule (82 FR 19918) provided the specific
methodology and data source used to derive the remaining detailed cost
weights. Section IV.B.3. of the preamble of proposed rule (82 FR 19923)
provided information regarding how the Professional Fees cost category
was divided between Labor-related and Nonlabor-related services. The
data sources used to produce the market basket cost weights are
publicly available. In addition, contact information for CMS staff was
provided in the proposed rule to provide the opportunity to ask any
specific questions regarding the methodology.
We note that we provided a similar detailed description of the
methodologies used to derive the 2012-based IPF and 2012-based IRF
market baskets in the FY 2016 IPF PPS proposed rule and the FY 2016 IRF
PPS proposed rule, respectively. In those instances, stakeholders were
able to use the detailed description in the proposed rules to closely
replicate the proposed cost weights and suggest methodological changes
that were considered during final rulemaking.
Therefore, for the reasons stated earlier, we believe that there
was sufficient detail provided in the FY 2018 IPPS/LTCH PPS proposed
rule to describe the proposed methodology for deriving the market
basket cost weights and labor-related share.
Comment: Several commenters opposed the decrease in the labor-
related share from 69.6 percent to 68.3 percent, stating that reducing
the labor-related share further undervalues the very real differences
in hospital-specific costs. These commenters stated that such a change
to the labor-related share would specifically harm hospitals in higher-
cost urban areas that already experience some of the highest labor
costs in the country. Furthermore, they stated that they opposed
reducing the sensitivity of the prospective payment system to the
different circumstances of individual hospitals through the
introduction of an approach that would foster the development of a
reimbursement system that trends toward the mean despite unquestionable
differences in hospital costs. The commenters urged CMS to withdraw the
proposal to reduce the labor-related share for FY 2018.
Response: We disagree with the commenters' rationale for the
request to
[[Page 38170]]
withdraw the proposal to reduce the labor-related share. The
methodology used to derive the proposed labor-related share of 68.3
percent based on the proposed 2014-based market basket is the same
methodology used to determine the current labor-related share of 69.6
percent using the FY 2010-based IPPS market basket. The decrease in the
labor-related share of 1.3 percentage points stems from a decrease in
the Wages and Salaries and Employee Benefit cost weights (which were
derived from the Medicare cost reports), as discussed in the FY 2018
IPPS/LTCH PPS proposed rule (82 FR 19918), accounting for a decrease of
4.5 percentage points. This is partially offset by an increase in the
Labor-related services cost weight, accounting for an increase of 3.2
percentage points. As stated in the FY 2018 IPPS/LTCH PPS proposed
rule, the decrease in the Wages and Salaries cost weight from FY 2010
to FY 2014 occurred across most cost centers and in aggregate for the
General Service (overhead), Inpatient Routine Service, Ancillary
Service, and Outpatient Service cost centers.
Furthermore, the other components of the IPPS (including, but not
limited to, MS-DRG, wage index, disproportionate share hospital
adjustment, and indirect medical education adjustment) account for
variations in costs among individual hospitals. After consideration of
the public comments we received, we are finalizing our methodology for
calculating the labor-related share of 68.3 percent using the 2014-
based IPPS market basket cost weights.
C. Market Basket for Certain Hospitals Presently Excluded From the IPPS
In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43857), we
adopted the use of the FY 2006-based IPPS operating market basket
percentage increase to update the target amounts for children's
hospitals, PPS-excluded cancer hospitals and religious nonmedical
health care institutions (RNHCIs). Children's hospitals and PPS-
excluded cancer hospitals and RNHCIs are still reimbursed solely under
the reasonable cost-based system, subject to the rate-of-increase
limits. Under these limits, an annual target amount (expressed in terms
of the inpatient operating cost per discharge) is set for each hospital
based on the hospital's own historical cost experience trended forward
by the applicable rate-of-increase percentages.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50603), under the
broad authority in sections 1886(b)(3)(A) and (B), 1886(b)(3)(E), and
1871 of the Act and section 4454 of the BBA, consistent with our use of
the IPPS operating market basket percentage increase to update target
amounts, we adopted the use of the FY 2010-based IPPS operating market
basket percentage increase to update the target amounts for children's
hospitals, PPS-excluded cancer hospitals, and RNHCIs that are paid on
the basis of reasonable cost subject to the rate-of-increase limits
under Sec. 413.40. In addition, as discussed in the FY 2015 IPPS/LTCH
PPS final rule (79 FR 50156 through 50157), consistent with Sec. Sec.
412.23(g), 413.40(a)(2)(ii)(A), and 413.40(c)(3)(viii), we also have
used the percentage increase in the FY 2010-based IPPS operating market
basket to update the target amounts for short-term acute care hospitals
located outside the 50 States, the District of Columbia, and Puerto
Rico (that is, hospitals located in the U.S. Virgin Islands, Guam, the
Northern Mariana Islands, and American Samoa). These hospitals also are
paid on the basis of reasonable cost, subject to the rate-of-increase
limits under Sec. 413.40.
Due to the small number of children's and cancer hospitals and
RNHCIs and hospitals located outside the 50 States, the District of
Columbia, and Puerto Rico and because these facilities provide limited
Medicare cost report data, we are unable to create a separate market
basket specifically for these facilities. Due to the limited cost
report data available, we stated that we believe that the proposed
2014-based IPPS operating market basket most closely represents the
cost structure of children's hospitals, PPS-excluded cancer hospitals,
RNHCIs, and hospitals located outside the 50 States, the District of
Columbia, and Puerto Rico. We believe this is appropriate as the IPPS
operating market basket would reflect the input price growth for
providing inpatient hospital services (similar to the services provided
by the above excluded facilities) based on the specific mix of goods
and services required. Therefore, we proposed to use the 2014-based
IPPS market basket percentage increase to update the target amounts for
children's hospitals, PPS-excluded cancer hospitals, RNHCIs, and
hospitals located outside the 50 States, the District of Columbia, and
Puerto Rico that are paid on the basis of reasonable cost subject to
the rate-of-increase limits under Sec. 413.40. We stated that we
believe it is the best available measure of the average increase in the
prices of the goods and services purchased by children's hospitals, the
cancer hospitals, RNHCIs, and hospitals located outside the 50 States,
the District of Columbia, and Puerto Rico in order to provide care.
We did not receive any public comments on our proposal. Therefore,
we are adopting the use of the 2014-based IPPS market basket percentage
increase to update the target amounts for children's hospitals, PPS-
excluded cancer hospitals, RNHCIs, and hospitals located outside the 50
States, the District of Columbia, and Puerto Rico that are paid on the
basis of reasonable cost.
D. Rebasing and Revising the Capital Input Price Index (CIPI)
The CIPI was originally described in the FY 1993 IPPS final rule
(57 FR 40016). There have been subsequent discussions of the CIPI
presented in the IPPS proposed and final rules. The FY 2014 IPPS/LTCH
PPS final rule (78 FR 50603 through 50607) described the most recent
rebasing and revision of the CIPI to a FY 2010 base year, which
reflected the capital cost structure of IPPS hospitals available at
that time.
For the FY 2018 IPPS update, in the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 19925 through 19929), we proposed to rebase and revise the
CIPI to a 2014 base year to reflect a more current structure of capital
costs for IPPS hospitals. This proposed 2014-based CIPI was derived
using 2014 cost reports for IPPS hospitals, which includes providers
whose cost reporting period began on or after October 1, 2013, and
prior to September 30, 2014. While we proposed and finalized the title
of the current CIPI in the FY 2014 IPPS/LTCH proposed and final rules
as ``FY 2010-based CIPI'', for the proposed CIPI, we proposed to simply
refer to the proposed CIPI as ``2014-based CIPI'' (dropping the
reference to FY). As discussed in section IV.B. of the preamble of the
proposed rule, for the 2014-based IPPS operating market basket, we
proposed this change in naming convention for the market basket because
the base year cost weight data for the proposed market basket do not
reflect only fiscal year data. Similarly, the proposed 2014-based CIPI
uses Medicare cost report data and other government data that reflect
2014 fiscal year, 2014 calendar year, and 2014 State fiscal year
expenses to determine the base year cost weights and vintage weights.
Given that it is based on a mix of classifications of 2014 data, we
proposed to refer to the CIPI as ``2014-based'' instead of ``FY 2014-
based'' or ``CY 2014-based''. However, the methods and data used to
derive each of these CIPI are similar. As with the FY 2010-based index,
we proposed to develop two sets of weights to derive
[[Page 38171]]
the proposed 2014-based CIPI. The first set of weights identifies the
proportion of hospital capital expenditures attributable to each
expenditure category, while the second set of weights is a set of
relative vintage weights for depreciation and interest. The set of
vintage weights is used to identify the proportion of capital
expenditures within a cost category that is attributable to each year
over the useful life of the capital assets in that category. A more
thorough discussion of vintage weights is provided later in this
section.
Using 2014 Medicare cost reports, we were able to group capital
costs into the following categories: Depreciation, Interest, Lease, and
Other. For each of these categories, we proposed to determine what
proportion of total capital costs the category represents using the
data reported by IPPS hospitals on Worksheet A-7, which is the same
methodology used for the FY 2010-based CIPI. As shown in the left
column of Table IV-07 in the proposed rule (82 FR 19926), in 2014,
depreciation expenses accounted for 66.4 percent of total capital
costs, interest expenses accounted for 16.3 percent, leasing expenses
accounted for 11.8 percent, and other capital expenses accounted for
5.5 percent. This table is also listed below.
We also proposed to allocate lease costs across each of the
remaining capital cost categories as was done in the FY 2010-based
CIPI. This resulted in three primary capital cost categories in the
proposed 2014-based CIPI: Depreciation, Interest, and Other. Lease
costs are unique in that they are not broken out as a separate cost
category in the proposed 2014-based CIPI. Rather, we proposed to
proportionally distribute leasing costs among the cost categories of
Depreciation, Interest, and Other, reflecting the assumption that the
underlying cost structure of leases is similar to that of capital costs
in general. As was done for the FY 2010-based CIPI, we proposed to
assume that 10 percent of the lease costs as a proportion of total
capital costs represents overhead and to assign those costs to the
Other capital cost category accordingly. Therefore, we assumed that
approximately 1.2 percent (11.8 percent x 0.1) of total capital costs
represent lease costs attributable to overhead, and we proposed to add
this 1.2 percent to the 5.5 percent Other cost category weight. We then
proposed to distribute the remaining lease costs (10.6 percent, or 11.8
percent - 1.2 percent) proportionally across the three cost categories
(Depreciation, Interest, and Other) based on the proportion that these
categories comprise of the sum of the Depreciation, Interest, and Other
cost categories (excluding lease expenses). For example, the Other cost
category represented 6.3 percent of all three cost categories
(Depreciation, Interest, and Other) prior to any lease expenses being
allocated. This 6.3 percent is applied to the 10.6 percent of remaining
lease expenses so that another 0.7 percent of lease expenses as a
percent of total capital costs is allocated to the Other cost category.
Therefore, the resulting proposed Other cost weight is 7.4 percent (5.5
percent + 1.2 percent + 0.7 percent). This is the same methodology used
for the FY 2010-based CIPI. The resulting cost weights of the proposed
allocation of lease expenses were shown in the right column of Table
IV-07 in the proposed rule (82 FR 19926). This table is also included
below and reflects the final allocation of lease expenses.
Table IV-07--Proposed and Final Allocation of Lease Expenses for the
Proposed and Final 2014-Based CIPI
------------------------------------------------------------------------
Proposed and
final cost Proposed and
shares final cost
obtained from shares after
Cost categories medicare cost allocation of
reports lease expenses
(percent of (percent of
total capital total capital
costs) costs)
------------------------------------------------------------------------
Depreciation............................ 66.4 74.4
Interest................................ 16.3 18.2
Lease................................... 11.8 ..............
Other................................... 5.5 7.4
------------------------------------------------------------------------
Finally, we proposed to further divide the Depreciation and
Interest cost categories. We proposed to separate the Depreciation cost
category into the following two categories: (1) Building and Fixed
Equipment and (2) Movable Equipment. We also proposed to separate the
Interest cost category into the following two categories: (1)
Government/Nonprofit; and (2) For-profit.
To disaggregate the depreciation cost weight, we needed to
determine the percent of total depreciation costs for IPPS hospitals
(after the allocation of lease costs) that are attributable to building
and fixed equipment, which we hereafter refer to as the ``fixed
percentage.'' Based on Worksheet A-7 data from the 2014 IPPS Medicare
cost reports, we have determined that depreciation costs for building
and fixed equipment account for approximately 49 percent of total
depreciation costs, while depreciation costs for movable equipment
account for approximately 51 percent of total depreciation costs. As
was done for the FY 2010-based CIPI, we proposed to apply this fixed
percentage to the depreciation cost weight (after leasing costs are
included) to derive a Depreciation cost weight attributable to Building
and Fixed Equipment and a Depreciation cost weight attributable to
Movable Equipment.
To disaggregate the interest cost weight, we needed to determine
the percent of total interest costs for IPPS hospitals that are
attributable to government and nonprofit facilities, which we hereafter
refer to as the ``nonprofit percentage,'' because interest price
pressures tend to differ between nonprofit and for-profit facilities.
We proposed to use interest costs data from Worksheet A-7 of the 2014
Medicare cost reports for IPPS hospitals, which is the same methodology
used for the FY 2010-based CIPI. The nonprofit percentage determined
using this method is 86 percent. Table IV-08 in the proposed rule (82
FR 19927) provides a comparison of the FY 2010-based CIPI cost weights
and the proposed 2014-based CIPI cost weights. This table is also
included below and
[[Page 38172]]
reflects the final 2014-based CIPI cost weights.
After the capital cost category weights were computed, it was
necessary to select appropriate price proxies to reflect the rate-of-
increase for each expenditure category. We proposed to apply the same
price proxies as were used in the FY 2010-based CIPI, which are listed
below and provided in Table IV-08 in the proposed rule. We also
proposed to continue to vintage weight the capital price proxies for
Depreciation and Interest to capture the long-term consumption of
capital. This vintage weighting method is the same method that was used
for the FY 2010-based CIPI and is described below.
We proposed to continue to proxy the Depreciation--Building and
Fixed Equipment cost category by the BEA Chained Price Index for
Private Fixed Investment in Structures, Nonresidential, Hospitals and
Special Care (BEA Table 5.4.4. Price Indexes for Private Fixed
Investment in Structures by Type). As stated in the FY 2010 IPPS/LTCH
PPS final rule (74 FR 43860), for the FY 2006-based CIPI we finalized
the use of this index to measure the price growth of this cost
category. This BEA index is intended to capture prices for construction
of facilities such as hospitals, nursing homes, hospices, and
rehabilitation centers. For the Depreciation--Movable Equipment cost
category, we proposed to continue to measure the price growth using the
PPI Commodity for Machinery and Equipment (BLS series code WPU11). This
price index reflects price inflation associated with a variety of
machinery and equipment that would be utilized by hospitals including
but not limited to communication equipment, computers, and medical
equipment. For the Nonprofit Interest and For-profit Interest cost
categories, we proposed to continue to measure the price growth using
the average yield on domestic municipal bonds (Bond Buyer 20-bond
index) and the average yield on Moody's Aaa bonds (Federal Reserve),
respectively. As stated above, we proposed two proxies because interest
price pressures tend to differ between nonprofit and for-profit
facilities.
For the Other capital cost category (including insurances, taxes,
and other capital-related costs), we proposed to continue to measure
the price growth using the CPI for Rent of Primary Residence (All Urban
Consumers) (BLS series code CUUS0000SEHA), which would reflect the
price growth of these costs. We believe that these price proxies
continue to be the most appropriate proxies for IPPS capital costs that
meet our selection criteria of relevance, timeliness, availability, and
reliability.
Table IV-08--Proposed and Final 2014-Based CIPI Cost Weights and Price Proxies With FY 2010-Based CIPI Cost
Weights Included for Comparison
----------------------------------------------------------------------------------------------------------------
Proposed and
Cost categories FY 2010 cost final 2014 cost Proposed and final price proxy
weights weights
----------------------------------------------------------------------------------------------------------------
Total..................................... 100.0 100.0 ..................................
Depreciation.......................... 74.0 74.4 ..................................
Building and Fixed Equipment...... 36.2 36.7 BEA's Chained Price Index for
Private Fixed Investment in
Structures, Nonresidential,
Hospitals and Special Care.
Movable Equipment................. 37.9 37.7 PPI Commodity for Machinery and
Equipment.
Interest.............................. 19.2 18.2 ..................................
Government/Nonprofit.............. 17.1 15.7 Average Yield on Domestic
Municipal Bonds (Bond Buyer 20-
Bond Index).
For-Profit........................ 2.1 2.5 Average Yield on Moody's Aaa
Bonds.
Other................................. 6.8 7.4 CPI for Rent of Primary Residence.
----------------------------------------------------------------------------------------------------------------
Note: The cost weights are calculated using three decimal places. For presentational purposes, we are displaying
one decimal and therefore, the detail may not add to the total due to rounding.
Because capital is acquired and paid for over time, capital
expenses in any given year are determined by both past and present
purchases of physical and financial capital. We stated in the proposed
rule that the proposed vintage-weighted 2014-based CIPI is intended to
capture the long-term consumption of capital, using vintage weights for
depreciation (physical capital) and interest (financial capital). These
vintage weights reflect the proportion of capital purchases
attributable to each year of the expected life of building and fixed
equipment, movable equipment, and interest. We proposed to use vintage
weights to compute vintage-weighted price changes associated with
depreciation and interest expenses.
Vintage weights are an integral part of the CIPI. Capital costs are
inherently complicated and are determined by complex capital purchasing
decisions, over time, based on such factors as interest rates and debt
financing. In addition, capital is depreciated over time instead of
being consumed in the same period it is purchased. By accounting for
the vintage nature of capital, we are able to provide an accurate and
stable annual measure of price changes. Annual nonvintage price changes
for capital are unstable due to the volatility of interest rate changes
and, therefore, do not reflect the actual annual price changes for IPPS
capital costs. The CIPI reflects the underlying stability of the
capital acquisition process.
To calculate the vintage weights for depreciation and interest
expenses, we first needed a time series of capital purchases for
building and fixed equipment and movable equipment. We found no single
source that provides an appropriate time series of capital purchases by
hospitals for all of the above components of capital purchases. The
early Medicare cost reports did not have sufficient capital data to
meet this need. Data we obtained from the American Hospital Association
(AHA) did not include annual capital purchases. However, we were able
to obtain data on total expenses back to 1963 from the AHA.
Consequently, we proposed to use data from the AHA Panel Survey and the
AHA Annual Survey to obtain a time series of total expenses for
hospitals. We then proposed to use data from the AHA Panel Survey
supplemented with the ratio of depreciation to total hospital expenses
obtained from the Medicare cost reports to derive a trend of annual
depreciation expenses for 1963 through 2014. We proposed to separate
these depreciation expenses into annual amounts of building and fixed
[[Page 38173]]
equipment depreciation and movable equipment depreciation as determined
earlier. From these annual depreciation amounts, we derived annual end-
of-year book values for building and fixed equipment and movable
equipment using the expected life for each type of asset category. We
used the AHA data and similar methodology to derive the FY 2010-based
IPPS capital market basket (78 FR 50604).
To continue to calculate the vintage weights for depreciation and
interest expenses, we also needed to account for the expected lives for
building and fixed equipment, movable equipment, and interest for the
proposed 2014-based CIPI. We proposed to calculate the expected lives
using Medicare cost report data. The expected life of any asset can be
determined by dividing the value of the asset (excluding fully
depreciated assets) by its current year depreciation amount. This
calculation yields the estimated expected life of an asset if the rates
of depreciation were to continue at current year levels, assuming
straight-line depreciation. Using this proposed method, we determined
the average expected life of building and fixed equipment to be equal
to 27 years, and the average expected life of movable equipment to be
equal to 12 years. For the expected life of interest, we believe that
vintage weights for interest should represent the average expected life
of building and fixed equipment because, based on previous research
described in the FY 1997 IPPS final rule (61 FR 46198), the expected
life of hospital debt instruments and the expected life of buildings
and fixed equipment are similar. We note that the FY 2010-based CIPI
was based on an expected average life of building and fixed equipment
of 26 years and an expected average life of movable equipment of 12
years. Multiplying these expected lives by the annual depreciation
amounts results in annual year-end asset costs for building and fixed
equipment and movable equipment. We then calculated a time series,
beginning in 1964, of annual capital purchases by subtracting the
previous year's asset costs from the current year's asset costs.
For the building and fixed equipment and movable equipment vintage
weights, we proposed to use the real annual capital-related purchase
amounts for each asset type to capture the actual amount of the
physical acquisition, net of the effect of price inflation.
These real annual capital-related purchase amounts are produced by
deflating the nominal annual purchase amount by the associated price
proxy as described in the proposed rule, and this final rule. For the
interest vintage weights, we proposed to use the total nominal annual
capital-related purchase amounts to capture the value of the debt
instrument (including, but not limited to, mortgages and bonds). Using
these capital purchases time series specific to each asset type, we
proposed to calculate the vintage weights for building and fixed
equipment, for movable equipment, and for interest.
The vintage weights for each asset type are deemed to represent the
average purchase pattern of the asset over its expected life (in the
case of building and fixed equipment and interest, 27 years, and in the
case of movable equipment, 12 years). For each asset type, we proposed
to use the time series of annual capital purchases amounts available
from 2014 back to 1964. These data allow us to derive twenty-five 27-
year periods of capital purchases for building and fixed equipment and
interest, and forty 12-year periods of capital purchases for movable
equipment. For each 27-year period for building and fixed equipment and
interest, or 12-year period for movable equipment, we proposed to
calculate annual vintage weights by dividing the capital-related
purchase amount in any given year by the total amount of purchases over
the entire 27-year or 12-year period. This calculation was done for
each year in the 27-year or 12-year period and for each of the periods
for which we have data. We then calculated the average vintage weight
for a given year of the expected life by taking the average of these
vintage weights across the multiple periods of data.
The vintage weights for the proposed 2014-based CIPI and the FY
2010-based CIPI were presented in Table IV-09 in the proposed rule (82
FR 19928). This table is also included below and reflects the final
2014-based CIPI.
Table IV-09--Proposed and Final 2014-Based CIPI and FY 2010-Based CIPI Vintage Weights
--------------------------------------------------------------------------------------------------------------------------------------------------------
Building and fixed equipment Movable equipment Interest
-----------------------------------------------------------------------------------------------
Year \1\ Proposed and Proposed and Proposed and
final 2014- FY 2010-based final 2014- FY 2010-based final 2014- FY 2010-based
based 27 years 26 years based 12 years 12 years based 27 years 26 years
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................................... 0.024 0.023 0.062 0.064 0.012 0.012
2....................................................... 0.025 0.024 0.064 0.068 0.014 0.013
3....................................................... 0.027 0.026 0.070 0.071 0.015 0.015
4....................................................... 0.028 0.028 0.074 0.073 0.017 0.017
5....................................................... 0.030 0.029 0.078 0.076 0.019 0.018
6....................................................... 0.031 0.031 0.082 0.078 0.021 0.021
7....................................................... 0.033 0.032 0.086 0.084 0.023 0.023
8....................................................... 0.034 0.034 0.088 0.088 0.025 0.025
9....................................................... 0.035 0.036 0.092 0.092 0.027 0.028
10...................................................... 0.036 0.038 0.097 0.098 0.029 0.030
11...................................................... 0.037 0.040 0.102 0.103 0.030 0.033
12...................................................... 0.039 0.041 0.105 0.106 0.033 0.036
13...................................................... 0.040 0.042 .............. .............. 0.035 0.038
14...................................................... 0.040 0.042 .............. .............. 0.037 0.040
15...................................................... 0.039 0.043 .............. .............. 0.037 0.043
16...................................................... 0.039 0.044 .............. .............. 0.040 0.045
17...................................................... 0.040 0.044 .............. .............. 0.041 0.047
18...................................................... 0.042 0.044 .............. .............. 0.045 0.048
19...................................................... 0.042 0.044 .............. .............. 0.048 0.051
20...................................................... 0.042 0.044 .............. .............. 0.050 0.052
21...................................................... 0.043 0.045 .............. .............. 0.052 0.056
22...................................................... 0.043 0.045 .............. .............. 0.054 0.057
[[Page 38174]]
23...................................................... 0.042 0.045 .............. .............. 0.055 0.060
24...................................................... 0.042 0.046 .............. .............. 0.057 0.062
25...................................................... 0.043 0.045 .............. .............. 0.059 0.064
26...................................................... 0.043 0.045 .............. .............. 0.061 0.066
27...................................................... 0.043 .............. .............. .............. 0.062 ..............
-----------------------------------------------------------------------------------------------
Total............................................... 1.000 1.000 1.000 1.000 1.000 1.000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Numbers may not add to total due to rounding.
\1\ Vintage weight in the last year (for example, year 27 for the 2014-based CIPI) is applied to the most recent data point and prior vintage weights
are applied going back in time. For example, year 27 vintage weight would be applied to the 2018q3 fixed price proxy level, year 26 vintage weight
would be applied to the 2017q3 fixed price proxy level, and so forth.
The process of creating vintage-weighted price proxies requires
applying the vintage weights to the price proxy index where the last
applied vintage weight in Table IV-09 is applied to the most recent
data point. We have provided on the CMS Web site an example of how the
vintage weighting price proxies are calculated, using example vintage
weights and example price indices. The example can be found under the
following CMS Web site link: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch.html in the zip file
titled ``Weight Calculations as described in the IPPS FY 2010 Proposed
Rule.''
Comment: A few commenters supported the proposal to rebase the
CIPI.
Response: We appreciate the commenters' support.
We did not receive any detailed public comments on our methodology
for deriving the proposed 2014-based CIPI. After consideration of the
public comments we received, in this final rule, we are finalizing the
2014-based CIPI as proposed.
Table IV-10 in the proposed rule (82 FR 19929) compares both the
historical and forecasted percent changes in the FY 2010-based CIPI and
the proposed 2014-based CIPI. The percent changes in the proposed rule
were based on IGI's fourth quarter 2016 forecast with historical data
through third quarter 2016. The forecasted growth rates provided in
Table IV-10 below are based on IGI's more recent second quarter 2017
forecast with historical data through first quarter 2017.
Table IV-10--Comparison of FY 2010-Based and Proposed and Final 2014-
Based Capital Input Price Index, Percent Change, FY 2013 Through FY 2020
------------------------------------------------------------------------
Proposed and
Fiscal year CIPI, FY 2010- final CIPI,
based 2014-based
------------------------------------------------------------------------
Historical Data:
FY 2013............................. 1.1 1.0
FY 2014............................. 1.2 1.2
FY 2015............................. 1.2 1.1
FY 2016............................. 1.1 1.0
Average FYs 2013-2016............... 1.2 1.1
Forecast:
FY 2017............................. 1.2 1.1
FY 2018............................. 1.4 1.3
FY 2019............................. 1.4 1.4
FY 2020............................. 1.5 1.5
Average FYs 2017-2020............... 1.4 1.3
------------------------------------------------------------------------
Source: IHS Global Inc., 2nd quarter 2017 forecast.
IGI forecasts a 1.3 percent increase in the proposed and final
2014-based CIPI for FY 2018, as shown in Table IV-10. The underlying
vintage-weighted price increases for depreciation (including building
and fixed equipment and movable equipment) and interest (including
government/nonprofit and for-profit) based on the proposed 2014-based
CIPI were included in Table IV-11 of the proposed rule (82 FR 19929).
Again, the percent changes in the proposed rule were based on IGI's
fourth quarter 2016 forecast with historical data through third quarter
2016. The forecasted growth rates provided in Table IV-11 below are
based on IGI's more recent second quarter 2017 forecast with historical
data through first quarter 2017.
[[Page 38175]]
Table IV-11--Proposed and Final 2014-Based Capital Input Price Index Percent Changes, Total and Depreciation and
Interest Components--FYs 2013 Through 2020
----------------------------------------------------------------------------------------------------------------
Fiscal year Total Depreciation Interest
----------------------------------------------------------------------------------------------------------------
Historical Data:
FY 2013..................................................... 1.0 1.7 -2.5
FY 2014..................................................... 1.2 1.8 -1.8
FY 2015..................................................... 1.1 1.8 -2.7
FY 2016..................................................... 1.0 1.7 -3.0
Forecast:
FY 2017..................................................... 1.1 1.6 -2.2
FY 2018..................................................... 1.3 1.6 -1.3
FY 2019..................................................... 1.4 1.6 -0.5
FY 2020..................................................... 1.5 1.6 -0.1
----------------------------------------------------------------------------------------------------------------
Source: IHS Global Inc. 2nd quarter 2017 forecast.
Rebasing the CIPI from FY 2010 to 2014 decreased the percent change
in the forecasted update for FY 2018 by 0.1 percentage point, from 1.4
percent to 1.3 percent, as shown in Table IV-10. The lower FY 2018
update is primarily due to a change in the vintage weights for the
proposed and final 2014-based CIPI, which includes updating the asset
purchase data through 2014 and changing the building and fixed
equipment and interest asset lives from 26 years to 27 years. This
lower update is only partially offset by the change in the base year
weights, which produce a faster increase due to more weight being given
to the Depreciation cost category and less weight being given to the
Interest cost category. As shown in Table IV-11 in the proposed rule
(82 FR 19929) and this final rule, for FY 2018, vintage-weighted price
growth is projected to be positive for the Depreciation cost category
and negative for the Interest cost category.
V. Other Decisions and Changes to the IPPS for Operating System
A. Changes to MS-DRGs Subject To Postacute Care Transfer Policy and MS-
DRG Special Payments Policies (Sec. 412.4)
1. Background
Existing regulations at 42 CFR 412.4(a) define discharges under the
IPPS as situations in which a patient is formally released from an
acute care hospital or dies in the hospital. Section 412.4(b) defines
acute care transfers, and Sec. 412.4(c) defines postacute care
transfers. Our policy set forth in Sec. 412.4(f) provides that when a
patient is transferred and his or her length of stay is less than the
geometric mean length of stay for the MS-DRG to which the case is
assigned, the transferring hospital is generally paid based on a
graduated per diem rate for each day of stay, not to exceed the full
MS-DRG payment that would have been made if the patient had been
discharged without being transferred.
The per diem rate paid to a transferring hospital is calculated by
dividing the full MS-DRG payment by the geometric mean length of stay
for the MS-DRG. Based on an analysis that showed that the first day of
hospitalization is the most expensive (60 FR 45804), our policy
generally provides for payment that is twice the per diem amount for
the first day, with each subsequent day paid at the per diem amount up
to the full MS-DRG payment (Sec. 412.4(f)(1)). Transfer cases also are
eligible for outlier payments. In general, the outlier threshold for
transfer cases, as described in Sec. 412.80(b), is equal to the fixed-
loss outlier threshold for nontransfer cases (adjusted for geographic
variations in costs), divided by the geometric mean length of stay for
the MS-DRG, and multiplied by the length of stay for the case, plus 1
day.
We established the criteria set forth in Sec. 412.4(d) for
determining which DRGs qualify for postacute care transfer payments in
the FY 2006 IPPS final rule (70 FR 47419 through 47420). The
determination of whether a DRG is subject to the postacute care
transfer policy was initially based on the Medicare Version 23.0
GROUPER (FY 2006) and data from the FY 2004 MedPAR file. However, if a
DRG did not exist in Version 23.0 or a DRG included in Version 23.0 is
revised, we use the current version of the Medicare GROUPER and the
most recent complete year of MedPAR data to determine if the DRG is
subject to the postacute care transfer policy. Specifically, if the MS-
DRG's total number of discharges to postacute care equals or exceeds
the 55th percentile for all MS-DRGs and the proportion of short-stay
discharges to postacute care to total discharges in the MS-DRG exceeds
the 55th percentile for all MS-DRGs, CMS will apply the postacute care
transfer policy to that MS-DRG and to any other MS-DRG that shares the
same base MS-DRG. The statute directs us to identify MS-DRGs based on a
high volume of discharges to postacute care facilities and a
disproportionate use of postacute care services. As discussed in the FY
2006 IPPS final rule (70 FR 47416), we determined that the 55th
percentile is an appropriate level at which to establish these
thresholds. In that same final rule (70 FR 47419), we stated that we
will not revise the list of DRGs subject to the postacute care transfer
policy annually unless we are making a change to a specific MS-DRG.
To account for MS-DRGs subject to the postacute care policy that
exhibit exceptionally higher shares of costs very early in the hospital
stay, Sec. 412.4(f) also includes a special payment methodology. For
these MS-DRGs, hospitals receive 50 percent of the full MS-DRG payment,
plus the single per diem payment, for the first day of the stay, as
well as a per diem payment for subsequent days (up to the full MS-DRG
payment (Sec. 412.4(f)(6)). For an MS- DRG to qualify for the special
payment methodology, the geometric mean length of stay must be greater
than 4 days, and the average charges of 1-day discharge cases in the
MS-DRG must be at least 50 percent of the average charges for all cases
within the MS-DRG. MS-DRGs that are part of an MS-DRG severity level
group will qualify under the MS-DRG special payment methodology policy
if any one of the MS-DRGs that share that same base MS-DRG qualifies
(Sec. 412.4(f)(6)).
2. Changes for FY 2018
In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19929 through
19931), based on our annual review of MS-DRGs, we identified three MS-
DRGs that we proposed to be included on the list of MS-DRGs subject to
the special payment transfer policy. As we discussed in section II.F.
of the preamble of that proposed rule, in
[[Page 38176]]
response to public comments and based on our analysis of FY 2016 MedPAR
claims data, we proposed to make changes to MS-DRGs, effective for FY
2018.
As discussed in the preamble of the FY 2018 IPPS/LTCH PPS proposed
rule (82 FR 19850), we proposed to delete MS-DRGs 984, 985, and 986
(Prostatic O.R. Procedure Unrelated to Principal Diagnosis with MCC,
with CC and without CC/MCC, respectively) and reassign the procedure
codes currently assigned to these three MS-DRGs to MS-DRGs 987, 988,
and 989 (Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis
with MCC, with CC and without CC/MCC, respectively).
In light of the proposed changes to the MS-DRGs for FY 2018,
according to the regulations under Sec. 412.4(d), we evaluated
proposed revised MS-DRGs 987, 988, and 989 (which would contain the
proposed reassigned procedures from MS-DRGs 984, 985, and 986) against
the general postacute care transfer policy criteria using the FY 2016
MedPAR data. If an MS-DRG qualified for the postacute care transfer
policy, we also evaluated that MS-DRG under the special payment
methodology criteria according to regulations at Sec. 412.4(f)(6). We
continue to believe it is appropriate to reassess MS-DRGs when
proposing reassignment of procedure or diagnosis codes that would
result in material changes to an MS-DRG. MS-DRGs 987, 988, and 989 are
currently subject to the postacute care transfer policy. We stated in
the proposed rule that as a result of our review, the proposed revised
MS-DRGs 987, 988, and 989 continue to qualify to be included on the
list of MS-DRGs that are subject to the postacute care transfer policy.
We did not propose to change the postacute care transfer policy status
for MS-DRGs 987, 988, and 989.
As discussed in section II.F.14.b. of the preamble of this FY 2018
IPPS/LTCH PPS final rule, we are finalizing the proposed revisions to
these MS-DRGs. Using the March 2017 update of the FY 2016 MedPAR file,
we developed the following chart which sets forth the most recent
analysis of the postacute care transfer policy criteria completed for
this final rule.
List of Revised MS-DRGs Subject to Review of Postacute Care Transfer Policy Status for FY 2018
--------------------------------------------------------------------------------------------------------------------------------------------------------
Percent of
short-stay
Postacute care postacute care
transfers Short-stay transfers to Postacute care transfer
Revised MS-DRG MS-DRG title Total cases (55th postacute care all cases policy status
percentile: transfers (55th
1,418) percentile:
7.80629%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
987........................ Non-Extensive O.R. Procedure 8,485 4,395 1,117 13.16441 Yes.
Unrelated to Principal
Diagnosis with MCC.
988........................ Non-Extensive O.R. Procedure 8,876 3,774 817 9.20460 Yes.
Unrelated to Principal
Diagnosis with CC.
989........................ Non-Extensive O.R. Procedure 2,364 * 568 53 * 2.24196 Yes. **
Unrelated to Principal
Diagnosis without MCC/CC.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Indicates a current postacute care transfer policy criterion that the MS-DRG did not meet.
** As described in the policy at 42 CFR 412.4(d)(3)(ii)(D), MS-DRGs that share the same base MS-DRG will all qualify under the postacute care transfer
policy if any one of the MS-DRGs that share that same base MS-DRG qualifies.
As we discussed in the proposed rule, we also determined that
proposed revised MS-DRGs 987, 988, and 989 would meet the criteria for
the MS-DRG special payment methodology. MS-DRGs 987, 988, and 989 are
not currently listed as being subject to the special payment policy.
Therefore, we proposed that these three proposed revised MS-DRGs would
be subject to the MS-DRG special payment methodology, effective FY
2018.
We did not receive any public comments on this proposal. Therefore,
we are finalizing the proposed changes to the special payment policy
status of MS-DRGs 987, 988, and 989. We note that, in a chart in the
proposed rule (82 FR 19931), we erroneously listed the geometric mean
length of stay for MS-DRG 988 as 8.6 days. The figure should have been
4.4 days (which, for this final rule, is revised to 4.3 days as a
result of the most recent data analysis). Regardless, because the
revised geometric mean length of stay is also greater than 4 days, MS-
DRG 988 qualifies for special payment policy status, and as described
in the policy at 42 CFR 412.4(d)(6)(iv), MS-DRGs 987 and 989 also
qualify, consistent with our proposal. Using the March 2017 update of
the FY 2016 MedPAR file, we developed the following chart which set
forth the most recent data analysis of the special payment methodology
criteria completed for this final rule.
List of Revised MS-DRGs Subject To Review of Special Payment Policy Status for FY 2018
----------------------------------------------------------------------------------------------------------------
50 percent of
Average average
Revised MS-DRG MS-DRG title Geometric mean charges of 1- charges for Special payment
length of stay day discharges all cases policy status
within MS-DRG
----------------------------------------------------------------------------------------------------------------
987................ Non-Extensive O.R. 7.9 $33,424 $52,050 Yes *.
Procedure Unrelated
to Principal
Diagnosis with MCC.
988................ Non-Extensive O.R. 4.3 34,443 28,404 Yes.
Procedure Unrelated
to Principal
Diagnosis with CC.
[[Page 38177]]
989................ Non-Extensive O.R. 2.2 0 0 Yes.*
Procedure Unrelated
to Principal
Diagnosis without
MCC/CC.
----------------------------------------------------------------------------------------------------------------
* As described in the policy at 42 CFR 412.4(d)(6)(iv), MS-DRGs that share the same base MS-DRG will all qualify
under the MS-DRG special payment policy if any one of the MS-DRGs that share that same base MS-DRG qualifies.
The finalized special payment policy status of these three MS-DRGs
is reflected in Table 5 associated with this final rule, which is
listed in section VI. of the Addendum to this final rule and available
via the Internet on the CMS Web site.
B. Changes in the Inpatient Hospital Update for FY 2018 (Sec.
412.64(d))
1. FY 2018 Inpatient Hospital Update
In accordance with section 1886(b)(3)(B)(i) of the Act, each year
we update the national standardized amount for inpatient hospital
operating costs by a factor called the ``applicable percentage
increase.'' As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82
FR 19931 through 19933), for FY 2018, we are setting the applicable
percentage increase by applying the adjustments listed in this section
in the same sequence as we did for FY 2017. Specifically, consistent
with section 1886(b)(3)(B) of the Act, as amended by sections 3401(a)
and 10319(a) of the Affordable Care Act, we are setting the applicable
percentage increase by applying the following adjustments in the
following sequence. The applicable percentage increase under the IPPS
is equal to the rate-of-increase in the hospital market basket for IPPS
hospitals in all areas, subject to--
(a) A reduction of one-quarter of the applicable percentage
increase (prior to the application of other statutory adjustments; also
referred to as the market basket update or rate-of-increase (with no
adjustments)) for hospitals that fail to submit quality information
under rules established by the Secretary in accordance with section
1886(b)(3)(B)(viii) of the Act;
(b) A reduction of three-quarters of the applicable percentage
increase (prior to the application of other statutory adjustments; also
referred to as the market basket update or rate-of-increase (with no
adjustments)) for hospitals not considered to be meaningful EHR users
in accordance with section 1886(b)(3)(B)(ix) of the Act;
(c) An adjustment based on changes in economy-wide productivity
(the multifactor productivity (MFP) adjustment); and
(d) An additional reduction of 0.75 percentage point as required by
section 1886(b)(3)(B)(xii) of the Act.
Sections 1886(b)(3)(B)(xi) and (b)(3)(B)(xii) of the Act, as added
by section 3401(a) of the Affordable Care Act, state that application
of the MFP adjustment and the additional FY 2018 adjustment of 0.75
percentage point may result in the applicable percentage increase being
less than zero.
We note that, in compliance with section 404 of the MMA, in the FY
2018 IPPS/LTCH PPS proposed rule (82 FR 19916 through 19923), we
proposed to replace the FY 2010-based IPPS operating market basket with
the rebased and revised 2014-based IPPS operating market basket for FY
2018. We proposed to base the proposed FY 2018 market basket update
used to determine the applicable percentage increase for the IPPS on
IHS Global Inc.'s (IGI's) fourth quarter 2016 forecast of the proposed
2014-based IPPS market basket rate-of-increase with historical data
through third quarter 2016, which was estimated to be 2.9 percent. We
proposed that if more recent data subsequently became available (for
example, a more recent estimate of the market basket and the MFP
adjustment), we would use such data, if appropriate, to determine the
FY 2018 market basket update and the MFP adjustment in this final rule.
We received public comments regarding the rebasing and revising of the
IPPS operating market basket and refer readers to section IV.B. of this
final rule for a complete discussion on the rebasing and revising of
the market basket. In section IV.B., we are finalizing our proposals
without modification and, therefore, are using the finalized rebased
and revised 2014-based IPPS market basket rate-of-increase for FY 2018.
Based on the most recent data available for this FY 2018 IPPS/LTCH
PPS final rule (that is, IGI's second quarter 2017 forecast of the
2014-based IPPS market basket rate-of-increase with historical data
through first quarter 2017), we estimate that the FY 2018 market basket
update used to determine the applicable percentage increase for the
IPPS is 2.7 percent.
For FY 2018, depending on whether a hospital submits quality data
under the rules established in accordance with section
1886(b)(3)(B)(viii) of the Act (hereafter referred to as a hospital
that submits quality data) and is a meaningful EHR user under section
1886(b)(3)(B)(ix) of the Act (hereafter referred to as a hospital that
is a meaningful EHR user), there are four possible applicable
percentage increases that can be applied to the standardized amount as
specified in the table that appears later in this section.
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51689 through
51692), we finalized our methodology for calculating and applying the
MFP adjustment. As we explained in that rule, section
1886(b)(3)(B)(xi)(II) of the Act, as added by section 3401(a) of the
Affordable Care Act, defines this productivity adjustment as equal to
the 10-year moving average of changes in annual economy-wide, private
nonfarm business MFP (as projected by the Secretary for the 10-year
period ending with the applicable fiscal year, calendar year, cost
reporting period, or other annual period). The Bureau of Labor
Statistics (BLS) publishes the official measure of private nonfarm
business MFP. We refer readers to the BLS Web site at https://www.bls.gov/mfp for the BLS historical published MFP data. MFP is
derived by subtracting the contribution of labor and capital input
growth from output growth. The projections of the components of MFP are
currently produced by IGI, a nationally recognized economic forecasting
firm with which CMS contracts to forecast the components of the market
baskets and MFP. As we discussed in the FY 2016 IPPS/LTCH PPS final
rule (80 FR 49509), beginning with the FY 2016 rulemaking cycle, the
MFP adjustment is calculated using the revised series developed by IGI
to proxy the aggregate capital inputs. Specifically, in order to
generate a forecast of MFP, IGI forecasts BLS aggregate capital inputs
using a
[[Page 38178]]
regression model. A complete description of the MFP projection
methodology is available on the CMS Web site at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch.html. As discussed in
the FY 2016 IPPS/LTCH PPS final rule, if IGI makes changes to the MFP
methodology, we will announce them on our Web site rather than in the
annual rulemaking.
In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19932), for FY
2018, we proposed an MFP adjustment of 0.4 percentage point. Similar to
the market basket update, for the proposed rule, we used IGI's fourth
quarter 2016 forecast of the MFP adjustment to compute the proposed MFP
adjustment. As noted previously, we proposed that if more recent data
subsequently become available, we would use such data, if appropriate,
to determine the FY 2018 market basket update and the MFP adjustment
for the final rule. Based on the most recent data available for this
final rule, we have determined an MFP adjustment of 0.6 percentage
point for FY 2018.
We did not receive any public comments on our proposal to use the
most recent available data to determine the final market basket update
and the MFP adjustment. Therefore, for this final rule, we are
finalizing a market basket update of 2.7 percent and an MFP adjustment
of 0.6 percentage point based on the most recent available data.
Based on the most recent data available for this final rule, as
described previously, we have determined four applicable percentage
increases to the standardized amount for FY 2018, as specified in the
following table:
FY 2018 Applicable Percentage Increases for The IPPS
----------------------------------------------------------------------------------------------------------------
Hospital Hospital Hospital did Hospital did
submitted submitted not submit not submit
quality data quality data quality data quality data
FY 2018 and is a and is not a and is a and is not a
meaningful EHR meaningful EHR meaningful EHR meaningful EHR
user user user user
----------------------------------------------------------------------------------------------------------------
Market Basket Rate[dash]of[dash]Increase........ 2.7 2.7 2.7 2.7
Adjustment for Failure to Submit Quality Data 0.0 0.0 -0.675 -0.675
under Section 1886(b)(3)(B)(viii) of the Act...
Adjustment for Failure to be a Meaningful EHR 0.0 -2.025 0.0 -2.025
User under Section 1886(b)(3)(B)(ix) of the Act
MFP Adjustment under Section 1886(b)(3)(B)(xi) -0.6 -0.6 -0.6 -0.6
of the Act.....................................
Statutory Adjustment under Section -0.75 -0.75 -0.75 -0.75
1886(b)(3)(B)(xii) of the Act..................
Applicable Percentage Increase Applied to 1.35 -0.675 0.675 -1.35
Standardized Amount............................
----------------------------------------------------------------------------------------------------------------
In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19932), we
proposed to revise the existing regulations at 42 CFR 412.64(d) to
reflect the current law for the FY 2018 update. Specifically, in
accordance with section 1886(b)(3)(B) of the Act, we proposed to revise
paragraph (vii) of Sec. 412.64(d)(1) to include the applicable
percentage increase to the FY 2018 operating standardized amount as the
percentage increase in the market basket index, subject to the
reductions specified under Sec. 412.64(d)(2) for a hospital that does
not submit quality data and Sec. 412.64(d)(3) for a hospital that is
not a meaningful EHR user, less an MFP adjustment and less an
additional reduction of 0.75 percentage point.
We did not receive any public comments on our proposed changes to
the regulations at Sec. 412.64(d)(1)(vii) and, therefore, are
finalizing these proposed changes without modification in this final
rule.
Section 1886(b)(3)(B)(iv) of the Act provides that the applicable
percentage increase to the hospital-specific rates for SCHs equals the
applicable percentage increase set forth in section 1886(b)(3)(B)(i) of
the Act (that is, the same update factor as for all other hospitals
subject to the IPPS). Therefore, the update to the hospital-specific
rates for SCHs also is subject to section 1886(b)(3)(B)(i) of the Act,
as amended by sections 3401(a) and 10319(a) of the Affordable Care Act.
As discussed in section V.H. of the preamble of the FY 2018 IPPS/
LTCH PPS proposed rule and in this final rule, section 205 of the
Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L.
114-10, enacted on April 16, 2015) extended the MDH program (which,
under previous law, was to be in effect for discharges on or before
March 31, 2015 only) for discharges occurring on or after April 1,
2015, through FY 2017 (that is, for discharges occurring on or before
September 30, 2017). Therefore, under current law, the MDH program will
expire at the end of FY 2017.
In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19932), for FY
2018, we proposed updates to the hospital-specific rates applicable to
SCHs based on IGI's fourth quarter 2016 forecast of the proposed 2014-
based IPPS market basket update with historical data through third
quarter 2016. Similarly, we used IGI's fourth quarter 2016 forecast of
the MFP adjustment. We proposed that if more recent data subsequently
became available (for example, a more recent estimate of the market
basket increase and the MFP adjustment), we would use such data, if
appropriate, to determine the update in the final rule.
We did not receive any public comments with regard to our proposal.
Therefore, we are finalizing the proposal to determine the update to
the hospital-specific rates for SCHs in this final rule using the most
recent data available.
For this final rule, based on the most recent available data, we
are finalizing the following updates to the hospital-specific rates
applicable to SCHs (using IGI's second quarter 2017 forecast of the
2014-based IPPS market basket update and the MFP adjustment): An update
of 1.35 percent for a hospital that submits quality data and is a
meaningful EHR user; an update of 0.675 percent for a hospital that
fails to submit quality data and is a meaningful EHR user; an update of
-0.675 percent for a hospital that submits quality data and is not a
meaningful EHR user; and an update of -1.35 percent for a hospital that
fails to submit quality data and is not a meaningful EHR user.
2. FY 2018 Puerto Rico Hospital Update
As discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56937
through 56938), prior to January 1, 2016, Puerto Rico hospitals were
paid based on 75 percent of the national
[[Page 38179]]
standardized amount and 25 percent of the Puerto Rico-specific
standardized amount. Section 601 of Public Law 114-113 amended section
1886(d)(9)(E) of the Act to specify that the payment calculation with
respect to operating costs of inpatient hospital services of a
subsection (d) Puerto Rico hospital for inpatient hospital discharges
on or after January 1, 2016, shall use 100 percent of the national
standardized amount.
Because Puerto Rico hospitals are no longer paid with a Puerto
Rico-specific standardized amount under the amendments to section
1886(d)(9)(E) of the Act, there is no longer a need for us to determine
an update to the Puerto Rico standardized amount. Hospitals in Puerto
Rico are now paid 100 percent of the national standardized amount and,
therefore, are subject to the same update to the national standardized
amount discussed under section V.B.1. of the preamble of this final
rule. Accordingly, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19932 through 19933), for FY 2018, we proposed an applicable percentage
increase of 1.75 percent to the standardized amount for hospitals
located in Puerto Rico. We did not receive any public comments on our
proposal. Based on the most recent available data, we are finalizing an
applicable percentage increase of 1.35 percent to the standardized
amount for hospitals located in Puerto Rico.
We note that section 1886(b)(3)(B)(viii) of the Act, which
specifies the adjustment to the applicable percentage increase for
``subsection (d)'' hospitals that do not submit quality data under the
rules established by the Secretary, is not applicable to hospitals
located in Puerto Rico.
In addition, section 602 of Public Law 114-113 amended section
1886(n)(6)(B) of the Act to specify that Puerto Rico hospitals are
eligible for incentive payments for the meaningful use of certified EHR
technology, effective beginning FY 2016, and also to apply the
adjustments to the applicable percentage increase under section
1886(b)(3)(B)(ix) of the Act to Puerto Rico hospitals that are not
meaningful EHR users, effective FY 2022. Accordingly, because the
provisions of section 1886(b)(3)(B)(ix) of the Act are not applicable
to hospitals located in Puerto Rico until FY 2022, the adjustments
under this provision are not applicable for FY 2018.
C. Change to Volume Decrease Adjustment for Sole Community Hospitals
(SCHs) and Medicare-Dependent, Small Rural Hospitals (MDHs) (Sec. Sec.
412.92 and 412.108)
1. Background
Sections 1886(d)(5)(D) and (d)(5)(G) of the Act provide special
payment protections under the IPPS to sole community hospitals (SCHs)
and Medicare-dependent, small rural hospitals (MDHs), respectively.
Section 1886(d)(5)(D)(iii) of the Act defines an SCH in part as a
hospital that the Secretary determines is located more than 35 road
miles from another hospital or that, by reason of factors such as
isolated location, weather conditions, travel conditions, or absence of
other like hospitals (as determined by the Secretary), is the sole
source of inpatient hospital services reasonably available to Medicare
beneficiaries. The regulations at 42 CFR 412.92 set forth the criteria
that a hospital must meet to be classified as a SCH. For more
information on SCHs, we refer readers to the FY 2009 IPPS/LTCH PPS
final rule (74 FR 43894 through 43897).
Section 1886(d)(5)(G)(iv) of the Act defines an MDH as a hospital
that is located in a rural area, has not more than 100 beds, is not an
SCH, and has a high percentage of Medicare discharges (that is, not
less than 60 percent of its inpatient days or discharges during the
cost reporting period beginning in FY 1987 or two of the three most
recently audited cost reporting periods for which the Secretary has a
settled cost report were attributable to inpatients entitled to
benefits under Part A). The regulations at 42 CFR 412.108 set forth the
criteria that a hospital must meet to be classified as an MDH. The MDH
program is not authorized by statute beyond September 30, 2017.
Therefore, beginning October 1, 2017, all hospitals that previously
qualified for MDH status under section 1886(d)(5)(G) of the Act will no
longer have MDH status and will be paid based on the IPPS Federal rate.
For additional information on the MDH program and the payment
methodology, we refer readers to the FY 2012 IPPS/LTCH PPS final rule
(76 FR 51683 through 51684).
2. Changes to the Volume Decrease Adjustment Calculation Methodology
for SCHs
Section 1886(d)(5)(D)(ii) and section 1886(d)(5)(G)(iii) of the Act
require that the Secretary adjust the payments made to an SCH and MDH,
respectively, as may be necessary to fully compensate the hospital for
the fixed costs it incurs in providing inpatient hospital services,
including the reasonable cost of maintaining necessary core staff and
services, when it experiences a decrease of more than 5 percent in its
total number of inpatient discharges due to circumstances beyond its
control. These adjustments are known as ``volume decrease
adjustments.''
The regulations governing volume decrease adjustments are found at
42 CFR 412.92(e) for SCHs and Sec. 412.108(d) for MDHs. As noted
earlier, the MDH program is set to expire as of October 1, 2017. As
such, we proposed that if the MDH program ends up being extended by
law, similar to how it was extended by section 205 of the MACRA (Pub.
L. 114-10) and prior legislation, the proposed changes to the volume
decrease adjustment methodology and the proposed amendment to Sec.
412.92(e)(3) for SCHs would also be made to the parallel requirements
for MDHs under Sec. 412.108(d)(3).
To qualify for a volume decrease adjustment, the SCH must: (a)
Submit documentation demonstrating the size of the decrease in
discharges and the resulting effect on per discharge costs; and (b)
show that the decrease is due to circumstances beyond the hospital's
control. If an SCH demonstrates to the MAC's satisfaction that it has
suffered a qualifying decrease in total inpatient discharges, the MAC
determines the appropriate amount, if any, due to the SCH as an
adjustment.
As we have noted in Section 2810.1 of the Provider Reimbursement
Manual, Part 1 (PRM-1) and in adjudications rendered by the PRRB and
the CMS Administrator, under the current methodology, the MAC
determines a volume decrease adjustment amount not to exceed a cap
calculated as the difference between the lesser of (1) the hospital's
current year's Medicare inpatient operating costs or (2) its prior
year's Medicare inpatient operating costs multiplied by the appropriate
IPPS update factor, and the hospital's total MS-DRG revenue for
inpatient operating costs (including outlier payments, DSH payments,
and IME payments). In determining the volume decrease adjustment
amount, the MAC considers the individual hospital's needs and
circumstances, including the reasonable cost of maintaining necessary
core staff and services in view of minimum staffing requirements
imposed by State agencies; the hospital's fixed costs (including
whether any semi-fixed costs are to be considered fixed) other than
those costs paid on a reasonable cost basis; and the length of time the
hospital has experienced a decrease in utilization.
[[Page 38180]]
We have set forth interpretive guidance regarding volume decrease
adjustments in the preambles to various rules and in Section 2810.1 of
the PRM-1. The adjustment also has been the subject of a series of
adjudications, rendered by the PRRB and the CMS Administrator. For
example, we refer readers to Greenwood County Hospital Eureka, Kansas,
v. Blue Cross Blue Shield Association/Blue Cross Blue Shield of Kansas,
2006 WL 3050893 (PRRB August 29, 2006); Unity Healthcare Muscatine,
Iowa v. Blue Cross Blue Shield Association/Wisconsin Physicians
Service, 2014 WL 5450066 (CMS Administrator September 4, 2014); Lakes
Regional Healthcare Spirit Lake, Iowa v. Blue Cross Blue Shield
Association/Wisconsin Physicians Service, 2014 WL 5450078 (CMS
Administrator September 4, 2014); Fairbanks Memorial Hospital v.
Wisconsin Physician Services/BlueCross BlueShield Association, 2015 WL
5852432 (CMS Administrator, August 5, 2015); St. Anthony Regional
Hospital v. Wisconsin Physicians Service, 2016 WL 7744992 (CMS
Administrator October 3, 2016); and Trinity Regional Medical Center v.
Wisconsin Physician Services, 2017 WL 2403399 (CMS Administrator
February 9, 2017). In those adjudications, the PRRB and the CMS
Administrator have recognized that: (1) The volume decrease adjustment
is intended to compensate qualifying SCHs for their fixed costs only,
and that variable costs are to be excluded from the adjustment; and (2)
an SCH's volume decrease adjustment should be reduced to reflect the
compensation of fixed costs that has already been made through MS-DRG
payments.
However, some hospitals have recently expressed concerns regarding
the exact calculations that the MACs use when determining the volume
decrease adjustment. The issue also has been addressed in some recent
decisions of the PRRB. As the above referenced Administrator decisions
illustrate and explain, under the current calculation methodology, the
MACs calculate the volume decrease adjustment by subtracting the
entirety of the hospital's total MS-DRG revenue for inpatient operating
costs, including outlier payments and IME and DSH payments in the cost
reporting period in which the volume decrease occurred, from fixed
costs in the cost reporting period in which the volume decrease
occurred, minus any adjustment for excess staff. If the result of that
calculation is greater than zero and less than the cap, the hospital
receives that amount in a lump-sum payment. If the result of that
calculation is zero or less than zero, the hospital does not receive a
volume decrease payment adjustment.
Under the IPPS, MS-DRG payments are not based on an individual
hospital's actual costs in a given cost reporting period. However, the
main issue raised by the PRRB and individual hospitals is that, under
the current calculation methodology, if the hospital's total MS-DRG
revenue for treating Medicare beneficiaries for which it incurs
inpatient operating costs (consisting of fixed, semi-fixed, and
variable costs) exceeds the hospital's fixed costs, the calculation by
the MACs results in no volume decrease adjustment for the hospital. In
some recent decisions, the PRRB has indicated that it believes it would
be more appropriate for the MACs to adjust the hospital's total MS-DRG
revenue from Medicare by looking at the ratio of a hospital's fixed
costs to its total costs (as determined by the MAC) and applying that
ratio as a proxy for the share of the hospital's MS-DRG payments that
it assumes are attributable (or allocable) to fixed costs, and then
comparing that estimate of the fixed portion of MS-DRG payments to the
hospital's fixed costs. In this way, the calculation would compare
estimated Medicare revenue for fixed costs to the hospital's fixed
costs when determining the volume decrease adjustment.
We continue to believe that our current approach in calculating
volume decrease adjustments is reasonable and consistent with the
statute. The relevant statutory provisions, at sections
1886(d)(5)(D)(ii) and 1886(d)(5)(G)(iii) of the Act, are silent about
and thus delegate to the Secretary the responsibility of determining
which costs are to be deemed ``fixed'' and what level of adjustment to
IPPS payments may be necessary to ensure that total Medicare payments
have fully compensated an SCH or MDH for its ``fixed costs.'' These
provisions suggest that the volume decrease adjustment amount should be
reduced (or eliminated as the case may be) to the extent that some or
all of an SCH's or MDH's fixed costs have already been compensated
through other Medicare subsection (d) payments. The Secretary's current
approach is also consistent with the regulations and the PRM-1. Like
the statute, the relevant regulations do not address variable costs,
and the regulations and the PRM-1 (along with the Secretary's preambles
to issued rules (48 FR 39781 through 39782 and 55 FR 15156) and
adjudications) all make it clear that the volume decrease adjustment is
intended to compensate qualifying SCHs and MDHs for their fixed costs,
not for their variable costs, and that variable costs are to be
excluded from the volume decrease adjustment calculation. Nevertheless,
we understand why hospitals might take the view that CMS should make an
effort, in some way, to ascertain whether a portion of MS-DRG payments
can be allocated or attributed to fixed costs in order to fulfill the
statutory mandate to ``fully compensate'' a qualifying SCH for its
fixed costs.
Accordingly, after considering these views, in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19933), we proposed to prospectively
change how the MACs calculate the volume decrease adjustments and
require that the MACs compare estimated Medicare revenue for fixed
costs to the hospital's fixed costs to remove any conceivable
possibility that a hospital that qualifies for the volume decrease
adjustment could ever be less than fully compensated for fixed costs as
a result of the application of the adjustment. We proposed that, in
order to estimate the fixed portion of the Medicare revenue, the MACs
would apply the ratio of the hospital's fixed costs to total costs in
the cost reporting period when it experienced the volume decrease to
the hospital's total Medicare revenue in that same cost reporting
period. We proposed to revise the regulations at 42 CFR 412.92(e)(3) to
reflect our proposed change in the MAC's calculation of the volume
decrease adjustment that would apply prospectively to cost reporting
periods beginning on or after October 1, 2017, and to reflect that the
language requiring that the volume decrease adjustment amount not
exceed the difference between the hospital's Medicare inpatient
operating costs and the hospital's total DRG revenue for inpatient
operating costs would only apply to cost reporting periods beginning
before October 1, 2017, but not to subsequent cost reporting periods.
Under the proposed methodology, if a hospital's total MS-DRG payment is
less than its total Medicare inpatient operating costs, the sum of any
resulting volume decrease adjustment payment and its MS-DRG payment
would never exceed its total Medicare inpatient operating costs due to
the fact that the fixed cost percentage is applied to the MS-DRG
payment in calculating the volume decrease adjustment amount. By taking
the ratio derived from the subset of fixed costs to total costs and
applying that same ratio to the MS-DRG payment, we ensure that the sum
of a hospital's IPPS payment
[[Page 38181]]
and its volume decrease adjustment payment would never exceed its total
Medicare inpatient operating costs, thus negating the need for a cap
calculation. Thus, the proposed methodology would render the current
volume decrease adjustment cap calculation obsolete. Conversely, if a
hospital's total MS-DRG payment is greater than its total Medicare
inpatient operating costs, calculating a volume decrease adjustment
using the proposed methodology would result in a negative payment
amount, which would yield a volume decrease adjustment payment of zero.
Finally, if a hospital's total MS-DRG payment is equal to its total
Medicare inpatient operating costs, calculating a volume decrease
adjustment using the proposed methodology would also yield a volume
decrease adjustment payment of zero. Furthermore, we believe that
because a hospital could not foresee a decrease in its volume from one
year to the next and would therefore not plan for a volume decrease
adjustment, the volume decrease adjustment payment should therefore not
be limited to a cap that is based on the previous year's costs. For
these reasons, we proposed to remove the cap calculation from the
volume decrease adjustment calculation methodology in future periods.
We believe that this new approach to calculating the volume decrease
adjustment, like the current methodology, is reasonable and consistent
with the statute.
We proposed that these proposed changes in the MAC's calculation of
the volume decrease adjustment would be prospective, effective for cost
reporting periods beginning on or after October 1, 2017. We indicated
in the proposed rule that if these proposed changes are adopted, we
also intended to update Section 2810.1 of the PRM-1 to reflect the
changes in the calculation of the volume decrease adjustment by the
MAC. For volume decrease adjustments for earlier cost reporting
periods, we stated that the current calculation methodology would
continue. In addition, we stated that we were not proposing to change
any part of the methodology, criteria, rules, or presumptions we
consider and apply in determining whether to classify a given cost as
fixed, semi-fixed, or variable for purposes of the volume decrease
adjustment.
In the proposed rule, we presented the following example to
illustrate the calculation of the volume decrease adjustment by the MAC
under our proposed change. We note that, as presented in our proposed
rule, the example may have implied that under the proposed methodology,
the MACs would apply the ratio of the hospital's Medicare fixed costs
to total Medicare costs, rather than ``the ratio of the hospital's
fixed costs to total costs in the cost reporting period when it
experienced the volume decrease to the hospital's total Medicare
revenue in that same cost reporting period,'' as stated elsewhere in
the preamble (82 FR 19934). We have modified the example below to
address this inconsistency and to clarify our intent by including
additional details to more clearly illustrate how Medicare fixed costs
and the fixed MS-DRG revenue are calculated and used in the
calculation, including to reflect that this same ratio, that is, the
hospital's fixed inpatient costs to total inpatient costs, is applied
to total Medicare costs to arrive at fixed Medicare costs, as under the
current methodology.
Example: In its cost reporting period beginning October 1, 2017,
Hospital A has total Medicare inpatient operating costs equaling
$1,600,000 and total MS-DRG revenue (including outlier payments, IME
and DSH) of $1,400,000. The MAC determines that the hospital qualifies
for a volume decrease adjustment for this cost reporting period. The
MAC classifies $2,720,000 of Hospital A's total (Medicare and non-
Medicare) costs as fixed and $480,000 as variable. Hospital A's fixed
cost ratio is therefore .85 = $2,720,000/($2,720,000 + $480,000) =
$2,720,000/$3,200,000. The MAC applies this ratio to the (1) total MS-
DRG revenue of $1,400,000 to estimate the hospital's fixed MS-DRG
revenue to be $1,190,000 and (2) total Medicare inpatient operating
costs to estimate the hospital's fixed Medicare costs to be $1,360,000.
The volume decrease adjustment payment is then calculated by comparing
the fixed MS-DRG revenue of $1,190,000 to the Medicare fixed costs of
$1,360,000, resulting in a volume decrease adjustment payment of
$170,000 ($1,360,000 minus $1,190,000).
Under the current methodology used by the MACs, Hospital A would
receive no volume decrease adjustment payment because its total MS-DRG
revenue from Medicare of $1,400,000 exceeded the hospital's Medicare
fixed costs of $1,360,000. Furthermore, under the current methodology,
but not under our proposed methodology, it is possible that a hospital
would still receive no volume decrease adjustment payment even if its
Medicare fixed costs exceeded its total MS-DRG revenue if those fixed
costs exceeded the previous year's costs updated for inflation.
We also proposed changes to an adjustment that might be made to a
hospital's staffing costs in calculating the volume decrease
adjustment. The statute and regulations and the PRM-1 imply, and we
have expressly indicated in prior rulemaking, most recently in the FY
2006 rulemaking, our belief that not all staff costs can necessarily be
considered fixed costs (71 FR 48056 through 48060). Therefore, we
currently require a hospital, when applying for a volume decrease
adjustment, to demonstrate that it appropriately adjusted the number of
staff in inpatient areas of the hospital based on the decrease in the
number of inpatient days but not beyond minimum levels as required by
State or local laws. If a hospital does not appropriately adjust its
number of staff, the cost of maintaining those staff members is
deducted from the total volume decrease adjustment payment. In
reviewing the volume decrease adjustment calculation, we have also
weighed the administrative burden on the hospital of making this
demonstration to CMS, as compared to an assumption that it is likely
that a hospital would, in its normal course of business, adjust its
staffing levels as revenue declines. In the absence of evidence to
contrary, we believe that a hospital would adjust its staffing levels
as revenue declines rather than maintain those staffing levels for the
sole purpose of potentially having those staffing costs eventually
reflected in a Medicare volume decrease adjustment payment that the
hospital may or may not qualify for when it files its cost report.
Therefore, we proposed to modify the volume decrease adjustment process
to no longer require that a hospital explicitly demonstrate that it
appropriately adjusted the number of staff in inpatient areas of the
hospital based on the decrease in the number of inpatient days and to
no longer require the MAC to adjust the volume decrease adjustment
payment amount for excess staffing. We proposed that these changes
would be effective for cost reporting periods beginning on or after
October 1, 2017.
Comment: Commenters supported CMS' proposed changes to the volume
decrease adjustment methodology to (1) apply the ratio of the
hospital's fixed costs to total costs in the cost reporting period when
it experienced the volume decrease to the hospital's total Medicare
revenue in that same cost reporting period; (2) remove the cap
calculation from the volume decrease adjustment calculation methodology
in future periods; (3) no longer require that a hospital explicitly
demonstrate that it appropriately adjusted the number of
[[Page 38182]]
staff in inpatient areas of the hospital based on the decrease in the
number of inpatient days; and (4) no longer require the MAC to adjust
the volume decrease adjustment payment amount for excess staffing.
However, commenters suggested that CMS apply these proposals
retrospectively with a gamut of suggestions as to the specific types of
volume decrease adjustment determinations for which to apply the
proposed methodology: Pending volume decrease adjustment
determinations; volume decrease adjustment determinations currently
under appeal; unsettled cost reports; volume decrease adjustment
determinations that are still within the PRRB appeal timeline; volume
decrease adjustment determinations for which the MAC has issued a
recoupment demand; volume decrease adjustment determinations for all
open cost reports, regardless of whether an appeal was made; and all
open cost reports, including those for which a volume decrease
adjustment was not requested.
Some commenters asserted that what CMS outlined in the proposed
rule as its ``current methodology'' was not, in fact, the current
methodology being applied consistently across the board and that
applying that methodology to pending volume decrease adjustment cases
would amount to retroactive rulemaking. The commenters added that the
proposed methodology, or the ``proxy methodology,'' is not, in fact,
new because it has been referenced in PRRB decisions and has been used
by some MACs at times. Other commenters stated that critical funding to
hospitals for pending volume decrease adjustment determinations should
not be at risk due to a lack of standardization across CMS and MAC
decisions.
Response: We appreciate the commenters' support of our proposed
changes to the volume decrease adjustment methodology. We disagree with
the commenters' assertion that the methodology that we outlined as our
``current methodology'' is not current but a new methodology that we
are introducing as ``current.'' While there may have been
inconsistencies in volume decrease adjustment determinations made by
some MACs, inconsistent MAC determinations and PRRB decisions that are
subsequently reversed by the Administrator do not establish agency
policy nor bind the agency. Furthermore, our current methodology has
been upheld by the PRRB in Greenwood County Hospital Eureka, Kansas, v.
Blue Cross Blue Shield Association/Blue Cross Blue Shield of Kansas,
2006 WL 3050893 (PRRB, August 29, 2006) and clearly outlined in the
Administrator's decisions in Unity Healthcare Muscatine, Iowa v. Blue
Cross Blue Shield Association/Wisconsin Physicians Service, 2014 WL
5450066 (CMS Administrator September 4, 2014); Lakes Regional
Healthcare Spirit Lake, Iowa v. Blue Cross Blue Shield Association/
Wisconsin Physicians Service, 2014 WL 5450078 (CMS Administrator
September 4, 2014); Fairbanks Memorial Hospital v. Wisconsin Physician
Services/BlueCross BlueShield Association, 2015 WL 5852432 (CMS
Administrator, August 5, 2015); St. Anthony Regional Hospital v.
Wisconsin Physicians Service, 2016 WL 7744992 (CMS Administrator
October 3, 2016); and Trinity Regional Medical Center v. Wisconsin
Physician Services, 2017 WL 2403399 (CMS Administrator February 9,
2017), to name a few. For these reasons, we disagree with the
commenters that our current policy was not the established policy, and
we believe that applying this policy does not constitute retroactive
rulemaking. Indeed, some of these same commenters are currently
awaiting a court decision in a pending appeal in which they challenged
the exact methodology which they claim in their comments is not
``current policy'' but a redefined ``new policy.''
We also do not agree that we should apply our proposed methodology
retroactively. The IPPS is a prospective system and, absent
legislation, a judicial decision, or other compelling considerations to
the contrary, we generally make changes to IPPS regulations effective
prospectively based on the date of discharge or the start of a cost
reporting period within a certain Federal fiscal year. We believe
following our usual approach and applying the new methodology for cost
reporting periods beginning on or after October 1, 2017 would allow for
the most equitable application of this methodology among all IPPS
providers seeking to qualify for volume decrease adjustments. For these
reasons, we are finalizing that our proposed changes to the volume
decrease adjustment methodology will apply prospectively for cost
reporting periods beginning on or after October 1, 2017.
Comment: One commenter suggested that, because CMS did not issue
updated core staffing factors for FY 2012 or later, the proposed change
to no longer require a hospital to explicitly demonstrate that it
appropriately adjusted the number of staff in inpatient areas of the
hospital based on the decrease in the number of inpatient days and to
no longer require the MAC to adjust the volume decrease adjustment
payment amount for excess staffing be effective for cost reporting
periods beginning on or after October 1, 2011.
Response: We appreciate the commenter's support of our effort to
streamline the volume decrease adjustment determination process by
eliminating the core staffing adjustment. However, we disagree with the
suggestion to apply this change retroactively. As noted earlier, the
IPPS is a prospective system and we generally make changes effectively
prospectively. The absence of updated core staffing data does not
undermine the policy that we expressly indicated in prior rulemaking.
Therefore, we do not see any compelling reason to apply this change
retrospectively.
Comment: Some commenters addressed areas of volume decrease
adjustment policy for which we did not propose any changes. These
included waiving the requirement for hospitals to demonstrate that the
decrease in discharges was beyond the hospital's control; to no longer
require the removal of variable costs and calculate the volume decrease
adjustment by subtracting the MS-DRG payment from total inpatient
costs; shortening the timeline in which MACs need to make volume
decrease adjustment determinations; and stopping MACs from rejecting
requests for volume decrease adjustments before an NPR is issued.
Response: We appreciate the commenters' concerns. However, because
we did not make any proposals related to these specific policy areas
and we consider these comments to be out of the scope of the proposed
rule, we are not addressing them in this final rule.
After consideration of the public comments we received, we are
finalizing our policies as proposed, with one modification to our
proposed amendment to Sec. 412.92(e)(3) to reflect these policies. We
are finalizing our proposal to prospectively require that the MACs
compare Medicare revenue allocable to fixed costs from the cost
reporting period in which the hospital experienced the volume decrease
to the hospital's fixed costs from that same cost reporting period when
calculating a volume decrease adjustment and that the cap will no
longer be applied to the volume decrease adjustment calculation
methodology. We proposed to revise the regulations at Sec.
412.92(e)(3) to reflect these changes. However, our proposed regulatory
text did not precisely capture the new calculation methodology that we
described in the preamble to the proposed rule, and which we are now
finalizing, in one respect. Specifically,
[[Page 38183]]
the preamble to the proposed rule stated that, under the proposed
change in the MAC's calculation of the volume decrease adjustment, ``in
order to estimate the fixed portion of the Medicare revenue, the MACs
would apply the ratio of the hospital's fixed costs to total costs in
the cost reporting period when it experienced the volume decrease to
the hospital's total Medicare revenue in that same cost reporting
period'' (82 FR 19934). By contrast, the proposed regulatory text in
the proposed rule stated that the ratio to be applied by the MAC would
be ``the ratio of the hospital's fixed Medicare inpatient operating
costs to its total Medicare inpatient operating costs'' (82 FR 20161).
Therefore, consistent with the proposed policy which we are now
finalizing, we are deleting the two instances of the words ``Medicare''
that appear in the clause quoted in the preceding sentence.
Accordingly, as finalized, the second sentence of Sec. 412.92(e)(3)
specifies that, effective for cost reporting periods beginning on or
after October 1, 2017, the MAC determines a lump sum adjustment amount
equal to the difference between the hospital's fixed Medicare inpatient
operating costs and the hospital's total MS-DRG revenue based on MS-
DRG-adjusted prospective payment rates for inpatient operating costs
(including outlier payments for inpatient operating costs determined
under subpart F of Part 412 and additional payments made for inpatient
operating costs for hospitals that serve a disproportionate share of
low-income patients as determined under Sec. 412.106 and for indirect
medical education costs as determined under Sec. 412.105) multiplied
by the ratio of the hospital's fixed inpatient operating costs to its
total inpatient operating costs. We also are finalizing our proposal to
prospectively modify the volume decrease adjustment process to no
longer require that a hospital explicitly demonstrate that it
appropriately adjusted the number of staff in inpatient areas of the
hospital based on the decrease in the number of inpatient days and to
no longer require the MAC to adjust the volume decrease adjustment
payment amount for excess staffing. These changes will be effective for
cost reporting periods beginning on or after October 1, 2017. As we
noted earlier, we proposed that if the MDH program ends up being
extended by law, similar to how it was extended by section 205 of the
MACRA (Pub. L. 114-10) and prior legislation, these changes to the
volume decrease adjustment methodology and the amendment to Sec.
412.92(e)(3) for SCHs would also be made to the parallel requirements
for MDHs under Sec. 412.108(d)(3). To that end, we are modifying the
regulations at Sec. 412.108(d)(3) by modifying the introductory
paragraph to cross-reference the requirements found at Sec.
412.92(e)(3). This will allow for consistency in the regulations
governing volume decrease adjustments should the MDH program be
extended.
D. Rural Referral Centers (RRCs) Annual Updates to Case-Mix Index and
Discharge Criteria (Sec. 412.96)
Under the authority of section 1886(d)(5)(C)(i) of the Act, the
regulations at Sec. 412.96 set forth the criteria that a hospital must
meet in order to qualify under the IPPS as a rural referral center
(RRC). RRCs receive some special treatment under both the DSH payment
adjustment and the criteria for geographic reclassification.
Section 402 of Public Law 108-173 raised the DSH payment adjustment
for RRCs such that they are not subject to the 12-percent cap on DSH
payments that is applicable to other rural hospitals. RRCs also are not
subject to the proximity criteria when applying for geographic
reclassification. In addition, they do not have to meet the requirement
that a hospital's average hourly wage must exceed, by a certain
percentage, the average hourly wage of the labor market area in which
the hospital is located.
Section 4202(b) of Public Law 105-33 states, in part, that any
hospital classified as an RRC by the Secretary for FY 1991 shall be
classified as such an RRC for FY 1998 and each subsequent fiscal year.
In the August 29, 1997 IPPS final rule with comment period (62 FR
45999), we reinstated RRC status for all hospitals that lost that
status due to triennial review or MGCRB reclassification. However, we
did not reinstate the status of hospitals that lost RRC status because
they were now urban for all purposes because of the OMB designation of
their geographic area as urban. Subsequently, in the August 1, 2000
IPPS final rule (65 FR 47089), we indicated that we were revisiting
that decision. Specifically, we stated that we would permit hospitals
that previously qualified as an RRC and lost their status due to OMB
redesignation of the county in which they are located from rural to
urban, to be reinstated as an RRC. Otherwise, a hospital seeking RRC
status must satisfy all of the other applicable criteria. We use the
definitions of ``urban'' and ``rural'' specified in Subpart D of 42 CFR
part 412. One of the criteria under which a hospital may qualify as an
RRC is to have 275 or more beds available for use (Sec.
412.96(b)(1)(ii)). A rural hospital that does not meet the bed size
requirement can qualify as an RRC if the hospital meets two mandatory
prerequisites (a minimum case-mix index (CMI) and a minimum number of
discharges), and at least one of three optional criteria (relating to
specialty composition of medical staff, source of inpatients, or
referral volume). (We refer readers to Sec. 412.96(c)(1) through
(c)(5) and the September 30, 1988 Federal Register (53 FR 38513) for
additional discussion.) With respect to the two mandatory
prerequisites, a hospital may be classified as an RRC if--
The hospital's CMI is at least equal to the lower of the
median CMI for urban hospitals in its census region, excluding
hospitals with approved teaching programs, or the median CMI for all
urban hospitals nationally; and
The hospital's number of discharges is at least 5,000 per
year, or, if fewer, the median number of discharges for urban hospitals
in the census region in which the hospital is located. The number of
discharges criterion for an osteopathic hospital is at least 3,000
discharges per year, as specified in section 1886(d)(5)(C)(i) of the
Act.
1. Case-Mix Index (CMI)
Section 412.96(c)(1) provides that CMS establish updated national
and regional CMI values in each year's annual notice of prospective
payment rates for purposes of determining RRC status. The methodology
we used to determine the national and regional CMI values is set forth
in the regulations at Sec. 412.96(c)(1)(ii). The national median CMI
value for FY 2018 is based on the CMI values of all urban hospitals
nationwide, and the regional median CMI values for FY 2018 are based on
the CMI values of all urban hospitals within each census region,
excluding those hospitals with approved teaching programs (that is,
those hospitals that train residents in an approved GME program as
provided in Sec. 413.75). These values are based on discharges
occurring during FY 2016 (October 1, 2015 through September 30, 2016),
and include bills posted to CMS' records through March 2016.
In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19936), we
proposed that, in addition to meeting other criteria, if rural
hospitals with fewer than 275 beds are to qualify for initial RRC
status for cost reporting periods beginning on or after October 1,
2017, they must have a CMI value for FY 2016 that is at least--
1.6635 (national--all urban); or
The median CMI value (not transfer-adjusted) for urban
hospitals
[[Page 38184]]
(excluding hospitals with approved teaching programs as identified in
Sec. 413.75) calculated by CMS for the census region in which the
hospital is located.
The proposed median CMI values by region were set forth in the
proposed rule (82 FR 19936). We stated in the proposed rule that we
intended to update these proposed CMI values in the FY 2018 final rule
to reflect the updated FY 2016 MedPAR file, which will contain data
from additional bills received through March 2017. We did not receive
any public comments on our proposal. Based on the latest available data
(FY 2016 bills received through March 2017), in addition to meeting
other criteria, if rural hospitals with fewer than 275 beds are to
qualify for initial RRC status for cost reporting periods beginning on
or after October 1, 2017, they must have a CMI value for FY 2016 that
is at least--
1.6638 (national--all urban); or
The median CMI value (not transfer-adjusted) for urban
hospitals (excluding hospitals with approved teaching programs as
identified in Sec. 413.75) calculated by CMS for the census region in
which the hospital is located.
The final CMI values by region are set forth in the table below:
------------------------------------------------------------------------
Case-mix index
Region value
------------------------------------------------------------------------
1. New England (CT, ME, MA, NH, RI, VT)................. 1.4192
2. Middle Atlantic (PA, NJ, NY)......................... 1.5133
3. South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV).. 1.5405
4. East North Central (IL, IN, MI, OH, WI).............. 1.5896
5. East South Central (AL, KY, MS, TN).................. 1.5086
6. West North Central (IA, KS, MN, MO, NE, ND, SD)...... 1.6344
7. West South Central (AR, LA, OK, TX).................. 1.6950
8. Mountain (AZ, CO, ID, MT, NV, NM, UT, WY)............ 1.7580
9. Pacific (AK, CA, HI, OR, WA)......................... 1.6473
------------------------------------------------------------------------
A hospital seeking to qualify as an RRC should obtain its hospital-
specific CMI value (not transfer-adjusted) from its MAC. Data are
available on the Provider Statistical and Reimbursement (PS&R) System.
In keeping with our policy on discharges, the CMI values are computed
based on all Medicare patient discharges subject to the IPPS MS-DRG-
based payment.
2. Discharges
Section 412.96(c)(2)(i) provides that CMS set forth the national
and regional numbers of discharges criteria in each year's annual
notice of prospective payment rates for purposes of determining RRC
status. As specified in section 1886(d)(5)(C)(ii) of the Act, the
national standard is set at 5,000 discharges. In the FY 2018 IPPS/LTCH
PPS proposed rule, for FY 2018, we proposed to update the regional
standards based on discharges for urban hospitals' cost reporting
periods that began during FY 2015 (that is, October 1, 2014 through
September 30, 2015), which were the latest cost report data available
at the time this proposed rule was developed. Therefore, we proposed
that, in addition to meeting other criteria, a hospital, if it is to
qualify for initial RRC status for cost reporting periods beginning on
or after October 1, 2017, must have, as the number of discharges for
its cost reporting period that began during FY 2015, at least--
5,000 (3,000 for an osteopathic hospital); or
The median number of discharges for urban hospitals in the
census region in which the hospital is located. (We refer readers to
the table set forth in the FY 2018 IPPS/LTCH PPS proposed rule at 82 FR
19936.) In the proposed rule, we stated that we intended to update
these numbers in the FY 2018 final rule based on the latest available
cost report data.
We did not receive any public comments on our proposal.
Based on the latest discharge data available at this time, that is,
for cost reporting periods that began during FY 2015, the final median
number of discharges for urban hospitals by census region are set forth
in the following table.
------------------------------------------------------------------------
Number of
Region discharges
------------------------------------------------------------------------
1. New England (CT, ME, MA, NH, RI, VT)................. 8,080
2. Middle Atlantic (PA, NJ, NY)......................... 9,988
3. South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV).. 10,552
4. East North Central (IL, IN, MI, OH, WI).............. 8,181
5. East South Central (AL, KY, MS, TN).................. 8,647
6. West North Central (IA, KS, MN, MO, NE, ND, SD)...... 7,709
7. West South Central (AR, LA, OK, TX).................. 5,325
8. Mountain (AZ, CO, ID, MT, NV, NM, UT, WY)............ 8,735
9. Pacific (AK, CA, HI, OR, WA)......................... 9,101
------------------------------------------------------------------------
We note that the median number of discharges for hospitals in each
census region is greater than the national standard of 5,000
discharges. Therefore, under this final rule, 5,000 discharges is the
minimum criterion for all hospitals, except for osteopathic hospitals
for which the minimum criterion is 3,000 discharges.
E. Payment Adjustment for Low-Volume Hospitals (Sec. 412.101)
1. Expiration of Temporary Changes to Low-Volume Hospital Payment
Policy
Under section 1886(d)(12) of the Act, as amended, most recently by
section 204 of the Medicare Access and CHIP
[[Page 38185]]
Reauthorization Act of 2015 (MACRA), Public Law 114-10, the temporary
changes in the low-volume hospital payment policy originally provided
by the Affordable Care Act and extended through subsequent legislation
are effective through FY 2017. Beginning with FY 2018, the preexisting
low-volume hospital payment adjustment and qualifying criteria, as
implemented in FY 2005 and discussed later in this section, will
resume. We discuss the payment policies for FY 2018 in section V.E.3.
of the preamble of this final rule.
2. Background
Section 1886(d)(12) of the Act, as added by section 406(a) of
Public Law 108-173, provides for a payment adjustment to account for
the higher costs per discharge for low-volume hospitals under the IPPS,
effective beginning FY 2005. Sections 3125 and 10314 of the Affordable
Care Act amended section 1886(d)(12) of the Act by modifying the
definition of a low-volume hospital and the methodology for calculating
the payment adjustment for low-volume hospitals, effective only for
discharges occurring during FYs 2011 and 2012. Specifically, the
provisions of the Affordable Care Act amended the qualifying criteria
for low-volume hospitals to specify, for FYs 2011 and 2012, that a
hospital qualifies as a low-volume hospital if it is more than 15 road
miles from another subsection (d) hospital and has less than 1,600
discharges of individuals entitled to, or enrolled for, benefits under
Medicare Part A during the fiscal year. In addition, the statute, as
amended by the Affordable Care Act, provides that the low-volume
hospital payment adjustment (that is, the percentage increase) is
determined using a continuous linear sliding scale ranging from 25
percent for low-volume hospitals with 200 or fewer discharges of
individuals entitled to, or enrolled for, benefits under Medicare Part
A in the fiscal year to 0 percent for low-volume hospitals with greater
than 1,600 discharges of such individuals in the fiscal year. The
temporary changes to the low-volume hospital qualifying criteria and
the payment adjustment originally provided by the Affordable Care Act
were extended by subsequent legislation, most recently through FY 2017
by section 204 of the MACRA. (We refer readers to the FY 2017 IPPS/LTCH
PPS final rule (81 FR 56941 through 59943) for a detailed summary of
the applicable legislation.) Under current law, beginning with FY 2018,
the preexisting low-volume hospital qualifying criteria and payment
adjustment, as implemented in FY 2005 and described in this section,
will resume. The regulations implementing the low-volume hospital
adjustment provided by section 1886(d)(12) of the Act are located at 42
CFR 412.101.
The additional payment adjustment to a low-volume hospital provided
for under section 1886(d)(12) of the Act is in addition to any payment
calculated under this section. Therefore, the additional payment
adjustment is based on the per discharge amount paid to the qualifying
hospital under section 1886 of the Act. In other words, the low-volume
add-on payment amount is based on total per discharge payments made
under section 1886 of the Act, including capital, DSH, IME, and
outliers. For hospitals paid based on the hospital-specific rate, the
low-volume add-on payment amount is based on either the Federal rate or
the hospital-specific rate, whichever results in a greater operating
IPPS payment.
Section 1886(d)(12)(C)(i) of the Act defines a low-volume hospital,
for fiscal years other than FYs 2011 through 2017, as a subsection (d)
hospital (as defined in paragraph (1)(B)) that the Secretary determines
is located more than 25 road miles from another subsection (d) hospital
and that has less than 800 discharges during the fiscal year. Section
1886(d)(12)(C)(ii) of the Act further stipulates that the term
``discharge'' means an inpatient acute care discharge of an individual,
regardless of whether the individual is entitled to benefits under
Medicare Part A. Therefore, for fiscal years other than FYs 2011
through 2017, the term ``discharge'' refers to total discharges,
regardless of payer (that is, not only Medicare discharges).
Furthermore, section 1886(d)(12)(B) of the Act requires, for discharges
occurring in FYs 2005 through 2010 and FY 2018 and subsequent years,
that the Secretary determine an applicable percentage increase for
these low-volume hospitals based on the ``empirical relationship''
between the standardized cost-per-case for such hospitals and the total
number of discharges of such hospitals and the amount of the additional
incremental costs (if any) that are associated with such number of
discharges. The statute thus mandates that the Secretary develop an
empirically justifiable adjustment based on the relationship between
costs and discharges for these low-volume hospitals. Section
1886(d)(12)(B)(iii) of the Act limits the applicable percentage
increase adjustment to no more than 25 percent.
Based on an analysis we conducted for the FY 2005 IPPS final rule
(69 FR 49099 through 49102), a 25-percent low-volume adjustment to all
qualifying hospitals with less than 200 discharges was found to be most
consistent with the statutory requirement to provide relief to low-
volume hospitals where there is empirical evidence that higher
incremental costs are associated with low numbers of total discharges.
In the FY 2006 IPPS final rule (70 FR 47432 through 47434), we stated
that multivariate analyses supported the existing low-volume adjustment
implemented in FY 2005.
3. Payment Adjustment for FY 2018 and Subsequent Fiscal Years
In accordance with section 1886(d)(12) of the Act, beginning with
FY 2018, the low-volume hospital definition and payment adjustment
methodology will revert back to the statutory requirements that were in
effect prior to the amendments made by the Affordable Care Act and
extended by subsequent legislation. Therefore, effective for FY 2018
and subsequent years, in order to qualify as a low-volume hospital, a
subsection (d) hospital must be more than 25 road miles from another
subsection (d) hospital and have less than 200 discharges (that is,
less than 200 discharges total, including both Medicare and non-
Medicare discharges) during the fiscal year. As discussed earlier, the
statute specifies that a low-volume hospital must have less than 800
discharges during the fiscal year. However, as required by section
1886(d)(12)(B)(i) of the Act and as discussed earlier, the Secretary
has developed an empirically justifiable payment adjustment based on
the relationship, for IPPS hospitals with less than 800 discharges,
between the additional incremental costs (if any) that are associated
with a particular number of discharges. Based on an analysis we
conducted for the FY 2005 IPPS final rule (69 FR 49099 through 49102),
a 25-percent low-volume adjustment to all qualifying hospitals with
less than 200 discharges was found to be most consistent with the
statutory requirement to provide relief for low-volume hospitals where
there is empirical evidence that higher incremental costs are
associated with low numbers of total discharges. (Under the policy we
established in that same final rule, hospitals with between 200 and 799
discharges do not receive a low-volume hospital adjustment.)
As described earlier, for FYs 2005 through 2010 and FY 2018 and
subsequent years, the discharge determination is made based on the
hospital's number of total discharges, that is, Medicare and non-
Medicare discharges. The hospital's most recently
[[Page 38186]]
submitted cost report is used to determine if the hospital meets the
discharge criterion to receive the low-volume payment adjustment in the
current year (Sec. 412.101(b)(2)(i)). We use cost report data to
determine if a hospital meets the discharge criterion because this is
the best available data source that includes information on both
Medicare and non-Medicare discharges. We note that, for FYs 2011
through 2017, we used the most recently available MedPAR data to
determine the hospital's Medicare discharges because only Medicare
discharges were used to determine if a hospital met the discharge
criterion for those years.
For FY 2018 and for subsequent fiscal years, in addition to a
discharge criterion, the eligibility for the low-volume payment
adjustment is also dependent upon the hospital meeting the mileage
criterion specified at Sec. 412.101(b)(2)(i). Specifically, to meet
the mileage criterion to qualify for the low-volume payment adjustment
for FY 2018 and subsequent fiscal years, a hospital must be located
more than 25 road miles from the nearest subsection (d) hospital. We
define, at Sec. 412.101(a), the term ``road miles'' to mean ``miles''
as defined at Sec. 412.92(c)(1) (75 FR 50238 through 50275 and 50414).
In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50238 through 50275
and 50414) and subsequent rulemaking, most recently in the FY 2017
IPPS/LTCH PPS final rule (81 FR 56942 through 56943), we discussed the
process for requesting and obtaining the low-volume hospital payment
adjustment. In order to qualify for the low-volume hospital payment
adjustment, a hospital must provide to its MAC sufficient evidence to
document that it meets the discharge and distance requirements. The MAC
will determine, based on the most recent data available, if the
hospital qualifies as a low-volume hospital, so that the hospital will
know in advance whether or not it will receive a payment adjustment.
The MAC and CMS may review available data, in addition to the data the
hospital submits with its request for low-volume hospital status, in
order to determine whether or not the hospital meets the qualifying
criteria.
In order to receive a low-volume hospital payment adjustment under
Sec. 412.101, a hospital must notify and provide documentation to its
MAC that it meets the mileage criterion. The use of a Web-based mapping
tool as part of documenting that the hospital meets the mileage
criterion for low-volume hospitals is acceptable. The MAC will
determine if the information submitted by the hospital, such as the
name and street address of the nearest hospitals, location on a map,
and distance (in road miles, as defined in the regulations at Sec.
412.101(a)) from the hospital requesting low-volume hospital status, is
sufficient to document that it meets the mileage criterion. If not, the
MAC will follow up with the hospital to obtain additional necessary
information to determine whether or not the hospital meets the low-
volume mileage criterion. In addition, the MAC will refer to the
hospital's most recently submitted cost report to determine whether or
not the hospital meets the discharge criterion. A hospital should refer
to its most recently submitted cost report for total discharges
(Medicare and non-Medicare) in order to decide whether or not to apply
for low-volume hospital status for a particular fiscal year. A hospital
must continue to meet the qualifying criteria at Sec. 412.101(b)(2)(i)
as a low-volume hospital (that is, the discharge criterion and the
mileage criterion) in order to receive the payment adjustment in that
year; that is, low-volume hospital status is not based on a ``one-
time'' qualification (75 FR 50238 through 50275).
As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19938), in order to be a low-volume hospital in FY 2018 and subsequent
fiscal years, in accordance with our previously established procedure,
a hospital must make a written request for low-volume hospital status
that is received by its MAC by September 1 immediately preceding the
start of the Federal fiscal year for which the hospital is applying for
low-volume hospital status in order for the 25-percent, low-volume,
add-on payment adjustment to be applied to payments for its discharges
for the fiscal year beginning on or after October 1 immediately
following the request (that is, the start of the Federal fiscal year).
For a hospital whose request for low-volume hospital status is received
after September 1, if the MAC determines the hospital meets the
criteria to qualify as a low-volume hospital, the MAC will apply the
25-percent, low-volume, add-on payment adjustment to determine payment
for the hospital's discharges for the fiscal year, effective
prospectively within 30 days of the date of the MAC's low-volume status
determination.
Specifically, for FY 2018, a hospital must make a written request
for low-volume hospital status that is received by its MAC no later
than September 1, 2017, in order for the 25-percent, low-volume, add-on
payment adjustment to be applied to payments for its discharges
beginning on or after October 1, 2017 (through September 30, 2018).
Under this procedure, a hospital that qualified for the low-volume
hospital payment adjustment for FY 2017 may continue to receive a low-
volume hospital payment adjustment for FY 2018 without reapplying if it
meets both the discharge criterion and the mileage criterion applicable
for FY 2018. As in previous years, in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19938), we proposed that such a hospital must send
written verification that is received by its MAC no later than
September 1, 2017, stating that it meets the mileage criterion
applicable for FY 2018. For FY 2018, we further proposed that this
written verification must also state, based upon the most recently
submitted cost report, that the hospital meets the discharge criterion
applicable for FY 2018 (that is, less than 200 discharges total,
including both Medicare and non-Medicare discharges). If a hospital's
request for low-volume hospital status for FY 2018 is received after
September 1, 2017, and if the MAC determines the hospital meets the
criteria to qualify as a low-volume hospital, the MAC will apply the
25-percent, low-volume, add-on payment adjustment to determine the
payment for the hospital's FY 2018 discharges, effective prospectively
within 30 days of the date of the MAC's low-volume hospital status
determination. We noted that this process mirrors our established
application process but is updated to ensure that providers currently
receiving the low-volume hospital payment adjustment verify that they
meet both the mileage criterion and the discharge criterion applicable
for FY 2018 to continue receiving the adjustment for FY 2018. For
additional information on our established application process for the
low-volume hospital payment adjustment, we refer readers to the FY 2017
IPPS/LTCH PPS final rule (81 FR 56942 through 56943).
Comment: A few commenters expressed concern about the financial
impact of the expiration of the temporary changes to the low-volume
hospital payment adjustment provided for by the Affordable Care Act and
extended through subsequent legislation (most recently the MACRA). Some
commenters supported legislative action that would make permanent these
changes to the low-volume hospital payment adjustment. Other commenters
requested that CMS use the existing statutory authority to make the
low-volume adjustment to qualifying hospitals that have less than 800
total discharges rather than only to qualifying hospitals that have
less than 200 total discharges. These commenters did not provide any
data analysis in support of
[[Page 38187]]
their comments to expand the low-volume hospital adjustment to
qualifying hospitals that have less than 800 total discharges.
One commenter questioned whether CMS would be making any claims
processing or cost report changes in light of the expiration of the
temporary changes to the low-volume hospital payment adjustment.
Response: As noted earlier in the preamble of this final rule and
as discussed in response to public comments in the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53408 through 53409) and the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50612 through 50613), to implement the original
low-volume hospital payment adjustment provision, and as mandated by
statute, we developed an empirically justified adjustment based on the
relationship between costs and total discharges of hospitals with less
than 800 total (Medicare and non-Medicare) discharges. Specifically, we
performed several regression analyses to evaluate the relationship
between hospitals' costs per case and discharges, and found that an
adjustment for hospitals with less than 200 total discharges is most
consistent with the statutory requirement to provide for additional
payments to low-volume hospitals where there is empirical evidence that
higher incremental costs are associated with lower numbers of
discharges (69 FR 49101 through 49102). Based on these analyses, we
established a low-volume hospital policy under which qualifying
hospitals with less than 200 total discharges receive a payment
adjustment of an additional 25 percent. (Section 1886(d)(12)(B)(iii) of
the Act limits the applicable percentage increase adjustment to no more
than 25 percent.) In the future, we may reevaluate the low-volume
hospital adjustment policy; that is, the definition of a low-volume
hospital and the payment adjustment. However, because we are not aware
of any analysis or empirical evidence that would support expanding the
originally established a low-volume hospital adjustment policy, we did
not make any proposals regarding the low-volume hospital payment
adjustment for FY 2018 and are not making any changes to the low-volume
hospital payment adjustment policy in this final rule.
Therefore, the low-volume hospital definition and payment
adjustment methodology will revert back to the policy established under
statutory requirements that were in effect prior to the amendments made
by the Affordable Care Act and extended through subsequent legislation
(most recently the MACRA).
With regard to the comment regarding revisions to claims processing
or the cost report, any such changes will be addressed through
subregulatory guidance or other avenues, as appropriate.
After consideration of the public comments we received, we are
finalizing our proposals as described above, without modification.
As described earlier, for FYs 2005 through 2010 and FY 2018 and
subsequent fiscal years, the discharge determination will be made based
on the hospital's number of total discharges; that is, Medicare and
non-Medicare discharges. The hospital's most recently submitted cost
report is used to determine if the hospital meets the discharge
criterion to receive the low-volume hospital payment adjustment in the
current year (Sec. 412.101(b)(2)(i)). We use cost report data to
determine if a hospital meets the discharge criterion because this is
the best available data source that includes information on both
Medicare and non-Medicare discharges. As we noted in the proposed rule,
for FYs 2011 through 2017, we used the most recently available MedPAR
data to determine the hospital's Medicare discharges because only
Medicare discharges were used to determine if a hospital met the
discharge criterion for those years. In addition to a discharge
criterion, the eligibility for the low-volume hospital payment
adjustment also will be dependent upon the hospital meeting the mileage
criterion specified at Sec. 412.101(b)(2)(i). Specifically, to meet
the mileage criterion to qualify for the low-volume hospital payment
adjustment for FY 2018 and subsequent fiscal years, a hospital must be
located more than 25 road miles from the nearest subsection (d)
hospital.
For FY 2018, as discussed in the proposed rule, we will continue to
use the established process for requesting and obtaining the low-volume
hospital payment adjustment. That is, in order to receive a low-volume
hospital payment adjustment under Sec. 412.101, a hospital must notify
and provide documentation to its MAC that it meets the discharge and
distance requirements. The MAC will determine, based on the most recent
data available, if the hospital qualifies as a low-volume hospital, so
that the hospital will know in advance whether or not it will receive a
payment adjustment. The MAC and CMS may review available data, in
addition to the data the hospital submits with its request for low-
volume hospital status, in order to determine whether or not the
hospital meets the qualifying criteria. (For additional details on our
established process for the low-volume hospital payment adjustment, we
refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56942
through 56943).)
Consistent with our previously established procedure, for FY 2018,
a hospital must make a written request for low-volume hospital status
that is received by its MAC no later than September 1, 2017, in order
for the 25-percent low-volume hospital payment adjustment to be applied
to payments for its discharges beginning on or after October 1, 2017
(through September 30, 2018). Under this procedure, a hospital that
qualified for the low-volume hospital payment adjustment for FY 2017
may continue to receive a low-volume hospital payment adjustment for FY
2018 without reapplying if it meets both the discharge criterion and
the mileage criterion applicable for FY 2018. As in previous years,
such a hospital must send written verification that is received by its
MAC no later than September 1, 2017, stating that it meets the mileage
criterion applicable for FY 2018. In addition, for such a hospital,
this written verification must also state, based upon the most recently
submitted cost report, that the hospital meets the discharge criterion
applicable for FY 2018 (that is, less than 200 discharges total,
including both Medicare and non-Medicare discharges). If a hospital's
request for low-volume hospital status for FY 2018 is received after
September 1, 2017, and if the MAC determines the hospital meets the
criteria to qualify as a low-volume hospital, the MAC will apply the
25-percent low-volume hospital payment adjustment to determine the
payment for the hospital's FY 2018 discharges, effective prospectively
within 30 days of the date of the MAC's low-volume hospital status
determination.
In the FY 2016 IPPS interim final rule with comment period (80 FR
49594 through 49597 and 49767), we made conforming changes to the
regulations at 42 CFR 412.101 to reflect the extension of the changes
to the qualifying criteria and the payment adjustment methodology for
low-volume hospitals through FY 2017 in accordance with section 204 of
the MACRA. Under these revisions, beginning with FY 2018, consistent
with current law, the low-volume hospital qualifying criteria and
payment adjustment methodology will return to the criteria and
methodology that were in effect prior to the amendments made by the
Affordable Care Act (that is, the low-volume hospital payment policy in
effect for FYs 2005 through 2010). Therefore, no
[[Page 38188]]
further revisions to the policy or to the regulations at Sec. 412.101
are required to conform them to the statutory requirement that the low-
volume hospital policy in effect prior to the Affordable Care Act will
again be in effect for FY 2018 and subsequent years.
As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19938), for this reason, we did not propose specific amendments to the
regulations at Sec. 412.101 to reflect the expiration of the temporary
changes to the low-volume hospital payment adjustment policy originally
provided for by the Affordable Care Act, but we proposed that if these
temporary changes to the low-volume hospital payment policy were to be
extended by law, similar to extensions provided most recently through
FY 2017 by MACRA, we would make conforming changes to the regulations
at Sec. 412.101(b) through (d), as appropriate, to reflect any such
extension. Because, as of the time of the development of this final
rule, these temporary changes to the low-volume hospital payment policy
have not been extended by law, we are not making any such conforming
changes. As noted previously, any changes to the cost report will be
addressed through subregulatory guidance or other avenues, as
appropriate.
4. Parallel Low-Volume Hospital Payment Adjustment Regarding Hospitals
Operated by the Indian Health Services (IHS) or a Tribe
As previously stated, section 1886(d)(12)(C) of the Act and our
regulations at 42 CFR 412.101(b)(2) require that, in order to qualify
for the low-volume hospital payment adjustment, a hospital must be
located more than a specified number of miles from the nearest
subsection (d) hospital (referred to as the mileage criterion). Section
1886(d)(1)(B) of the Act defines a ``subsection (d) hospital'' as a
hospital located in one of the 50 States or District of Columbia, other
than the specified excluded types of hospitals. As stated in prior
rulemaking (for example, 79 FR 50153 (August 22, 2014), 78 FR 61194 and
61196 (October 3, 2013), 78 FR 50710 (August 19, 2013), 78 FR 27623
(May 10, 2013), 77 FR 53397 (August 31, 2012), 77 FR 27965 (May 11,
2012), 75 FR 50307 (August 16, 2010)), CMS considers IHS and Tribal
hospitals to be subsection (d) hospitals. However, in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 19939), we stated that, given the unique
nature of IHS and Tribal hospitals and the populations they serve, as
discussed below, we believe it would be appropriate to provide
additional flexibility in determining eligibility for the low-volume
hospital payment adjustment for IHS and Tribal hospitals and non-IHS
hospitals that are located less than the specified mileage from one
another. Specifically, we proposed that, for an IHS or Tribal hospital,
only its proximity to other IHS or Tribal hospitals would be used to
determine if the mileage criterion is met. Similarly, for a non-IHS
hospital, only its proximity to other non-IHS hospitals would be used
to determine if the mileage criterion is met.
Except for emergencies and a few other limited special cases, those
individuals who are not members of a federally recognized Tribe are not
eligible for treatment at IHS or Tribal hospitals. Therefore, such a
hospital is not a valid option for the general Medicare population,
including local residents who are not members of a federally recognized
Tribe or not otherwise eligible for IHS services. Therefore, we stated
that we believe it would be appropriate to not consider IHS and Tribal
hospitals when evaluating whether a non-IHS hospital meets the mileage
criterion.
Likewise, we stated that we believe it would be appropriate to not
consider non-IHS hospitals when evaluating whether an IHS or Tribal
hospital meets the mileage criterion. The principal mission of the IHS
is the provision of health care to American Indians and Alaska Natives
throughout the United States. In carrying out that mission, IHS
operates under two primary authorizing statutes. The first statute, the
Snyder Act, authorizes IHS to expend such moneys as Congress may
determine from time to time appropriate for the conservation of the
health of American Indians or Alaska Natives. We refer readers to 25
U.S.C. 13 (providing that the Bureau of Indian Affairs (BIA) will
expend funds as appropriated for, among other things, the conservation
of health of American Indians and Alaska Natives); and 42 U.S.C.
2001(a) (transferring the responsibility for American Indian and Alaska
Native health care from BIA to HHS). The second statute, the Indian
Health Care Improvement Act (IHCIA), established IHS as an agency
within the Public Health Service of HHS and provides authority for
numerous programs to address particular health initiatives for American
Indians and Alaska Natives, such as alcohol and substance abuse and
diabetes (25 U.S.C. 1601 et seq.).
IHS and Tribal hospitals are charged with addressing the health of
American Indians and Alaska Natives and are uniquely situated to
provide services to this population. For this reason, we stated that we
believe it would be appropriate to not consider the non-IHS hospitals
when evaluating whether an IHS or Tribal hospital meets the mileage
criterion.
Because IHS and Tribal hospitals are subsection (d) hospitals, in
the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19339), we proposed to
use our authority under section 1886(d)(5)(I)(i) of the Act to provide
an adjustment equal to the applicable low-volume adjustment provided
for under section 1886(d)(12) of the Act for an IHS or Tribal hospital
whose sole disqualifier for the low-volume hospital adjustment is its
proximity to a non-IHS hospital, and for a non-IHS hospital whose sole
disqualifier is its proximity to an IHS or Tribal hospital. Such an
adjustment would provide that, practically speaking, an IHS or Tribal
hospital would be able to receive a low-volume hospital adjustment
based on its distance to the nearest IHS or Tribal hospital, and a non-
IHS hospital would be able to qualify to receive a low-volume hospital
adjustment based on its distance to the nearest non-IHS hospital. We
believe it is appropriate to apply this authority here, given the
unique characteristics of IHS and Tribal hospitals, as discussed above.
To implement this proposed adjustment, we proposed to revise 42 CFR
412.101 by adding paragraph (e) to provide that, for discharges
occurring in FY 2018 and subsequent years, only the distance between
IHS or Tribal hospitals would be considered when assessing whether an
IHS or Tribal hospital meets the mileage criterion under Sec.
412.101(b)(2). Similarly, only the distance between non-IHS hospitals
would be considered when assessing whether a non-IHS hospital meets the
mileage criterion under Sec. 412.101(b)(2).
Comment: Commenters supported the proposed parallel adjustment so
that, for discharges occurring in FY 2018 and subsequent years, only
the distance between IHS or Tribal hospitals would be considered when
assessing whether an IHS or Tribal hospital meets the mileage criterion
under Sec. 412.101(b)(2), and similarly, only the distance between
non-IHS hospitals would be considered when assessing whether a non-IHS
hospital meets the mileage criterion under Sec. 412.101(b)(2). Several
commenters urged CMS to apply this proposal retroactively as, according
to some commenters, they did not believe CMS has always considered IHS
and Tribal hospitals to be subsection (d) hospitals for purposes of the
low-volume payment adjustment, while other commenters believed that IHS
and Tribal hospitals are not ``like'' hospitals. Some commenters asked
CMS to state in
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its final rule that the proposed addition of paragraph (e) to Sec.
412.101 is a codification and clarification of existing policy
regarding dissimilar hospitals, and that under that policy it is proper
to approve a low-volume hospital adjustment to a hospital despite its
proximity to an IHS or Tribal hospital. In general, commenters pointed
to one or more of the following reasons in support of their assertion
that the proposed rule is a codification and clarification of existing
policy rather than a new policy: (1) Published CMS and MAC guidance
that commenters claim has provided for a ``like hospital'' standard
since the implementation of the adjustment (for example, Transmittal
1347, Change Request 8627 (February 14, 2014)); (2) a hospital that is
within 15 miles of an IHS hospital and also has sole community hospital
status indicates that such hospitals and IHS facilities are not ``like
hospitals''; (3) assertions that some MACs had, at times for some cost
reporting periods (or portions thereof), allowed non-IHS hospitals
whose sole disqualifier was proximity to an IHS or Tribal hospital to
receive a low-volume hospital adjustment; and (4) two Departmental
Appeals Board decisions for cases which involved CAH designation not
eligibility for a low-volume hospital adjustment (Cibola General
Hospital, DAB No. 2387 (2011) and La Paz Regional Hospital, DAB CR 2883
(2013)), that commenters asserted found that ``IHS facilities should be
disregarded in determining a hospital's eligibility for Medicare
program classifications that are based on proximity to other Medicare
hospitals.''
Response: We appreciate the commenters' support of our proposal.
Because we have consistently considered IHS and Tribal hospitals to be
subsection (d) hospitals, as noted in the preambles of the above cited
rules, we believe it is inappropriate to apply this parallel adjustment
retroactively. While CMS may have in certain instances used terms such
as ``like'' in place of ``subsection (d)'' when issuing subregulatory
guidance for the low-volume hospital adjustment and there may have been
inconsistencies in low-volume hospital adjustment determinations made
by some contractors, these factors do not establish agency policy or
bind the agency. Indeed, CMS' regulations at Sec. 412.101(b)(2)
clearly refer to the proximity to the nearest subsection (d) hospital,
consistent with section 1886(d)(12)(C)(i) of the Act, but neither the
statutory nor the regulatory provisions that govern the low-volume
hospital adjustment refer to a ``like'' hospital standard. The SCH
regulations at Sec. 412.92(a), by comparison, expressly refer to
proximity to a ``like'' hospital (as defined at Sec. 412.92(c)(2)),
consistent with section 1886(d)(5)(D)(iii) of the Act.
Moreover, the DAB decisions cited by the commenters concerned the
certification of a hospital for CAH status, not the requirements for
determining proximity to a subsection (d) hospital for purposes of the
low-volume hospital payment adjustment. To the extent that these
decisions could be interpreted to mean that the DAB has held that IHS
hospitals may not, by implication, be subsection (d) hospitals, we
reiterate that CMS has a longstanding policy of considering IHS and
Tribal hospitals to be subsection (d) hospitals (as noted in the
preambles to the rules cited above). As a result, we believe that it is
necessary to amend the regulation governing the low-volume hospital
payment adjustment in order to provide flexibility in determining
eligibility for the adjustment. Therefore, after consideration of the
public comments we received, we are finalizing this proposal, including
our proposed revisions to 42 CFR 412.101, without modification.
F. Indirect Medical Education (IME) Payment Adjustment Factor for FY
2018 (Sec. 412.105)
Under the IPPS, an additional payment amount is made to hospitals
with residents in an approved graduate medical education (GME) program
in order to reflect the higher indirect patient care costs of teaching
hospitals relative to nonteaching hospitals. The payment amount is
determined by use of a statutorily specified adjustment factor. The
regulations regarding the calculation of this additional payment, known
as the IME adjustment, are located at Sec. 412.105. We refer readers
to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51680) for a full
discussion of the IME adjustment and IME adjustment factor. Section
1886(d)(5)(B)(ii)(XII) of the Act provides that, for discharges
occurring during FY 2008 and fiscal years thereafter, the IME formula
multiplier is 1.35. Accordingly, in the FY 2018 IPPS/LTH PPS proposed
rule (82 FR 19940), we stated that, for discharges occurring during FY
2018, the formula multiplier is 1.35. We estimate that application of
this formula multiplier for the FY 2018 IME adjustment will result in
an increase in IPPS payment of 5.5 percent for every approximately 10
percent increase in the hospital's resident-to-bed ratio.
Comment: One commenter stated that it appreciated that the
resident-to-bed ratio is statutorily required for purposes of
calculating the IME adjustment. The commenter requested that, in order
to respond to physician shortages, policymakers provide additional
funding to train future physicians and urged CMS to consider additional
funding that would supplement the current IME adjustment factor.
Response: We appreciate the commenter's comment. As noted above,
the IME adjustment factor is statutory and the calculation of the IME
payment is also specified in statute. Accordingly, for discharges
occurring during FY 2018, the formula multiplier is 1.35.
G. Payment Adjustment for Medicare Disproportionate Share Hospitals
(DSHs) for FY 2018 (Sec. 412.106)
1. General Discussion
Section 1886(d)(5)(F) of the Act provides for additional Medicare
payments to subsection (d) hospitals that serve a significantly
disproportionate number of low-income patients. The Act specifies two
methods by which a hospital may qualify for the Medicare
disproportionate share hospital (DSH) adjustment. Under the first
method, hospitals that are located in an urban area and have 100 or
more beds may receive a Medicare DSH payment adjustment if the hospital
can demonstrate that, during its cost reporting period, more than 30
percent of its net inpatient care revenues are derived from State and
local government payments for care furnished to needy patients with low
incomes. This method is commonly referred to as the ``Pickle method.''
The second method for qualifying for the DSH payment adjustment, which
is the most common, is based on a complex statutory formula under which
the DSH payment adjustment is based on the hospital's geographic
designation, the number of beds in the hospital, and the level of the
hospital's disproportionate patient percentage (DPP). A hospital's DPP
is the sum of two fractions: the ``Medicare fraction'' and the
``Medicaid fraction.'' The Medicare fraction (also known as the ``SSI
fraction'' or ``SSI ratio'') is computed by dividing the number of the
hospital's inpatient days that are furnished to patients who were
entitled to both Medicare Part A and Supplemental Security Income (SSI)
benefits by the hospital's total number of patient days furnished to
patients entitled to benefits under Medicare Part A. The Medicaid
fraction is computed by dividing the hospital's number of inpatient
days furnished to patients
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who, for such days, were eligible for Medicaid, but were not entitled
to benefits under Medicare Part A, by the hospital's total number of
inpatient days in the same period.
Because the DSH payment adjustment is part of the IPPS, the
statutory references to ``days'' in section 1886(d)(5)(F) of the Act
have been interpreted to apply only to hospital acute care inpatient
days. Regulations located at Sec. 412.106 govern the Medicare DSH
payment adjustment and specify how the DPP is calculated as well as how
beds and patient days are counted in determining the Medicare DSH
payment adjustment. Under Sec. 412.106(a)(1)(i), the number of beds
for the Medicare DSH payment adjustment is determined in accordance
with bed counting rules for the IME adjustment under Sec. 412.105(b).
Section 3133 of the Patient Protection and Affordable Care Act, as
amended by section 10316 of the same Act and section 1104 of the Health
Care and Education Reconciliation Act (Pub. L. 111-152), added a
section 1886(r) to the Act that modifies the methodology for computing
the Medicare DSH payment adjustment. (For purposes of this final rule,
we refer to these provisions collectively as section 3133 of the
Affordable Care Act.) Beginning with discharges in FY 2014, hospitals
that qualify for Medicare DSH payments under section 1886(d)(5)(F) of
the Act receive 25 percent of the amount they previously would have
received under the statutory formula for Medicare DSH payments. This
provision applies equally to hospitals that qualify for DSH payments
under section 1886(d)(5)(F)(i)(I) of the Act and those hospitals that
qualify under the Pickle method under section 1886(d)(5)(F)(i)(II) of
the Act.
The remaining amount, equal to an estimate of 75 percent of what
otherwise would have been paid as Medicare DSH payments, reduced to
reflect changes in the percentage of individuals who are uninsured, is
available to make additional payments to each hospital that qualifies
for Medicare DSH payments and that has uncompensated care. The payments
to each hospital for a fiscal year are based on the hospital's amount
of uncompensated care for a given time period relative to the total
amount of uncompensated care for that same time period reported by all
hospitals that receive Medicare DSH payments for that fiscal year.
As provided by section 3133 of the Affordable Care Act, section
1886(r) of the Act requires that, for FY 2014 and each subsequent
fiscal year, a subsection (d) hospital that would otherwise receive DSH
payments made under section 1886(d)(5)(F) of the Act receives two
separately calculated payments. Specifically, section 1886(r)(1) of the
Act provides that the Secretary shall pay to such subsection (d)
hospital (including a Pickle hospital) 25 percent of the amount the
hospital would have received under section 1886(d)(5)(F) of the Act for
DSH payments, which represents the empirically justified amount for
such payment, as determined by the MedPAC in its March 2007 Report to
Congress. We refer to this payment as the ``empirically justified
Medicare DSH payment.''
In addition to this empirically justified Medicare DSH payment,
section 1886(r)(2) of the Act provides that, for FY 2014 and each
subsequent fiscal year, the Secretary shall pay to such subsection (d)
hospital an additional amount equal to the product of three factors.
The first factor is the difference between the aggregate amount of
payments that would be made to subsection (d) hospitals under section
1886(d)(5)(F) of the Act if subsection (r) did not apply and the
aggregate amount of payments that are made to subsection (d) hospitals
under section 1886(r)(1) of the Act for such fiscal year. Therefore,
this factor amounts to 75 percent of the payments that would otherwise
be made under section 1886(d)(5)(F) of the Act.
The second factor is, for FYs 2014 through 2017, 1 minus the
percent change in the percent of individuals under the age of 65 who
are uninsured, determined by comparing the percent of such individuals
who were uninsured in 2013, the last year before coverage expansion
under the Affordable Care Act (as calculated by the Secretary based on
the most recent estimates available from the Director of the
Congressional Budget Office before a vote in either House on the Health
Care and Education Reconciliation Act of 2010 that, if determined in
the affirmative, would clear such Act for enrollment), and the percent
of individuals who were uninsured in the most recent period for which
data are available (as so calculated) minus 0.1 percentage point for FY
2014, and minus 0.2 percentage point for FYs 2015 through 2017. For FYs
2014 through 2017, the baseline for the estimate of the change in
uninsurance is fixed by the most recent estimate of the Congressional
Budget Office before the final vote on the Health Care and Education
Reconciliation Act of 2010, which is contained in a March 20, 2010
letter from the Director of the Congressional Budget Office to the
Speaker of the House. (The March 20, 2010 letter is available for
viewing on the following Web site: https://www.cbo.gov/sites/default/files/111th-congress-2009-2010/costestimate/amendreconprop.pdf.)
For FY 2018 and subsequent fiscal years, the second factor is 1
minus the percent change in the percent of individuals who are
uninsured, as determined by comparing the percent of individuals who
were uninsured in 2013 (as estimated by the Secretary, based on data
from the Census Bureau or other sources the Secretary determines
appropriate, and certified by the Chief Actuary of CMS), and the
percent of individuals who were uninsured in the most recent period for
which data are available (as so estimated and certified), minus 0.2
percentage point for FYs 2018 and 2019.
The third factor is a percent that, for each subsection (d)
hospital, represents the quotient of the amount of uncompensated care
for such hospital for a period selected by the Secretary (as estimated
by the Secretary, based on appropriate data), including the use of
alternative data where the Secretary determines that alternative data
are available which are a better proxy for the costs of subsection (d)
hospitals for treating the uninsured, and the aggregate amount of
uncompensated care for all subsection (d) hospitals that receive a
payment under section 1886(r) of the Act. Therefore, this third factor
represents a hospital's uncompensated care amount for a given time
period relative to the uncompensated care amount for that same time
period for all hospitals that receive Medicare DSH payments in the
applicable fiscal year, expressed as a percent.
For each hospital, the product of these three factors represents
its additional payment for uncompensated care for the applicable fiscal
year. We refer to the additional payment determined by these factors as
the ``uncompensated care payment.''
Section 1886(r) of the Act applies to FY 2014 and each subsequent
fiscal year. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50620
through 50647) and the FY 2014 IPPS interim final rule with comment
period (78 FR 61191 through 61197), we set forth our policies for
implementing the required changes to the Medicare DSH payment
methodology made by section 3133 of the Affordable Care Act for FY
2014. In those rules, we noted that, because section 1886(r) of the Act
modifies the payment required under section 1886(d)(5)(F) of the Act,
it affects only the DSH payment under the operating IPPS. It does not
revise or replace the
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capital IPPS DSH payment provided under the regulations at 42 CFR part
412, subpart M, which were established through the exercise of the
Secretary's discretion in implementing the capital IPPS under section
1886(g)(1)(A) of the Act.
Finally, section 1886(r)(3) of the Act provides that there shall be
no administrative or judicial review under section 1869, section 1878,
or otherwise of any estimate of the Secretary for purposes of
determining the factors described in section 1886(r)(2) of the Act or
of any period selected by the Secretary for the purpose of determining
those factors. Therefore, there is no administrative or judicial review
of the estimates developed for purposes of applying the three factors
used to determine uncompensated care payments, or the periods selected
in order to develop such estimates.
2. Eligibility for Empirically Justified Medicare DSH Payments and
Uncompensated Care Payments
As indicated earlier, the payment methodology under section 3133 of
the Affordable Care Act applies to ``subsection (d) hospitals'' that
would otherwise receive a DSH payment made under section 1886(d)(5)(F)
of the Act. Therefore, hospitals must receive empirically justified
Medicare DSH payments in a fiscal year in order to receive an
additional Medicare uncompensated care payment for that year.
Specifically, section 1886(r)(2) of the Act states that, in addition to
the payment made to a subsection (d) hospital under section 1886(r)(1)
of the Act, the Secretary shall pay to such subsection (d) hospitals an
additional amount. Because section 1886(r)(1) of the Act refers to
empirically justified Medicare DSH payments, the additional payment
under section 1886(r)(2) of the Act is limited to hospitals that
receive empirically justified Medicare DSH payments in accordance with
section 1886(r)(1) of the Act for the applicable fiscal year.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50622) and the FY
2014 IPPS interim final rule with comment period (78 FR 61193), we
provided that hospitals that are not eligible to receive empirically
justified Medicare DSH payments in a fiscal year will not receive
uncompensated care payments for that year. We also specified that we
would make a determination concerning eligibility for interim
uncompensated care payments based on each hospital's estimated DSH
status for the applicable fiscal year (using the most recent data that
are available). We indicated that our final determination on the
hospital's eligibility for uncompensated care payments will be based on
the hospital's actual DSH status at cost report settlement for that
payment year.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50622) and the FY
2015 IPPS/LTCH PPS final rule (79 FR 50006), we specified our policies
for several specific classes of hospitals within the scope of section
1886(r) of the Act. We refer readers to those two final rules for a
detailed discussion of our policies. In summary, we specified the
following:
Subsection (d) Puerto Rico hospitals that are eligible for
DSH payments also are eligible to receive empirically justified
Medicare DSH payments and uncompensated care payments under the new
payment methodology (78 FR 50623 and 79 FR 50006).